Michael Siegal, Chairman and CEO, Olympic Steel Inc.
Michael Siegal isn’t someone who is satisfied by achieving one goal — no matter how lofty. When Olympic Steel Inc. passed $1 billion in sales (it reached $1.26 billion in 2011), the chairman and CEO of the national metals service center set his sights on growing the company into one capable of reaching $4 billion in sales. To achieve that growth, Siegal has implemented strategies focusing on an environment that fosters sustainability and growth, as well as one that attracts and maintains the right kind of people.
“The challenge of Olympic Steel always is we’ve never been where we’ve been before,” Siegal says. “To a certain degree, everybody expects you to continue to drive forward, but every time we drive forward, it’s into an area where we’ve never been. “Therefore, strategy and buy-in is very important. It’s a lot easier to go from $20 million to $50 million in sales, although it’s a doubling of your business, than it is to go from $1 billion to $4 billion, because you’re dealing with different implications and risks.”
Those implications and risks are why Siegal places the spotlight on Olympic’s environment and its employees in order to succeed. “It’s all about people,” Siegal says. “There’s no other challenge. Have you hired the right people? Do you have an environment that can foster growth and motivate and retain existing employees? You have to balance the expectation between employees who want a great career and customers who continually want lower pricing.”
Here’s how Michael Siegal is doubling Olympic Steel through strategy and fostering an environment that supports employees and company growth.
Put people first
To achieve the strategies that will get Olympic Steel moving toward $4 billion in sales, Siegal put his focus on his 1,750 employees. The work environment has to be one in which employees enjoy what they do and where they work.
“We do what we have to do to try to foster the environment where an employee can succeed,” Siegal says. “You set a certain level of value structure and you adhere to it. You want to be consistent, reliable and living up to the value system that you have in your organization.”
The key to creating a positive work environment is having an established value structure and being accountable toward those values.
“If you’re accountable and you hold your managers at the highest level to the consistent level of performing at those values, then ultimately you create an environment where people can at least respect the environment that they work in,” he says. “If you have the commitment of the ongoing education of the employee, the betterment of the employee, the safety of the employee and you have growth, there’s no reason for them to go someplace else other than the money.”
Olympic Steel operates in a commodity industry that is very volatile and unregulated. The same value structure that the company applies to its employees is crucial for customers as well.
“We try to create a value structure for our customers that imbeds us with them regardless of the volatility of the marketplace,” he says. “By adding that value to the commodity we find ourselves to be better positioned to have a level of competitiveness, as well as sustainability with the customer in spite of the volatility of what goes on in steel pricing.”
To overcome volatility in the market you have to look at the customer you serve and the industry you’re in. You have to look at long-term sustainability and growth for your company.
“There’s never standing still in the marketplace — there’s going forward or falling back,” Siegal says. “You control your own destiny to a certain degree by the decisions that you make. You have to understand all business takes risk. You have to define the aptitude for your risk company by company and individual by individual. Are you always swimming upstream, or sometimes are you going downstream? You really have to look at the environment that you’re in and then say, ‘How do I differentiate myself from the pack?’”
When looking to grow your organization, there are financial metrics that are acceptable. It’s the CEO who ultimately decides what levels they are willing to go to in order to create leverage for growth.
“Some people are never comfortable with that,” Siegal says. “Some people are so risky that they ignore the financial metrics and go beyond what is safe just to roll the dice. Within a certain structure of what your outlook is for the future, people expect those in my position to be conservatively aggressive.”
Achieving growth within your business is what ultimately helps to create an environment where employees are excited to come to work.
“You have to create growth because employees want personal growth in their career,” he says. “If you as the company are not growing, it’s going to be difficult to promote your young talent into areas where they see a future for themselves as opposed to having to leave to get ahead. So you have to create the environment of growth. You have to create the environment of promoting from within, not to say that you can’t hire from the outside, but do you really have the environment where people are excited to come to work because they see the company doing well and the opportunity for them to be of significance?”
Create a growth environment
Establishing an atmosphere where your employees are happy and supportive of the company and its direction comes back to core values and not being hypocritical about them.
“If I said I am supportive of employee’s educational growth, I can’t turn them down when they come and say, ‘I’d like to take these courses that will better myself in the job,’” Siegal says. “Even though the financial environment may be difficult, you still have to be committed to the employee. You have to be consistent. You can do it within a certain degree of discretion, but for those who have been identified as high-performers within your own organization, are you really investing in their future as much as they are investing in their job?”
The consistency of being able to listen, create the environment in which education is valued and execute on those structural elements to the betterment of the individuals in your company is crucial.
“You have to do what you say you’re going to do,” he says. “If you say it and don’t do it, it’s hypocritical, and people will see that and they’ll lose hope and that’s when they’ll answer all the head-hunter calls.”
Olympic makes sure it has ways for employees to express themselves by bringing up issues or submitting ideas. The company has luncheons for new employees and regular gatherings where they’re allowed to share ideas. Olympic encourages ideas and rewards ideas through its FE Award of Excellence program. The company gives employees opportunities to come up with ideas that will help streamline the business, increase safety, work smarter, save money and be collaborative.
“We recognize it with a certain degree of reward, documentation and financial remuneration,” he says. “Within the whole organization someone can be nominated, including self-nomination, for going over and beyond their every day job by devising better ideas. We do that both on the corporate level and a local level as well. Some things are not great for all of Olympic Steel, but it may be great for your individual unit.”
These kinds of initiatives are important because they demonstrate respect for the employees.
“The hardest thing in America today, it seems, is, ‘How do I earn and get respect?’” he says. “So within the construct of what we try to do is not disrespect anyone. Most people just want to be heard. You don’t have to agree, but you have to give them the opportunity to be listened to. “We have a very personal connection with our employees. People here understand that if they have something to say most of my management will listen.”
Olympic employees take full advantage of opportunities to submit an idea or bring up an issue. From little things such as, “How do I burn the material a little bit better, faster or quicker?” to keeping processes in-house that will save money, employees are willing to be vocal to support the company.
“If you foster the environment where your ideas are listened to and respected, more ideas come from that,” Siegal says. “It is creating the environment where people are not threatened, disrespected or embarrassed by the fact that they may have an idea which won’t be accepted. You can’t say, ‘That’s a terrible idea’ or humiliate them by saying, ‘That’s stupid.’ You have to be sensitive to the fact that when people come forward that you give them the appropriate time to listen to their ideas even if the idea isn’t a good idea, because you don’t know if you don’t listen.”
Strategize for growth
Putting people first and creating a solid environment within Olympic Steel has helped the company and Siegal in the effort to become a $4 billion business. Having that reinforcement helps the buy-in stage when implementing new growth strategies.
“As we make decisions in management, we have to have more buy-in today from a bigger group of people to execute on those strategies than we did when we were smaller,” Siegal says. “The challenge is how do you communicate effectively to a broader group of people who may not have the full picture at hand and then expect them to execute well. Communication becomes more of a challenge as you get bigger.”
When communicating a new strategy, it is important to inform employees of how that new strategy will impact them.
“You’re always trying to look at the other side of the equation when you’re executing a strategy,” he says. “It’s the person on the other side of the table saying, ‘What does this mean to me? Does that mean I’ve got to work harder? Does that mean I’m going to be traveling more? Does that mean I’m going to get more money or more work for the same amount of money?’ ‘What does this mean to me’ is always an indication of fear and resistance. So what we try to do is understand that we’re not going to get 2,000 people to buy in. We need 20 people to buy in and that cascades down to the rest.”
It is nearly impossible to get a unanimous decision surrounding a new strategy, but leadership is about somebody ultimately having the final say and the responsibility.
“You want people to understand why we’re going this direction and answering the question of what this means to you,” he says. “I can answer what it means to the organization, but if that doesn’t somehow correlate to how I think it benefits me, maybe I’ll say yes, but I don’t mean yes. So we are always very sensitive to creating strategies on the expectation that this will be better for everyone if we do it. To make sure that everybody is on board to those philosophies takes a much longer time of communication and education to the change of strategy.”
Gaining buy-in for a new direction is crucial. While you don’t need everyone on board, you want to have a large majority behind your new direction.
“You have to keep everything pretty rational,” he says. “We’re going to go from here if we do these things and here’s where we’re going to get to. If we get there, this is what it means and this is why it’s better. Now you may not believe we can go from here to there, but if we go from here to there, isn’t this truly better? By and large, it’s about the destination.”
Siegal compares strategy buy-in to getting on a bus. When you get on a bus, you’ve got to know where the bus is going to take you. You choose to get on the bus to go to the destination because you’ve got to get off the bus at a certain point. If you just get on a bus and you don’t know where it’s going to go, then you’re just riding around all day hoping that something happens.
“We’ve got to be very concise in terms of where the destination is,” he says. “If you tell people, ‘Here’s the destination. Forget the journey. Here’s our starting point and here’s the destination.’ There may be different tangential ways in which we can get to the ultimate destination, but if we all agree that this destination is a better spot, I don’t find that people say, ‘No, that destination is going to be worse than where we’re at or it’s going to be too risky.’ If you tell them the destination, they’ll get on the bus with you.”
When planning a strategy Olympic typically looks out five years. Siegal says there isn’t necessarily a time frame that’s too forward-looking, but there are things that are too risky in strategizing and having a goal is vital.
“You have to have targets and goals in business,” Siegal says. “There has to be a way in which you’re trying to create the future. The goal is important to articulate. There can be lots of tactics to get you to the goal, and tactics may differ by location, process and customer. The tactics aren’t universal, but the goal has got to be. If you don’t have that same goal, you’ll be driving around in a circle.”
Siegal’s goal to grow Olympic to $4 billion is part of his strategy to double the business and then double it again.
“Outside of natural growth, there is always this construct in the back of your mind that says, ‘Double and then double again,’” Siegal says. “So if you’re at $50 million, you want to get to $200 million. If you’re a $1 billion company, you could say, ‘Let’s go buy a $3 billion company.’ But you don’t have the skill set to run it. The question is how do you get from $1 [billion] to $2 and from $2 [billion] to $4.”
Almost every CEO who doubles the sales would want to keep that growth going and see how far it can be taken. You have to ride that momentum in order to double business again.
“It will take you a lot shorter time frame to get to the second billion in sales than it took you for the first billion in sales,” he says. “Once you’re there, you understand how to maintain that level of business. It’s not hard to see the doubling. It’s hard to see the doubling again.”
Within the construct of the leadership, you have to keep everybody realistic. It’s not sensible to have an objective of going from $1 billion to $4 billion without getting to $2 billion first.
“If you have the strategies to get to ($2 billion) and you actually execute on those strategies, it’s going to propel you way past ($2 billion), because it doesn’t stop,” Siegal says. “Those things that you will do strategically to double your business will continue to foster additional growth beyond that. I find that to be a useful way to create a certain degree of momentum for growth.”
Over the last three years since the recession, Olympic has deployed a significant amount of capital into the marketplace for growth. Now the company has to focus on the execution of the growth initiatives that it’s begun.
“We’ve deployed the biggest capital that we ever have in the last three years over any 10-year period, and we have to make sure that we make that stuff work,” Siegal says. “To a certain degree, it’s about succession management. Are we populating the next level of management capable of running the organization? Do we have the good strategy initiatives and the balance sheet and capital structure to do that? You have a lot of headwinds in terms of your plans, and what you have to do is make sure that your foundation is secure based upon the things that you’ve done.”
Ultimately, it’s really about performance.
“As people look at Olympic Steel over the next couple of years, I think you’ll see a company that has positioned itself for growth, and now we’ll be executing on the growth initiatives,” he says.
How to Reach: Olympic Steel Inc., (216) 292-3800 or www.olysteel.com
Make employees your No. 1 priority.
Create an environment that fosters growth.
Implement strategies to drive your business forward.