Throughout the years, strategy and major decision-making at Major Brands Premium Beverage Distributors was something placed strictly under the province of ownership.
But CEO Todd Epsten says that attitude began to change in the late 1990s when an employee in the field tipped the company off to the Red Bull energy drink, which was just starting to grow in popularity.
“He said, ‘I was on the West Coast and this product is doing really well,’” Epsten says of the employee. “‘We need to try and get it for Missouri.’ If he had never spotted it, it never would have happened.
“We regrouped and refocused and actively pursued Red Bull, and now, it’s a successful niche part of our business that’s really provided a catalyst for growth.”
By promoting a culture of oneness in which Epsten encourages employees to offer their opinions and actively participate in the growth of the company, many other successful brands have been discovered by a network of personnel that keeps its ear to the ground in search of trends and opportunities.
The philosophy helped Epsten lead the largest wine and spirits wholesale distributor in Missouri to 2006 revenue of $410 million.
“Everybody in the company should be approachable,” Epsten says. “We have an open-door policy, which sounds kind of trivial, but everybody is free to walk in any door. Hierarchy is something that not only is not important but shunned at Major Brands. It doesn’t mean that we don’t have an organizational chart or an organized way of doing business; it just means that, at the end of the day, collaboration is much more important than hierarchy.
“With a company that has almost 650 people working there, we needed to expand the number of people that were helping chart the overall direction. For the company to maintain its success in the future, it’s much more incumbent on who works there than what ownership does.”
Be a team builder
One of the challenges Epsten has faced in leading Major Brands and developing the culture he wants to see is finding a word to describe the people that most companies refer to as employees or associates.
Neither term is reflective of the type of culture Epsten wants at Major Brands.
“I like using the term ‘the people who I work with’ because all of us work together and ultimately work for Major Brands,” Epsten says. “Employee sounds way too formal. Associate sounds passé, and ‘you guys’ sounds too informal.”
In addition to his disdain for the word employee, Epsten is not a big fan of courtesy titles either, for himself or for his father, Bobby Epsten, the company’s chairman.
“Nobody would ever think to call him Mr. Epsten,” Epsten says. “If anybody does, the first thing he does is correct them. It’s just a very small example of the way that business is conducted. It’s about relationships. Relationships have become somehow a negative in business, or that’s the old way of doing things. Relationships have to be built on wins and performance, but that relationship is still important.”
In hopes of developing relationships with employees to encourage them to offer innovative suggestions, David Vittor, the company’s president and COO, created the Major Brands Council.
Epsten says the new forum provides a chance for midlevel managers to be a more active part of the culture by meeting and discussing possible initiatives that can help the company continue to grow.
“It’s a great opportunity for them to interact with David, tackle issues that a company like us might not normally have the time to do and build our senior leaders of tomorrow,” Epsten says. “As an organization grows larger, I think the most important thing leadership can do is get the right people in the organization from top to bottom.”
The forum reinforces the idea that new ideas are not only welcomed by everyone in the company, but they are encouraged.
“It should flow down and permeate the organization,” Epsten says.
In addition to the Major Brands Council, the company also developed an advisory board made up of seasoned business leaders from outside the beverage industry.
“It gave ownership somebody that would challenge us in a way that had never been challenged before,” Epsten says. “It was a real eye-opener. ... The fact is that, at the end of the day, there are common goals and issues that all businesses have to deal with. I think they brought a perspective that was different than the myopic world that one exists at when they are just focused solely on their business. They have done a great job of pointing out our strengths that we never realized we had, but they also challenged us on remedying some weaknesses.”
Regardless of what method you use to get feedback, you need to be genuine about your desire to get everyone involved in plotting the future of the company.
“If you don’t come at it from an honest perspective, anybody can sniff it out,” Epsten says.
“It’s giving people the right tools, giving them a great work environment, and getting out of their way and letting them do their job. Just like our own families, there are positives and negatives in our familial relationships. But hopefully, if a family is healthy, there’s a lot more positives than there are negatives. At the end of the day, we all pull together in a common direction for a common goal.”
Keep working hard
The culture is part of a leadership philosophy where a company constantly strives to get better and its leader does not get caught up in reading about how good he or she is doing at running the business.
“Nothing breeds failure like success,” Epsten says. “You have to stay hungry. You have to constantly challenge the organization and constantly run it as though you are an underdog. The business landscape is littered with yesterday’s success stories.
“By nature, I tend to look for what goes wrong. It’s one of the fears that I have in success. There are always threats lurking around the corner for any business. Our job is to try and figure out what those are and work around them and try to mitigate them.”
Epsten says he walks around the office on a regular basis to interact with his employees and keep the lines of communication open, looking and listening for opportunities and threats.
Whenever he can, Epsten says he will arrange a face-to-face meeting. If that isn’t possible, he says a phone call and even a voice mail is a more effective and more personal way of getting his message across than e-mail.
“In a culture where hopefully everybody is moving in the same direction, the need for the written word, e-mail or memos is not needed as much,” Epsten says. “What’s more important is speed and informality. Our managers can pick up the phone and leave a voice mail say, for instance, in St. Louis and talk to 100 sales-people all at the same time. They can not only listen to his words, but they can hear his tone or inflection, as well. For our field sales-people, they don’t even have e-mail.”
He says this regular interaction along with the opportunity to be involved in the larger decisions of the company is not only beneficial to today’s businesses, but it is something that younger employees are looking for in today’s world.
“They want to be a part of something in everything that they do, including their job and where they work,” Epsten says. “To be part of not only a company but also a community, as well.
“We encourage, and, in fact, we have initiatives in all our offices to become involved in the community.”
Whether it’s getting involved with a Meals-on-Wheels program to deliver food on Thanksgiving and the holidays or helping out a local school with supplies at the start of a new school year, phil-anthropic deeds tend to pay off in multiple ways.
“It’s amazing how ultimately somebody that I can run across one day in the community, the next day, I’m involved with in a business relationship,” Epsten says.
The stronger the bond between employer and employee, the better the chance that the relationship will lead to success, both for the person and for the company. This bond can prove particularly helpful when there are differing opinions about a direction the company is thinking about going.
“Hopefully, we are good listeners,” Epsten says. “We give people the opportunity to express their opinions. What’s important for me is that people be allowed to express themselves. It’s OK to disagree. If somebody wants to voice their opinion, they can voice it not only to their boss but to anybody in the company they want. As long as it is appropriate and done with respect, we feel it’s something that’s really a part of who we are. It may mean that somebody may go to their boss’s boss and express an opinion. That’s something that we’re comfortable doing around here.
“There is a difference between expressing one’s opinion and complaining. Expressing an opinion involves agreement on the overall goal but seeing different ways of getting there. Complaining is being an impediment and not offering any solutions or alternatives.”
One of the most important qualities an employee can have in a culture where ideas are welcome is the ability to think outside of the box.
“Besides intelligence, which is a prerequisite, there has to be a right fit,” Epsten says. “For Major Brands, the right fit is the ability to work in an informal environment (and have) a sense of humor, which probably includes having a thick skin so you can not only give but receive it, as well. Be able to work in an environment where the lines of authority and a way of conducting business is not all clearly spelled out. You will not find large numbers of manuals or directions on the way to do business at Major Brands. Ultimately, we want people that can look at what the big picture is and the common goal and work toward that. There are many different paths to get to the same destination. As long as they understand the destination, we want to make as limited constraints as we can in reaching that.”
Looking to the future, Epsten says Major Brands’ place as one of the largest undergraduate recruiters at the College of Business at the University of Missouri is evidence that the culture is working.
“The ability to work in an organization where there is interaction from top to bottom is something that many young people find as a real asset,” Epsten says. “I don’t think typically in business today there is the contract between an employer and a company that there was in the past. We’ve been lucky enough that if the company is successful and the individual is successful, we can prosper together.”
HOW TO REACH: Major Brands Premium Beverage Distributors, (314) 645-1843 or www.major-brands.com
Various corporations spend a great deal of time and money on their employees’ corporate training programs. At the same time, many employers offer their employees college tuition reimbursement.
When employees enrolls in both their company training program as well as a college program, the content may be duplicated. As a result, the company may pay for the educational training twice. To avoid this duplication, companies can have their training programs evaluated to see if the courses qualify for college credit. If the courses do qualify, the company saves money and the employees save time by not repeating subject matter. In addition, the company receives validation that its training programs are of high quality.
Smart Business spoke to Arthur Hunborg, director of prior learning assessment and off-campus sites at Fontbonne University, about how colleges evaluate prior learning.
How can a company tell if its training programs qualify for college credit?
Corporate human resource departments can request to have the American Council on Education (ACE), a college credit recommendation service, review their corporate training. Recommendations by ACE are intended to guide colleges and universities as they consider awarding college credit to given students. Corporations can contact the national or state ACE offices to have their corporate training evaluated.
Will universities grant credit to employees for certain learning already obtained?
Yes. Most colleges and universities throughout the United States have a Prior Learning Assessment Center to review educational experiences outside the traditional classroom. A prior learning assessment is a concept based on accepted principles of adult learning and serves to validate the professional competence achieved by adults outside the classroom.
For what types of prior learning do colleges and universities grant credit?
In addition to possibly granting college credit for corporate/educational training that has already been reviewed by ACE, colleges and universities may also award credit hours for successful performance on College-Level Examination Program (CLEP) standardized tests, which provide students the opportunity to demonstrate their college-level outcomes through a program of competency exams in undergraduate college courses. ACE also conducts evaluations of the outcomes of military service educational training and, once completed, it recommends, if warranted, college credits for the respective military educational and occupational (MOS) training. Many colleges and universities also have internal, standardized departmental proficiency exams to award their students with college-level education experiences gained outside the traditional classroom. Lastly, students may verifying their educational learning outcomes by completing a Documented Learning Portfolio, which offers students another avenue to attain college credit in a nontraditional format.
How can an individual’s ACE recommendation help a company?
First, it validates that the company’s training programs are of high quality. Second, once they are cognizant of the fact that their corporation’s educational training programs have been approved by ACE and are transferable college credits, employees will possibly be more likely to actively seek out corporate educational opportunities offered by their employer. Third, the educational posting fees for ACE-recommended credit hours are usually fairly minimal usually around $35 to $50 per credit hour. Given the tuition cost of private and public colleges and universities throughout the U.S., this can be an additional cost benefit to corporations that offer tuition reimbursement.
How many ACE-recommended credit hours will a college or university accept?
This varies depending on the institution and the ACE recommendation. Colleges and universities may have a multitude of stipulations on the acceptance and posting of prior learning credits. Many colleges and universities will not accept ACE vocational recommendation credit hours. Most colleges and universities accept up to 48 to 60 prior learning credit hours to be posted to their official college transcripts at the undergraduate level. A small number of earned prior learning credit hours may be used to fulfill the university’s general educational requirements, but most corporate learning/training evaluated by ACE will be utilized to fulfill elective hours.
Why is prior learning assessment attractive for employees?
Most college students, adult learners in particular, are very consumer-oriented and like to be rewarded for college-level learning outcomes attained outside the traditional classroom. It helps students attain additional credit hours in a practical manner, and it usually saves the student money. We’ve found that business professionals seek out ACE-recommended corporate training, so employers that offer it are generally viewed positively as having a strong commitment to high-quality, ongoing education.
ARTHUR HUNBORG is the director of prior learning assessment and off-campus sites at Fontbonne University. Reach him at (314) 719-8009 or email@example.com.
In 2004, St. Louis Staffing’s third-largest customer declared bankruptcy, putting the company into a deep hole. But that challenge paled next to the challenge of getting his entire team aligned around a common vision, says Keith Jacob, founder, president and CEO of the $11 million company.
“You have to be able to see a better future,” Jacob says. “Then you have to have the audacity to get everybody to work toward it. You don’t want to be the CEO who thinks they have all the answers.”
Smart Business spoke with Jacob about why you need to communicate until your employees can finish your sentences and why you should dance with the girl you brought to the dance.
Q. How do you align your team with the vision?
Be pretty quick to show people the door if they’re not fitting in. Be quick to fire and slow to hire. Take your time; make sure it’s the right fit.
Talk about your values constantly until some people will know what words are coming out of your mouth next. Once I’ve got to that point, then I am communicating our values enough when people start finishing sentences for me.
Listen to what they want. You’ve got to listen to what the people want who work with you both personally and professionally. You still have to get stuff done, and I still have to be the guy to determine what stuff we’re going to get done. But if I’m not at least trying to help them achieve their goals, they’ll never help me achieve the goals we have for the company.
Q. How do you develop that vision?
You have to be able to see a better future. Then you have to have [the] audacity to get everybody to work toward doing it. So you have to have some ego.
You have to ask yourself, as a founder and an owner, what do I want to accomplish with the company in a broad sense? Then, I don’t want to do it in a vacuum either. So I’m happy to bring in some of the key leaders, key decision-makers in the company.
We establish what the key points of our vision are going to be. I am not the kind of owner who sets daily policy. After all, I don’t do it, so how could I be an expert on it?
Q. How important is delegation?
In our organization, we want people to have an ownership mentality. So you cannot hoard what it is you’re doing. I’ve got a front-line manager who has to delegate to the people who work for him. He has to trust that they will take stuff off his plate and do the little things that need to be done. Everybody in our organization has to be able to delegate.
If you don’t, then one person becomes an island. They get frustrated; they don’t see someone else’s point of view. They don’t see what’s important to someone else who’s helping them get this work done. It’s critical.
Q. How do you motivate or empower employees?
I treat them like owners, and I expect that they will act like owners. Frankly, if they’re uncomfortable in that, that cuts against our values and what we’re trying to accomplish.
I want them involved in the policymaking; I want them involved in the decision-making.
I want them to feel that a part of this company is theirs. So I share profits; I share numbers. We have open-book management, so everybody knows where we stand revenue-wise, gross-marginwise, profit-wise and they know what their stake in it is.
Q. How do you manage business growth?
We plan for growth; we know every year we lay out a game plan anticipating how much we’re going to grow that year and what infrastructure we’re going to need.
Also, it sounds crazy, but you have to decide if you want to grow. A few years ago, we grew by 97 percent in one year, and it wasn’t very profitable. We just threw a ton of resources against the growth to try to manage the growth.
Well, the next year we only grew by 30 percent, and we were much more profitable. We said, ‘We’re going to stem the tide of growth here for a while because we’ve got to get our profits straight now that we’re a much different company twice as big as we were the year before.’
Q. How do you lay the groundwork for business growth?
You’ve got to stick to your plan and execute the plan. When it comes to growth, you decide how much bigger you want to get, and you do what you have to do to get that much bigger.
Dance with the girl you brought to the dance; quit looking at the other one who may look prettier. Do what got you there, and do it really well. People would be amazed how much growth can actually come from their own current customer base if they just do even better at what they profess that they do.
HOW TO REACH: St. Louis Staffing, (314) 423-1223 or www.stlouis-staffing.com
Asale-leaseback is a transaction whereby an owner of real estate sells its property to an investor, subject to a lease that allows the seller to utilize the property during the term of the lease. The primary reason an owner would do a sale-leaseback would be to free up capital to grow their business.
Sale-leasebacks can benefit a company by reducing costs and maximizing profits. On the other hand, increased taxes and long-term obligation can be potential drawbacks.
“Sale-leasebacks are a proven strategy for many companies,” says Paul M. Hilton, senior vice president and principal of Colliers Investment Services Group. “However, there are definitely instances where a sale-leaseback is not a good strategy.”
Smart Business spoke with Hilton about sale-leasebacks and what this type of transaction can mean to your company.
What are the benefits and drawbacks of a sale-leaseback?
There are several benefits to a sale-leaseback. Some of them are:
- Maximum proceeds. The seller receives 100 percent of the market value of a property, as compared to conventional financing, which would typically only provide proceeds of a maximum of up to 75 to 80 percent of the market value.
- Lower costs. In many instances, the cost of the funds from a sale-lease-back are lower than financing.
- Investment funds. A sale-lease-back typically allows a company to rein-vest the proceeds from the sale of the property into the business in order to grow the company, usually generating a higher rate of return on the capital.
- Tax benefits. Rental payments are often fully tax deductible, whereby payments on loans only allow for the interest portion of the payment to be deducted.
- Off balance sheet financing. Under some circumstances, the lease obligation does not show up on a company’s balance sheet.
The possible drawbacks of a sale-leaseback include:
- Long-term obligation. The seller is bound by a lease, which requires monthly payments.
- Long-term control. At the end of the lease and/or options, the seller must negotiate a new lease with the owner or relocate.
- Capital gains tax. The seller may incur taxes on the profits from a sale.
Are sale-leasebacks better for the buyer or the seller?
Sale-leasebacks can be good for both the buyer and the seller. Sellers obtain funds to grow their businesses, and buyers can invest their funds at specified returns. On the flip side, they can be bad for either party in the event of a significant change in the business.
For example, if the company is sold and, as a result of the sale, the company no longer needs the property, the company is still liable for the lease payments. On the other hand, if the seller, or the tenant, has financial difficulties and can no longer meet the lease obligations, this would be bad for the buyer.
What should a company look for when considering a sale-leaseback?
When considering a sale-leaseback it is important to look at the company’s goals moving forward, the cost of funds and the reinvestment opportunity for the proceeds. In order to complete a sale-leaseback, a seller needs input from the accounting, legal and real estate fields. This team should work together to structure the terms of the lease to best meet the company’s goal. For instance, it is important in structuring a transaction to understand if the company would prefer higher proceeds from a sale or a lower long-term lease obligation.
Once the terms of a lease are established, the property should be fully marketed to the entire investment community, utilizing a sealed bid process in order to maximize the proceeds to the seller.
PAUL M. HILTON is the senior vice president and principal of Colliers Investment Services Group. Reach him at (314) 746-0313 or firstname.lastname@example.org.
Welcome to the premiere issue of Smart Business St. Louis, a monthly management journal for C-level executives of middle-market and large companies.
Before you say it, let me do it for you: “The last thing I need is something else to read.”
I know how you feel. Running a growing organization is enough to keep anyone busy. The demand on our time from employees, suppliers and clients seems to increase every day. The bumpy economy only adds to the pressures of managing a successful business.
That’s why we have designed a unique publication. After 18 years in the publishing business, we know to listen to our readers. The publication you hold in your hands the fifth in our growing chain is the result of all our listening.
In one-on-one conversations, CEO focus groups and written surveys, here is what readers like you told us they want in a local management journal.
1. Big minds, big ideas.
Smart Business St. Louis will tap into the top local business minds. Take this issue as an example. Our cover story tells how Edward Jones Managing Partner Jim Weddle strives to maintain a culture in which senior leaders feel empowered to make important decisions in far-
flung offices, and employees feel they have a means to speak openly about the way in which the business is operating.
In our Smart Leaders feature, St. Louis Blues Enterprises CEO Peter McLoughlin shares how he turns passion into profit and how you can get the most out of your employees.
Finally, our Fast Lane interview subject, Adamson Advertising President Kimberly Boyer, explains how she drives innovation at the fast-growing agency by giving employees independence.
In the coming months, you’ll hear from more of the best business minds in St. Louis on issues ranging from leadership and motivation to brand-building and innovation.
2. Go to the source.
To get the latest thoughts on best practices in key business areas, we have partnered with key local service providers in areas including real estate and employment services. They have front-line experience in dealing with the issues facing middle-market companies throughout
the St. Louis area. We work with these companies to develop content on issues facing C-level management of middle-market companies. As I always say, wisdom comes from an abundance of councilors.
3. Keep it short.
Most articles in Smart Business St. Louis fill just a page. Only our major features are longer because they delve into the management styles and strategies of top executives. And don’t look for us to drop on your desk one day like a phone book. We plan to keep our page count low so you don’t have to fight to find the articles you are looking for.
You will find those three principles carried throughout the premiere issue of Smart Business St. Louis and every subsequent issue just as our readers have come to expect the same from our other award-winning publications for the last 18 years.
So why are you getting Smart Business St. Louis? One of two reasons: Because of your success in building a business to middle-market status or your senior management role at a larger company that values the middle market. In either case, I hope you enjoy reading our premiere issue.
One more thing: You won’t find stacks of Smart Business St. Louis on newsstands or in building lobbies. Just as we carefully select the CEOs we feature, we carefully select who receives our management journal, as well. I invite you to share your feedback with me by e-mailing me or
calling me. I look forward to hearing from you.
FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.
In the sports and entertainment industry, the challenge of competing for the attention of the consumer is daunting enough. But when Peter McLoughlin was named CEO of St. Louis Blues Enterprises during the summer of 2006, he faced yet another challenge. Responsible for the management of the National Hockey League franchise’s nonhockey operations, McLoughlin had the task of continuing to reignite interest in a product that was just one full season removed from a yearlong absence from the market, the result of a labor dispute that wiped out the 2004-2005 season. After implementing rules changes intended to increase scoring and entertainment value, the league set records for average and total attendance during the 2005-2006 season, and McLoughlin has continued to work to win back fans. With his staff aligned behind one distinct responsibility to provide a unique and exciting entertainment experience McLoughlin employs a leadership style that emphasizes constant communication and accountability. Smart Business spoke with McLoughlin about how to turn passion into profits and how to get the most out of your employees.
Foster alignment through communication. One of the keys to leadership, for me, is to communicate with your people about the goals of the organization and the direction you’re all headed in.
Communication has always been one of the foundations of how I manage and lead an organization. As people hear you articulate the goals and the vision of the direction that you’re going, they can share in that and participate in the development of that mission. Everyone gets on the same page.
When communication fails, mistakes get made and inconsistent messages get out. When that happens, your customer gets confused. When the customers are confused or don’t like what they are hearing, they will maybe make the decision to spend their money elsewhere. That’s why alignment is key.
We’re creating a culture of the St. Louis Blues here. It’s a great brand with a 40-year history.
In order for us to be successful and to compete, we all have to be aligned.
Take every opportunity to interact with your team. We have regular top-level management meetings so that we can make sure all of our department heads are aligned and are communicating and sharing strategies and plans together, and then it’s up to those department heads to communicate those things to their people. We try to use e-mails to all the employees to let them know of events and activities and developments that are coming up so that they’re not surprised and they hear it from us.
As we’re at the press and we’re talking about strategies and objectives, that’s also a great way for people to read the morning paper or hear on radio shows what’s going on with the team, and we want to make sure everybody is informed of what we’re going to be saying and what the objectives are.
It’s making people throughout the organization feel a part of it. That can be anything from a broad staff meeting, which we do often in terms of the events that are coming into our building and everybody’s role in terms of activating around that event. And it comes down to simple things like having an all-employee luncheon or Christmas party and using that opportunity to take the microphone and make some points and give people an opportunity for question-and-answer so they feel engaged and feel a part of it.
Commit to success and hold people accountable. A big challenge is getting the most out of your people. What I mean by that is a combination of setting goals, encouraging people to meet those goals and holding those people accountable.
When you’re working in a company, in a business environment, you become close with the people you’re working with, and you want everyone to be successful, yet you also have to hold people accountable, including the leader. The challenge is getting everyone committed to being successful and working hard to achieve that.
Encourage dedication to common goals. You’re always looking for a certain passion within people to go along with their experience and with their particular skill set.
If someone brings passion and dedication and shares the common goal of wanting to win back the fans of the Blues, pack the house, provide great customer service and be part of a team that is going to win the championship in the National Hockey League, that’s what I look for, someone who is really passionate about those things.
We’re in a fun business, and that helps. Professional sports and the great concerts and family shows that come through the Scottrade Center are a fun business to be a part of. There is an underlying enthusiasm there, and the key is to turn that enthusiasm and passion for what we do into profitability by selling tickets and selling sponsorships and selling food and beverages and merchandise and reaching out to customers so that they feel good about spending their money here.
People who are very committed and hardworking and are driven to succeed are the kinds of people that are going to go that extra step to make an organization successful. You have to have your own personal pride and personal drive and work ethic and the collective sense that everyone is working for the same goals.
When you have that combination, it really leads to great success.
HOW TO REACH: St. Louis Blues Enterprises, (314) 622-2500 or www.stlouisblues.com
Jones in January 2006, he didn’t come in with the attitude that he
had to have all the answers. Instead, he placed a great deal of
responsibility on the leaders in the company whose expertise in
specific areas exceeded his own knowledge. In his view, the way
to effective leadership is not through knowing the answer to
every question but through assembling and managing a team of
people who could provide the answers needed to move the
“I’m not the expert in technology, I’m not the expert in compliance, and I’m not the expert in operations,” Weddle says. “I
spent my career on the client side of the business.”
Instead of pretending to have all the answers, Weddle
embraces a culture of responsibility-based management in
which he expects people to use what they have learned to do
their job to the best of their ability.
“I want to be in the loop on big things, and I certainly want to
have the right performance measures in place so that we can see
how the different areas of the firm are doing,” Weddle says. “But
for people to be coming to me for decisions in the areas of the firm
where they are more expert than I am, that’s ridiculous.
“If you want my opinion, I’ll give you that. But you need to come
to me with your recommendation. I need to know what you as the
expert feels like we need to do. Usually, I’m going to agree.
Perhaps sometimes, I will not. But don’t come to me and ask me
to make the decision because I know less about it than you do. I
want them making the decisions and moving on.”
By promoting a culture of shared responsibility, Weddle has
enabled Edward Jones to maintain its standing as one of the best
places in the nation to work, which is evidenced in the fact that
the company has been ranked by Fortune magazine as one of the
“100 Best Companies to Work For” for eight consecutive years. The
investment firm now has about 30,000 employees working at more
than 10,000 branch offices around the world, and it generated $3.4
billion in 2006 net revenue.
Success in the future relies on Weddle’s ability to maintain a
culture in which senior leaders feel empowered to make
important decisions in far-flung offices, and employees feel
they have a means to speak openly about the way in which the
business is operating.
Talk about the past
A healthy, productive culture requires continuous reinforcement
from the leader of the organization. This is even more critical during a period of fast growth when new personnel are being added
to the organization.
“Growth is a challenge to your culture,” Weddle says. “As you
bring new people into your culture, into your firm, it’s an educational opportunity but also a necessity. You have to teach people.
You have to hire the right people, but then you have to teach them
the history and communicate the values. A lot of that has to do
with the ‘why you do things,’ not just the what. It’s not something
that you can sit them down for an hour and do an associate orientation and tell them everything they ever needed to know.”
Weddle doesn’t miss an opportunity to teach employees about the culture and history of the firm. When people take a break from
a meeting he’s in, he uses a video clip to get everyone back on time
— and to teach them something about the company in the process.
He shows a clip of Edward “Ted” Jones Jr., son of the firm’s
founder, or retired managing partner John Bachmann or another
prominent figure from the firm’s past talking about what Edward
Jones means to them.
“We’ll have a video clip that we’ll play at the end of the break
and, by golly, if you want to see it, you’ve got to get back in the
room and back in your seat,” Weddle says. “It’s a way to get the
meeting restarted, but it’s also a wonderful way for people to
hear a little bit of the history of the firm. You make it fun, and
I think people appreciate it.”
History can be an important aspect of culture as it often shapes
the decisions the company has made or will make in the future.
“You can teach people what we do or how we do things, but very
important is an understanding of why we do certain things or why
we don’t do certain things,” Weddle says. “A lot of times, history
has guided the decisions that have made us who we are today. ...
It’s all wrapped up in what we refer to as the culture of our firm.
We teach it, and we talk about it.”
Get out there
With thousands of offices, Weddle can’t just talk about culture
through e-mail or video clips. He has to take the message directly
to employees, and that means getting out of the corporate headquarters.
Weddle schedules regular visits to branch offices in the United
States, Canada and the United Kingdom. The meetings are an
opportunity for Weddle to share, face to face, what is happening in
the company, but they also provide a chance for him to hear questions and engage in dialogue.
“We’re not out there giving speeches,” Weddle says. “We’re out
there asking questions. It gives people the opportunity to provide
input, and I think they appreciate being asked.”
Members of Weddle’s management team are also part of the
process. This allows for more offices to be visited, which gives the
company’s leadership more feedback than Weddle could get on his
“We want to know how we are doing and what are your suggestions for things that we can make better,” Weddle says. “What are
your suggestions for things that we’re not doing at all but, in fact,
should? Can you provide us some input in terms of how the home
office is meeting your needs and supporting your efforts to service
In providing opportunities for feedback, you must keep an open
mind when it comes to the responses you get.
“You have to solicit input, and you have to ask,” Weddle says.
“When they provide it to you, accept it for what it is. It’s feedback.
You may agree. You may disagree. But listen to the feedback. Don’t
criticize. Don’t argue. Some you may think is accurate and some
not, but you asked for the feedback. Be open about it.”
Post-meeting discussions are critical to connect the dots on what
was heard and to coordinate action plans to get the best ideas
The series of group meetings also provides Weddle with a natural launch point to talk with regional leaders about the importance
“Let’s help each other to be successful,” Weddle says. “If we’ve
got four offices in a community, let’s do joint seminars. Let’s advertise together. Let’s attack this market opportunity as a team and
not just as four individuals. We’re far stronger. We’re looking for
people that fit and want to be part of a larger organization that has
a good reputation that they can be proud of but that they can also
Give everyone a chance to talk
In order to be truly open, the culture also needs to have a forum
for lower-level employees who do not always get the chance for a
direct conversation with the boss. Weddle has found the firm’s
electronic suggestion box particularly useful. It has the advantage
of being accessible to people at all levels of the organization and is
completely anonymous, providing the opportunity for some very
“They can send a suggestion, and that can be a good idea or it can
be a cheap shot,” Weddle says. “Or it can be just a creative thought.
If they choose to sign their name, that’s fine. If they want to remain
anonymous, they can.”
The box was the brainchild of Bachmann, who thought employees needed a means to express themselves.
“He said, ‘You know what, you’ve got to have a way for people to
speak up. If they don’t feel comfortable speaking up one on one,
and that can be kind of intimidating, I appreciate that. So let’s create a way for them to do so.’
“It’s a release valve. If somebody gets angry, they send in a message and kind of pop off. Don’t sign it. Don’t go home and kick the
dog, and, most certainly, don’t get angry at a client. Send me a ‘sugg
box’ and blow off a little steam, and then feel better and go back
Fortunately for Weddle, Edward Jones continues to have a
lot of positives to focus on.
“Growth creates opportunity and growth creates an excitement
and an energy in an organization with that opportunity to move
ahead,” Weddle says.
In December 2006, Edward Jones had a limited partnership offering that included 11,500 of the firm’s 30,000 employees.
“I believe it’s a strategic advantage to have one-third of our full-time associates as owners of this firm,” Weddle says. “All those are
ways of us saying, ‘Hey, we respect you as an individual, and we
appreciate the contribution that you’re making toward the success
of our firm.’”
Weddle says the limited partnership program helps ensure
the future of the firm, as well.
“If you’re a limited partner of Edward Jones, you don’t want
to bring somebody in who doesn’t work very hard or isn’t going
to treat the place with the respect that it’s due,” Weddle says.
“You’re going to bring in the best because you own a little piece
of this place. You want it to be better.”
Identify your leaders
Finding leaders who can work in this type of collaborative
culture requires a lot of effort in the interviewing process. In
addition to educational background and work history, Weddle
says he wants to know what type of management style potential executives bring to the table and how they are able to work
“You do some situational kinds of discussions,” Weddle says.
“You ask them about their leadership style. You ask them who was
the most effective person they were ever responsible to and have
them describe that individual.”
Weddle says he is looking for people who want to be part of
a team and can readily accept that they don’t always have all
“You can almost always do it a little bit better,” Weddle says.
“You’ve got a lot of proofreaders out there. Every decision, every
bit of correspondence, every statement, every decision that you
make, there is no lack of critics. They can tell you pretty quickly,
‘Boy, you didn’t do this one very well.’ I appreciate that.”
Weddle says he looks for people who are good listeners. He also
relies on his instincts in determining who would be a good fit in
terms of their personal values and how those values match up with
those of himself and the company.
“You’ve got to sit down with those people and think, ‘Do I
want to spend 10 or 12 hours a day for the next 20 years working with this person?” Weddle says. “If the answer is no, I don’t
care how smart they are, it’s not the right fit.”
HOW TO REACH: Edward Jones, www.edwardjones.com or (314) 515-2000
As business owners look ahead to the future, many of them are planning on how to transition out of their company. Given that a business owner’s greatest asset is generally his or her company, it’s important to understand the business’s real worth well before it’s time to exit. A proactive business valuation performed well before an ownership change can provide an owner with a roadmap for improving the bottom line, driving profit and increasing overall value over time. Ultimately, this means a more favorable payoff when the time comes to execute a succession plan. “To maximize business value, owners need to develop a strategy to build institutional value,” says Barry Worth, member and director of mergers and acquisitions, Brown Smith Wallace LLC, St. Louis. But aside from simply determining the company’s worth, an owner should dig deeper and work to understand the various components of a business valuation. What areas of the business are driving value and what parts are profitable? And just as important, what departments or product lines or people are not contributing to the bottom line? “A proactive business valuation is about looking at the value of the company, then reaching below and peeling off the layers to identify what components of the business are really driving value,” said Bill Willbrand, tax and accounting member, Brown Smith Wallace. Smart Business spoke with Worth and Willbrand about how a business valuation can serve as a strategic growth tool for your business. Why should a business undergo a business valuation years before an ownership change? By performing a business valuation well before initiating any sort of exit strategy, you can create a baseline, a planning document to use as a roadmap for building value. A valuation can help you focus on key components of the business, understand what areas of the business are really driving value and identify weak spots that are detrimental to the worth of a company. For example, a valuation may show that a certain product line is not actually contributing to the financial success of the company. This might be a surprise to owners, who never fully investigated the product line’s contribution from a value proposition perspective. Based on these findings, the company can set goals to eliminate or sell off the product line and focus its energies on areas of the business that have the greatest impact on profitability and long-term value. A business valuation forces you to really tease out value drivers and spoilers, and it gives you a baseline so you can develop a plan and begin to measure progress. How can a business valuation enhance shareholder value? Through a business valuation, a company can determine its true value drivers. Those might include key client relationships, location, proprietary technology or any number of critical success factors. A valuation illustrates where a company should focus its efforts in order to grow the value of the business and maximize dollars invested in growth. Simply put, investors want to know where to focus time, talent and capital, and a business valuation can highlight those promising areas. You wouldn’t throw money at a product that wasn’t a value-driver. Also, keep in mind, shareholders are the true owners of a business, so a valuation is a critical exercise for identifying corporate differentiators that deliver shareholder value. How can a business owner use a valuation to increase a company’s worth? A valuation can help you begin with the end in mind and create a plan to focus on enhancing areas of the business that promise profit. Once you identify areas of the business that improve profit, you can stop doing the things that don’t. For example, you could eliminate a product line in order to focus your company’s talent and capital on a product that will raise the overall value of the business. A valuation truly serves as a critical planning document that can help you make key business decisions in the areas of customers, people, process and finance. When these four components fall into place, a company has a balanced scorecard and is in the best position to improve its value. What are the keys to developing a value enhancement process? The valuation establishes a baseline and a better understanding of the key value drivers. These are different in every company, but there are three basic areas that affect the value of every company: people, systems and strategy. Management depth and quality affect a company’s value. A company can immediately improve the bottom line, and its overall value, by establishing sound contracts with key personnel. Second, financial and accounting systems are important to assess the value of a company. Third, a company that has vision and a plan to reach its goals is more valuable than one without such a focus. Simply performing a business valuation improves value because it gives owners a clear picture of where the company stands and what components will help it grow profitably. How does an owner get started with a valuation process? Seek out accredited individuals specializing in business valuation who know how to really dissect a business, analyze financial statements and project to the future. While maintaining their independence and objectivity, valuation professionals can apply their business knowledge and recommend steps you can take to improve the overall value of your business. BARRY WORTH is a member and director of mergers and acquisitions and turnaround consulting and BILL WILLBRAND is a member in tax and accounting at Brown Smith Wallace LLC. Reach Worth at (314) 983-1202 or firstname.lastname@example.org. Reach Willbrand at (636) 754-0200 or email@example.com.
Harvey Wallace played a key role in founding Brown Smith Wallace LLC in 1972 and is the managing member of the firm. He helps privately held client companies in the manufacturing, distribution and services industries plan for growth and improve profitability.
Q. What can an accounting firm do to help its business clients come out of the recession in sound financial condition?
Planning and budgeting are key. They really need their professional advisers to take the lead and help them work on the financial aspects of their business. In the last two years, we’ve helped many clients look at where to invest, which capital investments make sense and where they should cut back or divest. A good accountant can help you stay on top of credit collections, so you are not surprised by a Chapter 11 filing when you think you have a solid asset on the books.
Q. If businesses are in the market to change their accounting firm, would now be a good time to do so?
If you feel the relationship isn’t what it should be, there’s never a bad time. They may believe the relationship is providing all the services they need, but it’s partly because they don’t have a true understanding about how a firm could help them manage all the challenges they have. Even if you are uncertain you want to make a change, talk to a few firms, especially if you’re dealing with a small firm. A firm like that is occupied with audits, accounting and taxes as opposed to consulting and advisory services. Go out and interview some considerably larger firms just to get a better understanding of the types of things they can provide.
Q. How often should businesses talk with their accountant or their accounting firm?
Each situation is unique, but it has to be 50-50. We want to be ahead of the curve as far as clients are concerned when it comes to initiating meetings or conversations. So many clients are busy working in businesses, rather than on businesses. If a client is calling their adviser and almost all the calls are one way, the client will realize their adviser is not being an advocate for them.
The Gulf oil spill disaster has been a catalyst for companies to think about their exposure to catastrophic risk. How would you react if a disaster of that scale befell your company?
“Nassim Nicholas Taleb’s book ‘The Black Swan: the Impact of the Highly Improbable,’ states that we all waste a lot of time managing for the predictable risks, but the only ones that really matter are the ones we cannot, or at least do not, imagine,” says Bruce Jefferis, CEO of Aon Energy.
Smart Business spoke with Jefferis and Jim Gloriod, JD ARM, resident managing director, Aon Risk Solutions, about the issues raised by the Gulf oil spill and about what companies can learn from this disaster.
What lessons can companies learn from the Gulf oil spill?
No firm should underestimate the worst-case situation. Often, when you talk about insurance planning, people assume they will have losses, and they look back at previous losses, but they don’t often look at the worst possible thing that could happen. How would your insurance and risk management programs function in that kind of environment? It seems like an obvious question. But too often, people say, ‘Well, that’s unlikely. So I’ll buy something centered around a more likely loss.’ Frankly, it’s not the ‘more likely’ losses that impact the firm. It’s the completely unpredictable events — like the Gulf spill.
Most companies have already got that message. It doesn’t mean they can completely protect themselves from that worst-case scenario, but at least they have considered it and looked at all of their options.
How can companies prepare for that worst-case situation?
Don’t wait for that event to happen before you look at all your policies. How will you respond to that kind of event?
Many people look at a policy only thinking about a single event, a single line of coverage. But in a really bad catastrophe, almost every policy you have gets involved in some fashion. Property, casualty, fiduciary liability, pollution — it can easily spill over into directors’ and officers’ — a really bad event can cross over into almost every policy you have, so you need to think about it from that standpoint. You need to see how they all work together and figure out if they are going to do what you want them to do.
Say you have a large property claim, but you didn’t buy enough limits. The firm goes into bankruptcy, and you then have a spin-off D&O claim, because someone claims the directors and officers weren’t properly protecting the company. So you have D&O issues, the company stock is tanked because of the bankruptcy and you have some fiduciary claims coming out of that. That can get quite expensive. When an event like this happens, you need to map out how it hits everything — how the policies react, where the issues are — and find out if there is a better way to do it.
What can companies do about safety?
One lesson learned very clearly through all this is that safety should be of the highest priority. It’s fairly easy in the aftermath of an accident to say, ‘If we just did something a little differently, perhaps we could have kept this whole thing from happening.’ Inevitably, the extra cost of doing that thing is minute in comparison to the consequences of not doing it. There’s no question that every industrial company is focused on making sure it has done everything it can do to make sure a disaster doesn’t happen. From a safety standpoint, here are some issues we saw in the Gulf spill: How do you establish controls about who has the authority to stop unsafe operations? How do you manage that within your company so that if there is something unsafe going on, you can communicate properly on how to stop it immediately?
How can companies determine if their insurance is sufficient?
I’ve never heard of a company that had a big claim and said, ‘I wish I had bought less insurance.’ Almost always, the first question asked is, ‘Did I buy enough?’
When a claim happens, you want all you can get. Most of the time, buying additional limits is quite inexpensive.
After a disaster, most firms wish they had purchased more limits, and if they were concerned about their budget, they would have reduced costs in another area. They could take bigger deductibles or remove unimportant coverages.
I’m not saying you have to spend more money, but that most firms, in the aftermath of a disaster, would have spent their dollars in a different way than they did.
To help companies make that decision, they can use our Risk Financing Decision Platform. It helps companies by doing dynamic financial modeling of how they spend their insurance dollars. It can measure the impact of different program options against a company’s specific financial criteria used to drive its business. It is a sophisticated way of aggregating a lot of insurance options by using historical loss data and other loss forecasting methods to stress-test the different options.
How does the platform work?
You can put simulated losses through different insurance programs, then measure the results. Whatever metric is important in their business, it can measure the impact of different loss scenarios against those metrics under a variety of different programs.
It can help a company try different limits on for size, so to speak. Set them, run them through the model, look at the results, then decide if you are more comfortable with this spending versus this outcome. It’s a very flexible process that allows companies to home in on the program that is optimal for them.
Bruce Jefferis is CEO of Aon Energy. Reach him at firstname.lastname@example.org. Jim Gloriod, JD ARM, is resident managing director, Aon Risk Solutions. Reach him at (314) 719-5148 or email@example.com. The Aon Energy Risk Symposium is scheduled on Jan. 19, 2011, in Houston, Texas. Aon will present a one-day conference to address the latest risk management issues facing companies in the upstream, midstream, downstream and service sectors. Contact Jefferis for more information.