Amar Panchal didn’t plan to start “waffle day.” It came about after he and a group of employees arranged an impromptu breakfast one Friday at the office. But it didn’t take long before waffle day became a company tradition.
“People really enjoyed it, so then they volunteered to make this a monthly event,” says Panchal, the co-founder and CEO of the Akraya Inc., an IT consulting and staffing business in Sunnyvale, Calif. “Every second Friday of every month, there’s a team of employees who volunteer to arrange for breakfast. It’s amazing how excited people are about it, because every month we’ve had a completely different menu for breakfast. That’s how much people enjoy it. And since they are working in a team, there’s a sense of achieving something together as a team. Everybody is enthusiastically part of participating.”
Providing breakfast for employees is just one of the ways Panchal leads his company to celebrate and reward employees for their contributions.
“All of us have achievements on a regular basis and it’s important to recognize and celebrate the achievements and milestones that we have,” he says.
At the company level, key achievers are recognized on a monthly basis at an all-hands meeting. Also, to celebrate success on a daily basis, employees come together to ring a bell in the center of the office whenever a person or group has a significant achievement.
“Everybody actually gathers around and high fives, and that’s a constant recognition of people hitting milestones during their everyday tasks,” Panchal says.
One of the company’s most obvious forms of employee appreciation is its unique perks for personnel. Panchal says each of these is the result of listening to people and identifying ways to reward them for their hard work. A good example is the company’s biweekly cleaning service for employees, which came about several years ago when the company was much smaller but gained it attention on Inc.’s Top 10 Perks We Love list in 2010.
“One day a few of the employees were discussing in the break room that they had to spend a long time over the weekend cleaning up their homes because they had visitors coming in,” Panchal says. “So I said, ‘OK. What can we do to help in this situation?’ We identified a cleaning service that every two weeks goes and cleans people’s homes.
“We listen to employees needs. Small things make a big difference to people.”
Yet although the ideas for a cleaning service and a monthly breakfast took off, there have been other ideas that did not work out financially or culturally long term. Implementing perks for employees comes down to trial and error.
“Some of them will work; some of them will not,” Panchal says. “We recognize that and continue to evolve.
“We’re constantly experimenting with ways to recognize or celebrate within the company, which is why people enjoy working here.”
In recent years, another challenge of having employee perks has been managing expectations when people begin to take certain cultural benefits for granted. Over time, a perk can become something that employees feel entitled to, and you may need to remind them of its value.
“Part of the solution is refreshing, especially the older employees, that these were things that although you have had for several years and think that everybody has it, that is not the case,” Panchal says. “It is still a fairly unique benefit or culture that we have in place.”
Although the costs of certain recognition programs and perks have increased as the company has grown — it grew to $32.5 million in revenue in 2010 — Panchal says he sees culture as an ongoing investment.
“Each of these has a significant cost in terms of not just hard dollars but time that it takes,” he says. “It’s something that is part of the prohibitive cost of doing business.
“When we were smaller, the costs were lower but as we’ve continued to grow, the costs have added up. But the value of that small perk is immense, because it benefits not just the employee. It benefits the entire family, and they appreciate it.”
How to reach: Akraya Inc., (408) 907-6400 www.akraya.com
Cultural success at Akraya Inc. is the result of not just building a great culture for employees but working hard at maintaining it, says the company’s co-founder and CEO Amar Panchal.
“We consciously work on not just creating the culture, but we work on maintaining it and continuing to evolve it,” Panchal says. “It takes effort. All of us are busy with meeting our customers’ needs. It’s a competitive industry and people have a lot of tasks on their plates, but I venture that we take time out and do things that we value as a company, whether it is celebrating or it is giving back to the community.”
Though the company has been recognized for its culture in the past, Panchal continues to look for ways to improve its recognition program. That is why he invited an outside consultant to meet with employees one on one to gain more employee feedback about how they view the company’s culture.
“We’re actually going through that process right now, where we have compiled information and we are actually working on more of a companywide recognition program,” he says.
This has helped the company create a recognition program that takes into account the various contributions of different roles within the company.
“In most companies, it’s very easy to recognize the achievement of sales people because that is very measurable, but there are operations teams, there are customer support teams, there are marketing teams, there are finance teams. How do you have a recognition program that recognizes their achievements too?”
In 2008, Bruce Neil watched 68 percent of his revenue at The Doe Run Co. disappear thanks to a severe drop in the price of lead.
“We needed a very rapid and dramatic response,” says Neil, president and CEO at the natural resource mining company and lead producer. “We knew prices would come back up, but we didn’t know when. We decided this was going to be a long-term thing and a long-term recovery, and we would need a couple of years.”
Neil knew he was facing a tough battle for the future of his business. He also knew he couldn’t fight that battle by himself.
“The reality is, as the CEO, I’m not going to survive alone,” Neil says. “I’m not going to get through this alone. I’m not going to do this alone. I need every manager, every supervisor and every employee to realize that as a company and as individuals, we’re all going to have to make sacrifices.”
Neil did offer one edict to his people that he expected to be followed as decisions were made about Doe Run’s survival plan.
“If there are going to be reductions in the company, they have to be across the board and at all levels,” Neil says. “They cannot be in one area and not another. We’re all in this. The long-term strategy of the company is that we’re going to continue to operate each of these parts of our business, and we had to make sure that we did not end up with one part of our business that was in terrible shape to the advantage of the other. We said, ‘We’re all going to have to make some sacrifices here. We understand we can’t do everything we said we wanted to do in our planning.’”
Neil was confident that if the 1,400-employee company was going to come through this storm in good shape, there would need to be a heavy emphasis on finding solutions collaboratively.
Show you trust people
Neil was adamant that the majority of the key decisions that would be made about the future of Doe Run would be made with a lot of input from people at all levels of the business.
“The guidance was around, ‘This is the situation we’re in, this is our reality, and this is what we need to accomplish,’” Neil says. “So my guidance was around broader strokes. It was not on details. I really relied on people. What is the best plan? I didn’t say, ‘You need to have a lower production plan.’ I said, ‘You need to have a plan that is going to economically enable us to get through the next 24 months if things don’t change. If things get worse, we need to have the assurance that the plan you give us, all the people in the company can deliver on it. There’s no point in having a plan that you think I may want to hear. You’ve got to give me a plan that you will deliver on.’”
Neil and his people needed to find ways to reduce costs. About 85 of the company’s production ends up in lead acid batteries. Many of these batteries are used by the U.S. auto industry, which itself was taking a major hit in the recession.
So that’s where one of the first cutbacks was made. It was a decision that made sense and that’s what Neil wanted.
“What was happening in Detroit was having an immediate impact on the need for our products and our ability to generate revenue to survive,” Neil says. “We made the decision that we were not going to produce one pound of metal more than what the market would bear. So if it fell to whatever level, we were going to match our production plan or business plan to meet that demand and no more.”
Neil wanted his people to understand that he trusted them to make these important decisions. He had no desire to stroll out of his office and issue proclamations about how things were going to be done, nor did he think that was the best way to go.
“I had full confidence in people to come up with the solutions that would be needed,” Neil says. “I just absolutely couldn’t say, ‘You have to do your job this way.’ Everybody knows how to do their job better than I know how to do their job. No matter how much experience you have over the years in different parts of the business, that’s a reality. People who are on the job today can do it better than I ever could. All I can do is give people a vision that this is what we’re going to look like when we’re through this and ask them to achieve their goals and we’ll make it sustainable.”
If people struggled to come up with things to cut, Neil encouraged them to talk to people in other departments who were having more luck.
“People felt they were under a lot of stress because of the understanding that pricing had dropped so rapidly that everything was at risk,” Neil says. “They were aware that we were going to have to make job reductions and that people that they worked with were going to be off for a period of time or be laid off on a permanent basis.
“The guidance that people were given when they were struggling was examples of how people were solving this problem in other areas. Just try to make sure that people weren’t leaving any stone unturned. Everything was on the table. It’s supporting and encouraging and just making sure people understood that what I was saying, it was something I believed in.”
Offer a bit of hope
It probably did little to ease the pain of the people who were laid off, but Neil went ahead with planned pay increases for those who remained with Doe Run.
“We insisted we were going to keep the top quality of the competencies that we needed for the future,” Neil says. “We held onto those. We paid people the annual increase. We decided that these were based on performance and so we paid those. We deferred any kind of incentive payments or incentive programs. We said, ‘In this situation, we can’t afford this.’ But as we went through, we not only retained the key staff, but we actually continued to hire some really top caliber people because if we needed a skill, we hired it. We continued to build the people skills that we had in the company.”
Members of the executive management team did not receive a pay increase. But he felt the message had to be sent to the other employees that the company was not giving up on its future.
“The truth is, I did not know how it was going to work out,” Neil says. “That’s for sure. Having been through the rough edges before, I wanted it to work out in a way that would enable us to have the hopes and dreams of who we wanted to be in the future and retain that. My sense was it was a question of telling people there was no certainty here. We’re in a tough position. But on the other hand, we’re in a good position. I would talk about our strengths and that we’re going to do this together. To some extent it was team building. For people to believe in the team and be part of the team, they have to believe in the goal.”
Neil did not sugarcoat the future and was upfront about the challenges Doe Run would face. But he wanted people to have a reason to believe that if they worked hard, there was a good chance things would improve.
“You have to have the credibility that if you say this will happen and you don’t know if it will happen, you have to say, ‘This may not happen and these are the problems,’” Neil says. “‘But I believe if we do this together and we share this, we can accomplish it.’ You have to believe that. I don’t believe you can tell people something that you don’t believe in.”
Prepare for the future
Cutbacks weren’t the only thing Neil wanted help with as he led Doe Run through the recession. He wanted people engaged in steps that could help the company be more prepared to thrive when the economy began to improve again.
There was one piece of criteria offered at the beginning of this particular process.
“If it’s not going to completely pay for itself within the next year or 10 months, we’re not going to do this year,” Neil says. “It had to be a very quick return if we’re going to spend capital on it. We felt we needed capital to pay our operating costs.”
These projects would also need to be pulled off without any outside help or consultants as that would be an additional expense.
So the plan was to bring people in from all levels of the organization to present their ideas on how to help the business generate more revenue.
“We set up a structured prioritizing process where we involved not the executives, but we involved senior leaders in the company and we involved people representing all areas,” Neil says. “We had people present their projects to each other and present to a larger group.”
Some projects got a lot of support, while others did not get as much.
“What is the result of that?” Neil says. “People are more focused on the business returns for a project or an investment they want to make in their area because they have been through this process where if it didn’t meet a very tight business standard compared to someone else, than that other project would go ahead and not theirs. There was a better understanding on that and the planning process is stronger than it was before.”
It’s also a good lesson to people about the barriers that may frustrate them when it comes to getting things done in a business.
“When you make change, there are going to be barriers, whether it’s the culture of the company or people saying, ‘We never did it that way,’ or people don’t want to give up something,” Neil says.
If you’re soliciting input for this type of participation and you don’t feel like you’re getting much of a response, you may not be as empowering and collaborative as you think you are.
“If you don’t communicate the vision and you don’t talk to people regularly about how you are doing and what you need to do, then when you tell them something, it’s going to be as if it’s coming out of the blue,” Neil says. “People want to be listened to. They want to have their ideas listened to. They want you to hear their ideas. People are all interested in a dialogue on what you’re doing and what their company is doing. I don’t think it matters where you are in the company. You have an interest in that, you need to promote that.”
As 2009 ended and 2010 dawned, Doe Run began to see demand increase again. Profit sharing and 401(k) matches came back into play and the company found several new options to begin growing again.
“You have to be direct and honest and say, ‘We may not get out of this when we want,” Neil says. “We may not all be here when this is through. But we believe in our products, we believe in our ability to do this and all we have to do is work together and we’ll deliver it.’”
How to reach: The Doe Run Co., (314) 453-7100 or www.doerun.com
The Neil File
Born: Tofino, British Columbia, Canada. At the time it was outside an Air Force base on Vancouver Island. My dad was in the Royal Canadian Air Force and I was born right at the end of World War II.
Education: Queen’s University, Kingston, Ontario. I took metallurgical engineering.
What was your very first job?
It was a retail store. There had been a heavy rainfall and the basement of this store was flooded. My first job was to clean and take apart as much of the old electronics that existed in those days. My job was to take out the tubes in the flooded television sets and test which ones could work and could be sold and which ones couldn’t. Once that was cleaned, I ended up working for the owner of the store.
Who has been the biggest influence in your life?
I would say the person that always gave me the best advice and best support was my father. I didn’t ever have a driving desire to be the CEO of a company. I’ve been fortunate to be given the opportunity. I’ve been fortunate to work with so many good, quality people.
What is the best advice anyone ever gave you?
When you graduate with an engineering degree, you believe that you’re going to be doing engineering, measuring, building and improving. There is some of that. But the reality today is what you and your business accomplish is accomplished through many people. So how you relate to people, how you talk to people, how you work with people is the most important part. And the best advice that I’ve been given is trust yourself, be open with your people and trust your judgment.
Teamwork. You would be hard pressed to find a more overused and under-delivered concept in business. But do platitudes and an abundance of focus on teamwork actually produce a team? Sadly, not very often.
Frustrated by the complexity of getting a talented group of people to actually work together, I searched for the nub of what turns a group of motivated and capable people into a team. I won’t claim enlightenment just yet, but the foundational elements seem to be trust and transparency.
Trust is a complicated word with a host of meanings. While no one ever challenges the importance of trust to a team, they don’t know how to define it and aren’t sure whether trust at work means the same thing that it does at home. Our experience tells us that families don’t function well when members don’t trust each other. The same is true for business units. But are there differences between the trust that we have in our families and the trust that we need to have with our co-workers? I don’t think so.
At the core of it, trust exists where people are able to feel vulnerable with each other. “Dad, you just don’t trust me!” wails your child when you tell them that they can’t go to their friend’s house unless a parent is there. And they are definitely right. Away from your watchful eye, and motivated by the personal gain of ‘fitting in’ with their peers, you question whether they would do the right thing. Trust doesn’t even enter the equation when they are at home, where you can monitor their behavior. But at some point, you know that you can’t always be there. You will have to trust them to do the right thing eventually. So you try to build a foundation of mutual respect that will increase the likelihood that your child will make good choices even when you’re not looking.
It’s the same at work. People are naturally apprehensive about allowing themselves to be vulnerable. Over time, this fear of trust causes them to act in ways that make it hard for a group to function as a unit. But a great leader looks for opportunities to encourage vulnerability. Then, the leader diligently ensures that no one takes advantage of that vulnerability for their own gain. Finally, the leader rewards that vulnerability with praise, highlighting wherever possible how it improved the functioning of the team. Over time, trust grows.
Here is another good way to think about it. My son was fortunate enough to attend the California Institute of Technology. Their honor code contains a great prescription for trust and vulnerability. It reads, “No member of the Caltech community shall take unfair advantage of any other member of the Caltech community.” Go ahead and substitute your company name for Caltech in that sentence, and ask your people to live by that rule. Trust will abound.
But trust alone is not sufficient. Your real goal is to foster constructive conflict, just like the kind you want to have with your child.
Finally, great leaders allow decisions to be made transparently. Sometimes we feel the need to protect one team member from the rest of the team’s concerns about their performance and/or ideas. But having those discussions behind closed doors doesn’t help anyone improve their performance or rethink their ideas. Worse than that, it makes it nearly impossible for people to feel comfortable with vulnerability. And that will destroy the foundation of any team. So rid the workplace of clandestine meetings and the misguided protection of people’s feelings. You’ll be glad you did.
Frank Napolitano is the CEO of GlobalFit. Before joining GlobalFit in 2006, he ran Strategic Planning for the largest gym chain in the Northeast. Napolitano has held corporate leadership roles since 1984, including CEO positions at five different companies. Before that, he practiced law and public accounting with two national firms. Reach him at Frankn@globalfit.com.
Jeff Sharfstein was about as frightened as he has ever been in his life. As he considered the grim future facing the company his father and grandfather had worked so hard to build, he feared he was watching the business crumble before his eyes.
“Here my father had built this incredible business over all these years and in a period of a year and a half, I was successful in completely turning the direction of the business in a terrible direction,” says Sharfstein, CEO at The Strive Group.
The 550-employee corrugated box manufacturer was launched in 1968 and fared pretty well for almost 30 years. By 1997, Sharfstein’s father had had enough and Jeff and his brother Doug assumed control. But shortly thereafter, the trouble began.
First, Strive Group’s largest customer filed for bankruptcy, resulting in a large and unplanned expense. At the same time, Internet auctions for commodity businesses, such as corrugated boxes, began to gain in popularity and sales began to drop.
“What we needed to do was figure out a way to bring additional revenue into the business,” Sharfstein says. “We had all these hard assets on the floor, meaning equipment. We asked ourselves what else this equipment was capable of doing other than producing corrugated packaging.”
It turned out that this equipment could produce temporary point-of-purchase displays that consumer-oriented businesses love to use to promote their products.
“Little did I know at the time how much of a different skill set was needed to make that transition and that transformation successful,” Sharfstein says. “It was a long, hard struggle on top of which, it was going in a direction that I did not have a tremendous amount of familiarity with.”
Sharfstein couldn’t shake the fear of ruining all that his father had built, but he couldn’t let that show with his people. He had to prove to them that as their leader, he would pull the business through.
“I elected to go to one of the largest consumer products companies that
purchased this type of product and that was Procter and Gamble,” Sharfstein says. “I figured if I could sell Procter and Gamble on this value proposition, that would be fantastic validation and would really set our organization on a new path.”
When you’re trying to drive business for your company, or trying to save it from disaster, you need to keep your people posted about what you’re doing and don’t keep them in the dark. Engage them in your effort to find solutions and then make those solutions work.
“We call them courageous conversations,” Sharfstein says. “You have to be willing to have courageous conversations with folks. Having very direct conversations saying, ‘Hey, I just need to let you know what I see. This is where I need your help. If you can do this, it will work out great. If not, it’s probably not the best place for you at this company.’”
Hopefully you’ll find you have a wealth of support to join you in your quest, but you may find otherwise.
“There were a number of long-term employees I needed to have conversations with and let go because they did not sit well with the new vision and direction of the business,” Sharfstein says. “If you have people constantly saying it’s not going to work or if they are constantly looking for the negative instead of what’s in the best interest of the business, you have to cut that cancer out.”
Fortunately for Sharfstein, Procter and Gamble worked like a charm and built desperately needed momentum for Strive.
“That really helped change the course of our business,” Sharfstein says. “Today, our largest customers are all these huge consumer products companies.”
Looking back, Sharfstein says he wishes he had been even more transparent than he was.
“You may not have all the answers,” Sharfstein says. “Be very open-minded and willing to bring in people from the outside who have had experiences before and have successfully navigated through them.”
How to reach: The Strive Group, (312) 880-4620 or www.strivegroup.com
Don’t hold back
When you’re business is in trouble, you often turn to lenders for help. After all, they have money and you probably need cash pretty bad. Jeff Sharfstein says you need to go to them with your books wide open.
“They were my lifeline,” says Sharfstein, CEO at The Strive Group, a 550-employee corrugated box and sign company. “Communicating to them anything and everything that I thought was possible and was happening was critical. I needed to give them the confidence that they could count on me giving them every piece of information I possibly had for the long-term viability of the business.”
You need to give people who can help you, whether it’s lenders, customers or your own employees, you need to give them a reason to believe that helping you will be worth it in the end.
“I had a vision and whether it was going to succeed or not, I didn’t know,” Sharfstein says. “But I had a very clear path in my mind as to what that looked like. And as I communicated along the way, it was critical that people came along.”
Rob Prinzo had been involved in implementing technology projects for 15 years. In 2008, he started to look back and ask why projects failed and why some were successful. He started writing out his methodology for quality assurance checks.
“As I went through that process, I created the methodology to make sure a project is on track,” he says.
But as he wrote it up, it also became apparent that it wasn’t a very interesting read.
“It was very technical, so I rewrote the methodology into the story to take some mystery out of it and give something easier to read,” he says.
The result was his book: “No Wishing Required: The Business Case for Project Assurance.”
Smart Business spoke with Prinzo, founder and CEO of The Prinzo Group, about his book.
What is one of the major principles you hit on in your book?
The principle behind it is really to identify the real issue that you’re facing. If you look at the reason why projects fail — they fail early in the life cycle or not having top management commitment — they lead to buying the wrong software or buying services that don’t fit your needs.
Take the time to do things upfront in terms of requirements, analysis and planning and validate that with other organizations in your industry research before you plunge into a project. That way you make sure you’re heading off on the right track. Assess how you’re doing against that baseline. As the project goes on, more gaps can occur if someone isn’t monitoring.
How often do you suggest people monitor those projects?
I’ve identified six places across the project life cycle where it makes sense to do an assessment. Each is after you’ve gathered and before you’ve made a formal decision to validate.
[It takes] as long as it takes to make sure you’ve thought everything through. If you have a significant project that may be a 12-month initiative, you may see people spending one to two months planning and the next 10 on implementing, 8 to 12 weeks of strategy and then verifying if your timeframe allows for that. But definitely more time needs to be spent up front. The more you do up front, the less correction you have to do later. It’s better to pay up front.
So the bigger issue is people are rushing those projects?
They may not have thought they rushed into it — a lot of times people look for a technical solution. We need to go out and procure a system, but really what an organization may need is to improve its processes around how it manages its customers. A lot of time people go out and look for a point technology solution instead of looking at everything that’s needed in that process. It may be functionality — they go looking to buy a solution to a problem but they didn’t really look at all their requirements across the board.
What can executives do to be better at project management?
Executives have to be engaged in the project on a periodic basis beyond someone reporting status. They need to be asking questions about the project status today but also what’s coming up in the days ahead. Everything is on track. That’s great, but you need to be looking beyond those indicators to see what’s coming.
It’s being able to hold your people accountable. You don’t want that person in the details, but they also shouldn’t assume that everything is being taken care of. Ask the questions that give them a comfort level that everything is on track.
What I’ve tried to do is write a very simple-to-read, educational book that everyone can have a takeaway from. From the feedback I’ve gotten, that’s the direction I’ve achieved.
How to reach: The Prinzo Group, (770) 777-8316 or www.prinzogroup.com
With unemployment levels still high, it remains a buyer’s market when it comes to talent.
But Lisa Varga says that’s not the whole story. The founder, chairman and CEO of Phoenix Energy Technologies says you might be able to find talented individuals in the stack of resumes on your HR director’s desk. But finding the right talent — the right mix of skills and values that match your company’s mission — can become more of a challenge.
At her growing 41-employee company, Varga and her staff have needed to get creative and methodical when it comes to getting the best possible candidates in the door and sifting through them to find the right person for each open position.
Smart Business spoke with Varga about how to move from merely hiring to building a cohesive team of players who complement each other’s skill sets and share common values.
What is the biggest recruitment challenge you have faced at Phoenix Energy Technologies, and how have you overcome it?
The biggest challenge is we’re a growing firm with many positions to be filled, and we need to find qualified individuals to fill those seats and help execute on our plan. Many positions you’d think would be easier to fill with the unemployment rate where it is, but the percentages of the unemployable are something to consider, because they’re not just sitting out there knocking on your door.
So we’ve had to get creative with overcoming the challenge, particularly in the technology area, with the seats that we needed to fill — not only using recruiters but trying to get feedback from the individuals of quality that we were finding and how do you infiltrate their network. It’s almost like you’re interviewing the people in those fields and trying to figure out where they’re looking for new opportunities.
What did you learn from that experience about recruiting?
Definitely, you have to give yourself the proper ramp-up time to get those positions filled. And make sure you have a good, solid story, because you’re pretty much conducting a sales pitch to those individuals, selling them on your company. So you want to get your marketing team involved in putting some excitement into an ad for your positions that are open.
On my end, I try to get people excited about coming to work here by being as accessible as possible. I constantly engage our employees at all levels to make sure they know our successes and our vision, and let them share in the celebrations and wins we do accomplish. That is key for keeping everyone aligned and motivated and excited about what we’re doing.
As you go through the recruiting and interviewing process, how are you ensuring that you’re finding the right match?
It can be tough, but we have a multitiered interviewing process for every position in the company, and we have one person from our HR department who is in every interview, so that we are consistent in certain values. I think we are a very family-oriented company, and it is always good to see people who have a good, solid family life. It is good to see people who are used to working in fast-paced environments but are able to leave that behind at the end of the day and transition into their family life.
What questions do you ask of someone to determine if they’re going to be a cultural fit?
We want to know their likes and dislikes, what excites them, what drives them, what did they like to get involved in at the companies they worked at previously.
Some people like to be very strategic, some like to be very tactical, so we try to ask many different kinds of questions. Where do they see themselves in the future? Are they someone that likes to get in a position and just stay there forever? Or are they a growth-opportunity person? Do they multitask well? How do they do in serving different scenarios?
Do you recruit first for the technical skills of a job or for a cultural fit?
They have to have the basic skill sets for the position. If they’re a programmer, they have to have certain technology applications that they’re able to do. But we actually weight it heavily on the cultural fit.
Years ago, we tried to hire people who were familiar with our processes, but we realized that it was just as easy to take someone with the core basic skill sets, values and cultural principles, and teach them our processes. That has helped us with retention and growth in those areas. So there is a lot of weight we place on culture.
How to reach: Phoenix Energy Technologies Corp., (877) 340-8855 or www.phoenixet.com
When Rob Hillman speaks about the needle, the president and general manager of Anthem Blue Cross and Blue Shield in Indiana isn’t talking about a shot in the arm.
Rather, it’s about efforts to move the needle on key company performance metrics that measure how well employees are building relationships with customers and how well customers are relating to Anthem.
“When we are talking about a high-ticket item like health care and how personal it is, relationships are very important,” Hillman says. “Things work so much better when you focus on the value of the relationships and not the value of the transactions.”
While companies are putting more emphasis on communicating with customers and employees through ever-developing means, it still boils down to the best ways to develop personal interaction.
“Maybe I'm old school, and there are a lot of this social media out there today, but relationships are very important,” he says. “We spend a lot of time with our associates, talking about the value of our relationships and how important an asset our relationships are with the broker community, with our customers, with our medical providers in the community.”
The results? Anthem is growing its footprint in the marketplace in terms of customers served, and the percentage of customers sticking with Anthem year after year is above the industry average ? typically in the high 80s to low 90s as a percent range.
Here’s the prescription Hillman uses to build relationships to help push the needle upward for Anthem Blue Cross and Blue Shield in Indiana.
Diagnose the situation
To understand the role of relationships, the first steps are to study your core values and look for common threads among them. Draw conclusions as you examine them. It often means taking a look at the basics and factoring in what will make the relationship thrive.
In terms of core values, companies can’t go far off track if they set customer service and integrity at the top.
“What we sell every day are sheets of paper that have promises written on them,” Hillman says. “When all you do is sell promises, customer-first and integrity are No. 1 and No. 2.”
But tangible and intangible products both share a promise ? a manufacturer or organization will stand by what they deliver. The recipe is the same for both types of companies.
“The customer is first, and if you meet or exceed their expectations, you have delivered on your promise,” Hillman says. “Any company that does this consistently, no matter what it is they sell, builds brand loyalty, repeat business and referrals. They are well-positioned for success.”
Do some thinking about your promises. Stick by the ones that you will deliver, whether they are merchandise or services listed on a sheet of paper.
“If it is adhering to the language of a contract, the performance of a product or delivering on your commitments, they all have the same effect ? you build credibility, trust and confidence in your company,” Hillman says.
The benefits you sell to your customers are the same benefits you provide to your associates. This indicates that you believe in your product.
“If you don’t believe in it for your own employees, then don’t try to sell it to your customers,” he says.
“You have to make sure that the way that your contracts are written and the benefits that you have sold are the promises that you can deliver,” Hillman says. “If you can't deliver, if there has been a miscue, and if you have a promise that you sold to someone that seemingly you can't deliver on, you have to make sure that you make it right.”
Remember in your analysis that there is only one occasion to make an initial impression, and doing that correctly will go the distance in establishing a relationship.
“Try to do it right the first time,” Hillman says. “If you mess it up, make sure the second time you do it right.
“Everything has to be tied together in terms of your systems, your people, their focus, to make sure that they know what to note in those promises that you sold and that you are delivering on the promises.”
Examine as well the localness of your product or service.
“Make sure that you are providing the type of value that the local market wants and needs,” Hillman says.
Evaluate the role of the customer. He or she is more than just that. You want to create loyalty, that the person will be a return customer and that the interactions the customer will have with the company will leave him highly satisfied.
If you have been mindful and put the customer first, operate with integrity, and hold employees personally accountable for excellence in everything that you do, those are the common threads that over a period of time will allow you to retain the local touch.
“Customers are folks that you define as more than just people you send a bill to and they send a check every month,” Hillman says. “By virtue of that fact, they are customers. But the thing that can be attributed to success is how you define customers based on the relationships that you have with them personally.”
When it comes to considering how to build successful relationships across the widest possible segments, expand your definition of customer. Anyone who expects you to deliver at some level qualifies as a customer, ranging from the traditional definition to the level of subcontractor to consultant.
“When there is that expectation that you’re going to deliver, however that’s defined by any one of those constituencies, regard them as customers,” Hillman says. “So the key is, it may be a cliché, but you need to deliver what you promise. If you do that basic blocking and tackling, you’re going to build relationships over the years.”
Examine how it is beneficial to keep your focus on your pledge over the long term. Concentrating on short-term gains disregards the consequences that may happen and can give a distorted picture.
“Customers may leave, but they will always come back if you’ve dealt with them with integrity and delivered on your promise,” Hillman says. “And if you don’t, some customers are very difficult to get back.
“If you bat with a good average of delivering on your promises and value those relationships that build because of that, whether it’s internally or externally ? brokers, customers or the folks you work with every day at the company ? that’s a pretty good recipe for success over a long period of time.”
Learn the value of metrics
If you are going to focus on evaluating relationships, performance metrics can help a company compare its operation against customer requirements and the value created. In short, metrics can help keep the company on track and ensure consistency.
In an organization the size of Anthem with 5,000 employees, metrics are part of the core value of continuous improvement. In order to maintain a competitive position, a company has to strive to better itself.
“There are all kinds of activities that end up impacting either your service level, your ability to grow your business and ultimately whether or not you are able to produce a successful bottom line,” Hillman says. “Every input or activity that can impact any of those three, measure it. If it moves, measure it.”
For instance, WellPoint’s member health index measures more than 40 areas of the quality of care an individual has received, some of which were developed using national standards and others which were developed by WellPoint’s clinical experts.
There’s a unique connection that Anthem uses, as do the other divisions of parent organization WellPoint Inc. They directly link improving the health of members to the compensation of every associate in the company. Improvements in members’ health index are used to help calculate employees’ annual bonuses.
“These could be things like were we able to move the needle along the percentage of women who had mammograms,” Hillman says. “Were we able to move the needle on individuals who have reached a certain age needing other types of preventive measures and scans?”
Another indication of how well a company is doing in terms of growth is an analysis of its market share.
“When you couple market share with the fact that you’re growing at the same time that you’re losing some percentage of your business (in part due to the economy), that means that your value proposition for those folks already on board is resonating with those who are just deciding to do business with you,” Hillman says.
Metrics are not only important in helping gauge a company’s performance with its customers, but for its employee-management relations, as well.
Conduct an annual employee survey to measure strengths and weaknesses between both parties. The goal is to nurture continuous improvement.
“Tie every manager's performance review to some degree to associate survey results,” Hillman says. “It is something to take very seriously. Benchmark yourselves not only within the industry but outside the industry to what's considered best in class as well as to what is the average across the entire organization.”
If you are clear about the mission of the company, what the core values are and the level of seriousness that is given to employee engagement, you will obtain positive results.
Watch for threats
Relationships that stand the test of time are those that have received consistent care and feeding ? and that have survived challenges. A company that continually monitors them is in a position to prevent derailments.
Complacency ranks as one of the top concerns that can sink a relationship. It can prevent a company from seeing it needs to change and grow.
“Don’t take any success that you're having for granted,” Hillman says. “Take your eye off the ball, the train leaves the tracks, and it's a bumpy road to get back on. When that happens, you lose customers.
“You lose credibility. You jeopardize relationships.”
Promises made but not kept are often at the root of failed relationships. Going hand-in-hand with keeping promises is the proper attitude toward standardization.
“A second threat is not maintaining discipline in your decision-making ? deviating from the kinds of types of decisions that have helped you become a success and just becoming less disciplined,” Hillman says
While inconsistent discipline is equally a threat as complacency, its effects are different. Sticking to the standards that are ethical and morally right is a desirable quality. Human nature sometimes lets discipline slide just at the moment it may be needed the most.
“Being less disciplined is sort of moving the edges of what are acceptable decisions and non-acceptable decisions out a little bit,” Hillman says.
A third major threat is losing touch with your customers. It’s often said that the longer a company is around, the greater the danger it has of losing customers. Maintaining a personal connection comes down to building relationships, building trust, keeping promises and delivering.
While maintaining a connection can be a time-consuming process, it is necessary part of a disciplined approach to your business.
“You have to stay connected with your customers,” he says. “You have to understand what issues they’re dealing with. You can’t allow a competitor to come in and drive a wedge between you and your customer.”
How to reach: Anthem Blue Cross and Blue Shield in Indiana, (317) 488-6000 or www.anthem.com
Customer service and integrity should be top priorities
Measuring performance ensures consistency
Complacency is a top threat
The Hillman File
Born: I was born in Shelbyville, Ind., and I grew up in a small town called Fairland, now the exit off I-74 for Indiana Live Casino, which growing up in a rural farming community, I thought would never happen.
Education: Purdue University, with a bachelor of science degree in management
What is your definition of success?
Delivering on my promises, the ability to deliver on our promises, to our customers, to our sales associates, to our shareholders, staying true to the company’s mission and our core values.
What’s the best business advice you’ve ever received?
You can only lead from the front. There are many people who think they can lead from the back of the pack. To lead from the front, you must lead by example in all that you do. That’s a full-time effort. It’s not a part-time thing because your customers, your fellow associates or whomever you do business with will see through that in a second.
The second advice is you can’t fall off the floor, which has always been to me courage and conviction in your decision-making. If you’re confronted with a challenge, you have to make a tough decision and have the courage and conviction to make that decision, particularly if you are the leader of the organization because that is your job.
What was your first job?
It made me not want to be a farmer ? it was baling hay and detasseling corn. I was probably 10 years old, and it’s hard to detassel corn when you are only 10. [I wasn’t] tall enough. It was $1.55 an hour. I would have rather been paid by the tassel.
Ted Teele left his job as CEO of one of the largest sales organizations in the gift and home décor industry for an opportunity he saw as new and different. He saw the growth and potential of social media and how that platform could be used in the industry. His idea formed a company called SnapRetail LLC, a 55-employee wholesale supplier of marketing solutions.
“We were looking around and we could see how social media was in an uptick,” says Teele, CEO. “We saw this big opportunity because in our market were these 100,000 independent retailers selling gift products and furniture and home accent products and they all know marketing was changing but they needed somebody to help get them there.”
Teele capitalized on discovering an opportunity in his industry and began to focus on helping independent retailers evolve and adapt to new marketing strategies.
Smart Business spoke to Teele about how to recognize and grow new opportunities.
How do you form partnerships?
When you are working on a partnership arrangement, it’s very important to be able to model the arrangement financially from the perspective of the partner; what is the benefit to them? The way you do that is you ask really good questions and understand what the partner needs.
You should come up with a list of at least five companies that you most want to partner with and then come up with a value proposition. The first meeting should be all about understanding them. You may have some ideas about the value you can provide and you should talk about them, but you’re probably not going to have a complete proposal. You don’t want to come to somebody with a complete proposal when it comes to partnerships because you don’t understand what they need. Once you understand what a partner needs then you can come back to them with some ideas on how you could help meet those needs. If you are able to show value, then they will look at you as an equal.
How do you find the right partnerships for your company?
You have to learn who would be the best partners and who would get value. The first thing is to identify who the companies are that you want to go after. You have to be important to them too. You have to find people that have similar goals. Part of it is just asking. Partnerships allow you to build a brand, extend yourself broader, and get more information.
What are some keys to finding new opportunities?
We’re living in a world that is changing very quickly. If you’re running a company and you’re looking around, whatever your specialty was 10 years ago is now vanilla. You have to create a new special sauce and that’s true for individuals and it’s true for companies. So many companies just hold on to their old business model and they hold on for dear life. You have to be willing to make transformational decisions. You have to be able to adapt to the changing world and you have to be solving a problem that needs to be solved.
How do you find the right people to help grow the company?
There are two parts of hiring any person. There’s the buying and the selling. The buying is finding somebody that is right for the job and selling is having that person want to work for your company. Some CEOs spend too much time on the selling and some CEOs spend too much time on the buying. You’ve got to find the proper balance.
You need to find people that have the right skills, know what they’re doing and don’t need to be told what to do. The second thing you need are people that fit the culture. They have plenty of options and you want them to want this option. You have to be relevant. If you’re not relevant you’re not going to be able to hire great people. People want to solve big problems.
HOW TO REACH: SnapRetail LLC, (877) 459-7627 or www.snapretail.com
When Michael Brunner looks at all the challenges posed by the economy over the past few years, he has always stayed true to one thing: client satisfaction. While the economy has put everyone in a tough situation, Brunner makes sure that his clients are the No. 1 priority. M.J. Brunner Inc., a 220-employee, $200 million full-service advertising agency, understands that in a down economy you have to be stronger to push through or you don’t survive.
“One of the things I learned along the way is something that we absolutely have to and we did do is stay close to our clients,” says Brunner, chairman and CEO. “It is so important to remember that you’re not the only person going through this, they are as well. The last thing you want is to work your way through the down period and then find that once you’re through it, your client feels that you were very little or no value to them during that time.”
It is through the company’s continued effort to deliver success and its focus on a people-first culture that allows the ad agency to work with companies like H.J. Heinz, Huffy Corp. and GlaxoSmithKline.
Here’s how Brunner focuses on the client and consumer relationship and a strong culture to get great results.
Get close to customers
When tough times are eminent, it is critical that you find ways to help your clients improve their business. If you do, those efforts will be rewarded.
“I found it just makes more sense to get even closer, to be more sensitive and more aware of the issues and the challenges that they have,” Brunner says. “If you can find a way to really help them through that period, you’re going to be so much more valuable and particularly at the end of the downturn that relationship has probably been strengthened considerably. That’s one of the things that we’ve done or at least we’ve tried to do. In many cases, we’ve done it by being as creative as we can or inventive or imaginative in looking for answers to questions that they’re facing and problems that they’re having. It can go in lots of different ways, but when they need you most is probably when you need to be most sensitive to that need.”
Creating client satisfaction in a down economy takes more creativity and the ability to get results with fewer resources.
“You have to be very sensitive to their needs and to their problems and then help them solve those problems, which may mean you most likely have to invest more in resources than you normally would,” Brunner says. “That’s hard because in most instances their spending is probably down. I call it basic human nature. If I stay with you through a tough period or if I help you through a tough period, most likely when that tough period is over, you’re going to remember that. You just may have to do more with less in those kinds of times. You may have to find ways to answer problems that are very difficult, because you don’t have the resources that you normally would to do it.”
One of your most important resources is your team and the partnerships they make with clients.
“Our customers and clients are satisfied when we are building and delivering successful programs that drive results for their organization,” he says. “It takes a tremendous amount of communication and work that requires partnering with the client so that you clearly understand whatever their specific issues and needs are. One strategy isn’t going to work for every client. If the only tool you have is a hammer, then every problem looks like a nail. Every client is very different and has very different kinds of needs and has different marketing issues. Can there be similarities? Of course, but one size does not fit all. One size fits one and the challenge is finding the right size.”
To figure out the unique qualities of the clients you are working with, you need to have people responsible for those clients.
“The way we do that is we put teams on those businesses and those teams work with those clients over periods of time and the knowledge gets deeper and hopefully our approach gets stronger and better with each passing year,” Brunner says. “One of the first questions you have to ask is, ‘What problem are we trying to solve?’ Then you apply the necessary resources.”
Whether times are tough or not, it’s not enough to produce good results for your customers. You have to be looking to produce great results.
“If you’re not doing a good job with your clients you’re not going to keep them,” Brunner says. “That’s really the price of admission. It’s a matter of creating a program or campaign that catapults a client to the top of their category, one that achieves dramatic results, one that fires up the entire internal organization, one that’s built around a big game-changing idea that transforms their business; a radical departure from the norm. Those are the kinds of things that I would say are going above and beyond.”
To offer that kind of result, you have to really get inside your client’s business and they have to be willing to let you in.
“You really have to understand the nuances of what they do, how they do it, how they make a profit and the best way to do that is to saturate yourself in their business,” he says. “The best way to try and understand what the client is all about is to try and live the client’s world. You’re not going to be able to do it forever, but you’re going to try and learn as much and as quickly as you possibly can about what factors ultimately become important to help you grow their business.”
Understand the consumer
A big part of getting close to your customers is to understand who they do business with and who their consumers are.
“It’s important for us to make sure that we’re lockstep with today’s consumer,” he says. “Today’s consumer is equipped very differently than yesterday’s consumer. I say that because that’s due to marketing technologies. One of the things we did was launch a lab called B-Hive lab and essentially it’s an idea incubator and it’s focused on inventing new ways to engage people on the go through emerging technologies. It’s incumbent upon us to make sure that we’re understanding the technologies that are in the consumer’s hands so that we can take those and make those meaningful to our clients situations. If we’re not out there in front, then why should the client invest in us or expect us to be the agency that handles their brand? Things like that are investments that you make when you look at your existing clients and you say, ‘Those clients are very important to us and we need to be ahead of the curve.’”
Staying ahead of the curve is critical when it comes to keeping pace with consumers. If you don’t, you won’t be effective for your clients.
“You want to know how their consumer thinks, how they behave, how they act, what drives them to a purchase,” Brunner says. “The better you understand what they do is imperative so you can put the kinds of programs together that will be most effective in terms of driving that purchase intent and getting them to be interested in whatever your clients’ products and services are.”
To find out what drives consumers to make certain choices you have to put in the effort.
“Some of it is plain old-fashioned hard work,” he says. “You need to learn the category and then you need to learn where your client is in that category and what the factors are. There’s no short cut to do that other than just spend time digging in. On the consumer side, you have to look at the past research and design different tools that will allow you to get to the way the consumer thinks.”
Create a winning culture
The culture of your company says everything about your business and when client service is your top priority, you have to have employees that enjoy their work.
“If you do not have a motivated and inspired employee base, you will never have clients for a very long time,” Brunner says. “If you don’t have a motivated and inspired employee base, then I don’t know how you can be doing the best job you can for your clients, because they’re cross-purposed then. There is uncertainty. I want them to know where they stand so we can put all of our energy, all of our efforts into the clients we have so we can be mutually successful. We can win and the client can win. That’s what we want at the end of the day.”
To keep a company running well with employees that strive to deliver the best results possible, you have to have a culture that breeds success.
“We have a culture here that’s dubbed people first,” Brunner says. “It’s about letting the people in this organization know that they’re important, that they are critical and that they are the difference in terms of what we do and that we will make all decisions in that direction. We will make decisions that will let them know how important they are and try to constantly find ways that either reward them or incentivize them to perform at the highest levels.”
No matter what your business is your people are the ones that make it successful or not and you have to be able to recognize and reward that fact.
“Ultimately, your own internal resource is what makes the difference at the end of the day,” he says. “Make sure that your top performers are rewarded and that you provide an environment where people not just feel comfortable, but they feel challenged and they know that there is an expectation of growth. They expect the company to grow and you expect them to grow.”
To grow your culture you have to be open and honest with employees about how the company is doing and where it is going.
“Communicating and being honest seems pretty simple but it’s not always done,” he says. “You have to let them know where you stand. It’s important for them to know where the organization is. You serve no greater good by telling them one thing when they’re seeing the company perform in another way. I think one of the most important attributes a CEO can have is to go out and be honest and frank with the entire employee base. I think they deserve that. They’re making decisions on their livelihood by working in your organization. At the very least you should be able to be candid with them and let them know where the organization is.”
Communicating the position of the company allows you to focus more on the task at hand.
“If you’re letting everyone know where you stand, then you can put all your energy and all your effort into trying to accomplish whatever it is that you want as opposed to trying to send mixed signals or not sharing information and making people worry,” he says. “If you’re making people worried then how productive can you be. All those things do not bode well for client service.”
Having a people-oriented culture is more than just letting people know where the company is. It’s letting them know where they are as an employee.
“It’s letting them know how they’re performing,” he says. “It’s having meaningful, honest appraisals and evaluations on an ongoing and regular basis. If you don’t do that then they don’t know where they stand. What you ultimately want to do is give them that opportunity to improve, to be better, to be stronger, and you want to do your best to make sure that happens.”
HOW TO REACH: M.J. Brunner Inc., (412) 995-9500 or www.brunnerworks.com
- Remain close to customers to meet their needs
- Understand your customers’ consumers to better serve them
- Create a culture that breeds a winning attitude
The Brunner File
Chairman and CEO
M.J. Brunner Inc.
Education: Bowling Green University, Communications and Education; MBA from the University of Pittsburgh
What was your very first job, and what did you learn from that experience?
I was a paper boy. Delivering newspapers in many ways was the perfect primer. I quickly learned that better service meant better tips. I also learned how to manage money.
What got you into advertising?
My dad always had an interest in advertising even though he spent his career working in a steel mill. Obviously, it was enough of a spark. I also had two cousins that were in the industry, and I found it fascinating.
What kind of ad was the first one you worked on?
A newspaper ad for Isaly’s
What is your favorite type of advertisement to create?
One that gets noticed
If you could invite any three people to lunch, past or present, whom would you invite and why?
I would invite Bobby Jones, Ben Hogan and Jack Nicklaus. After a thorough discussion on their approach to life, we would go out for a round of golf. I can’t think of a better way to spend an afternoon.
When Douglas Ewert first joined The Men’s Wearhouse Inc. in 1995, the specialty retailer of men’s apparel only had 200 stores and just the Men’s Wearhouse division. More than 15 years later, the company has 1,200 retail locations, six divisions, 17,000 employees and had 2010 revenue of $2.1 billion.
Ewert has seen the business grow quite a bit over the years, and as part of a succession plan, on July 15, 2011, he became the company’s new president and CEO. Previously serving as president and COO, he knows it will be a tough task to fill the shoes of founder George Zimmer, who will continue to serve as executive chairman of the board.
“I’ve learned a lot from George,” Ewert says. “Probably the two biggest are if you take good care of the employees, they’ll take good care of the customers, and secondly to listen to my instincts.”
Armed with years of knowledge in the retail industry and some guidance from Zimmer, Ewert is continuing to focus the company on a strong culture, customer satisfaction and retaining a No. 1 market share.
Since Ewert had a senior leadership history with the company and the management didn’t change much when he took the CEO role, Ewert had to focus on the strong aspects and initiatives of the company.
“Because I’ve been here for 16 years and George is going to be here for another 16 years at least, this has really been a succession story of continuity not of change,” he says. “One of the first things that I did do was reorganize the organization chart a little bit so I would have fewer direct reports to allow myself to fly at a higher altitude and spend more of my time focused on strategy rather than tactics.”
Part of that focus on strategy was aimed at getting more familiar with the investment community surrounding the company.
“I’ve met with a number of our shareholders, potential investors and analysts that cover our stock,” he says. “So I’ve spent time in the investment community more so than I have in the past. I think it is important for a CEO to understand the needs and motivations of all of their stakeholders: employees, customers and investors.”
The Men’s Wearhouse has always made sure that it pays attention to its stakeholders and most importantly its employees.
“If you had to rank all of our different stakeholders, we put our employees at the top of the list,” Ewert says. “We believe that if you take good care of the employees then all of the other stakeholders will get taken care of. It’s always been a focus in this company and I look forward to continuing that style of leadership.”
Ewert and the other executives in the company make sure that they are accessible to every employee in the organization. They want to know employees’ opinions and concerns.
“Every employee can contact me,” he says. “They have my phone number and my e-mail address and they have George’s. We hear from people throughout the organization every week, because we want to know what we can be doing better. Some of the best ideas that we’ve ever had have come out of the field. For example, our tuxedo rental business, which is something that we’re very proud of and is driving a lot of nice top and bottom line results for us, came from a suggestion from one of our store employees. So keeping those lines of communication open, remembering that our employees come first is just part of our heritage. We have a rich company culture that has always valued that.”
To get employees to voice their individual ideas, opinions and concerns, you have to be available and you have to be willing to listen.
“One of the keys is to spend more time listening than talking,” he says. “You have to be accessible. You have to be open to changing your mind with new information. It’s important to not to fall in love with your own opinions. You have to be open especially in retail and especially in this economy. Our company, just like most, has had to reinvent itself somewhat in the last couple of years. That took input from the entire organization and then winning the hearts and minds of the entire organization.”
Opportunities are all around you and as a CEO you have to make sure you utilize every avenue available in order to foster those creative ideas.
“If you hang on to your opinion on what the business requires too firmly, you may miss an opportunity or an emerging opportunity,” Ewert says. “A number of things need to be present for an organization to foster creativity. First, the CEO needs to believe that they don’t have to have the best ideas, but rather have to recognize the best ideas. Then you need to foster an environment that encourages creativity. Trust needs to exist throughout the organization. Trust that the ideas will be heard. Trust that they won’t be criticized and trust that employees will be recognized for their creative contributions. Finally, leaders have to create the space for people to share their ideas.”
To run a company as big as Men’s Wearhouse takes a lot of commitment and a lot of travel. If you meet those needs, employees will see that they have access to you.
“We do a lot of training and cultural events in our company and George and I both attend as many of them as we possibly can,” he says. “Every spring, we bring every store manager and assistant store manager out in California for three-day meetings and George and I make presentations at each of those meetings and spend the evenings socializing with all of our employees, giving them our perspective on the business and giving them an opportunity to share their perspectives. We have 55 holiday parties throughout North America every fourth quarter and George and I attend as many of them as we can. We visit a lot of stores and that just gets back to that access. I think most of our employees feel comfortable with us and feel comfortable talking to us.
“You have to be accessible. I wander through the office every day. I pop into offices and ask questions. They come into my office and ask questions — the door is open all the time. I visit stores and spend a lot of time talking to employees in the stores. With e-mail now and BlackBerrys, access is 24/7.”
Maintain market dominance
Having a No. 1 market share doesn’t mean you’re safe and have time to relax. You have to constantly be looking at ways to continually improve and protect that spot.
“One of the things that we did as a company about a year and a half ago was we changed our business model from being an every day value retailer to being a promotional retailer,” Ewert says. “We found that in this economy our customers weren’t responding to every day value pricing, so we adjusted our model to be much more promotional and the customers responded nicely. Our business is strong right now and we’re having a great year. We reinvented our company to figure out how to maximize our opportunity in what everybody’s defining as the new normal — this sluggish economy.”
To mitigate the challenges that the company is facing, Ewert has had to lean on his team to help find the best solutions.
“You need to surround yourself with very competent people and listen to their ideas and suggestions and trust your own instincts,” he says. “When it comes to reinventing your business those are pretty big decisions. You’ve got to be careful and you can’t do it all yourself. You need a strong team to reinvent the company and you’ve got to keep the lines of communication open so that everybody understands the direction you’re going and everybody is pulling on the oars at the same pace to move the ship, so-to-speak.”
The company had to leverage its suppliers to combat rising commodity prices, which helped increase its buying power. It also hedged certain materials like wool to help absorb cost increases.
“Most of the changes that we had to make we were able to test the change before we implemented it throughout the entire network,” he says. “We moved cautiously, and we didn’t make any dramatic changes without some assurance that we thought it was the right move and was going to work. You have to utilize the people around you and listen to their advice. You have to try and prioritize the areas where you think you can make the biggest impact.”
If you think protecting one No. 1 market share is tough work, Men’s Wearhouse has to look after five No. 1 market shares.
“We’re the largest seller of suits in America and the largest seller of suits in Canada and the largest tuxedo rental operator in both the U.S. and Canada,” Ewert says. “We’re the largest corporate uniform company in the UK and the largest retail dry cleaning operator in Houston. Our opportunity is to continue to drive our business with that strong dominant market share.”
The company’s biggest focus is on its prominent tuxedo rental business and its blooming Big & Tall stores.
“I think there is a lot of opportunity for us to continue to take more market share in tuxedo rental,” he says. “We believe that we have a compelling strategy. As a national retailer, we believe that we have market dominance throughout the country. Our competitors are primarily small independent regional players. For an out-of-town wedding where the wedding party is spread out around the country, we’re the logical place for that type of event, because you can go into any one of our stores and get measured and get fitted and pick up your tuxedo in one store and drop it off in another or pick-up your tuxedo in the city where the wedding will be held so you don’t have to travel with it.”
The company’s Big & Tall stores also continue to do well.
“Our Big & Tall business is growing at a double-digit pace and we are aggressively growing that business in all three of our retail divisions,” Ewert says. “In Big & Tall, we are increasing the amount of inventory that we carry and we’re also testing three free-standing Big & Tall stores — one in Houston, Manhattan and Dallas.”
By focusing on two of the company’s strongest markets, the company is doing what it can to remain on top.
“You need to evaluate the strengths of your brands,” he says. “You need to keep a close eye on the macro-economic conditions and the outlook. You need to keep an eye on the strengths and leveragability of your management team and the needs of all of your stakeholders.”
Ewert isn’t just reinventing areas of the company to beat business challenges. He is making these moves to also beat the competition.
“The pitfalls of being the No. 1 market share leader in a category is that everybody is trying to take that away from you,” he says. “In order to protect and preserve your position, you need to continually reinvent yourself, because whatever you’re doing this year, your competitors will be doing next year. You need to focus on constant reinvention and paying attention to your customers as the best ways to make sure you can retain that dominance.
“We have 1,200 stores and our employees are facing customers every day and getting feedback every day from those customers. We get hundreds of phone calls and e-mails from customers every week. We have a customer service call-in center where if somebody has a question or suggestion or compliment or concern, they can reach us. If you’re not satisfying the needs of your customers, you’re not going to have customers for very long.”
HOW TO REACH: The Men’s Wearhouse Inc., (800) 851-6744 or www.menswearhouse.com
- Lookout for employees and be accessible to hear their ideas
- Trust your instincts and ideas from your management team
- Reinvent areas of your business to keep market share
The Ewert File
President and CEO
The Men’s Wearhouse Inc.
Born: Riverside, Calif.
Education: Graduated from San Jose State with a bachelor’s degree in business
What was your first job and what did you take away from that experience?
My first job was as a bus boy in a restaurant. The only job I ever got fired from was as a disc jockey in a roller rink. I got fired because I wasn’t playing the kind of music the audience wanted to hear. I guess 7- and 8-year-old girls don’t like Van Halen. The lesson there was to listen to your customers.
What is the best business advice you’ve ever received?
I would go back to the things that I focus on most from George: listening to my own instincts. Don’t let self-doubt creep in too much.
How would you define success?
It’s always been important to me to be in a job that I enjoyed and I’ve been fortunate that, for 26 years, I’ve looked forward to coming to work every day, and I think that’s pretty rare. If you’re doing something you love, you’ve got to consider yourself successful.
In the corporate world, the suit-and-tie style is no longer the typical attire, how have you seen it change?
I think we’ve seen the suit transform itself from being a Monday through Friday, 9 a.m. to 5 p.m. uniform to being an element of your wardrobe that has a reason for being at times in the evenings and on the weekends. We’ve seen the suit jacket become an important piece to be worn with a pair of jeans and an open-collar shirt. You go back 10 years and you never would have seen something like that. The suit has become less of a uniform and more of a utility piece.
Do you have any plans to film your own Men’s Wearhouse commercial?
No. I promised my wife that I would not become our spokesman on TV. That was actually a condition of me accepting this job.