How to develop programs that will benefit employees and your business

Lisa Speaks, Director of Human Resources, ASG Renaissance

Healthy employees are happier and more productive employees, says Lisa Speaks, director of Human Resources at ASG Renaissance. A wellness program instituted three years ago has helped ASG Renaissance control health care costs, but the biggest benefits have been in increased productivity and employee retention.

“We hope we can see a decrease in insurance rates if our employees are healthier. But the other two pieces are more critical in terms of having an immediate impact on our bottom line,” Speaks says.

A 2012 report from the U.S. Department of Health showed wellness programs reduced health care costs by 20 percent to 55 percent, cut short-time sick leave by 6 percent to 32 percent and increased productivity by 2 percent to 52 percent.

“Employees spend a good portion of their waking hours at work, so the work environment can have a powerful influence on behavior,” Speaks says.

Smart Business spoke with Speaks about employee wellness programs and their benefits.

What are examples of employee wellness programs?

A wellness plan can be anything from a small health seminar held on-site for your employees to a yearlong initiative focusing on different health topics each month. For example, you might want to offer blood pressure screenings at the work site in February in recognition of Heart Health Month. The most important point is to make it convenient for your employees, so they can get the information and health screening they need without missing a lot of time away from work.

Another way to positively affect employee health is to schedule a day for a masseuse to visit the workplace. Stress can have a huge effect on your health, and relieving that stress may help your employees avoid catching a cold or flu that’s circulating in your area.

One popular program in our office has been healthy cooking classes, where we’ve brought in an outside professional to educate our employees about healthy eating and talk to them about what they eat and how it affects their body.

Once you have taken your first step in offering a wellness program, it’s important to continue to develop the program each year by adding new components. You always have to be looking for a new approach.

How do your determine what to offer?

Start by conducting an analysis of where your employees might have issues related to illness and disease. For example, asthma, weight management and diabetes are common areas of concern. There are many resources available through advocacy organizations focused on these health issues that can help you provide information to your employees explaining the risks and what they can do to alleviate the situation.

You also can work with a benefit broker, which works with firms that create wellness programs. For some programs, you might work directly with a wellness company.

ASG Renaissance has been recognized as one of the 101 Best and Brightest Companies and is invited to symposiums where managers hear what other companies are doing. Likewise, you can collect information from other firms that are interested in engaging employees and keeping them happy.

Are employees offered a participation incentive?

There are several insurance programs centered on wellness that offer incentives for participation. We offer the Healthy Blue Living Program. As part of enrollment in Healthy Blue Living, employees are encouraged to visit their primary care physician in the first 90 days of the plan year for a thorough health evaluation. Following the evaluation, their physician will develop a plan to help them improve their health. Because of their participation, employees are eligible for lower copays than if they do not participate. This doesn’t mean that employees have to meet their goals to be eligible for the plan incentive, they just need to take steps to improve their health.

How does encouraging employees to stay home when they are sick reduce absenteeism?

For a number of reasons, it’s better to stay home when you are sick than come into work and risk getting everyone else sick, too. You’re not as productive when you’re sick, and co-workers are not as productive because they are concerned that they might get sick, too. If loss of work time is an issue for your employees, telecommuting — the ability to work from home — may be a benefit to add to your wellness program.

How do you measure results?

Key measurements are absenteeism and work force productivity, which could be measured in performance reviews, retention rates and the overall wellness of employee population as measured by your insurance carriers.

ASG Renaissance has not seen direct savings yet in terms of health care costs. However, the rates haven’t increased as much as they were previously, and employees are getting better benefits out of their health care insurance for the same cost. The goal is to encourage prevention to avoid bigger issues down the line.

What steps should a company take to develop a program?

The key is to get feedback from your employees. There is no benefit gained by spending thousands of dollars on a workout facility that no one will use. The other thing is to take small steps. If you jump in and implement a full-blown wellness program from day one, it can be intimidating to employees. Develop a three-year plan and introduce one new initiative per quarter in year one, every other month in two year and then by year three have a different wellness initiative once a month. Have a strategy behind what you’re trying to accomplish.

Lisa Speaks is director of Human Resources at ASG Renaissance. Reach her at (248) 477-5046 or [email protected]

Insights Staffing is brought to you by ASG Renaissance

How Albert Crawford and his partners delegate to a new leadership to grow Banker’s Healthcare Group

Al Crawford, Chairman and CEO, Bankers Healthcare Group Inc.

When Al Crawford visits Disney theme parks, he’s thrilled by the rides, the theatrics and the entertainment. But what really leaves him in awe are the park’s employees.

“I’m absolutely amazed by an organization like Disney,” says Crawford, chairman and CEO of the Southwest Ranches, Fla.-based Bankers Healthcare Group Inc. “I’ll walk through their parks and I’ll ask, ‘How do they handle this? How do they control everything?’ … For just one park, you wonder how do you get the right people being responsible?”

At the time they founded BHG in 2001, Crawford and his partners didn’t have to worry about any of these questions. Among the three of them, they had all the skills they needed to launch a successful venture on their own.

As president, Robert “Bobby” Castro, was “the guy who brings the business in” and “makes it rain.” His brother Eric Castro —BHG’s COO and the “glue” between the three founding partners — put the systems in place to help the company scale. Then there was Crawford, who handled finances and built the balance sheet for the company, which provides financial services to medical professionals.

“One of the unique things about the company was that you didn’t have to go out there and hire people to do things that you didn’t know how to do, because the original three owners had expertise and experience in really all areas,” Crawford says. “So you didn’t rely on anybody else. You knew that you had the experience and that your partners had brought a tremendous amount to the table to get the job done and to grow the company.”

But as growth accelerated, so did the demands on the three partners. Soon enough, the notion of doing it all was feeling more like a burden than a joy. Like the Disney parks, they needed to assemble a team of people who could run the organization’s day-to-day operations and could be trusted to make decisions and take care of customer needs independently, so that the owners could focus on expansion. Yet this was easier said than done.

“When you’re doing everything yourself, you know there’s accountability,” Crawford says.

“As we grew, one of the challenges has been letting go of those reins and finding people who had the passion and dedication that we did in all three areas.”

Recognize when you need help

Flash back to 2005, the three owners were drowning in the responsibilities of day-to-day business. They no longer had the time and resources to run the company on their own. But when you’ve been handling certain parts of your business independently for years, it’s hard to recognize when it’s time to delegate some of your job to other people.

One way to gauge whether you need to reallocate some responsibility is by asking, “Can I take a vacation?” For instance, whenever partner Bobby Castro was out of town, it showed up in the bottom line.

“It was where you just couldn’t handle it all by yourself, and the fact that you were trying to handle it all by yourself was actually hurting the company,” Crawford says.

“I could tell you when Bobby was on vacation because there would be a drop in originations, which is unacceptable when you’re looking at $15 million of small ticket $100,000 loans on a monthly basis. All of a sudden Bob’s on vacation so we do $7 million that month because he was gone for 10 days. We can’t have that. We’ve got to have other people that, though maybe not as good as Bobby, are close.”

Another question to consider is how many hours are you working? Working nights and weekends may be necessary when starting out, but 60-hour workweeks may not be the best use of time for the CEO of a growing business.

As the head of finance, Crawford found himself struggling to juggle too many tasks while also trying to finance business growth. COO Eric Castro faced a similar dilemma.

“Eric was close behind me in saying I can’t build all of these systems myself,” Crawford says. “I need to hire people, and we need to grow proportionately.

“So I had to grow my section — I can’t run around talking to banks for the rest of my life, because I’m also trying to handle accounting. We’re trying to handle legal. And I need to be a little more grounded. Consequently, I need some people who can do what I’m doing and do it just as well and not drop the ball.”

In the end, each of the partners felt the strain differently and independently. But acknowledging that they needed to let go of the reins was a critical step in preparing the company for the next stage of growth.

“As your plate starts to grow beyond an average of eight to 10 hours a day and you truly to see growth from a P&L standpoint — you’re making money and you’re becoming more profitable — you need to put the money out and start to mentor somebody,” Crawford says.”

“From a real microeconomics look, as the tasks become so vast that you find yourself just about getting to none of your to-do list, it’s time to find somebody who can start to take some of those tasks.”

Reset your priorities

Delegating responsibility to other people is a relief for some leaders, but incredibly difficult for others. Either way, it helps to start small.

As Crawford and his partners began unloading some of their mounting job responsibilities, they handed off their lowest priority items first.

“If I made a list of everything I had to do today, there’s probably a bottom 10, 15 or 20 percent that somebody else could do,” Crawford says. “And they could do it just as efficiently as me. If I’m just running around in circles and constantly trying to catch up, constantly not getting to things, I’d be better off and more efficient doing the bigger things better and allowing somebody else to do that bottom 20 percent.”

Instead, take that bottom 20 percent and give it to a new employee, who can give it his or her utmost attention.

“Give it to the person who is looking to ride something in that department and let them make it their top priority, so all of the stuff on your list is always getting high priority,” Crawford says. “You’re getting effective representation if it’s customer service stuff. Your customers are being serviced better.”

If it’s taking you two or three days to get back to a client or customer, ask yourself if there’s an employee who could take the task of following up on phone calls or even an entire account. A new person will also be excited and eager to get back to them, Crawford says.

“Maybe they are not dealing with you, but that’s OK,” he says. “Because dealing with you is really hurting the relationship because you haven’t gotten back to them in three days. That type of delegation makes the whole organization better, when you can take a look at your list and say, ‘What am I not doing well here?’

“Delegate that to someone who’s anxious, who’s looking to climb, looking to grow within your organization, and they make it No. 1 through 5 on their list, so it gets done extremely well.”

Help new people learn the job by staying close to them — literally. As Crawford began delegating to new leaders, he frequently had them in his office or next to his office to shadow and learn from him. He also confesses that finding the right people tends to be a process of trial and error.

“It’s no different than a professional baseball team or a football team,” Crawford says. “They can go out there and they can literally go after what they think is going to be the best quarterback in the country. And he can be a flop.

And just because someone has pedigree or experience doesn’t mean that he or she is going to be a success.

“We’ve had people who we’ve hired that have been tremendous,” he says. “We’ve had people that we’ve hired who we thought were going to be tremendous who were horrible. And then we’ve had people who we hired that we cultivated, homegrown and have become superstars.

“It’s finding the right candidate with the right degree, the right experience and the right attitude that you bring in and put in close proximity to you. You look for them to just really absorb everything you’re doing. You try to share what you’re doing, and you look to grow them into your spot, honestly, so they could replace you.”

Find people like you

Since 2001, BHG has grown from its original three partners to 150 people. And as a result, Crawford doesn’t see the “young, aggressive, talented person” anymore. Instead, most of the hiring decisions are pushed down to different department heads, who are given the freedom to hire, fire and mentor the people who work within their area.

“We use that model where you’re counting on people who you’ve trained, people who are moving up the corporate ladder, and they have earned the respect of their peers, earned the respect of the owners,” Crawford says. “Now they’re making the same decisions that you were making two or three years ago, and they’re looking to grow that department by implementing the same type of strategy.

“So they’re going to find that person. They’re going to find a person that fits with them, and they’re going to mentor that person in the same way.”

As people become more independent, they’ll take on larger roles in the company and eventually their own disciples. This tiered mentoring ensures that new leaders are continually being developed at all levels of the organization.

“It’s important for me, Bobby and Eric that people within your department respect you and they look up to you, and your personal traits and business traits appeal to them,” Crawford says. “If we can get that out of the individuals that work for our department heads, it’s a home run because they’re the people that have to do the entire day’s work with their peers.”

Furthermore, managers in the company can be more effective because they’re able to surround themselves with people who share their working style, whether it’s fun and laid-back like the BHG marketing department or more structured like in accounting. For example, the company’s lead treasurer, Angela, is always one of the first to get to work and last to leave, so she looks for this work ethic from everyone in her department.

“I can guarantee that she’s going to surround herself with people who are like her,” Crawford says. “It’s going to run in straight contradiction to her if you’re coming in at 9 a.m. and you’re leaving at 5 p.m. You’re taking an hour and a half for lunch … It’s just not going to work. Angela probably works longer hours than I do. So if you’re in her department, you’re probably going to log some hours. And she’s got to hire. She’s got to fire.”

Hiring and mentoring people who share your values is important, but it doesn’t mean you want to fill your company with a bunch of “yes-men” either. That’s why Crawford always abides by the rule to hire intelligent people who are passionate about keeping the business innovative and thinking for themselves.

By developing and mentoring new leaders for the company, the partners grew BHG to $155 million in revenue in 2011, making the company a staple on Inc.’s list of fastest-growing companies, with six appearances in the last seven years. The company also received the Ernst & Young Entrepreneur of the Year 2012 Award in the Financial Services category in Florida — evidence that the new generation of leaders is carrying on the vision of its owners.

“We love to hire people that are smarter than us, that can bring ideas that we’re not bringing and that can just really push the envelope,” Crawford says. “In the future, we have the right people in place to challenge us daily, to come up with new products, to bring better solutions to the customer. And with those solutions, you’ll see a growth in business.” <<

How to reach: Bankers Healthcare Group Inc., (866) 297-4664 or www.bhg-inc.com

Takeaways

  • Recognize when you need to transfer responsibilities
  • Delegate some duties to a new employee
  • Encourage managers to hire and mentor people like them

 

The Crawford file

Al Crawford
Chairman and CEO
Bankers Healthcare Group Inc.

Born: Troy, NY

Education: BA from Gettysburg College, 1984

On being a worry wart:

I’ve been told that, ‘Geez Al, you worry a lot’; and it’s interesting, because Bobby [Castro] – he doesn’t worry. He’s so type A. The glass isn’t half full with Bobby. The glass is 7/8 full. And so that’s been a real help for me, because I’m a positive person. But a positive person can still worry about what’s coming around the corner.

What’s the best piece of business advice you’d give to another leader?
I don’t think it’s bad to worry and to be concerned that the world changes daily now. You have to be concerned. There are so many things that don’t last forever. For me it’s been a trait of always looking over my shoulder to see what might be coming at us from behind us and worrying about that, yet still not dwelling on that.

You’ve got to be positive. You’ve got to be thinking outside of the box. And I think the two traits go well together, where you’re willing to push on your people and willing to push on yourself…because nobody wins the Super Bowl every year.

On trusting your partners:
It’s trust in what they’re bringing to the table to the company. I’m dealing with two brothers who are 66 percent. People say to me, are you ever concerned about that? Could you be voted out? It’s not even a thought. They trust my opinion. They respect my opinion when it comes to growing the company, being the CEO of the company. And I feel the same exact way about them as individuals.

On loving what you do:
We’ve never been interested in even looking at a sale of the company because to sell the company and then have a non-compete clause and have to do something else – we like what we’re doing. To a point that might be not a good thing because maybe there’s a time where every company should be sold, but for us, it’s kind of like; well, what else would we want to do?

 

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.

 

Manufacturing picture for 2013 looks strong overall

Stuart Hoffman, Chief Economist, PNC Financial Services Group

U.S. manufacturers should continue to fare well in 2013, although next month’s election is a wild card that could change that outlook to some degree.

“U.S. manufacturing should do well next year, but a lot depends on the election and policies that the newly elected president and Congress may or may not undertake,” says Stuart Hoffman, chief economist, PNC Financial Services Group. “We’re assuming that some of what’s being called the ‘fiscal cliff’ will probably go into effect but not enough to be fatal to the economy.”

Hoffman expects that most manufacturing sectors will continue to do well, including household goods, energy-related manufacturing, farming equipment and nondefense aerospace manufacturing. Construction-related manufacturing is expected to be a particular bright spot, and automobile production should continue to fare well, though less robustly than the last couple of years.

“We think auto production will still be rising, so auto manufacturers and the related supply chain should do well,” Hoffman says. “It won’t be a big increase over this year. The rate of increase for next year will probably be around 5 percent, whereas this year it’s double-digits.

“But auto production will still be operating at an overall higher level — a higher production level, a higher employment level, a higher productivity level and, ultimately, a higher sales level.”

A few manufacturing sectors are expected to cool down, including heavy truck production, tool and die, defense aircraft (though that too depends on the direction of post-election government policy) and raw materials such as steel, copper and aluminum.

“Production of raw materials is more of a global issue, and while we don’t expect the global economy to fall into recession, we have seen global problems with steel slowing down and a tremendous amount of supply,” Hoffman says. “Some steel companies might not be all that profitable because of the increase in supply, and global supply could easily meet if not exceed the rise in demand.” <<

To learn more, listen to Stuart Hoffman on PNC’s 2012 National Economic Outlook webinar on Nov. 8. To register, go to www.csvep.com/pnc/110812flyer.html.

The manufacturing surge has slowed, but some resilient trends keep pushing it forward

While the U.S. manufacturing sector has been resurgent for three years and counting, the recovery cooled a bit in the third quarter — and there’s no clear consensus among experts as to the reasons why. The reasons for this leveling off are varied and complicated.

Many experts have lists of theories to explain the slowdown, but there’s a lot less consensus among these authorities’ theories than you might expect. There is one commonality, however, among the experts’ opinions. They remain guardedly optimistic that the rebound will continue but at a slower pace.

“We’re definitely seeing a little bit of a blip in our multiyear recovery over the last couple of months,” says Chad Moutray, chief economist for the National Association of Manufacturers.

“What’s causing that blip is uncertainty — uncertainty caused partly by the ‘fiscal cliff’ everyone has been talking about, partly by the [economic] problems in Europe and a few other factors. We haven’t solved these problems yet, and it doesn’t look like we’re going to be solving them anytime soon, so that’s a headwind that we expect is going to be persistent over the next few months and probably longer.”

What happens domestically over the next few months will be hugely important for U.S. manufacturers over the next year or two. That includes next month’s election, how steep the so-called “fiscal cliff” drop-off turns out to be at the beginning of 2013, and then the subsequent direction of the U.S. economy thereafter.

“The biggest unknown out there right now for the U.S. economy is the ‘fiscal cliff,’ and the fact that on Jan. 1, assuming that Congress doesn’t act between now and then, we’re going to see tax increases and spending cuts of around $500 billion to $600 billion,” Moutray says. “That obviously could have some dire consequences for the economy. We’ve had the Congressional Budget Office and a lot of others saying we could have a recession early next year if that’s the case.

“We’re seeing a lot of people in Washington angling to see if they can try to avert that. But there’s an enormous amount of pessimism that that’s going to happen. So that’s a key thing manufacturers are worried about: the uncertainty over what their tax rates are going to be and what the regulatory environment will be like next year.

“People are very engaged in what’s happening in the U.S. election because it obviously will impact manufacturers deeply.”

Nonetheless, Moutray says that on the whole, U.S. manufacturers’ outlook for 2013 is positive but guardedly so.

“Of course, that could all change very quickly,” he says. “We’re seeing some pessimistic numbers coming out right now, which I think should be a wake-up call to folks in Washington that, ‘Hey, maybe this is something we’d better act on. We need to reduce the level of uncertainty in the economy that’s out there.’ ”

Scott Paul, executive director of the Alliance for American Manufacturing, agrees that a large number of concurrent factors have conspired to flatten the U.S. manufacturing curve. One crucial factor he points to is import-export problems with both Europe and China.

“One thing that was helping to drive the boomlet in manufacturing over the last few years was increased demand for our exports to Europe and to Asia,” Paul says. “A key reason for that has been that our exchange rate has been, while not perfect, much more suited to exports than it used to be.”

But the days of gangbuster exports to Europe and China are fading.

“We’ve seen that tailing off dramatically over the last couple of months,” Paul says. “The Chinese are reverting to their traditional strategy of continuing to produce and export as much as they can regardless of what the demand is. That creates problems for other countries such as the United States. At the same time, we’re seeing the value of the Chinese currency take a nosedive. That, to me, is troubling.”

Exacerbating this set of complications coming from Asia is a different kind of economic headwind pushing across the Atlantic from Europe.

“Some of Europe is headed back into a recession again, related to the debt crisis financial situation,” Paul says. “That has an impact on demand, on unemployment, on a lot of things. And that, in turn, impacts U.S. manufacturers, because Europe is an important market for us.”

Swinging inventory

Cliff Waldman, senior economist for the Manufacturers Alliance for Productivity and Innovation, is another insider who attributes the U.S. manufacturing slowdown to a convergence of several factors. Waldman postulates that the key factor was the sharp inventory fluctuations that took place during the recession and in the years since.

“Over the last three to four years, the U.S. economy had probably the sharpest inventory swing in modern history,” Waldman says. “During the panicky days of 2008 and 2009, inventories were liquidated very rapidly. Some companies were liquidating inventories just to raise cash.

“So then, even though we had just a modest turn in the economy after the recession, there had to be a rapid restocking of the shelves just to handle that moderate traffic. That got our factories humming again. If you think about it, manufacturing essentially produces inventories for the economy. So that helped a lot.”

Now, though, the manufacturing sector has caught up with the shelf shortages, so the inventory catch-up surge that got the factories buzzing is dying away.

“The inventory swing is finite,” Waldman says. “Eventually the stocks on the shelves reach short-term equilibrium with the pace of sales. It’s a one-shot deal, in effect. It comes back to equilibrium.”

Another factor in the slowdown has been economic volatility in countries that Waldman labels emerging markets.

“After the recession, we had a stronger and a faster rebound in emerging markets, particularly some of the larger emerging markets, than people had thought,” he says. “China, India, Brazil, Mexico — these markets all felt the downdraft of the crisis in the industrialized world, and they certainly slowed.

“But they implemented policies rather quickly and came back rather quickly. As we all know, over the last decade, U.S. manufacturing has been making a lot of investments in those markets, and the health of those markets has been increasingly important for U.S. manufacturing profitability. This helped propel manufacturing into a more normal recovery than almost any other sector of the economy. That’s why manufacturing was able to lead the recovery.”

However, that’s another development that can be added to the list of trends that drove the manufacturing rebound but have now begun to slow down.

“Now, the storyline is changing,” Waldman says. “The global situation is troublesome, particularly for manufacturing. The activity in the emerging markets is slowing dramatically. That’s why we’re seeing that manufacturing is not really the leader anymore. It’s starting to get mixed up with the troubles of the U.S. and the global economies.”

Durable drivers

But not all of the recovery-driving trends are disappearing. Some look like they’ll have staying power, and that endurance should, barring other unforeseen problems, continue to keep the U.S. manufacturing rebound at least somewhat on track.

Exhibit 1 — leanness and efficiency: “Manufacturers have been able to take advantage of being much more lean and efficient, which has improved their overall competitiveness,” Moutray says. “When I look at the sectors that have done well the last couple of years, I think they’ve taken advantage of exports, which speaks to that level of increased competitiveness.

“Exports are going to be an evermore important part for the manufacturing sector. I think we’re going to continue to find ways that we can better compete.”

Another manufacturing-positive trend expected to have staying power is U.S. manufacturers’ increased competitiveness, which is being fed by several factors: advances in technology, consequent gains in productivity and decreases in costs, particularly energy costs.

“We definitely have seen a little bit of a sea change in terms of the overall competitiveness of U.S. manufacturing,” Moutray says. “Nearly every manufacturing sector is becoming more efficient by using technology. That’s why we’ve seen such huge gains in overall labor productivity the last few years.

“U.S. labor productivity grew more than 5 percent in the first quarter of this year. In the durable goods sector, it was almost 10 percent. Those are unheard of levels of labor productivity growth, and as a result, we’ve seen the overall cost of labor per unit fall dramatically. That has helped keep U.S. manufacturing more competitive.”

Declining energy costs have also been a boon to U.S. manufacturers’ attractiveness relative to foreign competition.

“Another key reason why we’ve seen this boomlet in manufacturing is that energy costs have come down with so much natural gas coming online,” Paul says. “That, in itself, has spawned an industry: supply pipe that goes into the natural gas. But more broadly for manufacturing in general, especially energy-intensive manufacturing sectors, it has helped to bring down their energy costs. And I see that continuing to be a very strong factor.”

Reshoring is another trend expected to have some durability, and thus continue to help U.S. manufacturing sustain its recovery to some degree, Waldman says.

“What appears to be happening — and underline appear, because it’s still in its early stages — is that for global manufacturing supply chains, which are spanning many countries these days, the U.S. is playing a somewhat better, stronger role in terms of production in those global manufacturing supply chains,” Waldman says. “It’s being driven by multinational decision-makers. When they look at the map of their world, U.S. manufacturers are looking more attractive.

“That’s because there are a lot of hidden costs to doing business and to having a production presence in a low-wage economy, and those costs are now becoming less and less hidden. And while the benefits of market potential in emerging economies are tremendous and always will be, these multinational decision-makers are beginning to realize that the costs are a little higher than they thought, so that puts the U.S. and North America in a better position.

“This is clearly a positive for the strength of U.S. manufacturing, and it’s something I think the United States needs to see as a glimmer of light and to capitalize on.”

Policymakers are expected to play a crucial role in the coming years in terms of whether the manufacturing sector continues to recover and perform well.

“We’re in a time that’s somewhat similar to just after World War II, in the sense that policy matters a great deal these days,” Waldman says. “And not just U.S. policy; central bank policies and fiscal policies around the world are absolutely crucial now.

“We’re also in a time where you have to watch policymakers. Manufacturers in the U.S. might have thought some time ago that monetary policy in India or in Europe or even in the Federal Reserve was a bit removed from their business, a bit arcane. Not these days. They need to follow it. It’s crucial. And the same holds true for fiscal policies.

“Over the long term, getting past the sluggishness and the challenge of this year and the next couple of years, we need to make policies that engender long-term investments in our workforce, in innovation, in technologies. So policy around the world matters more to manufacturers now than it has in a generation.”

In the big picture, the resurgence of U.S. manufacturing during the last three years has changed the way the public and political leaders view manufacturers and their role in the economy and in society, and that bodes well for the future of the domestic manufacturing sector.

“I think it’s healthy that we’re hearing more talk about the importance of manufacturing than we have in the past by everyone,” Paul says. “There’s this realization that it has to be part of our future, and everyone — particularly those in leadership positions — seems to be embracing that. I think that’s a very good thing.” <<

How to reach: National Association of Manufacturers, www.nam.org; Alliance for American Manufacturing, www.americanmanufacturing.org; Manufacturers Alliance for Productivity and Innovation, www.mapi.net

Second-quarter productivity raised, wage inflation muted

WASHINGTON, Wed Sep 5, 2012 – U.S. nonfarm productivity increased at a much faster clip than previously thought in the second quarter as businesses squeezed more output from employees, government data showed on Wednesday.

Productivity increased at a 2.2 percent annual rate rather than 1.6 percent, the Labor Department said. Productivity, which measures hourly output per worker, fell at a 0.5 percent rate in the first three months of 2012.

Economists had expected second-quarter productivity would be raised to a 1.8 percent rate. The revision reflects an upward adjustment to the country’s second-quarter economic growth estimate to a 1.7 percent pace from 1.5 percent.

Businesses emerged from the 2007-09 recession lean and are showing little urgency to ramp up hiring, relying on their existing workforces to meet production.

Output increased at a 2.4 percent rate in the second quarter instead of the previously reported 2.0 percent. Output increased at a 2.7 percent pace in the first quarter.

Productivity grew rapidly as the economy recovered from its steep downturn, peaking at a 6.8 percent growth rate in the second quarter of 2009. Gains came as companies cut costs, particularly their wage bills.

How Tony DiBenedetto changed Tribridge’s growth trajectory by launching decision-making

Tony DiBenedetto, co-founder, chairman and CEO, Tribridge

Tony DiBenedetto will never forget “the watercooler incident.”

“We were in our very first office building, and at that time everybody was bringing in their own bottled water,” says DiBenedetto, who is the co-founder, chairman and CEO of the national IT services provider. “We wound up having this meeting to talk about what we were going to do about the water.”

He and the other two principals sat down to deliberate the issue: Would they use bottled water or filtered? What about enlisting a water service? The meeting ended two hours later.

“At the end of that meeting, I looked at my two partners and said, ‘Guys — we’re never doing this again,” DiBenedetto says. “This is insane.’”

Seeing the inefficiency around decision-making, the partners agreed that something needed to change. With Tribridge still in its infancy, they understood that the way they handled decisions in the beginning years would set the precedent for the company’s future.

“What it led to was an acknowledgement that we all three did not need to be included in decisions,” DiBenedetto says. “In partnerships, a lot of times everybody feels the need to vote on every single issue and talk about every issue, and it doesn’t allow you to grow very fast.”

Assign roles

What the watercooler incident demonstrated is the age old problem of “too many cooks in the kitchen” combined with the mistake of bringing in the wrong cooks. When there are too many people involved in a decision, it’s hard for people to accomplish anything quickly or efficiently.

And if people are also participating in decisions that don’t concern them, they won’t have time to handle the issues that do.

What DiBenedetto and his partners realized early on was that most people at Tribridge, themselves included, didn’t really know what decisions were and weren’t their responsibility. They needed to divide the decision-making so that each person and department had clear areas of decision-making authority.

Today, each of the company’s partners has specific items that fall under his decision-making jurisdiction. For example, anything involving strategy lands within DiBenedetto’s arena, and sometimes, all three of the partners.

“I feel like my role here is to drive strategy, so if we’re going to stray from the strategy that is a decision I would want to be involved in,” DiBenedetto says.

Not all decisions in the company should be pushed down the ranks either. When it comes to large financial transactions, debt, M&A or strategy, you definitely want your top leaders to take the lead. As CEO, DiBenedetto still offers his input if there is a major decision that people want feedback on or when it’s a hire or fire decision where his expertise may help.

At the customer level, however, he’s rarely involved in decision-making. When the company opened its first office in Dallas, for example, DiBenedetto told Managing Director Bobby Priestley that he was charged with making all the decisions concerning Dallas — and not just some of them, but all of them.

“People closest to the decision make better decisions,” he says. “We have consultants in the field and 3,500 customers. They’re out there making decisions for a customer. They are in the best position to make the decision. They understand the customer’s needs. They understand what the firm can do.

“So to have them elevate that through a series of management layers is ridiculous.”
Rarely if ever has DiBenedetto seen a good decision that satisfied a customer but impacted the company negatively. That’s because the customer feedback loop can typically tell you whether or not employees are on the right track with their decision-making.

“We’ve got a nice built-in check and balance there — where if decisions are good for the customer, they’re good for Tribridge,” DiBenedetto says.

“In my 14 years at Tribridge, I’ve never felt like, ‘Oh my gosh, this person is such a rogue decision-maker, and I have to reel them in.’ I’ve never felt that at all — zero.”

Say what you need to say

When you have a lot of people making decisions every day, effective internal communication becomes much more critical. If communication breaks down, and decision-making becomes siloed, your company invites conflict within departments and across them.

“We probably have 100,000 decisions made a day, and the way our business works, we have 450 people making those decisions every day,” DiBenedetto says.

“A lot of times we make decisions but we don’t tell somebody either why we made it or even that we made a decision. So you might do something for a customer and not tell them, or you might do something internally and not tell somebody. Being able to communicate the decision is another lesson learned.”

One way to keep everyone apprised of important organizational changes or information while preserving decision-making autonomy is to have set meetings to share updates, talk strategy and discuss progress on goals.

At Tribridge, the company currently holds a monthly meeting for its national leadership team in Tampa as well as an all-company meeting each February, where more than 400 employees meet in-person at a chosen location. In addition, it conducts an all-employee phone call once a month.

Regular meetings are a great opportunity for people to bring topics to the table, submit questions and voice any issues or concerns that could require outside attention. But a two-hour meeting about bottled water? Absolutely not, DiBenedetto says.

In the case of the watercooler incident, it wasn’t the meeting itself that caused inefficiency. Rather, inefficiency occurred because the people in the meeting didn’t need to be there. So instead of vilifying meetings, which can contribute to productive, creative and helpful communication, the company does the opposite — it encourages them.

“One of the culture points for us is the very open communication process,” DiBenedetto says. “Most people here are very comfortable raising topics. So anybody can call a meeting. Titles are not involved. We don’t put titles on our business cards. It’s an open culture where people can call a meeting if they need to.”

However, another rule at Tribridge is that if anyone ever feels like they are in a meeting that they don’t need to be in, they are completely free to excuse themselves.

“They can say, ‘Hey listen, I’m not going to contribute to this meeting, so I don’t need to be here,’” DiBenedetto says. “It’s not looked upon as a bad thing. The culture of the company is not just to meet for meeting’s sake.”

The bottom line is that you don’t want to shackle people with endless meetings or ask them to check in constantly about their progress. This defeats the purpose of pushing out decisions in the first place. Once you give people power over decisions, you also need to give them the freedom to succeed or fail.

“I can’t come back later and constantly start micromanaging,” he says. “So part of it is a leadership point that you’ve got to allow the decision and the success or failure to happen. If it doesn’t happen, then nobody learns from it.”

So after any big decision is made at Tribridge, whatever group that is involved in that area of the business, whether it is a client, a region or the entire company, is also involved in a debriefing process. This step reinforces that every decision, good or bad, is a learning experience for your business and your employees and the key to continuous improvement.

If the decision was good, ask why was it good? How could an OK decision have been better? And what went wrong with the bad ones?

“You have to be able to keep learning from it,” DiBenedetto says. “It’s a skill set. So you get better at making decisions the more decisions you make. The fact that we have these hundreds of thousands decisions being made every day means our people are better decision-makers than if they worked somewhere else.”

Empower the right people

In the tech business, where you’ve got to be rapidly changing and adapting your business all the time, you can’t afford to have a culture that puts individuals on pedestals, DiBenedetto says. When you trust people to make important decisions that impact your customers, you need to feel confident they’re focused on helping the customers, not themselves.

That’s why DiBenedetto prioritizes a person’s cultural fit over his or her resume when he hires someone for a position of authority at Tribridge. Specifically, he looks for whether the person has the trait of “entrepreneurism.”

“The first thing we tell people who come to work here is that when we say ‘think like an entrepreneur,’ there are two elements of that,” DiBenedetto says. “One, keep improving Tribridge; two, really on an everyday basis when you’re working for a customer, pretend that you’re one of their shareholders. When you’re thinking like a shareholder for them, you’re making the best decision in their interest.”

Hiring for entrepreneurism doesn’t mean you only want people who plan to start their own companies or create new products. Instead, it defines a person’s willingness to take risks, make changes confidently, and guide the decisions based on how he or she thinks the customer’s business is going to go, DiBenedetto says.

“Culturally, it’s looking for people who have an entrepreneur’s mindset, who are comfortable making decisions in risky situations,” DiBenedetto says. “The easy decisions aren’t the ones that you are worried about. It’s the tough decisions where you want somebody who has more of an entrepreneur’s mindset making them.”

To get a feel for this trait when hiring, the company’s recruiters first ask job candidates to provide broad situational examples, such as a time when they used teamwork or faced a tough challenge. Then they use “critical behavioral interviewing” techniques to analyze the candidate’s behavior in those different situations. What they did when they made a mistake or when they had to give negative feedback?

“We’re looking at how they handled it, not the answer to the question,” DiBenedetto says.

“You’re not asking them about being honest. You’re asking them about teamwork or something else; and they start telling you the story. And you keep drilling down until you get to a situation where you have witnessed through their story what their behavior was. So it’s a crafty way of doing it.”

In behavioral interviewing, recruiters also look at the way people phrase statements and the subtleties of what they say. This can help you identify red flags in a person’s cultural fit. Big egos, for instance, don’t bode well when you’re making decisions for a team.

“Sometimes you’ll ask somebody, ‘Tell me what someone else on the team does,’ and they’ll answer the question by telling you what they did,” DiBenedetto says.

People who are new to an organization with decentralized decision-making may not feel confident making lots of big decisions right away. But by hiring people that fit well with the culture, demonstrate entrepreneurism, and are team players, DiBenedetto finds that most people can succeed in this kind of empowering environment.

“When you surround employees with people who help them all the time, that aren’t in it for themselves, that plan a team environment, and they are empowered to make decisions, they tend to like it,” he says.

“It translates into better decision-making, faster decision-making and therefore things happen quicker here. There’s a sense of urgency to get things done as a result of that, and that leads to growth.”

While DiBenedetto had some initial reservations about using a decentralized decision-making structure, today he can’t imagine doing things differently at Tribridge. From 2006 to 2009, the company grew its revenues 272 percent, generating $65 million in 2011.

“We’ve grown dramatically over a 10-year period,” DiBenedetto says. “We’ve had 9/11, multiple wars — we’ve had a tech bust, a real estate bust, a credit crunch. Yet our company continues to grow organically pretty quickly, and it’s because we have decentralized decision-making.”

How to reach: Tribridge, (877) 744-1360 or www.tribridge.com

  1. Give people clear responsibilities.
  2. Make meetings more efficient.
  3. Hire people who can make decisions.

The DiBenedetto File

Tony DiBenedetto
Co-founder, chairman and CEO
Tribridge

Born: Brooklyn, NY

Education: Florida State University

What was your first job?

A paper route

What is one part of your daily routine that you wouldn’t change?
Waking up my daughter

What would your friends be surprised to find out about you?
I write a lot, especially poetry.

What’s the biggest challenge in the future growth of Tribridge?

The strategy for us to get to the next level has been built around something we call ‘Concerto,’ which conceptually is the brand that we’ve coined for the business we’ve moved to the cloud. If you think about Tribridge, we do services for customers and we use a lot of different technology. We’ve built a private cloud and we’re offering this technology that’s some Tribridge intellectual property as well as Microsoft’s applications. We’ve integrated that and offered it to our customers. … The next five years if I look at tremendous growth — that is it. With that come some opportunities and challenges. One is where are the next 500 consultants going to come from? We’ve got to find the next 500 team members.

What trait does a leader need to be successful in today’s business environment?
With the really turbulent economic times we’ve had the last 10 years, we’re lacking the thinking big — blind confidence. We’re lacking the ability for our leaders to think bigger. Because it’s humbling to know that things are unpredictable, we all get stifled in our decision-making. Thinking bigger is something I see as an attribute that allows people to fight through the stifling news that you get from watching or reading the news. We’ve got to ignore that, keep thinking big, expect more. Expecting more is really about how can I make this better? How can I keep getting better? So if I’m thinking big and expecting more at the same time, that’s just driving success.

U.S. productivity rises in second quarter; 2011 revised upward

WASHINGTON, Wed Aug 8, 2012 – Nonfarm productivity rose more than expected in the second quarter as companies expanded output but only modestly increased the hours worked by their employees, data from the Labor Department showed on Wednesday.

Productivity climbed at a faster-than-expected 1.6 percent annual rate between April and June.

In the same report, the government also said productivity rose 0.7 percent last year, more than the initially estimated advance of 0.4 percent. In another revision, productivity declined less than initially thought in the first quarter of 2012, the Labor Department said.

The upwardly revised trend in recent productivity growth is heartening for the economy because in the long run living standards improve when workers are more productive.

Analysts polled by Reuters had expected productivity to increase at a 1.3 percent annual rate during the period.

Output increased at a 2.0 percent rate during the period, but hours worked only rose at a 0.4 percent rate, the department said.

The report also showed unit labor costs climbing 1.7 percent during the period, a faster pace than the 0.6 percent gain expected by economists polled by Reuters.

Andy Kanefield: How to get tuned in to what drives your employees at your company

Andy Kanefield, founder, Dialect Inc.

Andy Kanefield, founder, Dialect Inc.

In “Primal Leadership: Learning to Lead with Emotional Intelligence,” the authors tell the story of a manager who used cars in the parking lot as a barometer of her team’s collective emotions after a merger. Immediately after the merger announcement, she noticed full parking lots even late into the evening.

She interpreted this as an extra level of excitement about the potential opportunities afforded by the merger. Over time, and as post-merger change initiatives foundered, the number of cars decreased, and she interpreted this as decreasing excitement and commitment.

But she also noticed that certain cars were a constant. There were “pockets of people” that remained productive and happy in the midst of delays in progress with the merger.  What she found was that most people who endured the change with positivity were protected from the disorder by leaders who included them in the process of change, gave them needed information and provided as much control as possible over their destiny.

Effective leaders know how to promote engagement regardless of the strength of the winds of change — or in this case the lack of progress. 

Something in our business environments is always changing — either internally or externally. In addition, something in our business environments is always stalled.  Leaders need to understand how to keep the energy level up during challenging times.

Some of the most effective leadership behaviors during tough times are illustrated in this post-merger example: Include your team as much as possible, give them critical information and allow team members the appropriate level of autonomy so they feel they have some level of control over their immediate work environment.

The authors of “The Progress Principle: Using Small Wins to Ignite Joy, Engagement and Creativity at Work,” offer another key component of engagement. Teresa Amabile and Steven Kramer suggest that “of all the events that can deeply engage people in their jobs, the single most important is making progress in meaningful work.” 

Think about the last time a key corporate client said to you, “You guys are integral to our success; we couldn’t have done this without you.” Were your steps a little lighter that day? After celebrating that success with others and thanking all involved for their contributions, how much more motivated were you to do a great job for that client?  How much more motivated was your team?

As leaders, we need to ensure that our employees are not only making progress with organizational goals, but that they believe that their work matters. How do we do that? 

There are several key principles to keep in mind: First, of course, is that people find meaning in their work in different ways. Some derive value primarily by how much they please your customers. Others focus almost exclusively on what they can acquire from their employment: status, money, etc. Others want to build an organization or army of people who will accomplish something great for its own sake and some simply derive pleasure from getting things done. What they do is less important than the accomplishment of achieving goals. Finally, there are people who find meaning by working with others who are like a family to them. 

While none of us typically focus exclusively on just one source of meaning, it helps to remember that people do extract different primary sources of meaning and that leaders and managers need to have this in mind as they seek to lead others.

Second, once you know how your team members find meaning, make sure you don’t obscure it. Be clear about how what your team is doing connects to something beyond the day-to-day tasks in ways that has meaning to each person.

Finally, if you lead the entire organization, be clear with everyone, not just your team, on how the strategies, initiatives and measurable goals connect to different sources of meaning.

Helping people see the links between the progress they are making in their daily tasks and the meaning in their lives or the lives of others is one of the key tasks of leadership.  Doing this well can only serve to fuel the fire of full engagement for your employees and for you.

Andy Kanefield is the founder of Dialect Inc. and co-author of “Uncommon Sense:  One CEO’s Tale of Getting in Sync.” Dialect helps organizations improve alignment and translation of organizational identity. To explore how to get greater alignment behind systemic organizational changes, you may reach Andy at (314) 863-4400 or [email protected]