A client called me in a heightened state of frustration. Her business group recently made major decisions regarding strategy and future direction. While she was enthusiastic about what lay ahead, her team members weren’t. They were exhibiting signs of dissatisfaction and sowing the seeds of subversion. She needed to act quickly, but she didn’t know how.
Without knowing anything more, I could already guess the root of the problem: the team hadn’t felt included in the strategy-level decision-making. As I dug deeper, my suspicions were confirmed. Leadership had a history of asking for input and then stifling open and honest dialogue.
Another client recently went through a major restructuring. In the process, the company left employees in the dark by failing to communicate what was happening and why. By the time the client called Bright Side, it was facing a debilitating backlash.
Whether it’s leadership consistently disregarding (or failing to solicit) employee feedback or neglecting to communicate significant changes — the result is always the same: Employees end up feeling disrespected and devalued. Resentment simmers and eventually boils over.
Don’t misunderstand me. I know that not every decision can be subject to employee feedback. But, all too often, leadership loses sight of the organization’s most valued asset: its people. With a single-minded focus on the bottom line, leaders make the mistake of treating employees like automatons rather than people.
In the rush of getting the job done, leaders must remember these core truths: All people want to feel valued and respected for the work they do, to know that their contributions matter and to feel heard. When we overlook these principles, employees become disheartened, discouraged and disengaged. One way or another, the discontent manifests itself and everyone suffers.
The solution is to stay connected. Stay connected to your employees daily by cultivating honest person-to-person (rather than person-to-object) relationships, where respect and communication are the cornerstones. Demonstrate through your words and your actions that you value their work, that their input matters and that you believe in transparency. That doesn’t mean, of course, that you won’t at times make decisions that they don’t agree with. It means that the conversation will have happened — they’ll have spoken, you’ll have listened, and no one will be in the dark.
Create opportunities daily to demonstrate that employee feedback is valued. How? For starters, listen more and talk less. A good way to do that is to ask more questions. If you don’t like what you hear, don’t get defensive. A defensive reaction will only shut the conversation down and signal that you aren’t really interested in what others have to say. Instead, ask more questions to clarify and don’t take disagreement personally.
Intentionally seek out viewpoints that are different than your own. If you only talk to people who agree with you or tell you what you want to hear, then you’ll create a false sense of reality.
Lastly, be transparent. I can’t emphasize this enough. So many problems arise when leaders fail to be transparent in their decision-making. Don’t leave people guessing about important matters that impact them.
Resolve to actively practice these behaviors in meetings and routine interactions. Ask team members to follow suit. By doing so, you’ll demonstrate your willingness to learn and to be engaged. Morale will improve and you’ll head off unnecessary revolts and insurrections. <<
Donna Rae Smith is a guest blogger for Smart Business. She is the founder and CEO of Bright Side Inc., a transformational change catalyst company that has partnered with more than 250 of the world’s most influential companies. For more information, please visit www.bright-side.com or contact Donna Rae Smith at firstname.lastname@example.org
Sue Schick is well-versed in the art of the uphill battle.
Two years ago, she was named CEO of the commercial business line in UnitedHealthcare’s Pennsylvania and Delaware region. It was a unique assignment. UnitedHealthcare is one of the pillars of the health insurance industry, with a strong presence and widespread brand recognition in numerous markets around the county.
But in Schick’s 1,044-employee unit, the company was a relative newcomer, broaching the Pennsylvania/Delaware region less than a decade prior.
“We have only been here seven or eight years, so we don’t have the widespread brand recognition yet,” Schick says. “One of the big things we have done in my time here, particularly last year, was to focus on building our brand and increasing the level of brand recognition.”
And it’s not just about TV commercials, billboards or sponsorship deals. For Schick, increasing the profile of the UnitedHealthcare brand in her region means connecting with the community and teaching current and potential customers what the company’s brand stands for.
“Some leaders think they have to build their brand, so they just go about putting their company’s name on a bunch of billboards and the sides of buses,” she says. “But we wanted to take a really comprehensive approach that included setting ourselves apart as thought leaders. For us, it becomes not just a matter of advertising. It’s a question of how do you become a part of the business community. How do you really put down roots in the community and find ways to contribute to it?”
To develop the connection between UnitedHealthcare and the communities in her region, Schick needed to develop a better connection between several thousand employees and the goals, vision and mission of the company. In short, she needed to reinforce corporate culture, creating a work environment in which employees would be empowered and impassioned to realize the goals and mission.
Paint a picture
The first step in motivating employees is to give them aggressive goals built around a compelling vision for where you want to take the company, then set the example from the top of how you want your people to accomplish the goals and realize the vision.
Schick started by reaching out to community organizations, placing an emphasis on community involvement and philanthropy that she expected her executive team to demonstrate as well, pushing the message to their teams and throughout the unit.
“We had several of our national executives in town meeting with the local chamber of commerce and meeting with an executive women’s forum,” Schick says. “We became very involved with philanthropy and corporate nonprofits.
“In fact, I think just about every member of my executive team sits on the board of a nonprofit now. I’m personally involved with the Susan G. Komen Foundation and the Pennsylvania chapter of the March of Dimes. It takes an organized effort to get to the point where you are not just advertising, but you are a part of the business community.”
However, you have to create a bigger message around your community endeavors. While community volunteer work and service on nonprofit boards is a worthwhile endeavor in and of itself, if you want to integrate it into the overall culture and mindset of your business, you need to reinforce the altruism with internal communication.
Anytime Schick is in front of her people, whether in large audiences or small groups, she uses the opportunity to get her people thinking about their purpose and the potential of UnitedHealthcare in the Pennsylvania and Delaware marketplace.
“For a leader, one of the most important things you can do is paint a picture of the future,” Schick says. “Showing everyone what success is going to look like — what is the vision and what is the company’s full potential in the marketplace. It is a matter of inspiring those leaders to fall in behind that vision, and it all starts with communication.
“When you don’t have a team behind you, when you have failures in teamwork, many times the root cause of that is a lack of communication. Every opportunity I have to communicate with the entire team, I am talking about the vision, focusing them on our purpose and what we are trying to get done for our customers and members in Pennsylvania.
“Whether I am meeting with them one-on-one or in large groups or sending out a written communication or a video communication, it’s always a focus on reinforcing the vision of the future.”
With UnitedHealthcare, a relatively speaking new kid on the block, part of that vision involves embracing competition. Schick knows UnitedHealthcare faces stiff competition from health insurance providers that were established in the region long beforehand.
In connecting with the community and promoting the organizational goal of spreading the brand, Schick wants her team to embrace the challenge provided by competition, and realize that competition can benefit everyone in the end.
“If our ultimate goal is to help people live healthier lives, we have to look at the opportunities to make that mission real in this region,” Schick says. “The opportunity to really breathe life into that is to create a situation where employers and businesses have a choice, where they have true competition in health benefits so they can make the best choice for their employees.
“We see that wherever there is competition, that is going to lead to better and more innovative products, higher service levels and, over time, it is going to lead to more affordable costs.
“So when my team members get up in the morning, I want them to really think about what we can do to serve the business leaders in Pennsylvania and Delaware, what can we do to serve the consumers in the region, so that we are really helping to bring choice, which is a key component in bringing this vision of health and wellness to life.”
Live the culture
Schick thinks a lot of CEOs look at culture as a touchy-feely thing — an aspect of business leadership that has its place, but covers the rather squishy, formless subjects of motivation, purpose, morale and assorted other topics that might be more suited for discussion on a therapist’s couch.
In other words, culture is soft. It doesn’t impact the bottom line like hard data and numbers.
Schick sees it differently.
“When you have a positive, supportive culture, you can drive better results,” she says. “You can improve team satisfaction and engagement, you can improve customer service. If you’re focused on people and building relationships, if you’re focused on innovation, high integrity and developing people who approach their work with a compassionate spirit, you have a positive culture.
“Some people might say that’s soft. I say it’s not. A culture like that drives hard results.”
The CEO’s role is to set the values that comprise the foundation of the culture and ensure the company’s goals and vision are attained by methods that are in line with the cultural principles.
Schick began taking steps to strengthen the culture in her unit from her first day on the job and hasn’t stopped performing daily maintenance. She realized early that UnitedHealthcare’s success in branding and connecting with the communities of Pennsylvania and Delaware would heavily depend on how her employee perceived the company’s culture.
Before you can go out and build your brand to prominence, you need to know who you are as a company.
Schick focused on developing a mentality that embraced ambitious goals, learning from failures and creating the resourcefulness necessary to take advantage of market opportunities. She wanted a company in which focus on the cultural principles was a priority, not an afterthought.
“We talk about culture all the time,” she says. “The key to success in creating a really positive culture is that you talk about the culture first. You don’t have a business activity and then talk about the culture at the end. Culture is not like a side of fries. It’s not something that is optional. Culture should be embedded in everything you do.”
A positive culture is rooted in engagement, particularly when it comes to employee ideas and innovations. Employees have to feel like they’re a part of what is going on at the company. To that end, Schick and her leadership team carefully monitor the process by which employees are encouraged to bring new ideas to the table for consideration.
No company can use every single idea that employees bring forward, but how you accept or reject an idea can go a long way toward determining whether that employee accepts or rejects the culture of the company.
“It started small, with people bringing very small suggestions to life, and then we acted on them,” Schick says. “We publicized it and recognized people for bringing their ideas forward.
“The result has been that we have created a culture where people see innovation as their job. We set the pace, and now everybody wants to wake up in the morning and say, ‘How can we operate even more efficiently? How can we bring innovative products and solutions to market?’ It is a positive cycle of encouraging people, acting on their ideas and recognizing people when their ideas are successful.”
If an idea can’t be used, or isn’t ultimately successful, the creator of the idea receives recognition for speaking up in the first place.
“We celebrate failure, too,” Schick says. “The worst thing you can do is not speak up if you have an idea about how we can do a better job of serving our consumers out in the marketplace. Not every idea can work, so what can we do when it doesn’t work? We can recognize that person for having the guts to suggest the idea.”
It comes back to Schick’s philosophy on goal setting: If you really believe in something, aim for it. Don’t be afraid of overambitious goals.
“I’d rather aim for the stars and celebrate if you can get close,” she says. “I would rather not aim low or set low standards on goals. Sometimes if you take that approach, it requires a little bit more flexibility from a leadership standpoint, but it has worked pretty well for me in my career.”
If you want your employees to believe in your culture, your role as the leader is to avoid saying “no” unless the situation absolutely calls for it. That can be a judgment call, and it can be difficult to make at times, but if you have an employee who truly believes in an idea and truly believes it will be good for the business, work with them to modify the goal.
Schick believes goals can be both ambitions and sensible. When you can attain both, you’ve hit the sweet spot.
“If you’re setting a goal for an idea or project and people don’t see any way to reach it, you’ve just demoralized and disengaged your entire team,” she says. “The challenge for leaders is to figure out how to find that sweet spot. That gets back to the vision, the ability to see the future and paint a picture of what’s possible.
“If you can paint that picture, and you have a team that is engaged in the mission and values of the organization, they might see that this goal really is attainable.
“If you can work together to create the plan, and find a way for everyone involved to really contribute to that plan, I think that is when you are in the best situation.”
How to reach: UnitedHealthcare, (914) 467-2039 or www.uhc.com
The Schick file
Born: Long Branch, N.J.; Grew up in Fredericksburg, Va.
Education: Economics and business degree from Randolph-Macon College, Ashland, Va.
What was your first job?
I was a dishwasher at a steakhouse in Virginia. You learn a lot about hard work doing a job like that. I was 15 at the time.
What is the best business lesson you’ve learned?
One of the most important lessons I’ve learned is the importance of taking care of your team members. That means investing in them, making sure we’re meeting their career goals and needs, and making sure we’re letting them bring ideas to the table.
What traits or skills are essential for a business leader?
My answer is probably a little different from what it would have been a few years ago. Now, I’d probably say resilience and flexibility. The world is always changing, and what has worked in the past might not work in the future. So you need to have an attitude where you embrace innovation.
What is your definition of success?
I don’t look at my own success. I look at the success of my team and the satisfaction of my customers as my yardstick. If my employees are meeting their career goals, I am successful if I have helped them do that.
Frank Venegas Jr.’s company, The Ideal Group Inc., was facing what you would call, well, not an ideal situation.
The year was 2008. Even if your company didn’t file for bankruptcy or face an existential threat, you probably had a bottoming-out point about that time or thereafter. At some point, your company probably reached a nadir, and you knew the only place to go was up.
The Ideal Group’s low point came when the company had to slash nearly 14 percent of its workforce. For founder, chairman and CEO Venegas, the staff reduction was a fork in the road. He could have chipped away at his staff little by little, reducing the short-term trauma level, but potentially forcing his company to go through multiple rounds of demoralizing cuts.
Or he could take the lump-sum approach, get it all the cuts over with at once, causing more short-term trauma, but beginning the healing process sooner.
Venegas chose the latter approach.
“At that point, we were probably operating the company at 30 percent larger than what it needed to be,” Venegas says. “What we told everyone was ‘Here is where we are at, we are going to cut it really hard and heavy, and we are going to do it one time, instead of doing it every month.’ And we were fortunate because we were able to hold true to that. We did it once, and we held on.”
As the saying goes, laws are like sausages; you really don’t want to know how they are made — you really don’t want to know how staff cuts are made. It’s a stomach-turning process for just about every business leader to decide why one group should remain employed and other group members should lose their jobs.
But in uncertain times, information is your company’s lifeblood. Venegas quickly realized that if his industrial manufacturing, distribution and solutions company was to recover and emerge stronger, he’d have to lead the way.
That meant keeping his remaining employees in the loop regarding the company’s status, why the cuts were happening and, perhaps most importantly, the reasons to get excited about the future.
“You can’t do much about the short-term morale of the remaining people,” Venegas says. “The only thing you can do is keep them up on what you’re doing as a company, and be honest and forthright. You try to give them new opportunities whenever possible, and really establish an entrepreneurial culture where people have the ability to try new things and make some mistakes along the way.”
Create a culture
Employees do come to work for a paycheck. They rely on your company for the money that provides food, shelter and other basic life necessities. So to say money has nothing to do with fulfillment of employees is flat-out wrong. Money is a factor.
However, it’s a basic factor. If you can’t provide competitive wages, the discussion regarding talent retention ends there. But if you can satisfy an employee’s financial requirements, employment does become about something else.
In short, once the money matter is settled, fulfillment is a matter of engagement. Employees want opportunities to think, create and innovate. They want a leadership group that is responsive to their input.
Employee engagement is increasingly critical when a company has to do more with less.
Ideal’s staff cuts were the product of a customer base that was about 70 percent automotive. When the U.S. auto industry took a historic nosedive during the depths of the recession, the ripple effect hit Ideal. While the company was able to endure the shock better than some of its competitors, sales slipped to under $100 million in 2009, making cuts necessary.
While those left behind had to deal with the collective morale damage and other fallout, Venegas saw an opportunity. Ideal had to do more with less, but the opportunity was there for his remaining staff to flex its entrepreneurial muscles and demonstrate their versatility.
Entrepreneurship is something that has always been a part of Ideal’s culture, but Venegas realized the time was right to embrace the concept anew.
“When you walk in here, and see the way the company looks, the way we run the company, it doesn’t take you a long time to realize that we are a highly entrepreneurial and change-oriented company,” Venegas says. “We’re like a Silicon Valley company in that we do things far differently than anybody else.”
The key to developing and maintaining a focus on innovation within a company is to educate employees, which is as simple — and as complicated — as communicating with them. You have to reveal your vision, your strategy, your methods and, when possible, your financial numbers, to your people.
If you can paint a detailed picture regarding where the company stands, and where each person fits into the larger picture, you stand a much better chance of motivating employees and keeping the idea stream flowing.
Venegas likes to keep his employees apprised of where the company stands financially, whether the numbers show a profit or a loss. Though some leaders might look at a financial loss and see something that would damage employee motivation, Venegas believes the act of informing employees is a motivator in and of itself.
“You get people to buy into an entrepreneurial culture by making money,” he says. “So for our purposes, we want our people to know whether we are making money or not. We run a monthly financial statement for each of the six companies that we have, and those are reviewed not only by senior management but also by the people who lead those companies — which we call BUMs, or business unit managers. They are in charge of their balance sheet, P&L and the whole deal.
“You just make it really clear for everyone to see whether you are doing well or not so well. Everybody should be able to hold their eyes open and take a look.”
Informed employees have a better idea of how to formulate new ideas that walk in step with what the company needs. They feel more empowered to take calculated risks, live with the consequences, and if the plan fails, to turn it into a learning experience for next time.
“We don’t box many people into any particular role,” Venegas says. “My brother and I own the company, and I guess we were taught how to take things apart and put them back together. A lot of times, if we didn’t need this part or that part for a given project, we didn’t get it.
“So we were always looking at how we could build things faster, less expensive and more reliable. That is a concept we’re always trying to pass on to our people here.”
Feed their careers
Venegas believes employees want four things out of an employer, apart from financial compensation: consistency, opportunities to express their ideas, opportunities for promotion and the chance for longevity.
“My CFO just celebrated her 15th anniversary here,” Venegas says. “When she initially came to work for me, she was a graduate intern from the University of Michigan. Obviously, she wasn’t the CFO when she first started, but she grew into that position, she demonstrated great learning habits, and it has been a real blessing to have her here.”
To Venegas, the long tenure of his CFO reinforces the importance of career development as an employee motivator. In particular, Venegas values hands-on employee development that coaches his team to think, create and innovate in a real-world setting, formulating ideas that will be relevant to the company moving forward.
“Our career development operates every single day,” he says. “We are a very well-managed company. The key, I believe, is to set your missions in a very clear way, establish performance metrics and go through them frequently. We go through them not only on a monthly basis, but on a weekly basis.”
Venegas also has his team conduct frequent meetings. Though many business heads view meetings as one of the biggest time-wasters on the company schedule, Venegas still sees value in getting a group of people together in a room to exchange ideas, and share what is working and not working in the company’s operations.
“People say meetings are a waste of time, and that is their opinion,” he says. “But here, it really gives us time to open up and talk. Here, our meetings are pretty open, and you can say what you want. When someone proposes an idea for a new project, we start out with a white board, and begin listing the pros and cons. There is no particular recipe regarding the how and why of the projects we pick, the things we are going to go after.
“But I do find that it is pretty apparent over the course of the meeting whether it makes sense or not. We can generally see whether we’re filling the white board with reasons why we should do something, or reasons why we shouldn’t do it.”
As long as the conversation remains respectful and all viewpoints are considered, Venegas says his team will come to a consensus on how to proceed. If there are any disagreements or conflicts, those have to be addressed in order to get everyone back on the same page.
Motivating employees means respecting them — their work, their opinions, their careers, their ideas. Venegas has promoted that viewpoint at Ideal, and it has helped lead the company out of the recession to $201 million in revenue last year.
“We look at our company values during our meetings, and our mission statement, and from there it’s really not that hard to put together what we have to do in order to be a success. I remind our people — and sometimes, I have to remind myself — that we went through this whole recession, and we’re still here. We remain strong, and we didn’t have the problems of some of our competitors and other companies.”
How to reach: The Ideal Group Inc., (313) 849-0000 or www.weareideal.com
The Venegas file
Frank Venegas Jr.
Founder, chairman and CEO
The Ideal Group Inc.
History: I started the business 33 years ago because I won a Cadillac in a card draw. I sold it a few days later, took the money, put it in my banking account and started Ideal.
What is the best business lesson you’ve learned?
My grandfather always told me that if you do what the boss doesn’t want to do, you’ll have a job every time. Also, you need to create a reason why you’re in business. Do what someone else in the market isn’t doing. You could be in the window-washing business, but it might be how you present yourself. Maybe it’s how you let customers inspect the final product. But you do something a little different, and that draws the customers back to you.
What traits or skills are essential for a business leader?
Have integrity and don’t lie. I’d say that’s the most important thing by far. Once you’re not honest, no one wants to work for you.
What is your definition of success?
Being happy in anything and everything you do and seeing everybody around me fulfilled. I lost $18 million on a business deal in 1998. I did something that I should have thought harder about. The company made it back, not because I was a great leader, but because of the people who work for me. It takes a whole bunch of effort from a whole lot of people to keep a company happy.
Craig Clark is one of several general managers who have held the position at The Rivers Casino within its first three years of operation. But that inconsistency at the leadership role has made it hard to create programs that benefit the casino’s customers as well as its employees.
The Rivers Casino, which opened in 2009, has more than 1,800 employees and saw 2011 revenue of $434 million. Clark, who became GM in June 2011, has been focused on enhancing both the customer and employee experience to make the casino a better business overall.
“The key is really consistency of leadership so you can put together programs with the community and programs within the facility to allow team members to grow and advance,” Clark says. “I think that’s the key to my leadership. In the gaming industry some people move around, but for myself I like to be located at one facility for quite a period of time.”
Before coming to Rivers, Clark spent nearly 15 years at Turning Stone in upstate New York where he was able to develop the facility.
“That’s where I spent most of my career, and we had a complex there that we kept adding to for years and years,” Clark says. “(In Pittsburgh) we have a great complete facility that we keep creating different entertainment experiences within and reasons for our customers to come and visit.”
Currently, Rivers Casino has 80 table games, 30 poker table games and 2,970 slot machines. It also includes five different food and beverage outlets, a banquet space and three bar locations on the casino floor. All combined, there is plenty of opportunity to impress guests with customer service and create programs that motivate the employees.
Here is how Clark is driving customer- and employee-related initiatives.
Develop key programs
In an industry where excellent customer service and employee training are staples of operating a business, it isn’t enough to simply talk about having good service. To ensure customers are treated well and employees get opportunities to advance, you have to implement programs that keep service and training as a top priority.
“We have a variety of different programs here at the property,” Clark says. “We’ve introduced a 12-Star program, which is a program for our young business leaders to learn more about all operations of the facility.
“We have leadership training components within that training program. We have accounting practices. We have how to do a review and give good feedback to team members when you give them their annual review. It’s a 12 different part program.”
While one program may be aimed at learning all aspects of the casino business, other programs offer employees a chance to learn what it takes to perform specific jobs.
“We have a dealer school here where people from outside can interview and be trained as dealers and team members who are currently dealers can learn other games that they might not have perfected to date,” he says.
The casino also has programs aimed at recognizing employees who are going above and beyond the expectations of their jobs.
“We’ve put in a program for team member of the month and we have team member of the year, where both an hourly and a salaried team member are recognized for their great contributions to the facility,” he says.
“We are also putting together right now a supervisory leadership training program focusing on how to ensure our supervisors are consistent and thorough in their coaching and their mentoring of team members so we get the right consistency throughout the organization.”
While setting up a program is one thing, continuing to improve it and make necessary changes is another. The key is to view it as an on-going process.
“It doesn’t start one day and end another day,” Clark says. “It’s actually a process that you have to live and breathe and it has to be part of your business soul. You need to focus on it each day because as a leader, the team members are looking at you as the example.”
When you can listen to employees and listen to their ideas and make a positive change, that’s how these programs are developed. You have to ensure your team continues to focus on service levels because it’s not lost on clients, customers or guests.
“Our guests have such a high expectation of coming here and they all want to be treated as if they’re that special person; our goal each and every day is to ensure that we do that and they walk away with a memory and an experience of coming here to the Rivers,” Clark says.
One of the biggest reasons Rivers Casino has the amount of opportunities available to its employees is to offer them a chance to grow and learn about the whole business. This creates employees who thoroughly enjoy what they do and strive to be well-rounded.
“Sometimes people are narrowly focused and I think the more that you can explain to them or educate them on more parts of the business, the more valuable they become to your organization,” Clark says. “If a dealer understands how the marketing promotions are being created and what our goals are with those programs, they’re our salespeople that are out there each and every day and it just makes them more informed and better team members and better guest service professionals.”
To help encourage employees to become well-rounded, it is crucial that you provide outlets for them to be recognized.
“Those types of programs start from one-on-one contact with team members and ensuring that you recognize them as you walk around the facility and thank them for their hard work,” he says. “That’s something that business leaders need to continue to focus on because that pat on the back is one of the best rewards that a person can have each and every day if somebody can have that personalized recognition.”
Another way to develop your employees is to establish expected criteria and highlight the individuals who provide strong examples of the attitude, behavior and work ethic you expect.
“When you look at human resource programs, we try to create the criteria that establish what the right business behavior for a team member or team leader is,” Clark says. “We want to take those people who are examples of that behavior every day and put them on a pedestal so people look at them and say, ‘Matt is a great guest service deliverer every day. He walks the walk and coaches team members.’
“He is an example that they can look at for that consistency. Consistency is the hard part in the hospitality business because things happen in your personal life and when you come to work you have to shed anything that’s not positive and ensure you put that smile on your face and be positive and proactive in what you do at the workplace.”
Strong employee development ultimately comes down to how much employees want to help themselves become better. If you can get your employees to want to achieve greater things and you allow them outlets to suggest improvements, you create a culture that fosters continuous improvement.
“Quite often some of the best ideas come from listening to your team members,” Clark says. “Keep an open mind. I’ll walk the casino floor and some of the best ideas I get are from team members who come up to me with suggestions or ideas that were passed on from a customer. You have to take those ideas, and as a leader our job is to align the resources, when practical, to implement those great ideas.”
On a quarterly basis Clark does something he calls “communication corner” where he sets up a table in the team member cafeteria for all three shifts to get their input.
“I ask them for their ideas, suggestions and concerns because a third of the ideas come from the leadership team and their experience, a third comes from our team members who are in the workplace each day and a third comes from customers,” he says. “So I can get two-thirds of the knowledge I need by just listening to our team members.”
An outlet such as Clark’s communication corner is a great way to gain access to employee’s ideas. However, the key to continuing that practice is to show them you are acting on those ideas.
“A lot of it is listening to those ideas and then having the team members see the change,” he says. “That openness to listening as well as showing action, positive actions reinforce that behavior. It’s like anything else in life, if you’re an athlete or if you’re a business leader, you have to exercise those behaviors. As business leaders we have to exercise the behavior of listening and we have to exercise the behavior of implementing the things that are practical to our businesses and cost-effective.”
Drive customer service
The concept of customer service seems simple on the surface, but to achieve it and be a leader at it your company takes the right employees first.
“One of the keys is starting with the selection process of the team member,” Clark says. “The next most important thing is we have a two-day orientation here at the property. Part of it is going through policies and part of it is really talking about hospitality and talking about our guests and the expectations of our guests.
“Also, it’s how we ensure that we are focused on those good behaviors to make it a great experience for the guests when they come here and how all the systems work.”
An orientation program is a key way to set the tone for someone arriving in the company. It gives employees a good overview of the type of businesses that they’re entering in to and ensuring they’re the right person. The casino doesn’t stop there.
“From that, we have a 90-day checklist program which really follows the job description and what their core functions are as a team member,” Clark says. “We make sure we go through that checklist to ensure that we have good training programs set up to ensure that they focus on the job function, the quality and the service.
“Those types of things tend to work out well where team members really understand the expectation and deliver the best results.”
To measure whether employees understand their job and are delivering desired results, it is important to have some form of review in place.
“We do a 90-day review of a person who joins the organization and then an annual review,” he says. “An annual review should never really be a surprise. It should be a summary of the year’s performance of the team member. The key is to have ongoing communication and ongoing coaching and praise.
“When you have a balanced program and all those cogs of the wheel are working together, that’s where you have the best result. If there is something team members need to advance their skill on, the key is helping them out with that as soon as it’s identified. If they’re doing great things it’s recognizing them immediately because that’s where you’re going to create the best team loyalty and the best team culture.”
To keep customer service levels at their peak it is important that you use what resources you have available to you. Rivers recently implemented a secret shopper program to help test customer service.
“We have an independent party that will evaluate service levels looking at it from a guest perspective,” Clark says. “A shopper service will come in and they’ll go through experiences as if they were a guest and then give us their feedback on individual team members and the property overall.”
There are a lot of great resources, some of them free and some of them you can acquire. “You have to stay current on different practices and different education processes,” he says. “The world is changing rapidly when it comes to online training. We’ve put several tutorial programs in place this year. The key is really seeing what the most effective way is to use this technology to train team members and ensure that they are current on all their practices.”
How to reach: The Rivers Casino, (412) 231-7777 or www.theriverscasino.com
- Design programs around initiatives.
- Provide opportunity and outlets for employees.
- Enhance the customer experience.
The Clark File
Born: Endicott, NY
Education: Received an associate degree from Broome Community College in business administration. He also has a bachelor’s of science degree from SUNY Binghamton.
What was your first job, and what did you learn from that experience?
I worked with my father as a residential carpenter during high school up until I graduated with my bachelor’s degree. What I took away from that was hard work, an understanding of what you can create with your hands, and a strong work ethic.
What is some advice that has held true through your career?
One of the things I think is most important is education. Somebody should always focus on educating themselves and continue that education throughout their life.
Who is someone you look up to in the industry?
I spent most of my career at Turning Stone and I worked with Frank Riolo. He was somebody who always believed in me and continued to challenge me and give me opportunities to grow.
Do you ever gamble and what is your favorite game?
In the state of Pennsylvania, I rarely gamble. If I make a trip to Vegas, I gamble a little bit, but not very much. I like to play craps. I enjoy the entertainment experience.
What are you looking forward to at Rivers Casino?
I’m looking forward to the continued development of Rivers. I love to grow a business and I really believe in the business plan. That’s why I enjoy this job because I can see the growth of the team members and the growth of the property and the success that’s driven by both of those.
Tony DiBenedetto will never forget “the watercooler incident.”
“We were in our very first office building, and at that time everybody was bringing in their own bottled water,” says DiBenedetto, who is the co-founder, chairman and CEO of the national IT services provider. “We wound up having this meeting to talk about what we were going to do about the water.”
He and the other two principals sat down to deliberate the issue: Would they use bottled water or filtered? What about enlisting a water service? The meeting ended two hours later.
“At the end of that meeting, I looked at my two partners and said, ‘Guys — we’re never doing this again,” DiBenedetto says. “This is insane.’”
Seeing the inefficiency around decision-making, the partners agreed that something needed to change. With Tribridge still in its infancy, they understood that the way they handled decisions in the beginning years would set the precedent for the company’s future.
“What it led to was an acknowledgement that we all three did not need to be included in decisions,” DiBenedetto says. “In partnerships, a lot of times everybody feels the need to vote on every single issue and talk about every issue, and it doesn’t allow you to grow very fast.”
What the watercooler incident demonstrated is the age old problem of “too many cooks in the kitchen” combined with the mistake of bringing in the wrong cooks. When there are too many people involved in a decision, it’s hard for people to accomplish anything quickly or efficiently.
And if people are also participating in decisions that don’t concern them, they won’t have time to handle the issues that do.
What DiBenedetto and his partners realized early on was that most people at Tribridge, themselves included, didn’t really know what decisions were and weren’t their responsibility. They needed to divide the decision-making so that each person and department had clear areas of decision-making authority.
Today, each of the company’s partners has specific items that fall under his decision-making jurisdiction. For example, anything involving strategy lands within DiBenedetto’s arena, and sometimes, all three of the partners.
“I feel like my role here is to drive strategy, so if we’re going to stray from the strategy that is a decision I would want to be involved in,” DiBenedetto says.
Not all decisions in the company should be pushed down the ranks either. When it comes to large financial transactions, debt, M&A or strategy, you definitely want your top leaders to take the lead. As CEO, DiBenedetto still offers his input if there is a major decision that people want feedback on or when it’s a hire or fire decision where his expertise may help.
At the customer level, however, he’s rarely involved in decision-making. When the company opened its first office in Dallas, for example, DiBenedetto told Managing Director Bobby Priestley that he was charged with making all the decisions concerning Dallas — and not just some of them, but all of them.
“People closest to the decision make better decisions,” he says. “We have consultants in the field and 3,500 customers. They’re out there making decisions for a customer. They are in the best position to make the decision. They understand the customer’s needs. They understand what the firm can do.
“So to have them elevate that through a series of management layers is ridiculous.”
Rarely if ever has DiBenedetto seen a good decision that satisfied a customer but impacted the company negatively. That’s because the customer feedback loop can typically tell you whether or not employees are on the right track with their decision-making.
“We’ve got a nice built-in check and balance there — where if decisions are good for the customer, they’re good for Tribridge,” DiBenedetto says.
“In my 14 years at Tribridge, I’ve never felt like, ‘Oh my gosh, this person is such a rogue decision-maker, and I have to reel them in.’ I’ve never felt that at all — zero.”
Say what you need to say
When you have a lot of people making decisions every day, effective internal communication becomes much more critical. If communication breaks down, and decision-making becomes siloed, your company invites conflict within departments and across them.
“We probably have 100,000 decisions made a day, and the way our business works, we have 450 people making those decisions every day,” DiBenedetto says.
“A lot of times we make decisions but we don’t tell somebody either why we made it or even that we made a decision. So you might do something for a customer and not tell them, or you might do something internally and not tell somebody. Being able to communicate the decision is another lesson learned.”
One way to keep everyone apprised of important organizational changes or information while preserving decision-making autonomy is to have set meetings to share updates, talk strategy and discuss progress on goals.
At Tribridge, the company currently holds a monthly meeting for its national leadership team in Tampa as well as an all-company meeting each February, where more than 400 employees meet in-person at a chosen location. In addition, it conducts an all-employee phone call once a month.
Regular meetings are a great opportunity for people to bring topics to the table, submit questions and voice any issues or concerns that could require outside attention. But a two-hour meeting about bottled water? Absolutely not, DiBenedetto says.
In the case of the watercooler incident, it wasn’t the meeting itself that caused inefficiency. Rather, inefficiency occurred because the people in the meeting didn’t need to be there. So instead of vilifying meetings, which can contribute to productive, creative and helpful communication, the company does the opposite — it encourages them.
“One of the culture points for us is the very open communication process,” DiBenedetto says. “Most people here are very comfortable raising topics. So anybody can call a meeting. Titles are not involved. We don’t put titles on our business cards. It’s an open culture where people can call a meeting if they need to.”
However, another rule at Tribridge is that if anyone ever feels like they are in a meeting that they don’t need to be in, they are completely free to excuse themselves.
“They can say, ‘Hey listen, I’m not going to contribute to this meeting, so I don’t need to be here,’” DiBenedetto says. “It’s not looked upon as a bad thing. The culture of the company is not just to meet for meeting’s sake.”
The bottom line is that you don’t want to shackle people with endless meetings or ask them to check in constantly about their progress. This defeats the purpose of pushing out decisions in the first place. Once you give people power over decisions, you also need to give them the freedom to succeed or fail.
“I can’t come back later and constantly start micromanaging,” he says. “So part of it is a leadership point that you’ve got to allow the decision and the success or failure to happen. If it doesn’t happen, then nobody learns from it.”
So after any big decision is made at Tribridge, whatever group that is involved in that area of the business, whether it is a client, a region or the entire company, is also involved in a debriefing process. This step reinforces that every decision, good or bad, is a learning experience for your business and your employees and the key to continuous improvement.
If the decision was good, ask why was it good? How could an OK decision have been better? And what went wrong with the bad ones?
“You have to be able to keep learning from it,” DiBenedetto says. “It’s a skill set. So you get better at making decisions the more decisions you make. The fact that we have these hundreds of thousands decisions being made every day means our people are better decision-makers than if they worked somewhere else.”
Empower the right people
In the tech business, where you’ve got to be rapidly changing and adapting your business all the time, you can’t afford to have a culture that puts individuals on pedestals, DiBenedetto says. When you trust people to make important decisions that impact your customers, you need to feel confident they’re focused on helping the customers, not themselves.
That’s why DiBenedetto prioritizes a person’s cultural fit over his or her resume when he hires someone for a position of authority at Tribridge. Specifically, he looks for whether the person has the trait of “entrepreneurism.”
“The first thing we tell people who come to work here is that when we say ‘think like an entrepreneur,’ there are two elements of that,” DiBenedetto says. “One, keep improving Tribridge; two, really on an everyday basis when you’re working for a customer, pretend that you’re one of their shareholders. When you’re thinking like a shareholder for them, you’re making the best decision in their interest.”
Hiring for entrepreneurism doesn’t mean you only want people who plan to start their own companies or create new products. Instead, it defines a person’s willingness to take risks, make changes confidently, and guide the decisions based on how he or she thinks the customer’s business is going to go, DiBenedetto says.
“Culturally, it’s looking for people who have an entrepreneur’s mindset, who are comfortable making decisions in risky situations,” DiBenedetto says. “The easy decisions aren’t the ones that you are worried about. It’s the tough decisions where you want somebody who has more of an entrepreneur’s mindset making them.”
To get a feel for this trait when hiring, the company’s recruiters first ask job candidates to provide broad situational examples, such as a time when they used teamwork or faced a tough challenge. Then they use “critical behavioral interviewing” techniques to analyze the candidate’s behavior in those different situations. What they did when they made a mistake or when they had to give negative feedback?
“We’re looking at how they handled it, not the answer to the question,” DiBenedetto says.
“You’re not asking them about being honest. You’re asking them about teamwork or something else; and they start telling you the story. And you keep drilling down until you get to a situation where you have witnessed through their story what their behavior was. So it’s a crafty way of doing it.”
In behavioral interviewing, recruiters also look at the way people phrase statements and the subtleties of what they say. This can help you identify red flags in a person’s cultural fit. Big egos, for instance, don’t bode well when you’re making decisions for a team.
“Sometimes you’ll ask somebody, ‘Tell me what someone else on the team does,’ and they’ll answer the question by telling you what they did,” DiBenedetto says.
People who are new to an organization with decentralized decision-making may not feel confident making lots of big decisions right away. But by hiring people that fit well with the culture, demonstrate entrepreneurism, and are team players, DiBenedetto finds that most people can succeed in this kind of empowering environment.
“When you surround employees with people who help them all the time, that aren’t in it for themselves, that plan a team environment, and they are empowered to make decisions, they tend to like it,” he says.
“It translates into better decision-making, faster decision-making and therefore things happen quicker here. There’s a sense of urgency to get things done as a result of that, and that leads to growth.”
While DiBenedetto had some initial reservations about using a decentralized decision-making structure, today he can’t imagine doing things differently at Tribridge. From 2006 to 2009, the company grew its revenues 272 percent, generating $65 million in 2011.
“We’ve grown dramatically over a 10-year period,” DiBenedetto says. “We’ve had 9/11, multiple wars — we’ve had a tech bust, a real estate bust, a credit crunch. Yet our company continues to grow organically pretty quickly, and it’s because we have decentralized decision-making.”
How to reach: Tribridge, (877) 744-1360 or www.tribridge.com
- Give people clear responsibilities.
- Make meetings more efficient.
- Hire people who can make decisions.
The DiBenedetto File
Co-founder, chairman and CEO
Born: Brooklyn, NY
Education: Florida State University
What was your first job?
A paper route
What is one part of your daily routine that you wouldn’t change?
Waking up my daughter
What would your friends be surprised to find out about you?
I write a lot, especially poetry.
What’s the biggest challenge in the future growth of Tribridge?
The strategy for us to get to the next level has been built around something we call ‘Concerto,’ which conceptually is the brand that we’ve coined for the business we’ve moved to the cloud. If you think about Tribridge, we do services for customers and we use a lot of different technology. We’ve built a private cloud and we’re offering this technology that’s some Tribridge intellectual property as well as Microsoft’s applications. We’ve integrated that and offered it to our customers. … The next five years if I look at tremendous growth — that is it. With that come some opportunities and challenges. One is where are the next 500 consultants going to come from? We’ve got to find the next 500 team members.
What trait does a leader need to be successful in today’s business environment?
With the really turbulent economic times we’ve had the last 10 years, we’re lacking the thinking big — blind confidence. We’re lacking the ability for our leaders to think bigger. Because it’s humbling to know that things are unpredictable, we all get stifled in our decision-making. Thinking bigger is something I see as an attribute that allows people to fight through the stifling news that you get from watching or reading the news. We’ve got to ignore that, keep thinking big, expect more. Expecting more is really about how can I make this better? How can I keep getting better? So if I’m thinking big and expecting more at the same time, that’s just driving success.
It was a project that had Michael J. Perry more than a little nervous. He trusted his employees at HBD Construction Inc. and had a high level of confidence in their abilities. But this was something completely different from anything they had ever done before, and Perry wanted to proceed carefully.
Perry had been introduced to a Charlotte, N.C-based company that had expertise in blast- and ballistic-resistant technology, but lacked the building skills that HBD had as a general contractor in the construction industry.
“They had worked on barriers and things like that on military bases,” Perry says. “And while they had done some work on nuclear facilities, they had not done anything that was a structure.”
The two parties discussed the project and decided to put their respective skills to use to build a structure for a nuclear facility that needed it.
“It certainly took analysis and thought because we didn’t just say, ‘Oh sure, it’s a project. Let’s go for it,’” Perry says. “But we quickly adjusted. We have a great staff here, both in the field as well as in our office. We turned them loose to use their abilities and to tackle this new market, and we did it successfully.”
In an industry that had been hit hard by the recession, the project was a great opportunity for the 130-employee company. But it also reinforced for Perry the importance of doing your homework before you take on a project, no matter how much you may need the work.
“The real issue is if you’re going look at other sectors, do it in a slow, methodical way,” Perry says. “It can hurt you if you just decide, ‘I’m going to go over there,’ and you don’t know all the peculiarities of working in a certain environment. The knee-jerk reaction, particularly in a downturn, is the wrong move.”
Here’s how Perry has found ways to make decisions that both fit his team’s talents and make sense for HBD’s growth plans.
Look for a match
Perry and his team put in a lot of time talking about what’s happening in the construction industry. It’s work that takes time, but pays off when opportunities present themselves and decisions need to be made.
“We get input from all our project managers and field their opinion on where they see the market going,” Perry says. “Certainly, multiple heads are better than one.”
The idea of the constant dialogue is to measure what’s happening in the industry against their own capabilities and talent and look for matches.
“You just can’t pursue every opportunity that is out there so you try to make strategic decisions on what is the best fit for your company,” Perry says. “What is profitable work and who are good customers to work for? Our whole philosophy is customer service that ultimately yields repeat customers.”
When you can find customers who you have a good rapport with and you can build on that relationship, it can only mean good things for your business.
“We look for solid customers who are connoisseurs of construction that don’t just consider it a commodity and something to get the cheapest, bottom-of-the-barrel and quickest way to get it done,” Perry says.
“Those types of relationships usually end up in adversity and struggle and do not end pleasantly. We like to work with owners who understand construction or at least want to enjoy the process and want to have a contractor who is going to be looking out for them and build the best product for them of the highest quality within their financial needs.”
The work that HBD did on the nuclear facilities is a great example of the fruit that can be gained from a strong and committed relationship.
“We had to learn and educate ourselves, but we’re good at that,” Perry says. “We’re nimble because of our size, and we were able to provide a service that the larger companies these nuclear facilities were dealing with could not provide.
“We analyzed what it would take in terms of our resources and our abilities. Is this something within our ability to do? We just decided that it was, and in fact it worked out. We have six or eight successful projects under our belt now.”
One of the underlying keys that you should never lose sight of in your pursuit of work is your ethics and your values.
“It is very easy in this recession to see people bidding out of desperation,” Perry says. “It’s very easy to take shortcuts and do things that ethically you wouldn’t have done in a better market when you’re very busy and flush with work. Those will all come back to haunt you. That’s what the leaders of our company prior to me, that was their philosophy, and that’s what we’re continuing on today.”
Perry says it’s just as important during a recession, even one as tough as the one in 2008, as it is during the good times.
“We’re not going to compromise the way we do business, and we’re not going to compromise our product,” Perry says. “If that means we might miss a project or two and possibly our volume might decrease a little bit, then so be it. We’d rather have that and be in a strong position when the market comes back.”
Know who you need
It would be easy if Perry could hire a specialist to handle each aspect of running his company. Unfortunately, he doesn’t have enough room on his payroll for that many employees, so he needs people who can handle multiple tasks.
“Our project managers have to have the ability to go out on a sales call with me, they have to be able to estimate, schedule, run the project and close out the project and have interface,” Perry says.
“We can’t have a one-dimensional employee. So other companies, bigger companies than us, are more departmentalized and so they can have a person who is just good at scheduling, just good at estimating or just good at project management. That’s not the way we’re set up here.”
So to ensure that he has as many well-rounded people on staff as he can, Perry emphasizes opportunities for employees to learn new skills and grow their talent level.
“We tend to make sure all our project managers and superintendents in the field try to get as much experience in various types of work so that they are not one-dimensional,” Perry says.
“If you take a superintendent who has always done new work out of the ground and has never done a renovation project, he is somewhat limited and unavailable for renovation work. So while we do have folks who have more experience, and we will strategically place a guy in his best position, that doesn’t mean he can’t be trained.”
Encourage your people to continue their training and give them the time to learn new skills that can help them be better employees for your business. When you’re looking for new employees, look at their desire to learn and go after the ones who have the energy to broaden their abilities.
When you do that, you end up with people you can count on.
“My guys that I have here — I feel confident I could put them on almost any type of project,” Perry says.
Set employees up for success
If you have a project on the table that you feel your employees would have trouble completing, you’ve either got to find a way to train them or turn down the project. Otherwise, you’re going to have a very frustrated group of workers.
“You don’t want to set up an employee for failure,” Perry says. “As a leader, if you know an employee is weak on a certain thing, you try to shore up his weaknesses and show off his strengths. You don’t want to send a person into a task that you don’t believe they are up to.”
If you choose to train people, you’ve got to take a firm, yet patient approach to get good results. Perry says this has been particularly necessary when it comes to the influx of technology into the construction industry.
Instead of presenting changes as a burden or something else that a person has to do, present it as an opportunity to make their jobs easier to perform.
“The dawn of the tablets is a pretty good example,” Perry says. “We’re integrating the tablets out into the field now. Our guys, probably our biggest hurdle was getting field people used to computers period. That was a big learning curve and was met with some frustration. But to a man, everybody that gets over the fear of doing it can’t believe how they could ever do without it.”
The frustration that comes about when learning a new task or a new piece of equipment is natural. If you try to force someone to get up to speed quickly or make a sudden change in the way they do their jobs, that frustration is only going to grow.
“We have some new technologies that we are utilizing and admittedly, the young guys tend to take to it faster than the older guys,” Perry says. “That’s great because we have a good mixture in our office or young and experienced guys.
“The younger guys are helping us older guys with some of the new tools and so forth that are out there. Not forcing everybody on something immediately gives a little more time and somebody that maybe would be more anti-whatever, they’ll look over and see someone else doing it successfully and it makes it easier to implement.”
It really comes down to working with your team rather than fighting with them. You’re the boss and there are things that they need to do that aren’t optional. But if you proceed with that attitude, you’re just going to turn your people against you.
“It’s a communication business,” Perry says. “When you’re running a business and you have employees, the key with your employees is to communicate with them. Hear what’s on their mind, what’s worrying them, how they are doing personally and in their business environment, how they view you and how you view them.”
One of the ways business has changed over the years is the tilt toward more acceptance of work-life balance in the workplace. Perry says it’s something he accepts and has integrated into the way he runs HBD.
But he makes it clear that whatever culture you want to have in your business, there is no substitute for hard work.
“In the construction business, there is not an easy short cut to hard work,” Perry says. “It takes long hours, it takes a lot of time and a lot of patience. There’s not a way to hit the one big home run. It’s not like picking a lucky stock and you win big. It’s a lot of projects, a lot of time and that, I don’t see changing. So if you’re looking to click your mouse, do your thing and go home in a short work day, there are jobs that can answer that. But that’s not the construction business.”
How to reach: HBD Construction Inc., (314) 781-8000 or www.hbdgc.com
The Perry File
Born: St. Louis
Education: Bachelor’s degree in civil engineering, University of Missouri-Rolla in Rolla, Mo.
What was your very first job?
I had a little grass-cutting business that evolved into construction. That’s really what I did all the way through college, just about any kind of handyman work that you could think of. Building out basements, porches, fences. I always enjoyed building things with my hands. I do kind of miss that because I don’t have much chance to do that anymore.
What project stands out that you helped build?
When I was at the tender age of 14, my uncle had a very large house in a wealthy area of St. Louis. He turned me loose on his entire basement to design and build it out. I brought in one of my buddies and we single-handedly over the summer and into the winter did that. That was the first soup-to-nuts turnkey project that I did and that evolved to doing other things around his house.
Perry on having pride in your work: I can remember working on that basement and toiling for hours and hours wondering what it’s going to look like. It’s the same thing today when we cut the ribbon on a project that we just completed. It’s the thrill of having a happy customer and being the one who put the whole project together.
Who has been the biggest influence on you?
Without a doubt, my father. What he was able to instill was being fair with people that you deal with, both from the subcontractors beneath us to the owners above us. He always did that and always had a great reputation in St. Louis and I’m hoping to have the same.
Look for the right opportunities.
Don’t compromise your ethics.
Build relationships with your customers.
Social media gives people a much closer connection to your business, which can be very good. But when customers use the forum to criticize, you may find it hard to resist the urge to fire back with an emotional response. And that can be very bad.
“People are constantly getting in trouble for tweeting something they shouldn’t have and then somebody responds with a more emotional tweet,” says Kevin McCarney, founder of the $15 million Poquito Más restaurant chain. “Digital communication is great for information, but not really good for communication.”
McCarney has written a book based on the interactions he has each day in his restaurants. “The Secrets of Successful Communication” offers insight on how to avoid saying things you’ll later regret.
What is the difference between the big brain and the little brain?
I’ve been in the people business all my life, literally since I was about 14. I have been studying people’s reactions and their overreactions as well through all different kinds of circumstances.
I distilled a lot of the things that are happening inside the head into two simple concepts. The big brain gives you that smart, diplomatic, positive, thoughtful response you’re going to get in any situation. The little brain, which I put right next to your mouth, is going to spit out the impulsive, overreacting, sarcastic comment that gets us in trouble once in a while. We all have a big brain and we all have a little brain.
How can the little brain get me in trouble as a leader?
My responses to things will be mimicked by my employees. If you’re in a leadership position or in a management position, your words are far more powerful than a front-line worker. And they’ll have an impact on the front-line worker and the people working underneath and around them.
If I as the owner of a company get upset and angry every time something goes wrong, people aren’t going to tell me anything that is going wrong. They’re going to hide everything from me. So it’s important that my responses are measured, that I’m under control and that employees feel like they can talk to me about anything. Otherwise, I’ll lose control of what’s really going on.
How do I keep my cool during tough situations with my employees?
The key that we describe in the book is there are several different traps you can fall in to. If you identify the traps in your life and the things that may push you into little brain, then you can work to not overreact to it.
More importantly, you can teach others. If you’ve got other people in little brain mode, you can know how to handle them. You don’t follow them. If somebody is uptoning in the conversation, they are getting more angry and their tone is going up and escalating, you don’t follow them as a leader.
You realize if their tone is going up, there is something else going on here. Let me just bring that tone back to where it should be, and they will eventually come back.
Is it ever too late to apologize for losing your cool?
There’s no expiration date on an apology. You can go back and if you said something to a co-worker or about a co-worker and they found out, you can just go, ‘I don’t know what I was thinking. I apologize and I didn’t mean to say that.’ And you kind of reset after you apologize.
Andy Mills was confident that Medline Industries Inc. was ready to go live with its new enterprisewide system. After more than two years of preparation, it was going to make everyone’s life easier by organizing orders, inventory and every other business process in the organization.
“Then we hit the switch,” Mills says with a hint of doom in his voice. “The system had been tested, but not with the volume of orders that we had. So although it worked fine when you were throwing a few simple tests in there, it wasn’t stress-tested adequately enough. And it really collapsed the whole company.
“We couldn’t locate our inventory; we couldn’t bill. Customer service calls that normally would take two or three minutes were taking 45 minutes to an hour. We had a disaster on our hands.”
Medline has a long and rich history of manufacturing and distributing health care supplies to customers across the country. But that all seemed so far away now as leaders at the 9,000-employee company scrambled to find a solution.
Fortunately for Mills, he had built some credibility with his team over the years. So he went to them and explained exactly what had happened and what the company was facing.
“We said, ‘Here’s the situation we’re in,’” says Mills, the company’s president. ‘“We’re crippled in many different computer aspects. We think we can come out of this in 12 to 18 months. We’d like you to work Saturdays. We’ll pay you bonuses, but we’d like you to work Saturdays. It’s kind of do-or-die time for us.’”
As much credibility as had been built, this was still a lot to ask of his team, and Mills knew that.
“But a remarkable thing happened,” Mills says. “We had this feeling of all hands on deck and people saying, ‘We’re going to get through this.’ People brought in sleeping bags and were living here for weeks at a time. Morale was not lower but higher than normal. We came out of our problem in four to six months, not 12 to 18 months. It really taught us no matter how big or small the problem is, share it.”
Indeed, Medline overcame this significant hurdle to maintain its spot as the largest privately held medical supplier in the United States with nearly $5 billion in annual sales. Mills says the value of respecting your people was never more evident than it was during those tough times.
Here are some of the things Mills tries to instill in Medline’s culture to make employees feel like a valued part of the team and a willing partner to help the company achieve success.
Trust your people
Mills gets as excited as anyone when he has the opportunity to share good news with his employees. But he, CEO Charlie Mills and COO Jimmy Abrams did not earn the loyalty that saves their butts when problems occur by only delivering good news.
“You have to take a leap of faith and trust people when you share information, even challenges,” Mills says. “Some people are afraid to share dirty laundry. But when you share what challenges you’re facing, you really give people a feeling that they are empowered to be part of the solution. I don’t believe in hiding things, but some people are afraid to admit weaknesses or show anything other than a façade of strength.”
Whether it’s a problem in your company that you had no control over or a situation that came about due to a mistake on your part, you’re better off being upfront with everyone about exactly what happened.
In most cases, you’re going to be asking these people who work for you to step up and do something to fix the problem. So why not give them all the facts going in?
“You can say, ‘Listen, you’re closer to the situation than I am,’” Mills says. ‘“What do you think? Because I’m not sure.’ I wholeheartedly believe the people closest to the situation can help you find the best solution, and I’m not afraid to say that.”
When you talk about problems, or even if you’re talking about good news, frame your comments in a way that leaves people feeling like you’re all part of the same team. Don’t give the impression that you’re asking people to fix a problem in “your company.” It should be their company, too.
“We talk about the company being our company,” Mills says. “People like being associated with a company that’s growing and they take pride in the success. That’s part of the reason we get these kinds of unbelievably devoted employees who want to pitch in and help. They feel like we’ve all built this, and we’ve all been part of the success. That goes from the work on the factory floor to anybody in the organization.”
The closeness that leadership and employees feel at Medline was also evident when the company made an acquisition about seven years ago that included a component that created some uneasiness.
Medline wanted to remove the Canadian market from the deal because leaders didn’t feel they had the expertise to succeed there. But the point wasn’t negotiable so Canada stayed part of the deal.
“But we went into Canada, and it has become one of our biggest success stories,” Mills says. “We went from about $7 million the first year to this year we’ll do about $100 million.”
Once again, communication about the problem at hand was a key to achieving success.
“Open dialogue on some of the challenges we were facing and some of the resources we could bring to bear, I think that really created a culture of trust there that is common throughout the organization,” Mills says. “That turned it around. We had people who got involved and didn’t like the idea that we couldn’t succeed there.”
Reinforce your culture
There are times when, try as you might, you and the person you’re talking to just can’t connect on the topic at hand. This occurred with Mills and an employee who was trying to explain an idea she had to redesign and rename a Medline skin cream product.
“I said, ‘I really don’t get it,’” Mills says. “She went on to explain why she thought it made sense and said, ‘We’re going to change the image from a low-end cream to a more spa-like experience for the product.’ And I said, ‘I still don’t get it. I just don’t believe in it.’”
Mills wasn’t upset, but the employee’s supervisor, who was also in the room, felt that enough time had been spent on the topic. At one point, he interrupted the employee and told her it was time to go.
The employee remained persistent, however, and ultimately sold Mills on doing a field test.
“We picked this small area to field test it and it came back a couple weeks later validating what she had said, and I said, ‘Let’s go with it,’” Mills says. “But even before we got the results back from the test, I said, ‘I really want to congratulate you for standing up for what you believe in and not being afraid to share that with me. I think that makes us a better company.’”
Mills also went to the supervisor and expressed his disappointment in him for not backing up his employee when she clearly had a passion for what she was talking about.
“We want that culture where people have ideas and want to fight for their ideas,” Mills says. “Sometimes I judge the strength of the idea on how hard the person fights.”
Mills works hard to remind his managers on a constant basis to support new ideas and to encourage dialogue. He wants everyone in the company, from the top on down to the lowest levels, to feel comfortable bringing up a suggestion or a concern.
“One of the things we talk about is accidents in the operating room,” Mills says. “You’ll hear a nurse say, ‘I’ve been here for six months but the doctor has been here for 10 years, and I didn’t want to speak up. Who am I to say that?’
“I give that example when I talk to all our sales reps on their first day of joining Medline and either Charlie, Jimmy or I tell that to our new recruits. It’s kind of part of our standard speech to say, ‘No matter how new you are to the organization, you may see things that don’t seem right. If you do, we want you to speak up because you’re coming in here with a different perspective and you may just be right.’ So we try to get that in from day one.”
Bonuses give employees an opportunity to aim for a goal, meet that goal and be rewarded for their efforts. But as simple as it sounds, there are some corporate environments where it’s not clear what must be done to meet a particular goal.
“You really have to have an understanding of what the individual is working on and what’s controllable,” Mills says. “It’s very important that the individual feels the bonus is tied to something that is within their power to control.
“When you set up a bonus that is too broad and the individual thinks it’s either not measurable or too arbitrary or too broad for them to affect, you lose that engagement. People get excited about controlling their own destiny.”
If you really want to accurately track performance and determine who is being productive and who is not, it will take some effort. But once you have a system, it will be easy to demonstrate what needs to be done and who is doing their part to get it done.
“We know what equipment people are on and we know the size of the product they are picking,” Mills says. “We know the distance from the receiving dock or shipping dock to the slot. We know the hour of the shift and that somebody in their first four hours will be more productive than their second four hours. So we calculate all these things to come up with a standard time.”
Once you look at your business and figure out what metrics to use to track your employee productivity, you’ve got to stick with it.
“You have to make sure if you put it as your core value, that you’re going to walk the talk,” Mills says. “You’ll undermine everything if you don’t.”
If you do it the right way, you’ll create regular opportunities to talk to your employees about what’s happening on the job and what concerns they might have.
“We think making the time from work to bonus as quick as possible is smart,” Mills says. “Every time there is a discussion of the bonus, you look at the pay with the employee and you get them more engaged in what they need to do. If it’s once a year at the end of the year and you’re reviewing 2011 and they made bonus or they didn’t make bonus, you’d be surprised how much more effective it is to do it quarterly. It just reinforces what their target is.”
How to reach: Medline Industries Inc., (800) 633-5463 or www.medline.com
Be forthright with employees.
Commend people who speak up.
Promote what it takes to achieve a goal.
The Mills File
Education: Bachelor of science degree, Tulane University; MBA, J.L. Kellogg School of Management, Northwestern University
What was your very first job?
I went door to door with a bucket and rags and washed people’s cars when I was too young to get a job. You learn the value of hard work. My father and uncle both worked very hard and they would work six days a week. Frequently, they would have employees or customers over for dinner and be with them on the weekends. One of the ways that I got to spend time with my dad was to follow him around on some of these dinners and meetings when I was young. So I kind of grew up in the business.
Who has been the biggest influence on you?
My father and my uncle. If I can have two people, I would say both of them. They have been so supportive in mentoring. They just set an example of how to work together. It’s hard working with three people and not having an ego about things. They were very good about sharing ideas and crediting one another.
[Charlie, Jimmy and I] try to be the same way and we also try to be very supportive and they were always supportive of one another. They’ve been good and they’ve also taught us that nothing goes perfectly straight up. You’re going to hit bumps in the road, but don’t give up and don’t be afraid of hard work.
What person would you most like to meet?
I had a grandmother who had Alzheimer’s most of her life when I knew her, so I really didn’t know her very well. So for me personally, I would like that experience.
Michele Fabrizi has always had a philosophical difference with the way most advertising firms approach business and client relationships. Having worked on both the client and business side of the industry, she has become tired of continually seeing firms focus strictly on creating a strong ad with no regard for what the customer really wants and ignoring ideas because they came from a non-senior person, male or a female.
Fabrizi, who is president and CEO of MARC USA, a 280-employee, $300 million full-service advertising firm, was attracted to Marketing Advertising Research Consultants because the company did business the way she thought all firms should operate — with the client at the center of the business model.
In her first two years at the helm of MARC she oversaw 200 percent growth, much of it the result of her ability to get the firm to focus on the client’s needs.
“I am very much about building a business model that is centered on the clients and getting results for our clients,” Fabrizi says. “That DNA and some of the other philosophies such as it doesn’t matter who has a big idea whether they’re junior or senior, male or female, that idea is wrapped up, and we work to get it up and going. Those were very different from the experiences I had at larger shops and on the client side.”
With this philosophy driving the business and Fabrizi reinforcing it, MARC USA has been able to break barriers and foster innovation within the company, creating growth and client relationships that help transform brands.
“It’s been really exciting to build a company that is based on what’s right for the clients,” Fabrizi says. “It’s about breaking things and being innovative. We can do so much more for our clients and be more innovative and invest in the business which you couldn’t do in a public company.”
Here’s how Fabrizi keeps MARC USA client-focused while building relationships that foster growth and innovation.
Build a client relationship
Good business runs on developing and cultivating strong relationships. Simply having a good product or service no long assures repeat business or a place at the top of your industry. Look to make a lasting impression by playing to client needs.
“It sounds simple, but first of all you have to really have to want to hear and listen and get to know people,” Fabrizi says. “If you ultimately think either that’s not important, you’re not interested and it’s a waste of time, or you know more, then you can’t do it. If you think you know more about their business and you want to spend all the time talking, you can’t do it. It’s really about truly wanting to get to know someone on all levels, business and personal.”
Part of developing a deeper relationship lies in how you conduct your meetings, getting off site, and not just across the conference room table.
“Through those kinds of conversations, you can really get more insight, not just into the person but what’s really critical in their business that they feel is important that might not come up in the conference room,” she says.
“There’s a whole basic relationship management that really is critical in your client’s business at all levels. It’s really doing a relationship plan at all levels for all the key people you have to come in contact with. Making sure everybody has their ownership and accountability on that is the only way you’re going to be able to get the information and insight beyond what you can garner on your own to figure out how to help the client be ready for this big idea or the challenge that they’re facing.”
The best relationship people are the ones who really are very thoughtful and plan and study the business. Particularly in this day and age, everything is so fast. Everything is so 24/7 that it becomes very important for the high-touch part.
“Frankly, in our business, that’s very important to touch the consumer across all channels, online, in-store, word-of-mouth,” she says. “Having that kind of ability is important to us in our business in order to be effective communicators and it has to be integrated.”
To integrate better communication and high-touch capability, MARC focused on a team environment and training.
“Team is about behavioral modification, trust, and how to get people to talk,” Fabrizi says. “As part of our culture and our people and talent, we continue with team dynamic high-performance training at all levels, with my senior leaders all the way down. There’s nobody in the company that doesn’t get that training.
“If you’re training people how to work effectively among themselves, that transfers to their clients and relationships.”
To aid the culture of teamwork and a client relationship focus, MARC decided to move to one P&L statement. Instead of having each client listed under separate P&L statements, they combined them to make the overall environment more collaborative and team- oriented. The company wanted the best solutions for its clients and didn’t want people fighting over P&L.
“With the one P&L what we did was created a mindset shift in our employees, because you just can’t say, ‘Work together,’” Fabrizi says. “It won’t work. With that being freed up and the other training and tools that we give them, literally an integrated team gets together and will talk about the issues of a client and come up with ideas. It’s about breaking convention and being innovative.”
Get results through innovation
MARC USA has a heritage of doing things differently and bringing innovation to the industry. The company even created an off-the-wall word to describe its unique capabilities.
“We’re using breakthrough research techniques and new technologies to drive innovation every day,” Fabrizi says. “That’s what I’m about, what’s next? At MARC we say what we do is a word we made up because there is no word for what we do. It’s called ‘wezog’ and it’s how we think. It’s what we expect from our people. It’s a critical component of our long-term client relationships. It means doing things the way they haven’t been done before — thinking outside the box.”
The firm builds successful brands and drives sales through its creativity, insights and technology and the results are changing the game for clients.
“It’s a key reason why we have such strong, long-lasting client relationships,” she says. “It’s really about not doing things the way they’ve been done before, being highly collaborative with clients and finding ideas to break assumptions and challenge conventions. This is the kind of thinking that really helps brands strive in good times and in bad times.”
There are three words that clients use to describe MARC: passion, vision and collaboration. If you’re going to deliver on those three, you have to have the people power that’s going to do that.
“That’s how I’ve taken the company into the future, and it’s such a right thing for the business now,” she says. “It’s not about what’s nice and what the competitors are doing. People come in with ideas that are not founded.
“We do a lot of innovative techniques and strategic alliances on deep-seated emotions. Good enough is not good enough, particularly when you look at the business challenges that everyone’s facing.”
These days, consumers are more in charge than ever. They have more choices, they have more information and they have more ways to shop. It is up to firms to deliver something that is not a one-size-fits-all solution for clients.
“Sometimes our ideas are rethinking how they do business,” Fabrizi says. “Our initial ideas may not even be advertising ideas, but ideas that would protect their ROI and more along the lines of business solutions, but eventually could become advertising and marketing solutions.
“We have a very deep practice in behavioral science and behavioral economics so that we can really understand at a very deep, deep level. What we do is almost like brand therapy where we get the consumer to qualitatively express their conscious and subconscious thoughts so that we can really empower them to explore their thinking beyond the literal.”
To get those results you need to evolve and create tools and systems that help to provide new ways to connect with the consumer. In order to do this, you have to be up close and personal in your clients’ business.
“In any business today, whoever your clients are, if you’re not intimately involved, I don’t know how you’re going to survive,” she says. “You have to have trust so they’ll share data and the pain points, or you just can’t get the kind of revolutionary ideas that are going to get the kind of sea change results that are needed.”
Look for opportunities
In a business that constantly strives for new and innovative ideas, you have to reinforce what it is you’re trying to do within your company — and it’s the CEOs job to lead the charge.
“The secret is you have to get the senior leaders to buy in to it to make radical change,” Fabrizi says. “If you can’t do that, you will not be successful. If you want that type of environment then you need to keep saying it in every which way and reinforcing it and so do the leaders or it won’t happen.
“To me this is about transformation and how do you adjust your company in this day and age when you’ve got so many pressures. It’s really looking at your business and saying, ‘Why are we doing it this way? How do we do it differently?’”
In the world of advertising it’s all about being unique and having the ability to take advantage of opportunities when they arise. You have to plan for this in order to bring opportunity to fruition.
“Again, it’s thinking out of the box,” she says. “It’s not doing things normally. It takes time to do that, and it’s not a quick fix. What are the fundamental core things about the business that if nullified or changed or innovated, within a period of a year or two, could dramatically catapult the company forward so it’s not just parity?
“That’s what you’re seeing out there is a lot of parity, and you see a lot of tactics. You see very little really strong core business strategies. It’s very tactical and that’s short-term, so that means you’ll always be running, running to catch up because those things are very easy for competitors to emulate.”
Those strategies and plans are the responsibilities of the senior leadership. Those tactics have to be driven forward as the day-to-day business continues to function.
“That falls squarely with the CEO and the senior leadership and even the management level,” she says. “If they don’t think it’s important, they’re not adding those insights, they’re not worried about it, they’re not planning it and they’re not getting together to collaborate on it, you’re going to lose your way.”
The other key part is collaboration among your leadership in these processes.
“You have to have people who can help you make that idea happen,” she says. “If somebody within the organization has an amazing idea and I get hold of it, it’s like, ‘Oh my gosh — we’ve got to do it.’ I don’t care where it comes from. In this day and age we all have egos, but at the top you have to have less ego and more ability to know when you have to follow and listen, as opposed to constantly being the brilliant, fearless leader.”
How to reach: MARC USA, (412) 562-2000 or www.marcusa.com
- Get to know your clients on a business and personal level.
- Use client relationships to deliver results.
- Find opportunities to grow.
The Fabrizi File
President and CEO
Born: Pittsburgh, Pa.
Education: Received a bachelor of arts degree from Carlow University
What was your very first job and what did you take away from that experience?
My first job was helping out in my father’s music store. I saw how he took the time to listen to people and treat each student or customer as an individual. It was a very powerful lesson in many ways — how to develop people, how to deliver excellence in service, and how much you can learn about a customer’s needs if you pay attention to what they say and also what’s not said. He understood that emotions drive choices long before neuroscientists proved this.
Who is someone you admire in business?
Tena Clark — writer, musician, entrepreneur and head of DMI Music. She was one of the first people to understand that brands have a sound DNA and built a very successful company to deliver this vision. We’re very like-minded and that’s why MARC USA partners with DMI to use music to help brands forge strong emotional connections with their customers.
What are you most excited about for the future of your industry? Why?
Developments in brain science and technology are taking us in amazing new directions. While some people claim technology separates people, we’re using it to make stronger connections than ever and to deliver highly customized, personalized one-to-one experiences with brands.
If you could have a conversation with any one person from the past or present, to whom would you speak with and why?
Leonardo DaVinci — truly a visionary who also got things done. He combined left-brain and right-brain thinking to envision and then create things not even imagined by anyone else around at his time or for many years after.
K’NEX Brands LP has been taking a bigger and bigger bite out of its market ever since Michael Araten took over as president and CEO in 2006. In the past six years, the manufacturer of building toys has formed partnerships linking the K’NEX brand with brands such as Nintendo, Sesame Street and NASCAR.
This year, the company will introduce a line of toys licensed by Rovio Entertainment, makers of the “Angry Birds” video game franchise.
The tie-ins that Araten and his leadership team have orchestrated are having a major impact on the company’s bottom line. In 2008, K’NEX produced about $100 million in North American sales. In 2011, the company’s North American sales had jumped to $150 million.
Given all the success that K’NEX has had, what is Araten’s first tip on managing growth?
“I would tell other leaders to be lazy,” he says.
No, Araten hasn’t discovered the secret to building a highly successful enterprise from your living room couch. But he has developed a good grasp of what a CEO should and shouldn’t be doing when piloting a company through a growth phase.
“What I mean is, the first question when I’m looking at a task is, ‘Who needs to be doing this, and is there a way I can put this in someone else’s hands?’” he says. “The key for the CEO suite is to recognize who has what talents, and make sure they do what they are great at. If you don’t have the ability to do something yourself, what you want is someone on your team who can help you accomplish the key things you need to do, so that you can execute your growth strategy.”
Araten has been able to successfully manage the growth of K’NEX through strategic planning and effective delegation — knowing where he wants his company to go, and who can take it there.
To Araten, the plan is the known quantity, and the people are the variables. The success of K’NEX — or any company — is dependent on how well the team executes the strategy.
“If you have the right people executing on the plan, it will go really, really well,” he says. “If you don’t, it doesn’t matter how good the plan is, it just won’t happen. That’s why the linchpin in all of this is assessing the talent of your people and making sure they’re doing what they are really good at.”
Draw a map
The first step in any journey with a destination is to plan a route. When plotting a journey for your company, your route is outlined in your strategic plan.
Araten gathers all his top thinkers together for periodic strategy sessions, during which the team assesses growth opportunities that have either been presented to K’NEX or that the company is considering pursuing. The strategy team members weigh avenues for growth against a number of internal and external factors.
“It’s a risk-reward calculation, really,” Araten says. “How much reward do we think we can get for a given opportunity, and how much risk is related to that reward? We look at how much risk we want to take, how much inventory we want to build, what does our distribution channel look like, and build a plan around that. Once we agree on how much upside there is related to how much downside, we go and execute on that plan.”
To develop an accurate strategic plan, you have to know what market factors stand the biggest possible chance of affecting your business. K’NEX exists in a market that is seasonal in nature, and produces a product with a very specific appeal to consumers. With that in mind, he set boundary lines for what his team could consider regarding growth opportunities.
“We’re a seasonal business, so there is a little extra risk involved with that,” Araten says. “With every opportunity that comes along, we also have to ask ourselves if it makes sense as a building toy. Not to single out ‘American Idol,’ but even though the show is very popular, it probably wouldn’t make sense as a building toy.”
When Araten and his team did research prior to signing a licensing agreement with Nintendo last year, they started by figuring out the type of reach Nintendo had with its brand and video game characters, and by extension, the type of reach K’NEX could expect with cross-branded building toy products.
“We started by asking how many users of Nintendo products there are in the U.S. and around the world,” Araten says. “For example, we know that 40 million Wii units have been sold and another 70 million Nintendo DS units. We looked at Q Scores of various characters, and those scores have always been in the top five over the past decade.
“We also did a survey of our key customers, so we knew that retailers were open to carrying a new product. So we took all of that information, looked at our budgets in several categories, where we’d find placement in North America, Europe, Australia and other places, and decided that we were comfortable making, let’s say, a $10 million investment in inventory.”
Good growth opportunities in the manufacturing sector usually center on two areas: new customers and new products. You either increase what you offer to customers, or you increase the pool of customers to which you offer your existing products. In most cases, your growth will result from a mixture of the two, and you need to account for that in any strategic growth plan.
In the toy industry, executives such as Araten are fighting a constant battle to stay current. Kids quickly grow bored of their current toys and parents are always on the hunt for the next smash-hit birthday or holiday gift, so the leaders at K’NEX have to harness their creative and collaborative power to stay a step ahead of demand.
In that battle, the wins you already achieved can act as a critical springboard for future wins.
“When you look at our history, our first big licensing deal was with ‘Sesame Street’ back in 2007 or ’08,” Araten says. “Once we had ‘Sesame Street,’ and people saw how good we were performing and how well we could capitalize on the opportunity, licensors started coming to us with ideas.
“We were the ones who approached Nintendo for that deal, but we’ve had a lot of other brands come to us. That is where you want to build a checklist into any strategic plan that it makes sense for you. That you can reach consumers with marketing and distribution, and that the idea is a good match for your company. As I said, we want to make sure it’s an idea that makes sense as a building toy.
“We’re also starting to leverage technology so that we can ship directly to consumers in pretty much every country on earth. We want to be able to ship to anywhere from our warehouses in the U.S., so we are modifying our websites to be able to launch in a variety of countries that make sense. We’re working on both of those, and that is why we’re so interested in product relationships with global appeal.”
Invest in human capital
A strong culture that embraces solid core values is a central component of any high-growth organization. But to have that type of culture, you need to first build a team that can embody and promote your values.
Many leaders reference the principle of getting employees in the right seats on the bus, as popularized in Jim Collins’ book, “Good to Great.” No matter what metaphor you use to illustrate it, the concept is true: In order to have a strong culture that can enable growth, you need the best possible people positioned throughout your organization in a way that allows them to grow as employees, and allows you to leverage their talents and skills for the best possible effect.
Araten says much of what he has learned about people stems from years of experience, which has helped him develop a reliable gut instinct regarding whether a prospective employee fits in the company, or whether a given team member fits in a specific role. But that isn’t enough. You also need to be able to ask the right questions.
“Some of what I do I’ll refer to as a ‘friendly deposition,’” Araten says. “You ask people a lot of questions about why they are doing what they’re doing, you apply common sense to what the answers are, and you see if they’ve thought about all the potential angles to a given problem or scenario.
“If they have experience dealing with that scenario in the past, that is something to consider as well, Araten says. “In some cases, you’re going to have some new employees with limited experience, so some of what you are able to do is going to depend on where you are in your life cycle as an organization.”
In assessing a person for a job, promotion or assignment, you need to get to the core of their thought process. If you can peel back the onion layers on how they process information and solve problems, you’ll get a much clearer view regarding how they might fit your team.
“You have to look at the thought process of how they came to their decisions,” Araten says. “If it makes sense, it looks like the probabilities are in your favor, and you can move forward.
“There is never a scenario where you have perfect information or a guarantee of success, so you just try to get as close as you can, make the move with the information that you have at the time, and the results are the results. More often than not, when we take that approach, things seem to pan out in our favor.”
If you hire or promote an employee into a new position, and the person falters out of the gate, making decisions that don’t bear fruit, you need to get to the heart of what is going wrong. It might be the person, or it might be the process. In either case, you need to get your hands on as much information as possible so that you can address the issue.
When K’NEX launched its line of Nintendo products, the team overseeing the launch made a miscalculation in the budget. Admittedly, Araten was not happy, but he didn’t go on the warpath, point fingers of blame at everyone involved. Instead, he used it as a learning opportunity.
“On a couple of the items, we underestimated somewhere on the order of $100,000,” he says. “We thought it was going to cost $100,000, but it ended up costing $200,000. As part of our review on all the product lines, this comes up, and you could tell the person who was telling this to me was a little nervous. But we went through why it happened, whether we missed anything, and found that our logic was sound.
‘In the end, we learned some things about what we could have done differently. We ended up improving some of our internal mechanisms.”
If you encounter a similar situation, Araten says you should do three things.
“One, figure out if the person in charge asked the right questions, and if the questions were based in logic,” he says. “Second, if you would have done anything differently, what is it and did the person you put in charge know it – or should they have known it? Three, teach them how to ask better questions. Oftentimes, as the CEO, you will have a much broader view of the organization, and will think to ask questions that the team or department leader didn’t. That’s part of the learning process. If everybody knew all the questions to ask, we’d have hundreds of CEOs in the organization.
“If you value teaching in your organization, teach people what questions to ask so they improved their logic. Then, the next time a situation arises, it goes smoother and reaches an even better outcome.”
How to reach: K’NEX Brands LP, (215) 997-7722 or www.knex.com
The Araten file
Education: Political science degree from Stanford University; juris doctor from the University of Pennsylvania Law School
First job: I worked as a part-time sales guy at a leather and fur store in suburban Philadelphia.
Araten on building a high-growth organization:
I think you have to develop a culture, along with some mechanical things. You need to be able and willing to reinvest in the mechanical infrastructure, but to me the more important thing is that you need to create a culture where it is OK to take a chance going fast, where you forgive people their mistakes as long as their logic is good. So I think it is setting that tone from the top and letting your leadership team say it to the rest of the crew.
We are going to go a hundred miles an hour to try and take advantage of these opportunities, and we are going to miss some stuff. But as long as the logic is sound, what we miss shouldn't be critical. Whatever mistakes we make, we will learn from and move on. It is easy to say, but the more critical part is the first couple of times you make those mistakes and learn from them and move on. That is what people really remember.
Araten on reinforcing a culture through communication:
I have one-to-one meetings with my leadership team every week. We are sitting together for at least an hour each week making sure that we understand what the priorities are and the logic behind the major decisions that we are making. When things go awry, it starts with me asking how we are going to learn from it so that it doesn't happen again, and then moving on. Then, encouraging them to do the same thing with their teams.
On the flip side, you want to make sure that you are giving positive feedback whenever possible, whenever they are doing things that you really like. We have a few mechanisms in place for that, such as awards that any employee can give to any other employee when someone goes above and beyond the call of duty.