Born: St. Louis
Education: Bachelor of science degrees, marketing and psychology, Southwest Missouri State University (now called Missouri State University)
Whom do you admire most in business and why?
Sam Walton. Not Wal-Mart today, but Sam Walton. I think he was truly a leader. Sam Walton tried to do something to improve people’s lives, and I think he did it. What’s the optimal legacy of an individual? That’s to be a positive influence on the lives of others. He completely changed the landscape for so many small towns. You talk about painful and touch love. These people say, ‘Yeah, but Wal-Mart comes in and they put the small businesses out of business.’
But they also employ all the people that worked at small businesses and now they have health care and now they have the availability of all the different products that people have in the cities, including prescription drugs and technology tools and everything else. Sam Walton did that.
Fleming on letting someone go: Talk to them and say, ‘Look, we want to find another place for you. Can we redeploy you?’ You try to find a position that fits their personality. If that doesn’t work, you have to realize the best thing you can do for you and for the company is to let them go. You are doing them a disservice by letting them stay on. You have to be very generous in your severance package. If you did nothing, they’d be working for you for another six months. Why not give them six months severance? Why not say, ‘Look, we want to help you get a job. You can use us as a reference. But you really need to find something that fits you better than this.’
You think it may be time to put your business up for sale and retire. But how do you know if the time is right? Is your business in good enough shape to be attractive on the market? Is it turning a profit and are all of your books in order?
“You need to understand how businesses are valued in today’s business environment,” says Vince Garozzo, an officer in the corporate practice group and a member of the board of directors at Greensfelder, Hemker & Gale, P.C. “All businesses are valued based upon the quality of cash flow they generate.”
Smart Business spoke to Garozzo about what should be done to make sure a business is ready to be listed on the market.
How do business owners know their businesses are ready to be put on the market?
Business owners need to focus on improving and enhancing the sustainability of their cash flow. One way to do that is by generating more revenue, but another way is to manage the expenses and the growth of the company.
Most companies are valued and sold based upon a multiple of their cash flows. In today’s environment, such multiples could be anywhere from five to seven times, depending upon the nature of the business. Sometimes, with a sophisticated technology company with a lot of potential growth, you could be talking about a multiple as high as 10 to 12 times cash flow. In particular, publicly traded buyers look for middle-market companies that are closely held and the founder (or next generation) is examining diversification alternatives. As their stock may be trading at 15 to 20 times earnings, it makes economic sense for them to buy a company on a valuation equal to five to seven times cash flow, drop it onto their own bottom line and watch the accretion to their stock price.
How does the market look right now?
In today’s environment and due largely to the subprime meltdown over the summer, most of the active purchasers today are strategic buyers looking to make complementary acquisitions within their industry. These strategic buyers could be publicly traded or closely held, and may, in fact, be portfolio companies of existing private equity groups. Nonetheless, credit is much more difficult to attract under current market conditions, and leverage ratios are being ratcheted down, which has caused a decrease in the multiple of cash flow that a buyer is willing to pay. Consequently, it is currently a buyer’s market.
So what can business owners do?
Basically, they need to analyze the quality and sustainability of cash flow and eliminate all unnecessary and related party expenses that a buyer would not otherwise incur on a post-sale basis. For example, many closely held business owners pay themselves a significant salary and bonus. A strategic buyer may very well eliminate the owner’s compensation and replace him or her with a manager earning a substantially lesser amount. You may be better off to show earnings at an arm’s length management-level employee as opposed to showing an owner pulling out $500,000 a year as compensation. Especially if the company is a S Corporation or a LLC, where the earnings all flow to the owner anyway.
It’s also important to have a sustainable cash flow that is diversified. A buyer would rather buy a company that has 20 different customers that each make up 5 percent of total revenue as opposed to three customers that make up 33 percent each of total revenue.
Do business owners need to make repairs before a sale like a residential owner would?
There are many ways to make your company more appealing. One is to get your financial statements audited by an independent accounting firm. All buyers like to see audited financial statements of the companies they are reviewing. If you are reviewing a company generating $5 to $10 million in revenue, an audit might be too expensive. A company generating revenue in excess of $10 million generally should have its financial statements audited in order to provide more credibility to its financial statements and its earnings.
You also need to self-audit all of your contracts, licenses and intellectual property. You analyze and catalog what you have and make sure that it’s in a written format. If possible, it is always ideal to avoid change of control provisions in contracts, so if you sell the stock of the company, you don’t have to get the consent of the customer to close the transaction. Further, intellectual property is important because it provides another opportunity for the buyer to identify a continuing and sustainable earnings stream, and with the brand that is being purchased.
VINCE GAROZZO is an officer in the corporate practice group, specializing in mergers and acquisitions and corporate finance, and a member of the board of directors at Greensfelder, Hemker & Gale, P.C. Reach him at (314) 516-2624.
Dennis Barnes Jr. is never short of ideas something that helps him in his job as president of Marketing Direct Inc.
But he’s learned that just because an idea seems good to the person who came up with it doesn’t mean that it will work.
“Before you just roll out a vision, it’s important to do a little sanity check and have people poke holes in some of your thinking,” he says.
Barnes bounces ideas off his management team at his $12 million, 45-employee, direct-marketing company, and if the team validates those ideas, it’s time to move forward on them. And if his ideas aren’t validated, then it’s back to the drawing board.
Smart Business spoke with Barnes about why collaborative leadership beats holing up in your office and how to get everyone involved in the process.
Q. How do you develop a vision for your organization?
By surrounding myself with great people and collaborating, we have immediate buyin when there is a vision that comes out of it. That buy-in of the leadership ultimately trickles down through the organization.
So instead of holing up in a room myself and trying to decide where we should go, I pull together the leadership team people over the various disciplines of the company and say, ‘Let’s talk about what we’ve achieved in the last several years and [what] we want to achieve in the five years ahead.’
Q. Why is it important to get input from different areas of the company?
Everyone has an opportunity to speak. There is a big difference between a day in the life of somebody who is doing sequel programming and somebody who is on the front lines as a customer service representative dealing with clients or somebody who is heads down on a Macintosh designing a mail piece or a TV spot.
When we have all those people in the room together talking about what their priorities are, it brings everybody together, and they realize what the various roles are and how they are interdependent. While they do very different functions, they are all ultimately focused on the same outcome for our customer.
Q. How do you get employee buy-in?
It does need to start internally, rather than externally. We have something we call ‘20-minute sessions.’ We call them 20-minute sessions because we thought that’s all it would be, and they’ve become hour to hour-and-a-half sessions.
Those 20-minute sessions are either myself or myself and our senior vice president doing a one-on-one or two-on-one with every employee to talk about the vision, the values, their role, how they fit into that whole vision. We end up getting great feedback, and it ends up being a great dialogue.
The benefit for the employee is an opportunity to have reinforcement for what contribution they’re making toward the vision. Day to day, we get siloed and lose focus on how important the role we’re playing is toward the goal.
So it’s a great opportunity to reinforce, ‘Here’s where we’re trying to go, and here’s your role in that.’ Also, we get some feedback from them on things that we could do differently to make their role either more rewarding or more effective.
So, they get clarity, and we get great ideas.
Q. How do you find time to meet with everyone?
There’s not a timeline on it, so I’m not trying to knock every meeting out in one month. It’s just a rolling process, so I may meet with two or three people this month and six people next month and one person the month after that.
I know who we’ve met with and who we haven’t, so we have this rolling rhythm, and we schedule them out over time. It’s a good discipline, but we don’t tie ourselves down in terms of a timeline.
I don’t want them to feel forced, either. Sometimes, they can be impromptu. Sometimes, that feels better than something structured where you send a meeting invitation ‘Come sit in my office.’
We’ve had feedback that has led to us implementing changes in processes and investments in things that were good ideas. So the actions coming out of it reinforce that it’s time well spent.
Q. How do you sort through all of that feedback?
If something shared in that meeting looks like a potential concept for improvement, I’ll take that concept to our management team and share it with them. We’ll kick it around and talk about some of the pros and cons and make a determination together if it’s something we’d like to explore further and implement.
If so, we usually involve the person who came up with the idea. If not, we go back to the person and talk to them about the discussion we had and why we chose not to move forward with it at the time.
Usually, that gives it some closure. You see some action, or rather than perceived inaction, they get some feedback.
HOW TO REACH: Marketing Direct Inc., (314) 590-8301 or www.marketingdirect.com
In 1990, Congress created a cap on H-1B visas that limited the number of college-educated foreign workers who could come in and work for American companies for up to six years.
The cap was set at 65,000, and all was well until the Immigration and Naturalization Service (INS), now called the U.S. Citizenship and Immigration Services (USCIS), saw the cap limit reached in 1997, due in part to the IT industry boom. In 1998, the department increased the cap to 115,000 while the number of applicants continued to rise. The cap was increased in 2001 to 195,000 before it was returned to its pre-1999 number of 65,000 for fiscal 2004 to the present.
“Today, USCIS sees the maximum number of petitions filed before the start of each fiscal year,” says Tiffany Baldwin, a senior associate and a member of the immigration practice group at Greensfelder, Hemker & Gale. “In April, during the first week of filing for fiscal 2009, USCIS received approximately 150,000 petitions for the 65,000 slots.”
Smart Business asked Baldwin what companies can do to get the employees they need.
Are all nonimmigrant visas capped out?
No, most are not. We allow an unlimited number of students to come to our universities. There’s a special visa for managers and executives from international corporations that are coming here, and there’s no limit on that. The problem is that the two most popular visas have limits. The H-1B for professional workers and the H-2B for seasonal workers, such as landscapers, both have limits, and that is a huge problem.
Why does the government feel it necessary to put a cap on the visas?
Initially, there was a fear of foreign workers taking jobs from workers in America. Congress felt the caps were necessary because there were more applicants than positions available. Plus, H-1Bs were cheap and relatively fast and easy to get. The filing fee was reasonable and the applications could be processed fairly quickly. Now, there’s a huge disincentive for employers to petition for an H-1B. The filing fees alone can be more than $2,000 and then you have attorney fees and a minimum salary requirement at which to start the employees. This could mean that the employer might have to pay that employee a little bit more than someone it could have hired from this country.
Are visa caps still necessary?
There are a lot more financial and administrative hoops that employers have to jump through today, so the cap doesn’t really serve its purpose anymore. There are a number of other safeguards in place to protect both the U.S. workers and the system in general. On the other hand, H-1Bs are a complete necessity in our economy because our computer science and engineering departments are a lot smaller than they were even a decade ago. Fewer American kids are going into those fields, and employers have to get their workers from someplace. So, if we are going to continue to have caps, they must be tied to market needs. The number 65,000 is so arbitrary; it’s like they pulled the number out of thin air. It’s not based on anything.
Most H-1B professions, because we are talking about professional fields, not unskilled labor, tend to be low unemployment professions. In fact, some of those H-1Bs are going to professions for which we have a general shortage, such as physical therapists. Most people believed it was best to let the market determine if and how many foreign workers were needed. If we don’t let the market decide, then I think the practical solution is to break the H-1B down into various industries and then give that industry its own cap number that is based on unemployment rates and business needs.
Do you see U.S. companies going outside the country since the number of employees allowed in is restricted?
Yes. Google recently started moving some of its operations to Canada. The European Union has developed the Blue Card that will allow highly skilled workers and their families to move easily between EU countries and jobs. So we may see a lot of competition in areas we used to dominate, especially in the field of IT because the EU is taking a more reasoned approach.
Are there alternatives to the H-1B?
Depending on the job and the company, there are some good alternatives, such as a parallel to the H-1B called the E3, which is just for Australian citizens. There is also the TN visa for professionals in Canada and Mexico.
TIFFANY BALDWIN is a senior associate and a member of the immigration practice group at Greensfelder, Hemker & Gale. Reach her at (314) 516-2617.
Bert Schweizer III set up a “pull marketing” plan at Buckingham Family of Financial Services for one simple reason: He didn’t like making cold calls.
Schweizer, one of four founding principals at Buckingham, realized in 2003 that pushing the investment firm wasn’t the best way to develop new prospects. Instead, he discovered that if the company was regarded as an expert in its field, customers would come on their own.
In the next three years, the company grew revenue to $40 million a 151 percent increase in revenue from 2003 to 2006.
Smart Business spoke with Schweizer about how to pull customers to you by establishing yourself as an expert in your market.
Q. How do you position the firm as an expert in its field?
One technique we use for pull marketing is writing books. One of our principals authors books on investment topics. Then, those books are promoted through a public relations approach of getting the author interviewed in the print media and broadcast media, radio and television.
We do a lot of writing of articles for newspaper columns. So we do a lot of writing; then try to get those articles published.
Third, we have been successful at cultivating relationships with other financial reporters in the local newspapers but also in trade magazines in the industry. These relationships contact us periodically, if not for specific articles they want to do, at least for commentary.
Another strategy we’ve begun to develop the last couple years is creating white papers. This is original material that we develop that is designed to talk about subjects for specific groups.
Looking at niches like that and developing white papers along those niches is a way of positioning yourself as an expert.
Q. What are the advantages of cultivating relationships with the media?
The most important one is that relationship can lead to your name and, more importantly, your firm name appearing in print. By appearing in print, it develops not just recognition on a more consistent basis by potential prospects, but it also leads to our appearance to a group who may not know of us as an expert in an area in which they’re looking for solutions.
Q. How do you cultivate relationships with your clients?
It begins from the first introduction to the prospect. We initiate a program that we call ‘discovery.’ ... We go through discovery to really learn from that first meeting with a prospect of what’s important to them.
We really probe. When we first meet with a prospect, it’s all about us asking questions about what’s important to that prospect. That is the way we’ve found to be successful to immediately establishing that relationship.
That’s in contrast to what we first did when we began Buckingham. The first thing we did when we met a prospect was all about telling them how smart we were.
We’ve turned that around. In many ways, our pull marketing strategy has already established that we know what we’re talking about.
It’s like going to the doctor. When you go to the doctor, do you go there and question his ability to give medical advice very often? No, you already believe he’s an expert in health care, and he will have the answers.
What you want to do is hopefully have him ask you, ‘What’s bothering you?’ And, ‘Tell me more about it so I can help solve your problem.’
They don’t spend time telling you where they went to medical school and how much training they had in their specialty. We’re the same way. We’ve turned it around and now we approach it much more like the medical service industry would. We’ve found we don’t need to tell you that we’re smart guys, especially if someone referred you here. The person referring you probably already said, ‘These are smart guys. They know what they’re talking about.’
That’s where it begins and that’s where it differs from the strategy of how we began doing this 13 years ago. It starts with developing that relationship upfront.
Q. How do you maintain relationships with your clients?
The really important key to maintaining that relationship is contact. We have a systematic program that is designed to try to have 28 contacts a year with our clients.
It sounds like a lot, but a contact can be an e-mail, a face-to-face meeting, receiving our newsletter, having a client appreciation event, sending a card on their birthday or, if they’re going on a cruise, having a gift certificate in their cabin they can use.
Q. How does maintaining contact with clients benefit the firm?
The key benefits are that it helps accomplish what we want, which is maintaining a long-term relationship with our clients, and, secondly, it shows we really care about them, in more ways than just how their investment portfolio may be doing.
It’s that caring, that client-first attitude, that helps the client feel good about referring their friends, family and colleagues to us.
HOW TO REACH: Buckingham Family of Financial Services, (314) 725-0455 or www.bamstl.com
Mark S. Wrighton is traversing a theoretical high wire.
On one side, the chancellor of Washington University in St. Louis stares down the hands-on styling of micromanagement.
On the other side, he sees a macro approach facilitated by an autonomous group of direct reports. Finding the balance between those two, he says, has been one of the keys to his successful tenure at the university.
Wrighton says that to strike that balance and establish your footing, you need to recognize your limitations: Participate in areas where you can make a positive impact, but let key managers make the day-to-day decisions in areas where your expertise is limited. By taking his own advice, the chancellor has found his balance while juggling the needs of approximately 12,000 full-time faculty and staff members while managing an operating budget of $1.7 billion.
Smart Business spoke with Wrighton about how to develop a strong sense of community and how being consistent inspires confidence in employees.
Practice consistency in leadership. Tell everybody that you interact with the same thing. Tell each person that here are the priorities, and do not change them depending on who you speak to.
That relates to integrity. Be honest in all that you do. Not only say, ‘We are committed to high integrity,’ but also live that way conscientiousness, doing what you say you’ll do and being attentive to detail.
I would like (my direct reports) to have confidence in the person who does have the responsibilities that a president has. I’d like them to feel that they’re working with a person they can trust, a person who would be willing to listen to them and a person who will be honest and conduct not only the affairs of the institution but also their personal affairs, with integrity.
Create opportunities for participation. When we talk about setting up priorities, another characteristic I strive for is to be a good listener. What are my key leaders telling me that’s necessary to bring about great success for them and, therefore, for our university?
Collaboration is key in any organization. No unit is completely independent; otherwise they wouldn’t be part of the organization. It’s important to provide opportunities for people to share their ideas openly and to have people offer their own views, the ideas of others and what makes most sense in terms of pursuing a plan.
People that would have an interest in a potential area of development should all have an opportunity to help shape a plan.
We are in the midst of a major planning process. We are drawing on all of the stakeholders, so to speak, and encouraging everybody to take part.
Everybody will have been able to play a role in shaping that set of priorities.
It’s very consultative. It involved lots of people. It takes time. It’s a process that enables people to not only put forward suggestions but to rationalize them and to critique the suggestions of others.
When one thinks about setting priorities, these key groups need to be included. Customers need to be consulted. People who are the front lines of executing the plan must be consulted.
Celebrate achievement. We have a strong sense of community. (To develop that,) one of the key things is to lift up what each part of the organization is doing and to make others the focus of attention and to encourage them by being willing to stand alongside them and to be with them at events and activities of importance to them.
Celebrate individual achievement and encourage individual initiatives and entrepreneurship within the organization, and celebrate those successes.
The principle outcome is one that it provides the best environment to realize the great potential of our students and faculty. Therefore, that makes us a stronger, higher-impact university.
Maintain momentum and stay focused. One of our biggest challenges is maintaining momentum. We cannot rest on our laurels. We cannot become complacent.
When communicating about both the new opportunities and the challenges that we face, you need continuity. No amount of communication can really ever be enough.
They have to be effective communications, but we need to start early and go late and work hard every day to keep people informed and enthusiastic about what we’re doing. It’s easy to backslide.
Another challenge is to remain focused on your core responsibilities. With the passage of time, more people are anxious to interact and take part in the life of the institution, and it’s easy to be distracted.
There are a lot of things that can consume time and energy and resources, and I need to weigh how they stack up against this priority of remaining focused on the mission.
Approach each year with enthusiasm. I once heard a bit of interesting advice that I often remind myself of: Every organization that has some maturity has an annual cycle of activities and events. For a public company, every quarter you come out with your earnings. You have your annual meetings. There are seasons.
For universities, that is certainly true. We welcome students. They graduate in the spring.
It’s important to try to treat every year like it’s your first year. Exhibit the same enthusiasm the same sense of renewal and treat each year as if it’s going to be a new and exciting undertaking.
Associate Editor Patrick Mayock also contributed to this story.
HOW TO REACH: Washington University in St. Louis, (314) 935-5000 or www.wustl.edu
The industrial real estate market has changed dramatically over the past several years, acquiring a new, competitive edge.
“I think the saying, ‘a warehouse is a warehouse is a warehouse,’ isn’t true anymore,” says Terry A. Stieve, SIOR, CCIM, senior vice president, principal at Colliers Turley Martin Tucker. “Putting ‘For Rent’ signs up and waiting for calls just doesn’t cut it anymore.”
Succeeding in this environment, he says, often requires an aggressive marketing campaign, as the marketing period for larger spaces can be 12 to 18 months. Space becomes forgotten about by the brokerage community while the landlord continues to incur operating expenses and negative cash flow. Keeping your space fresh requires understanding the economic drivers and how the building is positioned in the marketplace. The largest users in the area are typically the market drivers, while transportation systems identify the linkage and positioning of the property. The marketing team has to be proactive, understand why the property does not work for the market drivers, and attempt to reposition the property to meet those requirements. Good marketing and being prepared means having creative tools to address concerns.
“These buildings show poorly, but just as importantly, they get tired. Brokers forget about them,” Stieve says. “They get market worn. That’s when you’ve got to reposition that building in brokers’ minds.”
Smart Business spoke with Stieve about ways to move properties in today’s sluggish real estate market by accommodating your target market.
How has industrial real estate changed?
When I first got into the business, we used simple brochures with pictures and limited information to get a showing. Now we have intricate Web sites with details and specifications of the property. As a result, prospects only tour the two or three spaces that best meet their needs. We have less property showings now, which results in fewer opportunities to be a deal maker and promote your property. In today’s market when you do have a showing it’s because you’re one of the finalists. With fewer at-bats, you have to increase your properties’ market appeals to as broad of range of tenants as possible. Industrial real estate leasing remains a numbers game and today’s successful brokers are increasing the number of showings by being creative in adapting their space to a wide range of tenants. Corporate consolidations show no signs of stopping and, generally speaking, there are fewer and larger tenants active in the market now. Meanwhile, tenants have become more knowledgeable. The ones that are in the market for larger sized industrial spaces, say above 25,000 square feet, are very educated buyers.
How else can investors and landlords be proactive?
When it comes to big bulk warehouses, tenants can not use the 32-foot clear stacking height in these large buildings without racking to store the pallets 6 and 7 feet high. Traditionally, real estate brokers marketed square footage when tenants like Procter & Gamble wanted to lease storage for 50,000 palettes. Landlords now are including racking as part of the tenant finish build out to better serve their customers and to differentiate their space while increasing the chance of renewing the tenant. So, owners are taking extra steps to lease their buildings.
Are there any other market drivers that you haven’t mentioned?
No question the global economy has cost American jobs. However, a report by the St. Louis Federal Reserve stated technology has had a much more dramatic effect on reduced manufacturing jobs in America. The State of Missouri’s exports have increased 88 percent from 2002 to 2006. Missouri ranked eighth in the nation for percentage growth during that period. In addition to agriculture, our top exports were transportation equipment and machinery manufacturing we’re making the equipment for other people to manufacture products overseas. With the dollar being low it’s more expensive to buy imports, but a lot cheaper to export, and 2008 should be a record year for exports. And, if the dollar stays low, it’s positive for Midwest states, where much of our nation’s exported commodities originate.
What else will 2008 bring?
St. Louis is just ending a robust period for new industrial construction. Developers will wait for the existing supply of new buildings to lease before starting additional buildings. There are numerous choices and demand is flat, so there’s downward pressure on lease rates. 2008 maybe the best year to be a tenant in this millennium and we expect to see large corporations take advantage of this and lock in longer term leases during this period of oversupply. Because the global market is changing daily, so are the users. Having a rail spur serve your building used to be an advantage, but now the rail lines are so busy, you may not be able to get service. Globalization is a driver to the industrial real estate market, which is not the case for other property types. Industrial real estate should outperform the real estate market as a whole going forward, and we see an active market while investors are delving into the operations of a given building and understanding how it’s positioned and its competitive strengths.
TERRY A. STIEVE, SIOR, CCIM, is a senior vice president, principal at Colliers Turley Martin Tucker. Reach him at (314) 746-0380 or email@example.com.
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 firstname.lastname@example.org.
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