How Dan Doyle Jr. leads a business model at Dex Imaging that puts profits toward people

Dan Doyle Jr., co-founder, president and CEO, Dex Imaging Inc.

Dan Doyle Jr. wanted his father to be a partner in his new business venture. So naturally, he brought the proposal to the breakfast table. One morning, over egg whites, he thoughtfully laid out his plan, all the while preparing for the possibility of a tough sell. What he wasn’t prepared for though were Dan Doyle Sr.’s terms.

“In order to get him out of retirement, he made me commit a third of our profits to local not-for-profits,” says Doyle, co-founder, president and CEO of Tampa, Fla.-based Dex Imaging Inc. “He didn’t take a paycheck. That’s what he wanted.”

Doyle knew giving away a third of the company’s profits would be a tall order to fill. But he also felt confident that with his and his father’s expertise in the office imaging industry — Doyle Sr. sold a previous business for $3.5 billion — they could build Dex Imaging into a high-growth document imaging dealership.

So he accepted his father’s terms. In fact, he took it a step further, agreeing to distribute another third of top line profits back to the company’s noncommissioned employees.

After all, “It’s not easy to negotiate with your father,” Doyle says.

Since the duo co-founded Dex in 2002, they’ve successfully fulfilled their commitment to giving two-thirds of its profits to employees and local not-for-profits. And in the meantime, they’ve still managed to grow the business from $1 million to $100 million in revenue, spreading its footprint to 24 locations across five states and 560 employees.

Here’s how Doyle keeps Dex Imaging profitable while taking care of its employees and the community.

Make it more than money

Starting out, it was pretty easy for Dex Imaging to meet financial commitments to employees and not-for-profits, Doyle says. For one, the company had just 14 employees. But also, Doyle and his father had been involved in the Tampa community and done business there for some time. The area’s recent struggles motivated them to take on a bigger role with Dex.

“It was during a time when the banks were getting all rolled up and moving to Charlotte County in the Bay Area as well as other areas in Florida,” Doyle says. “So Tampa banks used to support all the not-for-profits, and that kind of diminished as the banks moved their headquarters.”

However, as they opened new offices in other cities, not everyone understood the giving back philosophy and its significance for the organization. Profit-sharing was an easy concept for people to grasp. But Doyle wanted the community involvement to be equally valued by employee and the company culture.

“In the beginning, people kind of questioned us,” Doyle says.

“What our management learned is it’s easy to sit there and say, ‘Yes,’ and find people and not-for-profits that are looking for money. But then we would quiz them on ‘OK, well why did we support this cause?’”

To connect people to the why, Doyle asks each branch of the company to choose which not-for-profit they want to support with the third of their profits. And recognizing that every branch operates somewhat differently, he also leaves how they decide up to them.

Some offices meet weekly to discuss organizations they’re interested in supporting, while others get together monthly or quarterly to talk about their plans and criteria.

“We don’t dictate how we should do it and how they should look at each not-for-profit,” Doyle says. “I just want to know that they’re involved with it, they understand it and that they’re willing to commit themselves to it.”

For Doyle, the main concern before committing the money is whether or not people have done their due diligence. So he likes to ask staff as each branch questions to make sure they’ve dug deeper. For example, “How many dollars end up back in the local community’s hands?” and “What support is the organization most in need of?”

“See if they can give you a little background besides just the title or the name,” Doyle says. “If they said Boys and Girls Club, do they say, ‘Oh, they help boys and girls,’ and kind of waffle on it? Or do they say, ‘They get into this particular cause and they’re finding matches, or we’re supporting the program that helps grandparents that are taking care of grandchildren because the parents are deadbeats?’”

As a leader, asking the tough questions helps employees understand their reasons for getting involved with a not-for-profit. By making them dig deeper, you encourage people to choose missions or causes that speak to them personally and will motivate them to make a bigger impact.

That’s certainly the case at Dex, where many employees give back their time to their chosen organizations beyond  the profit contribution, whether it’s serving on boards and committees, getting involved in events, or just reaching into their own pockets to support a cause, Doyle says.

“The only way to really get into it is to understand that particular organization,” he says.

“It wasn’t just that somebody sent them a letter and they agreed to it.”

It’s also a point of pride when employees see your company’s name linked to organizations they feel benefit their local communities.

“People come in with their son’s or daughter’s soccer league, asking can we sponsor that — all the way to their church or their school, to bigger events that are hosted by whatever city,” Doyle says. “And it’s pride. They see our company’s name associated with these things and people are proud of it.”

Give more to get more

Today, Dex has minimal employee turnover. But the company’s people philosophies don’t just help it retain employees. They’re also a way to attract new talent to the company.

“We know we’ve done a good job when people say, ‘Hey, are you hiring?’” Doyle says. “When we’re hiring people, we tell them the story and they’re hooked on it.”

But making big commitments to people can’t just be a story. You also have to follow through.

During the economic recession, many of Doyle’s employees wondered whether the company would stick with its commitment to distribute two-thirds of its profits to employees and their not-for-profit causes.

“In 2009, I was nervous because — especially in Florida — it wasn’t the best financial year for anybody,” Doyle says. “We’d made some commitments to some local not-for-profits. But it would have been great to have the money sitting in our bank as a reserve.”

Despite the challenges, Doyle says the decision to stick with the commitment was a no-brainer.

“I was brought up under the philosophy that the more you give, the more you get,” he says. “So it keeps your pencil sharp, but it motivates you and it pushes you.

“When we stretched ourselves when we gave a third back to employees — and actually we gave them a little more than a third because we didn’t want anybody hurt — it took everybody by surprise. And once they realized that we were sticking to that and making sure that they were receiving their checks, they realized that we were going to stick to the other third going to not-for-profits.

“It was just another one of those moments where they go to raise their head above some other companies that either went by the wayside or turned the other way.”

The key is view community giving as an investment rather than a donation, Doyle says.

“The theory behind it was if we can support our local community and make it stronger, businesses will thrive,” he says. “And if businesses thrive — our business is very dependent upon other businesses thriving — we will thrive.”

The same goes for employees. Investing a third of your profits back into your people obviously has a positive impact on employee morale. But it also gives Dex a competitive advantage. Much of the company’s business is service-related. So when its service technicians have a real vested interest in retaining customers, it creates a better experience for customers.

“Having control of their financial destiny also empowers employees to take on bigger roles in decision-making — something the company already encourages with its hands-off management style.

“So we try to push them to make a decision today,” Doyle says.

“If they think the customer is right, they should give them that credit. And don’t wait and tell the customer, ‘I’ve got to look into it. I’ll call you back.’ That’s the thing people hate the most. People hate being put off.”

To show people he walks the talk, Doyle also subscribes to the management philosophy of leading by example. He knows that employees want to be a part of companies that have leaders who look out for their best interests and the interests of their community.

Sometimes that requires stepping back, for example, when it helps to empower employees. When he sees one of his managers getting overly involved in their people’s decisions, he likes to remind them that micromanaging goes both ways.

“I always ask them if they’d like me to get more hands on,” he says. “If I feel like they might be micromanaging, I’ll say, ‘Do you want me looking at every decision you make every day? And they always say, ‘Well, no.’ And that works doesn’t it?”

Other times it’s about modeling the values he wants to instill in the organization. Doyle serves on numerous not-for-profits boards as well as committees to support causes that inspire him — showing his people that even the CEO can take time to give back.

“I’ve explained to our management that ‘Look, I’m willing to sacrifice my time and my family time to do this,’ and I expect the same from them,” he says. “But they also see what it gets back.”

Admit what you can do

A big concern with giving away a percentage of your company’s profits is what happens if you don’t have the money. What if I need to fund an acquisition, hire new staff or cut costs during a recession? Doyle knows these challenges all too well.

“I don’t think any of us would have predicted what happened at the end of 2008 and 2009,” Doyle says.

“The fear always is that you give away a third of your profits and that’s a third of your profits you could have had as a nest egg, just in case you do end up in a financial crisis.”

But instead of avoiding profit-sharing initiatives, Doyle simply advises businesses considering these kinds of people strategies to be realistic. Don’t overcommit.

“Obviously, the more people see your name out there supporting local causes, the more local causes come to you, which is good and bad,” he says. “You get to learn a lot about local charities that might be small that are underfunded and have a tremendous impact on our community. But it also comes to a point where you have to turn down certain not-for-profits, which is always tough.”

People involved with not-for-profits are typically pretty passionate. And obviously, you don’t want to destroy anybody’s dreams or hopes. But you also need to make sure you don’t promise more than what you can deliver.

“You have to keep in mind that there are things out of your control that might have a financial impact on your organization,” Doyle says. “We took a philosophy that we’re going to push ourselves by donating a third, and even if we give away that third, we can still survive any storm. Obviously, it’s been tested just going through 2009. So just keep that in mind. Don’t overextend yourself.”

One way the company stays accountable to its commitments is by being incredibly transparent about its financials. Three times a year, Doyle convenes all of Dex’s employees at a town-hall meeting, where he goes over the company’s financials.

By letting employees know exactly where the company stands, you show them that everyone is in it together. So the better you do as a company, the bigger impact the company can have for them and their community.

Every now and then Doyle may have a branch overcommit to a not-for-profit. But in these cases, the company has always been able to back up their donation from corporate.

How did Doyle know a third would be a doable percentage for Dex? Well, he didn’t.

“To be honest with you, that was a total crapshoot,” he says. “That was just a deal I cut with my dad.”

So how should you set your goals for community giving? Doyle suggests coming up with a figure that you can stick to as you grow. That way you’ll be able to see your company’s success pay off.

“When we started, we were very small,” Doyle says. “So the impact locally wasn’t big. Now, you look at it, and the last year, we gave away almost $4 million.”

How to reach: Dex Imaging Inc., (800) 886-2329 or www.deximaging.com

Takeaways:

  • Connect people to the organizations they’re helping.
  • View giving back as an investment.
  • Don’t overcommit.

 

The Doyle File

Dan Doyle Jr.
Co-founder, president and CEO
Dex Imaging Inc.

Born: Baltimore, Md., but has lived in Florida since he was five.

Education: Lynn University in Boca Raton, Fla.

What would you do if you weren’t doing your current job?
I would probably work in the marine industry. I love boats.

What is one part of your daily routine that you wouldn’t change?
I meet my father for breakfast every morning.  This is where the two of us have time to talk about whatever is on our minds with no disruptions.

What do you to regroup on a tough day? 
I walk the seawall behind my house with my 6-year-old son. He loves the outdoors and all living creatures and loves to talk about them.

What do you do for fun? 
I hang out with my family. My wife and I both love having our kids around. We go out for dinner every year on our anniversary with all of them. It’s just fun to spend time with them and hear what they have to say.

Where would you like to go that you’ve never been? 
I would love to go to the Galapagos Islands.

How Mark Baiada used a new branding initiative to join the past, present and future at Bayada Home Health Care

Mark Baiada

Mark Baiada, founder and president, Bayada Home Health Care Inc.

There was a little disappointment at first.

After 37 years operating as Bayada Nurses, company founder and President Mark Baiada stood before members of his nursing staff and relayed the news: The word “nurses” was to be eliminated from the company’s name. As of January 2012, the company would operate as Bayada Home Health Care Inc.

It wasn’t a decision taken lightly by Baiada or his management team. But it was a decision they felt compelled to make.

“My wife is a nurse, we’ve been a nursing company throughout, so to drop ‘nurses’ when it had been in there for so long, I think there was a little disappointment,” Baiada says. “We still have nurses, but it’s not part of our official name now.”

Baiada and his team made the change as part of a wider rebranding initiative, recognizing that the scope of in-home health care services offered by the company had grown beyond nursing to include services such as physical therapy, occupational therapy and speech therapy.

The challenge for Baiada and his team was to unify employees in the many different disciplines around the company’s core mission and goals and to ensure that every employee, no matter the occupational field, felt accepted by and engaged with the rebranded organization.

“We created a new logo, with a larger dove icon, to symbolize the Bayada Way, a document which lists our guiding mission and values,” Baiada says.

“But we also wanted it to come to symbolize the extent of our services and the fact that we were doing more than nursing. The culture of excellence that had grown up around our nursing staff — we wanted to be sure our clients associated the same levels of compassion, excellence and reliability with all of our services.

“It was really a case of wanting to be fair to all parties.”

Communicate clearly

Baiada says the initial resistance to losing the word “nurses” in the company’s name was motivated by nostalgia more than anything else. Ultimately, the nursing staff wanted reassurance that the company still valued its nursing heritage and would preserve it alongside the effort to identify the Bayada name with a wider service offering.

Baiada took steps to reassure the nursing staff that the nursing practice would continue to be held in high esteem within the company. But with nurses seeking reassurance over their future role within the company and employees in other disciplines enjoying the recognition implied in the company’s new name, Baiada stepped back.

He surveyed the situation and saw the opportunity to use the rebranding initiative as a means of strengthening the connection between every employee and the mission of the company.

With a properly crafted message, he could renew the sense of purpose throughout the organization, re-energizing the entire workforce, regardless of role or background.

With more than 18,000 employees and operations in 26 states, Baiada encouraged a method of cascading communication that started at the company’s headquarters, eventually reaching all of the organization’s local offices with multiple forms of communication.

“We had a series of meetings, we rolled out a new website to let people know what we’re doing and why we’re doing it, and we also sent out some mailings,” Baiada says. “We had a lot of positives from the communications office, which handled the communication all the way down to the local offices, which then handed things out and supported the local nurses and field staff.

“If we had a meeting with 20 people, we’d have an introduction. If people couldn’t make it, they’d get something in the mail.”

Every move Baiada and his leadership team made had an eye toward rallying the workforce around the guiding company principles of compassion, excellence and reliability. That included altering the outward appearance of all employees by outfitting them with new uniforms. Bayada issued new scrubs to nurses and new uniforms to the other field employees, all bearing the company’s new logo.

“Everyone received new name tags and new uniforms with the new logo,” Baiada says. “It was another way to mark the change and another way to get it out in front of everyone. Almost everyone got something with the new logo on it.”

Ultimately, Baiada wanted to make the change real to everyone in the company. He wanted to immerse everyone in the new Bayada brand. If employees feel connected to the company’s future, they’ll be able to take more of a sense of ownership in the company’s mission and goals, which will strengthen the culture in turn.

“What you have to remember is, Enron had a beautiful mission statement, but they didn’t follow it,” Baiada says. “You need a sense of commitment that what you are putting down on paper and communicating to everyone is something that you are following continuously.

“If you aren’t following it, you don’t have integrity. And you want your people to agree to it, so you want to get a dialogue going and keep it going. What is in your heart also needs to be in their hearts.”

Start a dialogue

Baiada began to facilitate dialogue well before the rebranding initiative took effect.

If you want your employees to own the change, you have to let them buy in to the process.

“We conducted focus groups with our employees and additional focus groups with people outside the company,” Baiada says. “We conducted focus groups with clients and customers at-large and referral sources and also did surveys. What we really tried to determine was the key characteristics that are important.

“What we found was the research reiterated that the Bayada Way was pretty much on target as a set of guiding principles. When people needed help, they wanted compassion and reliability.”

But generating a renewed focus on the company’s guiding principles was only the first step toward fostering employee engagement. Baiada wanted to engage his people on a continuing basis, allowing employees throughout the Bayada organization to have a say in how the company embodies its foundational principles.

The engagement that employees feel in your brand, mission and values will show in the relationships they build with clients and customers.

“Happy employees and satisfied employees make for happier clients, which means we get more business,” Baiada says. “We’ve brought an analytic statistician on staff, and the research shows that when we compare our employee satisfaction, our client satisfaction and our business growth, they are highly correlated. They say it’s hard to find a good tomato, and it’s also hard to find a good nurse or therapist.

“So when we get them, we have to take care of them. We need to focus them, give them a voice, respect and honor them. If you respect them and engage your people, you’ll be able to build a team that can meet your clients’ needs.”

Engagement is about stimulating the thought process within your people. You want your employees to frequently think about the end users of your company’s product or service and how those people benefit from it.

“Knowing the stories of the people you serve helps employees put a human face on the work they do each day, and it also helps spur ideas around the subject of building better customer service.

“A success for us is when a client improves to the point that they don’t need our services anymore,” Baiada says. “We share those kinds of client stories, and we’re continually trying to put them in writing and record them on video. It’s all about getting that message out there, even in ways you might not immediately realize.

“For instance, all the photography on our website is images of actual clients and employees. We don’t use stock photos or actors.”

Though he can’t be everywhere at once, Baiada also recognizes the value of a visible, accessible organizational leader in maintaining a dialogue with employees and reinforcing the mission and values.

“You have to start out with an open door and a willingness to let people in,” he says. “If you have a story to share or an issue to address, here is my phone, here is my email. If you find something isn’t right around here or you feel something is going on that is disconnected from the Bayada Way, let me know.

“Hopefully, you’ll be able go to whoever is in charge of your area first, but if you need to contact me directly, I’m accessible.”

Hire for the culture

Achieving buy-in with existing employees is critical to the success of any effort to rebrand the company or refocus on your cultural values. But every bit as important as your existing employees is the employees you don’t have yet.

The reinforcement or erosion of your cultural values can hinge in large part on the quality of the hires you make and whether those people can align with the foundational principles of your organization.

As the leader of an organization that provides in-home care to clients who might be struggling to overcome disease or disability, Baiada believes his company’s culture of compassion is essential to success and is a critical pass/fail measurement in the hiring process.

Job candidates are presented with Bayada literature emphasizing compassion as a core value alongside operational excellence and reliability.

“We try to be clear in our materials about who we are and what we stand for,” Baiada says. “A lot of people take a job based on what they think it is or isn’t, and when they start working at the job, it’s not the same thing that they expected.

“For example, if a person is working primarily for money, this really isn’t the place for them. If you don’t like working for the clients and serving them, you’re probably not going to like the job.”

To develop a deep understanding of a job candidate’s behavior and thought patterns, you need to put the person in a work situation during the interview. Bayada’s team asks scenario-based questions and tries to uncover real-life examples of on-the-job situations in which the candidate demonstrated an adherence to Bayada’s core values.

Baiada says reliability is often the hardest to gauge, and if there is a hiring mistake to be made, it will often involve hiring a person who otherwise fits the mold of what you’re looking for but has reliability issues.

“Some of our care is on a one-on-one basis, so if someone doesn’t show up to work, we have a crisis on our hands in trying to find a replacement,” Baiada says. “You can get a feeling for compassion based on how someone behaves in the interview process. You can measure excellence in their performance.

“But the reliability factor can be harder to gauge.

“Ultimately, if you’re serving people, you want to find people who are motivated by serving people. That’s one of the biggest keys to continuing to strengthen our culture moving forward. It’s that focus on people. We like helping people, and the job can’t satisfy you if that doesn’t push your buttons.”

How to reach: Bayada Home Health Care Inc., (856) 231-1000 or www.bayada.com

 

The Baiada file

History: Founded Bayada Home Health Care Inc. in 1975 as RN Homecare. The company was subsequently renamed Bayada Nurses, and then rebranded as Bayada Home Health Care on Jan. 17, 2012 — the company’s 37th anniversary.

What is the best business lesson you’ve learned?

It is all about people. It is getting the right people connected and capable of serving our clients, and in making the Bayada Way come true as they carry out their responsibilities. We have a lot of people who make that happen each day.

What traits or skills are essential for a leader?

In our system, you have to be compassionate, excellent and reliable. If you can model that and make that come true, we’ll be in a great position to do what our clients require.

Baiada on keeping an eye open for small-scale factors that can make a big difference to the culture: I am a nut like that, personally. I hope we have enough people here like that, to keep things going forward. I am kind of a stickler for connecting the details to the bigger picture. And that takes constant attention. You are always trying to draw a connection. You’re always asking if everything is coherent and connected, if there are any disconnects. Is there any way we can be doing things better? It is a matter of being attentive, like coach, teacher or chef. You have to be attentive to it all, with an eye for improvement.

How Lily Sarafan replicates the success of Home Care Assistance nationwide

Lily Sarafan, president and COO, Home Care Assistance

Lily Sarafan got some angry phone calls at first. People wondered what her motivations were and what a home care company was thinking advertising its services with Google Adwords.

But for Sarafan and the owners of Home Care Assistance, the decision wasn’t about making waves. It was about making change.

“It’s funny when I think of it now, because almost every business known to man does some form of pay-per-click or online advertising,” says Sarafan, president and CEO of Home Care Assistance. “But at the time it was like, ‘This is a high-touch business. This is about people. How can you advertise online?’”

Being the first home care agency to utilize online search, even in 2005, is an early example of the unique approach Home Care takes to the in-home care industry — an industry that’s hardly painted as “innovative.”

The company has published a number of books about its care philosophies, which include offering classes such as senior yoga for clients and gourmet cooking lessons for caregivers. It also provides many of its caregivers with tablet computers so that they can log photos, videos and updates from a client’s home.

In the future, Sarafan hopes to have tablets in every client home, providing what amounts to a Facebook newsfeed for family members and friends.

As the only senior care franchisor headquartered in Silicon Valley, Home Care Assistance also strongly aligns itself with businesses that value innovation and entrepreneurialism.

“Being based here means that we’re not comparing ourselves so much to a Home Instead or a Comfort Keepers or typical home care agencies based in the Midwest as much as we’re comparing ourselves to Google and Facebook and all of these other amazing initial start-ups that were founded a couple of miles from where we are,” Sarafan says.

“We’ve used technology not just as a cool factor but to really push our business forward.”

But perhaps the biggest differentiator of all is the company’s growth model, which has allowed it to expand from its San Francisco Bay pilot office that opened in 2003 to 60 locations across 27 states, as well as four Canadian provinces and Puerto Rico — all the while preserving the quality experience its clients have come to expect.

So how do you replicate one wildly successful office across two locations or 10 or 20? Once you have the right growth model — Home Care Assistance uses an owner-franchisor model, where it franchises some stores while building company-owned locations — the first step is to carve out your road map.

Create a success blueprint

In 2005, the company aggressively launched its efforts to pursue the franchise avenue, selling territories to prospective owners while simultaneously opening its own locations nationwide. But after adding new locations in a number of territories, Home Care got a reality check from its new owners as they began implementing the company’s operational systems and processes.

“Everything seemed to be gung-ho,” Sarafan says. “We rolled it out across the network, and all of a sudden, it was like, ‘Wait a second. In Texas, we need to append care manager signatures. The system doesn’t allow for that. In Virginia, care notes need to be documented on a daily basis. You didn’t account for that.’ So it was a nightmare rolling out these systems and being all excited only to have everyone completely angry because they thought the system was inadequate.”

As successful as your business model is, you can’t duplicate that success if you don’t give others a format that they can copy. Because the company’s operational systems were developed and tested systems at its corporate site early on, they didn’t account for the diversity in it new locations. So they failed on a national scope.

“There are certainly a lot of business models out there that are successful, but when they try to replicate and open in other areas, they realize, ‘Oh wait, it’s different in different geographies,’” Sarafan says. “‘Or, ‘We didn’t actually codify this process correctly. Oh, wait, it only applies to this very first location that we opened.’

“The biggest part of the process of expanding our operations was coming up with tools and guides and operating manuals that reflect all of the practices that we think make this business successful anywhere.”

Some of it is basics — for example, updating your operations manual to include all of the best practices that have made your company successful so far. Information on areas, such as the company’s “balanced care method,” needed to be comprehensive and clear enough that anyone could pick it up and know how to handle a client issue step by step, Sarafan says.

When expanding quickly, businesses should also look at the way people access systems and processes.

“We realized that as great as all of these owners are, they were all very busy in their respective locations,” Sarafan says. “We can’t trust that the content that’s being delivered to their staff members or their caregivers is going to be uniformly excellent.”

After the experience of launching in disparate sites, Home Care Assistance made a number of investments in its site operations in the way of training and development. In 2006, the company launched a corporate intranet, giving employees and owners 24-hour access to corporate announcements, upgrades, tools, news and updates.

It also launched the first proprietary online university in the industry to train staff members and caregivers on how to execute the company’s model at any location.

Finally, Home Care Assistance has changed the way it rolls out new processes and systems. To make sure that operational systems work for everyone, the company uses a franchise “think tank” to help vet and test them before they are rolled out to the rest of the network. The owners represent a variety of geographies, tenures and operating models. Pooling feedback from the think tank has helped the organization launch new systems, such as its online university, almost seamlessly.

“People knew that we already had the buy-in, creditability and support of key owners within our network,” Sarafan says. “So we didn’t have that typical reaction, ‘What is corporate trying to do to us now?’ They knew that the leaders within the system already approved the system.”

Be selective

Another benefit of the company’s growth model is that it focuses on growth through territories instead of franchises — the standard franchising model. This allows Home Care Assistance’s owners to be extremely selective about new locations but also about the franchise owners it brings on to grow the business.

“We don’t have brokers out there who have a quota for a certain territory,” Sarafan says. “So if we don’t find an amazing, entrepreneurial, ethical, savvy, compassionate owner to develop a territory, we’ll just do it ourselves.”

The importance of carefully screening potential owners was a lesson the company’s leadership learned the hard way. With all of the initial excitement around expansion, Sarafan admits the company probably was a little too quick to bring on franchisees when starting out.

“At first, you’re just very excited and you think everyone can do this and everyone is as compassionate and committed as you are,” Sarafan says. “So one of the early mistakes is jumping the gun and bringing in your initial owners, not really testing for that organization or cultural fit. That can cause some discontent along the way.”

It’s hard to say no when people want to invest in your company. But you’re setting yourself up for failure if you don’t make sure that you’re growing with the right people.

Today, the company is much more judicious in selecting new franchise owners. While it still looks at whether or not someone has the working capital and desire to lead a franchise location, it also considers his or her personality and values. Potential owners go through a rigorous screening process, which includes meeting with various members of the executive team as well as at least five different franchise owners. Finally, they’re invited to visit several company sites to learn about daily operations, job responsibilities and culture.

The more detailed franchisee screening process ensures that people don’t enter into the business without having a good idea about what the business is, what’s expected of them and what the company’s culture is like, Sarafan says.

“When someone’s on the phone and says, ‘I’m looking for a part-time gig. I kind of want to be an absentee owner,’ and they have five people on the phone saying, ‘In your first year, there is a huge time commitment and you really need to be involved on a hands-on basis,’ that self-filtering happens,” she says.

Who you have running your business isn’t the only thing you want to be choosy about as you add new locations. If you can, you’ll also want to take fewer clients — at least, at first.

Before you gasp in horror — why in the world would you want to turn away business? — think of it this way: You want to grow to reach more customers. To reach more customers, you need to build your reputation in new markets. And to build your reputation, you need to maintain high customer satisfaction for the customers you have.

Currently, Home Care Assistance has the best ratio of client to care manager of almost all of its markets. With a smaller case load of clients to manage, the company’s 4,000 caregivers can visit clients more often, have better status reporting with family members and be more responsive. On the customer side, the result is better client feedback on surveys, more client referrals and high client retention. On, the business side, the company’s average weekly invoice is three times the national average for its industry.

“So the fact that we’re very selective with caregivers, we have smaller case loads of clients and we’re focusing on a fairly niche client … all of that makes it so that our customers receive the gold standard of care,” Sarafan says. “Almost every single one ends up being a VIP client because we don’t need 500 clients to turn a profit.”

Keep an eye out

Home Care Assistance’s growing client base points to the fact that the company is well on its way. By 2014, Sarafan hopes to have 120 to 150 territories across the country and perhaps even overseas. But this future growth is dependent upon the ability of today’s franchises to execute to the company’s high care standards, she says.

A responsive field operations team is one way the company keeps franchise owners accountable to these standards. In addition to assisting owners with everything from emergencies in the field to new office openings and compliance, field representatives serve as strategic advisers, helping people evaluate opportunities and stay innovative.

For example, every owner enters activity at his or her location into a companywide CRM system, accessible through the cloud.

“We can log in in real time and see what’s happening,” Sarafan says. “And then we might say, ‘Did you know you had this great partnership with the Alzheimer’s Association, and they sent you leads? You’ve actually been able to help their clients through our in-home memory care program, but it seems as if you haven’t been in touch in 90 days. It seems like this is great partnership that you shouldn’t let go of.’ So we’ll be able to send those recommendations remotely.”

Being able to offer these kinds of suggestions keeps the company culture entrepreneurial because it gets the company’s employees and owners constantly thinking about partnerships or growth opportunities, many that they may not have considered. These are simple things that people coming from the outside can explore to take the company to the next level, Sarafan says.

“We’re really there to help them optimize and maximize the experience in their communities,” Sarafan says. “We’re going to go there to give them some of the out-of-the-box thinking that’s not as apparent when you’re involved in the day-to-day.”

As the company focuses on the next goal — expanding its global footprint — it will mean a lot of new development and innovation. But by taking the same balanced approach to growth as it takes with its client care, it’s literally putting its money where its mouth is as it aims to break the perception that it’s just another home care company.

“The challenge is that physicians sort of come up to you and say, ‘Home Care? Oh yeah, I know Home Care,’ because there are a lot of companies that exist within this space, and health care professionals — they think they know,” Sarafan says.

“But almost everything we do is something that’s never been done before. So it’s not just saying we’re going to have caregivers in the home, but we’re going to have the best givers. It’s going way beyond that. It’s about creating that possible service, and every day, we’re striving for that new category of services that maybe didn’t exist before.”

How to reach: Home Care Assistance, (866) 454-8346 or www.homecareassistance.com

Takeaways

  • Codify your systems and processes.
  • Be selective about who you work with.
  • Put in systems to hold locations accountable.

 

The Sarafan File

Lily Sarafan
President and COO
Home Care Assistance

Born: Tehran, Iran
Education: B.S. in science technology and society and M.S. in management science and Engineering, Stanford University

What would you do if you weren’t doing your current job?
Nothing, really. Anything else beyond my world at HCA that I enjoy or feel inspired to do, I already manage to do alongside my responsibilities here.

What is one part of your daily routine that you wouldn’t change?
Keeping a running list of all my ideas regardless of practicality or timing.

What do you do for fun?
All things culinary. I have a passion for gourmet experiences and enjoy food preparation and presentation much like an art or architecture lover studies objects or design.

Where would you like to go that you’ve never been?
Outer space. The perspective would be intensely humbling.

How would you describe your leadership style?
I’m personally very interested in transformation. … I think if you’re always pushing the envelope in a strategic way then not only are you going to have a lot of job satisfaction as a leader, but you’re probably going to see that your innovations are going to make a real impact, that will hopefully positively influence people’s lives.

How Laurence Mawhinney focused Fisher & Paykel on its post-recession future

Laurence Mawhinney

Laurence Mawhinney, president, Fisher & Paykel Appliances North America

Laurence Mawhinney’s recession story is all too-familiar. His company took it on the chin, losing 25 percent of its workforce in the U.S. and forcing those who remained to do more with much less.

“Our team was experiencing enormous change in a very short time frame, and we had stopped investing in our people as part of our cost-cutting,” says Mawhinney, the president of Fisher & Paykel Appliances North America — which is the regional wing of New Zealand-based appliance manufacturer Fisher & Paykel.

“It was necessary at the time but very damaging to the morale of our team. And all of this is going on while the macro picture is pretty ugly out there. The general feeling among people wasn’t very positive.”

The challenge for Mawhinney was to turn around the mindset of the 200 employees in Fisher & Paykel’s North American footprint.

“We’ve had to refocus our team, help people become positive and forward-looking,” he says. “We’ve started to reinvest heavily in our team, and that has really helped to grow our business. It has helped reset our people’s minds to a positive state and realize that the company is focused on the future, focused on helping them and growing the business.”

But Mawhinney’s investment wasn’t just monetary. He and his team committed countless hours strategizing, communicating and promoting the culture.

Mawhinney and his team aimed their leadership agenda at one overarching goal: to strengthen the culture of their company, restore employee confidence, then harness the power of a newly motivated workforce to propel their region of Fisher & Paykel into the next chapter of its history.

“Once we realized that the way forward was pretty clear and we had more blue sky than dark clouds, that is when we saw that we really needed to change, to focus our culture and reinvest in our people,” Mawhinney says. “We needed to convince them that the company was on track and this was going to be a good place to work both now and in the future.”

Get the message

Nothing much has changed in terms of values over the years: Honesty is still the best policy.

When Mawhinney started to see evidence that the recession was loosening its grip, he didn’t try to minimize the damage that it had done to the business. In his communication with his people, he acknowledged the severity of the crisis, the extent to which it had damaged morale throughout Fisher & Paykel’s North American region and the distance that everyone would have to cover on the road back.

As the calendar progressed through 2010, Mawhinney kept employees updated on the financial state of the organization and gave them a clear picture of what areas of the company were performing well and not performing well.

“You have to be very honest, you show them your bottom line, you show them the areas that aren’t performing, and then you show them how to turn it around,” Mawhinney says.

“People are very understanding. It was a very difficult climate, so it’s not like people were driving home, listening to the radio and hearing good business news. It was all very negative. Everyone understood that and took a mature approach to realization of what we had to do to turn the business around.”

Mawhinney realized that the reassurance he could offer to his people was minimal at first. Once the economy started to show some signs of improvement, nobody knew if the improvement would be major or minor, fleeting or sustainable.

In addition to keeping employees in the know, the most important action you can take in that type of situation is to give employees a voice. You can’t simply mandate that they follow your prescribed plan of attack. You have to allow them to question the status and stability of the company and put your future plans under the microscope.

Though you may want everyone to completely buy in to your plans and fight the recession as a united front, each person has to come to his or her own conclusions about the situation.

It’s your company, but it’s their livelihood.

“What we did was centered very much on getting individuals together and listening to them, hearing what their concerns were and addressing the group from the perspective of really trying to understand what they’re going through, then presenting them with a strong business plan that we worked to develop together and using that as the way forward,” Mawhinney says.

“That was really a key to turning around the morale and the individual mindset throughout the company from a negative one to a very positive one.”

Crisis communication is usually about treading water. Employees simply want to know whether the ship is sinking — igniting the boilers and plotting a direction is of less importance until your people are confident that the company’s future is stable.

“At first, your communication will be along the lines of, ‘When do we stop making cuts? When can people stop worrying about whether they’ll have a job in the future?’ They want to know what steps you are taking to provide stability and eventually perform a turnaround,” Mawhinney says. “In our case, our people wanted reassurance that the company wasn’t just taking away and cutting to save.

Once the economy leveled off and we were able to stabilize the business, we started to demonstrate our commitment to the future. We were able to reinvest in our people and show them some wins, which was really critical.”

Grab some wins

A long-held truism in baseball is that pennants aren’t won in April, but they can be lost. The same can hold true when facing a turnaround or recovery in the business world.

You won’t slingshot your company to new heights of profitability and success in the initial weeks and months on the rebound, but the initial wins you do get, however small, are crucial for building the momentum that you will need to ride later.

Without those early wins to galvanize your company and build employee confidence, your recovery plan can stumble out of the gate and you’ll find yourself behind from the get-go.

As Fisher & Paykel started to rebound in the North American marketplace, Mawhinney made it a point to emphasize early wins to his people and demonstrate the importance of small victories at the outset.

“We started to be very successful with our outdoor products that we sell,” he says. “We were able to pick up market share in our outdoor division, which was very profitable for us, and it made for a nice improvement to our bottom line.

“Another big win was when we started to bring individuals together for retraining exercises, our cultural reinforcement and cultural understanding. They’re sessions that we have been running for over a year now.”

In the training sessions, Mawhinney and the leadership team placed the recession and recovery in a historical context. The real victory was in showing employees the staying power of the company. In more than seven decades, Fisher & Paykel had weathered numerous recessions and downturns and had overcome it all to develop into an industry leader.

“We sat down as a group and talked about the culture of the company,” Mawhinney says. “We talked about the history of the company, how the culture evolved due to that history and where we have come from. This company is over 70 years old, and we have been through similar cycles before.

“We used that history to draw analogies to where we are, what we have been through and how we’ve bounced back. That history, and the resilience of the culture, was very useful as far as getting people to understand that what we were going through was a cyclical event. It wasn’t a singular catastrophic event. We had been through this before.”

Early wins improved employee confidence in the future of the organization, which in turn strengthened their belief in the guiding cultural principles of the Fisher & Paykel organization — which is essential to any rebound or turnaround. Without a strong culture, your business isn’t healthy, regardless of the economic climate. Without a strong culture in a down economy, your business could face an existential threat.

“The culture has to be in everything you do,” Mawhinney says. “Everyone needs to be included at every level of your business. It’s important that your team understands that your culture can be a competitive advantage. In today’s environment, that can make the difference.”

Reinforce your culture

Mawhinney added momentum to the initial wins by continuing to link them back to the cultural principles of the organization on a daily basis. If employees can see how their daily tasks help advance the culture, and advance the success of the business overall, it can serve as an important motivational tool.

It’s something Mawhinney demonstrated by involving people in the strategic planning process.

By giving employees a view of, and input into, the strategic planning that was aimed at pulling Fisher & Paykel out of the recession, Mawhinney and his leadership team were able to give employees a sense of the steps management was taking to improve the company’s outlook, and how each person’s job affected the company’s ability to realize its goals.

“We had to develop a new strategy for a difficult time, and everyone was involved in that strategic planning,” he says. “The core values are clearly defined throughout the organization, and our teams have integrated those core values into everyday processes so that they are transparent to all.

“It includes defining the culture and defining a plan to implement the culture, which is really key in terms of stabilizing during difficult times and having that strong culture that can really carry you through.”

Mawhinney’s emphasis on promoting initial wins and on strengthening the culture has had the desired effect. Fisher & Paykel is exiting the recession with a renewed focus on the future. The company has begun making new hires and reinvesting in its existing workforce and has rebounded financially. The company’s North American operations generated $124 million in revenue during 2011.

“Maintaining a culture is really a function of having a strong training culture, as well as mixing the old with the new,” Mawhinney says. “What we found through these pretty challenging times is that the experienced and longer-term employees have really helped the new hires that we have made.

“Our new employees need to understand that our culture is different from what you might normally experience in a U.S.-based company, and it really helps us.

“We believe that you need to have an open culture. That is what I think we really have. It’s a culture where you can feel free to speak your mind and that if you have ideas, put them out there. If we can’t use them, we’ll at least consider them for later.

“It’s critical that employees feel a sense of ownership in what they do. Encouraging an open and creative culture will really help your business, and as the leader, you have to walk the talk if you want that type of culture.” <<

 

How to reach: Fisher & Paykel Appliances North America, (888) 936-7872 or www.fisherpaykel.com

 

The Mawhinney file

Born: Stratford, New Zealand

First job: I worked for Television New Zealand before joining Fisher & Paykel, where I’ve worked for 21 years. I’ve worked in the U.S. since 1997.

What is the best business lesson you’ve learned?

Innovation is great, but the bigger question is whether it solves a problem. You need to ask what your problems are, and respond to that. I’m looking for the people around me to offer solutions when they encounter a problem.

What traits or skills are essential for a business leader?

You must have a creative spark, and have the ability to incubate new ideas. That means you have to demonstrate the kind of leadership that allows you to develop a creative culture in your organization. Also, you have to help employees see that what they do each day really matters to the company.

What is your definition of success?

Achieving positive results for retailers and shareholders, which will continue to allow us to invest in the future growth of the business.

Art Weinstein: Co-creating value

Art Weinstein, author, “Superior Customer Value: Strategies for Winning and Retaining Customers”

Customer focus no longer means just researching current and future needs in order to design expected or desired goods and services. Instead, a rising trend in business today is co-creating value with customers.

Value is created when a product and buyer come together within a particular use situation. Some examples include retailers getting the customer involved in the shopping experience to save time (Home Depot’s self-checkout) or costs (IKEA’s assembly and delivery by customers), smartphone personalization through app selection and Dell’s online built-to-order computers are others.

Another is utilizing management consultants who collaborate with clients to add value in research projects.

Co-creation of value can lower costs, increase benefits and improve the overall service experience for both the organization and the user. As the table below explains, co-creation of value has a dual emphasis on the customer and company as value creators and is an applicable business strategy in a wide variety of market contexts. Airlines, supermarkets, supply chains, theaters, theme parks and retailers have all embraced co-creation of service opportunities through self-serve initiatives such as check-in, checkout, price checks, information/purchase kiosks and other technology enhancements.

Value Creation and Marketing Opportunities

Marketing Strategy Market Emphasis Value-Creation Focus Corporate Examples
Market driven Established market Customer Coca-Cola, Procter & Gamble, Toyota
Market driving Emerging or imagined markets Company Google, IKEA, Virgin Group
Co-creation of value Established, emerging or imagined markets Customer and company (simultaneous) Amazon, Apple, LinkedIn

A great example of the new co-creation of value model is illustrated in the case of Crushpad, a Sonoma, Calif., winery. Crushpad is a state-of-the-art winery where customers choose their level of involvement for small lot wine-making — typically 25 to 100 cases — based on their interest in the production process.

The company allows customers to develop wine-making plans, engage in hands-on activities, such as sorting, de-stemming, crushing, fermenting, pressing into barrels, labeling and packaging bottles, and even distributing and marketing the products. Wine enthusiasts, restaurants and retailers have co-created value with Crushpad, and as a result, the business has launched more than 150 world-class brands.

The rock music industry has also experimented with co-creation of value. Radiohead’s “In Rainbows” album was sold directly to more than 2 million consumers who paid what they felt the music was worth. The symphonic band Renaissance also raised more than $92,000 from 860 loyal fans to record a new CD called “Grandine il Vento.”

Innovation and creative collaboration allow the smartest — not necessarily the biggest — companies to win in the marketplace.

Here are six questions to think about as your company ponders the idea of co-creation of value.

1. Do you strive to continually exceed customer expectations?

2. Does your view of value creation go beyond the firm (to include the customer)?

3. Do you actively seek to create an extended community of users?

4. Is personalizing the customer experience a major part of your marketing strategy?

5. Is your marketing team truly obsessed with researching and improving customer experiences?

6. Do you nurture and forge enduring business relationships with customers and collaborators?

Art Weinstein, Ph.D., is a professor of marketing at Nova Southeastern University and author of “Superior Customer Value: Strategies for Winning and Retaining Customers.” Visit his website www.artweinstein.com or reach him at [email protected] or (954) 262-5097.

 

 

How James Wendle is growing EQM Technologies & Energy through mergers and acquisitions

James Wendle, President and COO, EQM Technologies & Energy Inc.

James Wendle and EQM Technologies & Energy Inc. are largely reliant upon government spending to drive business. However, with the lack of funds and resources from the government recently, Wendle has had to resort to alternative ways to keep the company flush.

EQM is a $75 million, 240-employee sustainable solutions company that provides consulting and technology to business and government. Wendle became EQM’s president and COO in 2010 after the board brought him in to help grow the business.

“What I bring to the table is accountability and know-how in the construction and the engineering world and growing more on the engineering side and developing that part of the business to get us more diverse,” Wendle says.

That diversity is what Wendle expects will ease EQM’s reliance on government spending. His acquisition strategy is to find companies that will get EQM into different aspects of the environmental and engineering industries. Most recently, EQM, which at the time was Environmental Quality Management Inc., merged with Beacon Energy Holdings Inc. in 2011 to become EQM Technologies & Energy Inc.

“The Beacon merger was a reverse merger,” Wendle says. “Beacon Energy gives EQM an added benefit that wasn’t there before.”

EQM has five different divisions that give the company a wide range of capabilities. Now Wendle is searching for the next company that will bring added value to the business.

Here is how Wendle is diversifying EQM through mergers and acquisitions.

Look for opportunity

EQM was looking to broaden its business and get into an industry that it wasn’t in yet, but one that was similar to the work it did. The company came across Beacon Energy Corp., a biodiesel production business.

“The plant was sitting idle, and we had a strategy that we were going to restart the plant, which we did, and be in the biodiesel business, which we are, and the plant is running now,” Wendle says. “It helped diversify us.”

Wendle and EQM put together an acquisition strategy that focused on finding companies in the engineering business and environmental services business that would help the company grow.

“Growth is an expectation,” he says. “It’s not something that you just do by mistake. Growth of companies is what’s expected, and it’s expected by our board. Growing organically can be difficult, and I think a lot of companies are experiencing that.

“So with our equity partner, we have a company that is an expert at it. They’re on a constant search, and raising the capital to make the acquisitions is something that they do every day and they’re very good at.”

In today’s market, if you’re going to grow, you have to look at growing both through acquisition and organically. If you grow through acquisition, you have to understand the business you’re interested in.

“We set up a model of companies that are in a certain range of what their revenue is, what their margins are, how we can be more of a strategic acquisition and what synergies there are,” he says. “If we merged, how can both firms benefit from it? It is something that we need to know something about. We’re not going to buy a company we have very little knowledge about.”

The other part of acquiring a company is what leadership comes with it.

“That is just as important as the company itself, because we are constantly looking for leaders and leadership,” he says. “When you acquire a company, you also acquire the leadership and you have to look at how those leaders can help you grow in other areas.”

One of the most challenging aspects of the acquisition process is not losing sight of your current business.

“You have to align yourself with a private equity company that can assist you in your search, because it can be very distracting, not only for the buyer but for the seller,” Wendle says. “You have a business to run while you’re doing all this and you want to keep your eye on the ball.

“I’ve seen sellers particularly get so distracted through the process that they don’t watch their business. You have to stay focused and keep your eye on the ball. Don’t get all consumed in an acquisition potential.”

Wendle understands how difficult a merger process can be, so he makes sure he is as helpful to those involved as he can be.

“That’s the way I develop a relationship with the people, because it is a relationship,” he says. “If the process goes well, then the closure is going to go well. It can’t be adversarial. It needs to be very friendly and very professional. Instead of looking at it like you’re out there buying assets, you should look at it as you’re being an advocate of the seller’s and you’re helping them sell their business.”

Integrate the merger

Once a deal is made to move forward with the merger and you’ve gone through and agreed on terms and produced a letter of intent, then you need to go through due diligence.

“We’re really trying to understand more and more about the company and they’re trying to understand more and more about us,” Wendle says.

“The integration actually starts in the due diligence process. You want them to learn as much about you as you learn about them. You want them to learn about what your benefits program is. The key for owners selling is how are my employees that I hired going to be treated.”

EQM gets its HR department involved to look through the merging company’s benefits program and matches it up with theirs.

“Typically ours is going to be overall in a better position, so the new employees are going to benefit from it,” he says. “Then it’s integrating the financial packages or the business systems. How do we communicate financially? Rarely do the new companies coming in have the same types of systems that we have.

“From there, we really try not to make changes. Any changes we have to make we want them to go slowly. What’s working obviously has been working and the last thing you want to do is keep it from working. You want the leaders and the employees to keep on doing what they’re doing.”

In a merger process, there are two sides: a legal side and an emotional side. The due diligence process focuses primarily on the emotional side.

“The legal side is pretty cut and dry,” Wendle says. “The emotional side is more cultural. What kind of culture are they coming into and how comfortable do they feel with it? I start explaining that once I first meet a potential acquisition candidate.

“For someone who’s going to sell their business, it’s a very emotional process and they have to be very comfortable with it. You have to pay attention to how you get the cultures to integrate and whether they feel they still have autonomy.

“That’s the one thing about running your own business that’s good, but now they’re part of a much larger organization and they have more potential for growth.”

Making this transition successful relies on strong communication between the two companies, specifically among leadership.

“You cannot communicate enough,” he says. “We have town-hall meetings. We have staff meetings every week. Each business unit has staff meetings every week and you’re just trying to keep the lines of communication open. It really comes down to employee engagement and whether the employees feel that they have a say and whether they’re being listened to.”

While cultural alignment is a big part of making a merger successful, there still has to be a good fit in other aspects of the business.

“Cultural alignment isn’t necessarily more important, but it is as important,” he says. “There still has to be intrinsic value and what the company brings to the table as far as net income. There has to be value-added services that customers want to buy. What I find is if employees have the right attitude and they’re happy, then they have a pretty good customer base. They walk hand in hand.

“If the employees are not happy, customers are going to hear about it because there are close relationships between the employees and the clients. And vice versa, if our client’s employees aren’t happy, we hear about it.”

EQM’s strategy is to leave the incoming company alone to continue the work it was already doing. You have to make a judgment call whether or not to make any changes to a company you’ve acquired.

“There are two aspects of it,” Wendle says. “When we look at a company we look at the brand. Most the time the companies that we acquire have a good brand and we want them to keep that name and that brand and operate it as a subsidiary, unless it is parallel to one of our business units and our brand may be stronger than theirs.”

Develop a strategy

The key to being successful at acquisitions and mergers and with the growth of your business in general is to have a strategy with goals that you hope to achieve.

“I think the business changes so fast that you can have a five-year plan, but to really put tactics behind that strategy is very difficult to do because it changes so fast,” Wendle says. “It’s been my experience that if you look in two to three years, you’re going to have a better chance of meeting your goals and putting more realistic goals out there. We’re in a different climate now than we were in four or five years ago. We’ve all managed downturns and now we’re trying to grow.”

Wendle is looking to keep EQM doing more of the same it did with Beacon Energy Corp. He is focusing on the private side more so than the public side.

“My belief system is that private industry is not investing in itself right now so there is a pent-up demand for capital improvement and industries are hoarding cash,” he says. “And I don’t think it’s going to matter who the president is, companies will start spending money on capital and start investing in themselves again. The first companies that private owners spend money on are environmental and engineering companies. We are going to be positioned to be there when companies start spending on themselves again.”

One of the biggest aspects of laying out any kind of growth strategy is the need to constantly change to stay ahead of competition.

“Presidents and CEOs have to constantly be looking to reinvent themselves and reinvent their companies,” Wendle says. “I think that the business moves so fast in the world we are in that you cannot restrict yourself geographically and you really have to reinvent yourself every three years.”

Part of that reinvention is attracting entrepreneurial people to your business to keep ideas fresh.

“To really look at new services, one of the keys is hiring entrepreneurial leaders in your company and creating a culture and environment that allows people to think freely and say their mind and be able to put strategies together without being frowned upon,” he says. “You have to create that kind of culture of growth … and have the right kind of people to create that culture.” <<

How to Reach: EQM Technologies & Energy Inc.,
(800) 229-7495 or www.eqm.com

Takeaways

–          Acquire companies that will allow you to grow.

–          Integrate the acquisition by developing a relationship.

–          Develop a growth strategy with two- and three-year goals.

The Wendle File

James Wendle

President and COO

EQM Technologies & Energy Inc.

Born: Alton, Ill.

Education: AAS degree in architectural engineering and a B.S. degree in construction management from Southern Illinois University.

What was your first job and what did you learn from that experience?

When I was 10, I swept hair in a barber shop and I also had a paper route. I was raised by parents who were born in the Depression. I was taught that if you worked hard everything would be fine. So I always had a job and I always had money. It’s about the work ethic. I knew I could get a job if I could prove I could work hard. People would want to hire me.

Who is somebody you look up to in leadership?

Abraham Lincoln. The man failed so many times. He had no way of becoming president of this country because of all his failures, but he did and he was the right president at the right time. Another man that had so much against him at the time was Winston Churchill.

What is the best advice that someone has given you?

I was taught by the CEO of the first professional job that I had to be friendly and be professional, but don’t be abused. Don’t let anyone treat you poorly. Stand up to it no matter what.

If you could do something dangerous one time without consequence, what would want to do?

I would ride my Harley through the Alps.

How Brian Schultz and Studio Movie Grill created a new market niche

Brian Schultz, CEO, Studio Movie Grill

Brian Schultz has learned some important lessons while leading Studio Movie Grill on its impressive growth path since he founded the Dallas-based company in 1993. Two of those lessons stand out among the others. The first is that if you want to change an entrenched business practice in your market, expect stiff resistance and you’ll need to be extremely tough and persistent in order to see the change through.

The second thing Studio Movie Grill’s CEO has learned is the meaning behind the saying, “Be careful what you ask for because you may get it,” coupled with this corollary, “And then you may find yourself with so much new business pouring in your doors that you don’t know which way to turn.”

“The first big challenge we faced was the need to get first-run movies so we could be considered a real movie theater,” Schultz says. “In our early years, we couldn’t get first-run features. Basically, all of the movie-theater-restaurants in those early days were like us — in older theaters that had one screen, maybe two. And therefore, we were only able to get sub-run movies — movies that had reached the end of their first run and would soon be released on video.”

Then Studio Movie Grill began building its second location in Addison, Texas. It was a larger-capacity theater with five screens in an upscale area. Schultz recognized that SMG might run into difficulty obtaining enough sub-run movies to fill those screens.

“We were looking at film distribution and the number of competitors that were in the area, and we were thinking, ‘Oh, man — we’re not going to be able to get enough movies,’” he says.

So a key challenge presented itself to Schultz: For SMG to realize its long-term growth goals, it would have to persuade the Hollywood studios to let it show first-run features on its screens.

“I saw that as the next evolution for movie-theater-restaurants,” he says. “As a moviegoer, you should be able to have the option to see whatever movie you want to see in this environment. So we began to think about what arguments we could make to break through this established mindset.”

Here is how Schultz got his 2,400 employees in focus for SMG to earn annual revenue of $70 million.

Insist, persist, repeat

Schultz began making rounds asking the studios to let Studio Movie Grill screen first-run movies at its theaters. The response was discouraging.

“I started contacting the people with their hands on the reins to tell them what we wanted to do,” he says. “The reaction was negative — strongly negative. I got doors slammed on me, one after another, for a lot of reasons: because we were too small, because the studios had their traditional system down and they weren’t willing to change, because they wanted to hold on to the way things were.

“But one thing I’ve learned about being an entrepreneur is that, a lot of times, it’s not about being the smartest guy in the room or anything like that — it’s about being able to get back up when you get kicked down.”

So Schultz kept calling and knocking. And calling. And knocking.

“I told myself that I was just going to keep on calling every studio distribution head for as many days as it took to get this thing done,” he says. “So that’s what I did. I would find their home phone number, their home fax machine, all of these different ways to contact them. I’d find out where they were going to be and I would show up at the place. I’d try to call their assistant. I’d try every way I could think of to get through to them. But I didn’t have any success.”

Finally, a gentleman who worked for Disney threw Schultz a bone — a meager one, or so the bone-thrower thought.

“This guy was the regional head for Disney in Dallas,” Schultz says. “I had been working on him for months. He kept saying no. I had annoyed him so much. Finally he said, ‘OK.’ I said, ‘OK what?’ He said, ‘Here’s the deal: I’m going to give you one movie to try. If it does well, we’ll talk. If not, you have to agree to never call me again.’ Then he basically picked the worst movie he could think of, just to get me to shut up.

“There was this no-name actor and this small movie that was supposed to do absolutely horribly. There was no marketing behind it, nothing. And that small-named actor was Adam Sandler, and the movie was ‘The Waterboy.’ We ended up being the top gross in all of Dallas with this movie that was supposed to be a dog. It just happened to fit perfectly with the type of customer that likes to come to a movie grill.

“By the time I got to work the following Monday, I had messages from all the other studios asking us if we would run their first-run movies.”

A key barrier had been knocked down. The tiny movie-theater-restaurant sector now had a critical tool in its hands that would enable it to compete with “real” movie theaters and, consequently, to grow and thrive.

“We were actually the first movie-theater-restaurant in the world to get first-run products,” Schultz says. “It changed the entire industry. It created this niche, which has really become the future of movie going.”

Prepare for the flood

The scene now turned to the “Be careful what you ask for” part of Studio Movie Grill’s story. Practically overnight, SMG was inundated with new business. People loved the idea of going to theater-restaurants where they could watch big-screen Hollywood movies while they were still hot, before their pop-culture glow had begun to fade.

But feeding those big crowds and serving all of the new customers well would not be easy. For Studio Movie Grill, it was time to scale up, and fast.

“We went from marginal attendance to huge attendance very quickly,” Schultz said. “So we started to run into problems. Instead of figuring out how to serve 150 meals in an hour when people came in, it was more like how do you serve 800 meals in an hour? That really got us into some operational challenges.”

To make matters even tougher, at the same time SMG was scaling up the quantity of food it had to serve to the bigger crowds, the company had ambitions to increase the overall quality of its offerings as well.

“The basis of this concept was originally more along the lines of, you know, beer and frozen foods — kind of like cheap bar food,” Schultz says. “But I never envisioned it like that. I thought it was important that we had to be able to compete with any casual dining restaurant. So we had to serve all fresh made-to-order food that’s high quality, presented well and tastes good.”

A key move Schultz made at that time was to hook up with a new mentor: Norman Brinker, founder of Brinker International, Steak & Ale and Chili’s.

“I went to a leadership event that [Brinker] hosted, and we hit it off,” Schultz says. “Eventually, it turned into a monthly meeting, with accountability, and it really informed our organization and helped us immeasurably. So if I were going to give advice, I would say that having a great mentor has always been one of the most important keys to our success.”

Optimizing its kitchens was one of the key initiatives that SMG undertook in order to scale up its food service operation to meet the huge increase in demand for tickets to its movies.

“It goes all the way down to the type of equipment you use and simply doing math equations,” Schultz says. “For example, we need to serve this many pounds of french fries, and the output of this particular fryer is X. So will that work, and how many of these do we need?

“How can you reduce the number of steps that it takes for an employee to do their work? Can we place all the things that they need to be successful in a small space to minimize the amount of traffic in the kitchen?”

Another key tool SMG began using was dining trend analyses.

“We saw that we needed to be able to follow the trends of what people are eating, how they’re eating it and when they’re eating it, so that we could be adequately prepared with the right quantity and quality of food and beverages,” Schultz says. “We keep track of what every customer eats and drinks on a per-movie basis. This enables us to predict what people are going to eat in the future. It’s a forecasting model, and it’s been a key basis for our success.”

Mobilize the team

Asked what other recommendations he would offer CEOs faced with the challenge of having to scale up operations quickly to meet a sudden increase in demand, Schultz says soliciting ideas from everyone who works for the company is crucial, as well as making sure everyone is on the same page in order to move forward as a team.

“Ask your line employees who are doing the work what success looks like to them, and use those perspectives to get everyone in alignment,” he says. “It seems like that has been a pretty common theme when we’ve been successful: We’re all aligned on the same page as far as what success looks like.

“What you need to scale up your business is to figure out how you can get your organization in alignment so everyone understands what their success means and what their contribution is supposed to be.”

Another point Schultz recommends is keeping an eye on cash flow.

“Especially when you’re scaling up, it’s important to realize that revenue doesn’t mean cash flow,” he says. “That’s a good lesson. If you’re going through a growth phase and you’re raising revenue but you’re ending up with less [cash] at the end of the day, that’s not a good trade.

“I think some CEOs get too enamored with the top line, and they forget that there are all these details and complexity when you get to a certain size. It becomes a little different. You can no longer touch everything. So cash flow becomes more important. You’ve got to watch it closely.”

Lastly, Schultz suggests that knowing how to uncover the important questions that need to be asked and then figuring out where to go for answers are more important skills than simply trying to answer all the questions yourself.

“The advice I would give is it’s OK not to know the answer,” he says. “I would have saved myself a lot of missteps and problems if I didn’t feel compelled to be a knower versus a learner. If you don’t know how to do something as it relates to, say, financing — or accounting or purchasing or you name it — a lot of times when you’re in the leadership role you feel compelled to respond, to answer — to, you know, provide leadership.

“But hopefully you can get to a point where you realize it’s OK to say, ‘I don’t know the answer to that — let’s figure out how to find the answer.’ And that can become a breakout moment for the CEO and the company.” <<

How to reach: Studio Movie Grill, (972) 388-7888 or www.studiomoviegrill.com

 

THE SCHULTZ FILE

Name: Brian Schultz

Title: CEO

Company: Studio Movie Grill

Born: Chicago

Education: Bachelor’s degree in finance, California State University, Chico

What lessons about business leadership did you learn during your time in school?

I was the vice president of finance for the student body. We owned and operated all the businesses on campus: food service, event management, catering, copy service, the bookstore. So I basically ran a $15 million corporation all through college. It was unbelievable training and experience.

What was your first job, and what did you learn from it?

It was car detailing. I started doing it when I was 10 years old, and I basically ran my own business. I learned that speaking with the customer and giving them what they want and doing it with quality always yielded better returns, appreciation and repeat business.

Do you have a business philosophy that you use to guide you?

Yes. It’s based on the principles of conscious capitalism. It’s the idea of doing good in the world through business. Our goal is to provide value for all of our stakeholders, which include our customers, our employees, our investors, our vendors, and our local neighborhoods. If we make all our decisions based on that philosophy, we believe it creates superior returns, an energized workforce, and community attachments.

What trait do you think is the most important one for an executive to have in order to be a successful leader?

Persistence — the ability to get back up when they get knocked down.

How do you define success in business?

Our success is based on making the world a better place one movie at a time, creating great experiences for families and memories for individuals. We’re pretty specific on how we measure that, rather than just measuring success on an income statement or a balance sheet. We think the two are related and that we actually get superior returns by doing the right thing.

What’s the best advice anyone ever gave you?

The thing I remember hearing from a young age is the harder you work, the luckier you get. That’s from my father.

How Warren Zinn transformed Warren Henry Automotive Group into a process-driven business

Warren Henry Zinn, president and CEO, Warren Henry Automotive Group

As a 36-year veteran of the auto industry, Warren Zinn has spent most of his life working around cars. From the time he learned to talk, he could rattle off the different brands: Mercedes, Jaguar and Lamborghini. And at age 21, he turned that passion into a lifelong career.

But Zinn also knows that passion isn’t everything. As the president and CEO of Warren Henry Automotive Group, he readily admits that his nine dealerships and more than 300 employees would not be in business today if the company hadn’t taken some tough steps to adapt to consumer needs.

“We like to think we’re in the front of the pack, but every day, we have to do more to stay in front of the pack,” he says. “We’re really only as strong as our dumbest competitor.”

In late 2007, Zinn began to see signs that the business was falling behind. People weren’t focused on results, and while there were a lot of reasons, the one that stood out to Zinn was the company’s loose structure and lack of process. Without these things, it was becoming harder for employees to deliver the kind of service consistency and responsiveness that customers now expected.

“It was the manner in which things were becoming so automated, computerized, the process that needed to take place because the way the business was changing,” Zinn says. “It was all becoming very electronic. So it was just a big change for us — the Internet, the world was changing.”

It was then that Zinn decided his company needed to change, too.

Identify obstacles

Zinn knew that it would take a big transformation to bring structure to the company’s operations. The problem was that the prevailing mentality at the auto dealerships was hardly one that embraced change. At the time, the company’s average employee tenure was about 16 years, and many of the more experienced employees were used to certain ways of doing things.

While having long-term people was great to build customer service relationships, it presented a challenge when it came to change management.

“Part of our success, which was also part of the problem, was familiar faces,” Zinn says.

Before making any changes, Zinn really needed to convince long-term employees to accept a new way of doing things.

“We needed to follow a process, and everybody had to be going in the same direction to get there,” Zinn says. “Nobody could take a shortcut to get to where we needed to go.”

So he and the company’s upper management held meetings with employees to discuss the process implementation, the reasons for doing it and how it would affect different areas of the business. The goal was to share the new direction but also help people overcome their reluctance to change.

After holding those meetings, Zinn and his leadership team were disappointed to find that only about one-third of the people seemed interested in the new direction.

“Very few people honestly were excited about it,” Zinn says.

“We had a lot of people here in different positions for a long stretch of time that had shown good initiative, knew what their job was and did it well. But at some point in time, when you are no longer able to have the people who have the same type of initiative — you really can’t teach initiative.”

As a leader, you need to communicate your reasons for taking your company in a certain direction. But once you do, you also must make it clear that the company is moving forward with people who embrace this direction.

So Zinn was also very upfront with employees about the fact that the company would only be moving forward with people who could get on board with the new processes.

“I had always known we needed to do this, but I really had to put my foot down and get it done,” he says.

“I had to convince people, in the best way that I could, that this is the way the company is going to go, and you’ve got to come along with us. And if you can’t make the process work — if it just doesn’t work for you — we’re going to have to part company, and that while it’s been a great relationship and we’ve worked together for a long time, this is the way that we have to go about doing things.”

Bring in new blood

After parting ways with a number of employees, the company was left to fill the empty positions before moving forward with the process implementation. But Zinn was hesitant to hire more experienced, automotive professionals, having seen the reluctance of his own long-term employees to accept a new way of doing things.

“I knew that if I hired somebody with experience, I could get the same individual that tells me everything I want to hear, but when it’s all said and done it’s, ‘Look, I’ve been doing this for 15 years. I know what I’m doing,’” Zinn says. “And that was dangerous.”

Instead, he decided to take the talent search outside the automotive industry.

“We found that in order for us to do what we needed to do and to initiate the change that we needed to put in place here, it was easiest for us and most effective for us with people who came from outside the industry, rather than people who come from the industry.”

So Zinn and his team began recruiting individuals with no automotive experience at all. Largely relying on referrals, they sought out people who were articulate and expressed themselves well — real estate agents, stockbrokers, lawyers and marketers — to be trained in a variety of industry positions.

Zinn says he looked for the kind of people who inspired confidence, people who “if they looked at you and said, ‘I can take care of this,’ you would believe them.”

As the new team members came on board, he explained to them what the company was trying to accomplish with its process-driven operations, how it would go about doing it and how it would help and support them as they entered into the unfamiliar business.

What he found is that that the inexperienced people were not only much more eager to embrace the changes than long-term employees, but they also had a better attitude in making the new processes successful.

“It’s very, very easy to get people who haven’t done this before to learn what we expect,” he says.

“It’s easy for them to absorb. It’s easy for them to do, and they embrace it. Then they become very effective in what they do.”

Create a ‘focus’ group

Because the company historically lacked structure in its operations, Zinn and his leadership team felt they needed to make the new processes simple if employees were going to execute them consistently and willingly. They decided that it would be best to implement them one department at a time, beginning with parts and services.

The parts and services department focuses on two areas in particular: greeting and inspecting. So after putting together the “best and simplest” guidelines for the new processes, Zinn and the department leadership spent time explaining the benefits to employees. They described how new processes would make customer interactions more efficient, for example, saving time by creating electronic reports on vehicles being serviced or allowing customers to make appointments electronically, so people wouldn’t have to constantly man the phones.

“I looked at what appeared to be the easiest to do, the easiest to be understood, the way that if someone who had been doing this for a long time — if they wanted to — could change to be able to do it,” he says.

Zinn especially wanted long-term employees to understand how consistent, automated processes would make the business more efficient in its customer service.

“It gives more structure,” Zinn says. “Everybody should be in the same place as to how we go about greeting a customer, how we go about selling cars, how we go about servicing cars.”

Recognizing that training would also be important in achieving process consistency, Zinn also gave employees the opportunity to shadow other experienced colleagues.

By shadowing team members in three different areas, they could master the different processes, one at a time, and then review them once more with the help of an experienced supervisor before trying them on their own. The company continues to use this “1-2-3” training process.

“So all that really changed is that there’s a manner and order in which we go about getting our job done,” he says. “We have a consistency in which, if you go to different people, they may have a little bit of a different style, but the steps and the processes it takes to get there are the same.”

Once the company implemented the changes in the parts and service business, Zinn moved on to new and used car sales department. By focusing on one department at a time, he and his top leaders were able to be much more hands-on as they went through the implementation. It also allowed them to take a lessons-learned approach as they faced similar issues or employee concerns on a larger scale.

“The key is to take care of [the problem] while making sure that it doesn’t happen again,” he says. “That’s what process is all about.

Stick with it

As luck would have it, soon after the new processes were in place, the economic recession sent the auto industry into a tailspin, and few businesses were immune. Despite the financial challenges, Zinn and his top leaders have continued to work hard, keeping employees focused on executing the new processes.

“Those were some very, very difficult times — some of the most difficult times in this industry ever,” Zinn says.

“You just have to keep your head down and make certain that it happens — because it works. I’d say if we didn’t embrace this, I don’t know if we’d still be in business today. I don’t think so. We couldn’t continue to do things without having established firm processes in place.”

One built-in benefit of the process automation was that it gave the company the ability to measure and monitor business metrics in areas such as sales, customer satisfaction and customer retention.

Zinn says that giving everyone in the company access to these results, including individuals, department heads and upper management, has helped motivate employees by holding them accountable to continuous improvement.

“We hold ourselves and each other responsible,” he says.

“If we get a great report, I shoot off an email to the individual, the department head or the whole department and tell them what a great job that they’re doing or tell them that we need to pick it up.”

Today, the company is much more efficient and spends significantly less time “putting out fires” thanks to the new processes, Zinn says. At the same time, he believes that it’s the focus on results, “not reasons,” that will keep the company innovative and competitive in the future.

In fact, if you ask Zinn what is the biggest difference between his company today and five years ago, he won’t hesitate to tell you that it’s accountability.

“We have to feel like we’re looking for constant improvement,” he says. “We have to feel like we’re all on the same team. This is the direction that we’re going to go, and you follow the captain or you don’t.”

And that’s one thing you can’t teach. <<

 

How to reach: Warren Henry Automotive Group, (888) 856-3113 or www.warrenhenryauto.com

Takeaways

  • Get the right people on board.
  • Hire people who can support change.
  • Keep the focus on improvement.

 

The Zinn File

Warren Henry Zinn
President and CEO
Warren Henry Automotive Group

Born: New York City, but moved to Florida when 6 months old

Education: Northwood University in Michigan

Role model for success: I admire Alan Mulally, CEO of Ford Motor Co. Mulally saw what was coming, put a plan together and stuck with. He saved the company without taking help from the government unlike other U.S. auto manufacturers, and he has been extremely successful since.

One part of his daily routine that he wouldn’t change: I wouldn’t change my communications with my department heads. To be a successful CEO, you must stay right in the thick of it — be involved with your staff, always have an open mind, and listen to what everyone has to say.

Why do people like working for you?

I’m available to people. I sit in my office with my door open. I move around from dealership to dealership on different days, and of course, I make people feel like they are part of something very important. They’re not on the outside. They’re on the inside.

What do you like most about your industry?

It’s something that I’ve always liked. I like seeing the new cars that continually come out. I like seeing people get excited when they get a car, happy about having their car, happy about the experience that they’ve had with their car. And I’m happiest when they come back and they get another car.

 

How Don Knauss ties corporate responsibility to financial success at The Clorox Co.

Don Knauss, chairman and CEO, The Clorox Co.

Don Knauss has built a career transforming new brands into household names, from debuting Simply Orange at the Minute Maid Co., Coca-Cola Zero as president of Coca-Cola North America or launching Green Works — one of the most successful new products in consumer packaged goods in the last decade — as chairman and CEO of The Clorox Co.

While the road hasn’t always been easy, Knauss says there’s one characteristic that will never change when it comes to what makes brands successful: People trust them. “At the end of the day, a brand is a promise of performance,” says Knauss, who joined Clorox in 2006. “It really is about creating trust with the consumer.”

Advances in technology have only magnified the role trust plays in consumer decision-making, Knauss says. Before people even set foot in a store to buy a product, they can research user reviews, look up product information and find out what other people think about the best practices of the brand as well as the company that makes it.

Coming on as the new CEO, Knauss quickly realized that Clorox, a company with products in more than 100 countries, needed to meet consumers’ need for trust and transparency if it was going to continue to get their vote as customers.

Here’s how Knauss created a corporate responsibility strategy at Clorox that’s not just good for consumers; it’s also good for business.

Make it a priority

One of the most important steps in the success of Clorox’s corporate responsibility initiatives dates back to 2006, when Knauss and his executive leadership team first formalized the company’s commitment to corporate responsibility (CR).

What began with a meeting about Clorox’s centennial business strategy — the company turns 100 in 2013 — quickly turned into a call to action as the group examined four “megatrends” going on in the business world, including health and wellness, sustainability, multicultural shifts and, of course, affordability. As Knauss and his team dove into the causes behind each trend, they kept coming back to the issue of corporate responsibility.

“Consumers were not only evaluating brands on strictly the performance of that brand, but they were also evaluating it on who was providing the brand to them,” Knauss says. “Was it a company they trusted? Was it a company that had the same core values that they espoused? And was it somebody that they wanted to do business with?”

Over the years, Clorox has grown from its trademark bleach and cleaning products to manufacturing and selling everything from salad dressing to water filters, cat litter and trash bags. And like many other brand-driven enterprises, it’s spent years focusing on its commitment to build trust with its customers.

But in that meeting, Knauss and his team realized that it was time to take the extra step. They needed to make the company’s commitment to corporate responsibility a formal strategy with clear metrics and goals.

“It was that insight to seeing the connection consumers were making between brands and companies that made us even drive it harder,” Knauss says.

“As an offshoot of health and wellness and sustainability, it really got us doubling down on our corporate responsibility of what do we want to stand for?”

They narrowed Clorox’s focus to five pillars of corporate responsibility: performance, planet, people, products and purpose. And they went about setting goals for each pillar. Some of these included making sustainability improvements to 25 percent of the product portfolio by 2013, reducing waste and moving to more sustainable product materials.

They also structured the goals in phases — annual goals as well as a three-year plan — allowing the leaders to adapt the strategy over time as consumer or economic trends play out. As you build a foundation for CR in your organization, the most important thing to consider is whether the goals you set are realistic, so that people internally and externally will take them seriously, Knauss says.

“If you set unrealistic goals, you can create some pretty bad behavior throughout the organization,” he says.

“So we thought it was a combination of getting the strategy right, getting the strategy focused on trends, sustainability being one of those trends, and then linking that to how do we do a better job from a corporate responsibility standpoint against the planet, against our people, against the purpose of the company.”

Build alignment

Creating a formal CR strategy gave Clorox the foundation it needed to drive the commitment throughout the organization. From there, Knauss says it was up to the company’s leadership to build alignment on the strategy, or “tone at the top.”

“It starts with the top,” he says. “So a CEO or COO really has to drive this thing if you’re going to get traction with the rest of the company, and then get traction with outside constituents.

“You have to keep people informed. So it’s not just me talking to the executive committee. It’s me sending out voice mails, emails, connecting with the rest of the organization on the kind of progress we’re making.”

As a leader, Knauss says he utilizes a piece of business advice he received from Don Keough, the former president of the Coca-Cola Co., when he’s trying to get buy-in from stakeholders.

“When I took over as president of Coca-Cola North America, I asked him, ‘Don, what kind of advice would you give me?’” Knauss says. “And he said, ‘Don’t act like a big shot.’

“One of the things I’ve learned is that as you move up in an organization, you’re given more power. The less you use that power, the more authority you’re given by people — in the sense that power is the ability to compel people to do things. Authority is really more about persuading people to do things.”

To get buy-in from shareholders about the CR strategy, Knauss simply reminded them how the integrity of the company that produces a brand translates into a consumer’s buying decisions, and therefore, profitability.

“Everyone understands the evolution of the consumer over time and how the consumer isn’t just evaluating the brand but the company that provides that brand — and is it somebody they really want to do business with,” Knauss says. “I think people intellectually get that. They get that intuitively. It’s just reminding them how important it is that our values and the focus on our corporate responsibility align with the values of our consumers.

“It was easy to make the leap from building trust with consumers — anchored in the performance of the brands — to building trust with investors by anchoring the trust in the performance of the stock and the company’s ability to deliver shareholder returns.”

Increase engagement

Having a strong CR strategy means nothing if you don’t accomplish any of the goals you set out to achieve. So to keep your organization accountable for progress, you need to find ways to keep them engaged in the goals and focused on their success.

One way to do this is by tying those goals to monetary incentives.

Because Knauss knew he would rely heavily on his executive committee to communicate and lead progress on CR initiatives, he decided to pay the company’s senior executives part of their annual compensation based on Clorox’s ability to deliver against its environment goals, such as for greenhouse gas emissions, wastewater reduction, energy use and solid waste.

“If you really want to get traction, you not only have to measure it, you have to pay people on it,” Knauss says. “So it’s first, getting the focus right, including defining the metrics that you want to measure progress with, second, getting alignment throughout the organization that these are the right pillars and the right metrics, and then lastly, the discipline — putting the routines in place to monitor the progress against those on a quarterly basis, at least.”

In addition, people throughout the organization need to understand how important CR programs are to the consumers you sell your brands to, Knauss says.

So to help people see this link between CR and company performance, the organization released its first official corporate responsibility report in 2010. It also highlighted its CR strategy throughout the 2011 annual report, titled “Think Outside the Bottle.” In both instances, Clorox emphasized how CR ties into the company’s vision and mission for employees and consumers.

Building this kind of high-level engagement with employees is important short-term because it drives progress on your goals and long-term because it also helps you attract and retain the best talent, Knauss says.

“That’s what it’s all about, is the best talent,” he says. “So when you look at what we’re trying to do from a business standpoint and not what we’re trying to do from a corporate responsibility standpoint, all of that together really drives a high level of engagement with our employees. At the end of the day, that’s how you win.”

Overshare

The No. 1 way to stay accountable to your CR progress is probably the most obvious. Because CR also reflects corporate values, you need to also link the goals and programs back to the wants and needs of consumers.

With the increasing availability of information, many companies have, at times,  suffered financially because of their lack of transparency in corporate practices — think Wal-Mart, British Petroleum and Nike.

Demonstrating transparency with consumers is increasingly important for companies who want to prove that their commitment to the customer is genuine.

“It’s so fundamentally different in terms of the consumer’s access to information — the ability to really say, ‘Look, I want to do business with people whose values align with my own,’” Knauss says.

“You’re really putting your brands at risk if those brands and the company don’t connect and communicate this sense of value.”

Instead of going on the defense, Clorox has used the transparency of digital and social media as a way to increase the amount of information it shares with its consumers.

For example, when Knauss and his team saw that consumers across segments were showing more concern about what kind of ingredients were in products, and especially cleaning products, they implemented an initiative to disclose all of the preservatives, dyes and fragrance ingredients in the company’s U.S. and Canadian cleaning, disinfecting and laundry products.

Although the company was the first in its industry to do so, it eventually became a leader in ingredient disclosure as other businesses followed suit.

“A consumer can go on our website, pull up any one of our brands, and it will give full disclosure of whatever ingredients are in there,” Knauss says. “So it’s an example of the transparency that we’re not only trying to bring to the financial side … but to the consumer side of the company by letting consumers know exactly what they’re buying.”

Another example is the website for its brand Green Works, which offers users tips on how to create a greener lifestyle and features a sustainability blog called “Green Mommy in a Plastic World,” with posts such as “Seven things to do with your kids’ artwork.”

Because the ability to connect and get feedback is now so immediate, most companies can only benefit from policies such as increased transparency, communication and disclosure, Knauss says.

“There are just so many different ways of connecting, so you’ve got to be where the consumer is,” Knauss says. “So I think everybody intuitively gets that. But we’ve certainly seen a big payout.”

In addition, many initiatives that have helped Clorox reduce its environmental footprint, such as using greener packaging, have also reduced cost. Today, all of its segments have bounced back from recession lows, bringing the company to $5.2 billion sales last year. And the fact that 90 percent of Clorox brands are No. 1 or No. 2 in the spaces that they compete in is just further proof that corporate responsibility and profitability can — and do — go hand in hand.

“If you don’t have a solid strategy around corporate responsibility and articulate that strategy to people in a compelling way, you’re missing half of the demand creation equation,” Knauss says. <<

 

How to reach: The Clorox Co., (510) 271-7000 or www.thecloroxcompany.com

Takeaways

  • Create a formal commitment.
  • Get key groups on board.
  • Find ways to raise engagement.

 

The Knauss File

Don Knauss
Chairman and CEO
The Clorox Co.

Born: Highland, Ind.

Education:  Indiana University

First job: Officer in the United States Marine Corps

What is one part of your daily routine that you wouldn’t change?
Senior corporate jobs are very demanding, not only mentally but physically, particularly given the extensive travel needed. I work out six to seven days a week. That physical exercise is a great release, and a high level of fitness is critical to being able to execute my job with excellence. I highly recommend a vigorous exercise program for everyone, but especially for those in high-pressure jobs.

If you could have dinner with one person you’ve never met, who would it be and why?
Margaret Thatcher. She was an incredibly effective prime minister during a very tumultuous time. I would like to understand her approach to leadership — the traits she valued the most in people for them to be truly effective and drive real progress whatever their role in life.

What is your favorite part of your job?
The aspect of my job I most enjoy is helping to define and sustain the values of our culture. The CEO must set a ‘tone at the top’ to win in the marketplace and, importantly, to win in the right way. It is extremely important to define the traits you expect from your leadership team and your entire company. I believe a values-based culture anchored in integrity, optimism, compassion, humility and curiosity will attract and keep the best people engaged.

 

How Richard Reif reinforces culture and identity at Doylestown Hospital

Richard Reif

Richard Reif, president and CEO, Doylestown Hospital

Richard Reif is well-versed on the subject of health care reform — and he should be. He had a 13-year head start on the government.

In 1997, more than a decade before President Barack Obama signed the Patient Protection and Affordable Care Act into law, Reif worked with the leadership team at Doylestown Hospital to build a strategic plan around a series of building blocks designed to promote many of the same areas of emphasis now outlined in the federal act.

Reif, the hospital’s longtime president and CEO who will retire in December, wanted to build an organization in which health care providers believe they have a duty to preserve health as much as they have an obligation to cure illness.

He wanted an organization that fostered alignment among all staff members who came in contact with a given patient — doctors, nurses and support staff all united with a common goal of providing a high-quality and seamless patient experience.

“We had a series of building blocks that I believed would be paramount to our long-term success,” Reif says. “I testified before Congress that year on the issue of how we needed to transform health care. It was the origin of a lot of things that were proposed in the (Patient Protection and Affordable Care Act). We have used those fundamental building blocks to help drive who we are, always coming back to what benefits the patient and the patient’s family.”

But building that kind of organization wasn’t as simple as posting a mission statement over the entrance door. It required Reif and his team to define what Doylestown Hospital stood for as both a business and a health care entity and what it meant to work for the hospital. He then had to focus 2,000 associates and 900 volunteers on those core beliefs, keeping the message in front of existing staff and introducing the message to new staff.

In short, it took consistent and tireless communication.

Know who you are

Every business has an identity. Defining that identity, however, can be a difficult and ongoing process. Organizations, like the people who comprise them, don’t easily fit into prefabricated molds.

But defining what you are as an organization is essential to developing your mission and core values.

At Doylestown Hospital, Reif draws heavily on the organization’s history to chart a course for the future. The Village Improvement Association, a local women’s group that still owns the hospital, founded the hospital in 1923. The hospital was founded as a product of one of the association’s missions — to promote health and wellness in the Doylestown community.

With that as a guiding beacon, Reif put his effort into preserving and improving the hospital as a resource for health and wellness in the immediate area, closely embracing that identity.

“We don’t do a lot of teaching and we don’t do a lot of research,” Reif says. “We do a bit of both, but that isn’t our primary emphasis. We want to stay focused on our patients and serving them to the best of our ability.”

Often, companies and organizations try to define themselves by the business they conduct instead of the people they serve. Your list of clients might be impressive, your product might be cutting-edge and your services might have helped you carve out a lucrative niche.

But if you can’t identify the positive impact your company makes on the people you ultimately serve, you’re not doing a good job of identifying your company’s reason for being, which in turn, could have a damaging effect on your ability to promote your culture and motivate your employees to do their best work.

“Whether I’m relating the concept to people in this area or outside this area, you tend to find a universal problem in that people can have a tendency to lose where their focus is meant to be,” Reif says.

“Sometimes, you worry more about the business scale of what you’re doing as opposed to what and who you are ultimately impacting. That’s especially important in our field due to the nature of our work. Hospitals and schools are two great examples of organizations in which you should know what you should be doing.”

Reif learned the value of developing and maintaining an organizational identity early in his career, when he worked at a pair of Quaker hospitals.

“I came to learn a lot about myself as well, as well as what you need to do to emphasize the importance and value of the people you serve,” he says. “I believe my job is to create an environment where those people can achieve their sense of inspiration.”

To build an organizational identity around developing relationships and serving your customers, you need to give your employees — especially the employees who directly face your customers — the tools and resources necessary to foster those relationships and maintain them over the long haul.

“One of the things we do and communicate is the whole issue of our values and our responsiveness and giving the people the tools they need to be successful,” Reif says. “It can be continuing education, it can be the right equipment, it can be the right work environment. It can be that you try to cultivate a sense of respect between departments or a sense of functional respect between doctors and associates. But you’re ultimately trying to focus on a series of things that are all related back to the mission and the core values.”

Live the culture

Reif couldn’t build an organization that promotes alignment and accountability without a strong culture to serve as its backbone. Building and maintaining the culture was an essential first step.

A company’s culture lives and breathes through the actions of its employees. But you don’t get the desired actions without employees who have a firm belief in the mission and values of the organization. It needs to start with the hiring process, when you identify the job candidates who you think have the personality and individual values needed to mesh with your organizational values.

But if you don’t seed and cultivate your culture within those people, all you’ll ever have is raw materials and a workforce full of unrealized potential.

That’s why Reif gets involved in the training of new Doylestown Hospital employees from their first week on the job.

“I am in my 24th year now in this position, and I do virtually every new associate orientation,” Reif says. “We start with the premise that we are all aimed in the same direction, and I emphasize our sense of responsibility to our mission and our values. We reinforce that in any way we possibly can, no matter what topic. Where we are, how people are evaluated, how we make decisions — it always comes back to the mission.”

Once new employees are up to speed with how health care and business are conducted at the hospital, Reif further reinforces the culture through the stories of patients — the consumers of the hospital’s end products and services. By putting a human face on the ultimate product of the work each employee does, you demonstrate the ultimate benefit that the work of each person has to the end consumer.

“We have a major fundraiser every spring, and this year, we had 80 to 100 women involved,” Reif says. “As I was thanking them for their involvement in the effort, I reminded them why we were raising the money. This year, it happened to be that they’re raising money for a maternity unit, so in my presentation, I put pictures of four newborn babies on the screen.

“Another time, at the end of our budget approval for the following fiscal year, we had a board meeting. I showed our board 10 pictures of patients living with cancer. They’re people who we are treating, who agreed to be photographed for this presentation. I put their pictures in front of everyone and told their story. In both cases, showing the babies we delivered and the cancer patients we’re treating, it reminds us why we’re here as an organization.

“We share stories of patient successes, and even the times when we fail a patient. We need to learn from those stories as well. It always comes back to who we are serving.”

Reif says the real-life examples serve as a means of showing empathy. Effective leaders need to foster a sense of empathy within their organizations. That includes empathy between employees and management and empathy between those inside and outside the company.

If management does a good job of instilling a sense of empathy within the culture, that feeling will trickle down to the relationship your employees have with the people you serve — be they customers, clients or, in the case of Doylestown Hospital, patients.

“You have to be empathetic to your people,” Reif says. “You have to listen. If I’m showing empathy to the people who work here, the associates and why we value that, they are going to be more empathetic with regard to their relationship with the patients.

“If I remember who is providing the patient care and I treat them with respect, they’re going to continue that relationship with the people they come into contact with, which includes the patients and their families. Again, it’s always coming back to who you serve and what you are as an organization.” <<

How to reach: Doylestown Hospital, (215) 345-2200
or www.dh.org

Richard Reif, president and CEO, Doylestown Hospital

The Reif file

Born: I was born in Baltimore. I actually went on to become the CEO of the hospital I was born in, Union Memorial Hospital.

Education: Zoology degree from the University of Maryland; Hospital administration degree from the Medical College of Virginia (now VCU Medical Center).

First job: My first real job was as a Good Humor truck driver when I was 18. The following year I started working in hospitals.

What is the best business lesson you’ve learned?

I learned to be genuine and be yourself, and find an organization that values you. Those are the two most important things: be sincere and fit the organization.

What traits or skills are essential for a leader?

Empathy, listening and consensus-building. Those are three things that Quakers do very well. In my time at Quaker hospitals, I learned to conceptualize, think long-term and be a steward to the community.

What is your definition of success?

It is a statement more than a set of criteria, and I can quote it from you. My wife and I both live by it: “I expect to pass through this world but once. Any good therefore that I can do, or any kindness or abilities that I can show to any fellow creature, let me do it now. Let me not defer it or neglect it, for I shall not pass this way again.” (Attributed to William Penn.)