Turning Your Employees Into Owners
Phone: 314.283.1589

2013 – 2014 surveys provide the following picture of today’s workforce.

  • 70% of employees say they are motivated to do their very best1
  • 57% would recommend their organization to others as a good place to work1
  • 27% intend to seek employment elsewhere1
  • 50% report that the organization values employee recognition1
  • 40% report sufficient opportunities for advancement1

How is your organization measuring up?

Team members are increasingly becoming more important for US business.  In the 1930’s, 76% of GDP was outside the service sector.  A majority of business was focused in manufacturing where the deliverable was often a product of a machine.  These machines delivered the same result day in and day out.  When they broke we fixed them and they continued on.

Today, 68% of the U.S. GDP or 4 out of 5 jobs is from the service sector2.  These services are generated by human beings that have the power to think.  The 1950’s management style of “When I want your opinion, I will tell you what it is” will no longer work.  Hence, the results of the above survey where we find an alarming number of our team members turn off their brains when they come to work.  As leaders, it is our job to nurture, educate, and provide opportunity to expand their horizons.  Investing in the team is the only way to grow and expand our companies and success.  Change can be scary, but a requirement for survival.

As business leaders we are often distracted from our primary task of working on our business by the constant firefighting of today’s emergencies.  However, we must focus on the important and not just the urgent.  To get more out of our team members, we must:

  • Replace short term reaction with long term planning.
  • Focus not on how many we make, but how well we make them.
  • Institute a culture of leadership and not supervision. Leadership focuses on process, supervision focuses on targets.
  • Sharpen the saw – institute education and self-improvement for everyone.
  • Convert individual knowledge and experiences into institutional knowledge. The worst place to store business information is in the human brain.

Edward Deming’s work found that 94% of all problems in the workplace are problems not with the workers, not with performance, but with the system.  By focusing on the processes and systems that deliver repeatable outcomes, we are able to continually sharpen the saw with a passion for continuous improvement that results in an engaged team, corporate growth and individual success.

 

 

1   American Psychological Association, Psychologically Healthy Workplace Program; APA’s 2014 Work & Well-Being Survey; U.S. Department of Labor, Bureau of Labor Statistics.

2   Office of the United States Trade Representative

In the latest Be Human Salon hosted by Bigwidesky, David Grey author of The Connected Company shares his observations of the divided company and the connected company.  The divided company responded to the needs of the industrial age, creating a division of labor, Interchangeable parts and mass production.  They made on thing, very well and a lot of them.  However, in today’s world change is happening at an increasing rate.  What worked yesterday does not work today.  The connected company is responding to this need for change.  These organizations are flexible, morph, and respond quickly to change.  Unlike the divided company, these companies structure facilitate cross communication and support from different areas.

The challenge for business leaders is should and / or how should culture be changed.  Mr. Grey defines culture at habits that your form as a group over time.  As small portion of the culture is observable, however a majority is under the surface.  What are the levers or incentives to drive behavior?  What do we value?  Do we say we have an open door policy, but cringe when someone takes us up on it?  What are our belief regarding our outcomes that drive the organization.  There are startups constantly challenging the status quo in our beliefs.  Are book stores the only way to get a book?  Are music stores the only way to get music?  Are grocery stores the only place to get groceries?  Is film the only way to keep memories?

So as a business leader it is your job to manage change.  There are opportunities for a divided company to continue being very successful, however, it is critical to no be something you are not.  Mr. Grey uses the example of Nokia that was a great phone manufacture but tried to be an Apple type company of creating its own operating system.  Samsung on the other hand focused on phone manufactures and commands a significant market share today.  In Louis Gerstner, Jr’s book Who Says Elephants Can’t Dance?  He observes that changing the culture is a last resort but can be done.

Watch David Grey’s insightful conversation.

 

The Conference for the Model Aquatic Health Code (CMAHC) aims to support and improve public health and safety by promoting aquatic recreational health and safety guidance and standards based on the Model Aquatic Health Code (MAHC). This newly formed nonprofit organization is operating exclusively for educational and charitable purposes.

The MAHC is a Centers for Disease Control and Prevention (CDC)-sponsored document covering all health and safety aspects of aquatic facility design, construction, operation, maintenance, and management. Available for free on the CDC website (www.cdc.gov/mahc), the MAHC serves as a guide for local and state agencies or legislatures needing to update or implement applicable codes, rules, regulations, guidance, law, or standards.

The MAHC was developed over seven years with direct and exhaustive input from all related sectors of public health and industry. Over 150 owners, operators, regulators, academics, manufactures, suppliers and health care professionals participated on technical committees responsible for drafting the proposed MAHC language. In addition, over 3000 public comments were received during the MAHC’s national review, with 75% of these comments leading directly to improvements in the final publication.

Why is the CMAHC needed?

In order to ensure the MAHC remains a current, regularly updated and relevant document, the Conference for the Model Aquatic Health Code was formed. The purpose of the CMAHC is to support and improve public health by promoting healthy and safe aquatic experiences for everyone. The CMAHC is a nonprofit 501 (c)(3) organization.  The CMAHC’s role is to serve as a national clearinghouse for input and advice on needed improvements to CDC’s Model Aquatic Health Code (MAHC).

 

The CMAHC works to achieve this by:

  • Collecting, assessing, and relaying national input on needed MAHC revisions back to CDC for final acceptance,
  • Advocating for improved health and safety at swimming facilities,
  • Providing assistance to health departments, Boards of Health, legislatures, and other partners on MAHC uses, benefits, and adoption,
  • Providing assistance to the pool industry on uses, interpretation, and benefits of the MAHC, and
  • Soliciting, coordinating, and prioritizing MAHC research needs

 

Check out the new website at www.cmahc.org.

 

Why is the MAHC important?

Today there is no one national regulatory authority responsible for disinfected aquatic facilities like swimming pools, spas, or waterparks. All pool codes are developed, reviewed and approved by local or state public health officials or legislatures. As a result, there is no uniform standard governing the design, construction, operation or maintenance of pools or other treated aquatic facilities. Instead, code requirements for preventing and responding to health and safety issues vary significantly across the United States. Worse yet, many of these existing codes disagree or outright conflict on key issues such as acceptable chlorination and pH levels.

The MAHC was created to give national level data- and best practices-based guidance to improve the situation. The ultimate goal is to transform the typical health department pool program into a data-driven, knowledge- and science-based, risk-reduction effort to prevent diseases and injuries and to promote healthy and safe recreational water experiences. The MAHC provides the best available guidance for protecting public health that can be adopted in part or completely by any interested agency. It provides agencies with uniform guidelines for all aspects of aquatic facility design, construction, operation, and maintenance.

 

As business leaders our results impact more than our families, employees and customers.  In a recent USA Today article America’s fastest shrinking Cities, the demographic realities are impacting cities and businesses alike.  The U.S. population is increasing at a deceasing rate, just 0.82% in 2013 with the domestic birth rate at a multi-decade low.  Immigrants are less attracted to the US with immigration down 30% from 2001 levels.  Manufacturing has declined in the US 30% between 2001 and 2013 while employment in this category is down 57%.  This has had devastating results in communities that focused on manufacturing like steel and automobile industries.

The US has shifted to services making up 80% of the US economy.  90% of companies with less than 20 people are in the service industry.  Dave Gray suggests in his book The Connected Company, that product saturation, information technology and urbanization are driving the move to services. 

As business leaders we need to anticipate and react to change.  The options for passing the corporate baton to the next team is different than that of even 10 years ago.  The transaction is less focused on bricks, mortar, and equipment that produces, but on the intellectual horsepower of your team.  Investing in your team and turning them into owners is critical to your sustainability and future.  The fact of the matter is they walk out the door at the end of every day and your company must offer them something the others can’t or won’t so they walk in again tomorrow.  We are all in this together.  If we fail our community fails and vice –a- versa.

Communication is a pillar for Ardent.  As business leaders, communication nurtures and develops our team to think and act like owners.  When we are owners we put ourselves out there for all to see.  We may be imperfect but we are worthy of sharing connections that are authentic.  In Dr. Brown’s TEDX presentation, she suggests these connections are not based on a hierarchical business expectation but on being vulnerable.

Dr. Brown states that in order to connect we need to have the courage to be imperfect, to be kind to ourselves and others and the ability to be our self.  We have to learn to be comfortable with being uncomfortable.  This could be entering into a business, relationship, or conversation where there are no guarantees.  As owners we need to embrace space where failure is an option.

Vulnerability is not a weakness but a measure of courage.  Vulnerability unlocks the door to innovation, creativity and change.  If we are not willing to be vulnerable we avoid.  Avoidance may manifest itself by ignoring the obvious, being dictatorial or micromanaging.  By being vulnerable it gives owners the ability to work through the tough decisions (hire/fire, new markets, turnaround, new products, define culture, succession planning, financial performance).  By having the tough conversations we foster growth and maximize success for the organization, team and ourselves.

I encourage you to watch Dr. Brown’s Presentations

The Power of Vulnerability

Listening To Shame

“Vulnerability sounds like truth and feels like courage.  Truth and courage aren’t always comfortable, but they’re never weakness”.  Brené Brown

Are you blasting away at your prospects through advertising, direct mail, and email?  Is your message a one-sided shouting match of pontificating how big, great, and accomplished your organization is?

Today’s customers have more fact based information at their fingertips than any other time in history.  The slick salesman approach of Professor Harold Hill in the Music Man would be run of town with the first Tweet or Facebook post.  Not to mention Angie’s List.

I submit that today’s business relationships are co-created between the buyer and seller.  The company can outline the premise of an offer.  The customer needs to help define the product and its value.  This required marketing dialog involves authentic discussion where the parties are listening intently.  This point is articulately made in the 1990, United Airlines commercial called “Speech”.

In my experience there was a manufacturer that offered a unique industry solution to an industry challenge.  They could have easily doubled their market share every year.  However, their approach was transactional with sacrificing any foundation of a relationship to “bag” the customer.  While this generated short term successes, it poisoned the well to develop strong working relationships that could have transformed an industry and brought significant accomplishment to the organization.

Every touch point with a customer generates a perception and response.  Is your goal transactional focusing on the “kill” or strategic that develops long term relationships built on respect, trust, experience and loyalty?

You Earn It!

Culture cannot be mandated.  Engineered vision, mission, values and principle statements are meaningless if they fly in the face of observed behaviors.

I would suggest corporate culture is much like a marriage.  The participants are continually building it up or taking away from it based on their actions.  Every action by a team member has an intended and likely an unintended outcome.  A team member might be willing to spend some cultural capital to achieve his or her desired outcome.  A short term individual gain can have a long term charge to collective organizational cultural capital.  When the organization members are able to align goals, achieve transparency, and share in the collective fate top to bottom, a strong foundation is laid on which to build.

As leaders we can create a big wake that dramatically affects others.  Our actions or inactions can trump months of work to build up cultural capital.  Are you walking the walk and talking the talk?  Are you tolerating others toxic behavior that suck the cultural life out of the organization?

Productivity can drop 50% when an organization takes a major hit to culture.  Tangible measures such as service levels, safety, turnover, and absenteeism may all take a turn for the worse.  If survivable, these may be the short term costs and don’t quantify the true cost to the organization.

A healthy culture is willing to be vulnerable.  Vulnerability and trust are the foundation for innovation, creativity and change.  Team members embracing vulnerability is a measure of organizational courage.  A company without these attributes is static and dying a slow death likely driven by a dictatorial, micromanaging culture.

In the short term, nurturing a positive culture will require giving more than you get or faking it until you make it.  A positive corporate culture cannot be built overnight, but it is the only way to build a sustainable organization.  Turning your employees into owners requires continued investment in your culture through actions until the collective team has “Earned It”.

A close friend pointed out in my April 21st blog post My Journeythat I did not provide any detail on the way we created our ownership group at Counsilman – Hunsaker.

I knew from the beginning that to carry the firm to the next level I needed an engaged team with a shared risk / reward.  A professional marriage of sorts that had the team members committed to the long term success of the firm.  While my father was not comfortable with partners, I realized that to attract the best, they would want to participate in a meaningful way.  Looking at the legal and accounting fields, if you are not a partner, you have not arrived.  The same is true, although less prevalent, in the other professional service firms like architecture and engineering.

The agreement with my father prevented me from adding partners until his note was paid in full.  However, we started the process almost immediately of laying the ground work for what ownership would look like by discussing all of the various expectations, issues, concerns, and “what if’s”.  We created a white paper outlining the issues and collective expectations on how to deal with them.  We then retained legal counsel to memorialize our goals and objectives.

This was more difficult than one might think.  The legal team wrote the first version one sided focusing on providing every protection and benefit for me.  Our goal was to create working documents that could support multiple transactions over the life of the firm.  We used 100 years as a guide.  On the fifth draft we had a solid structure that was well documented.  The next question was how to fund it?

It is my belief that stock has real value and should be purchased at that value.  We did not favor other stock strategies like phantom stock or different classes of stock.  The stock was not to be given away or discounted.  So how to finance the purchase?  On the first purchase, I provided my personal guarantee to the bank.  Call it priming the pump.  It allowed the bank time to get comfortable with the ownership team.  This was the only time I provided this level of support.  These new owners were taking a leap of faith on me and on a good but untested ownership plan.

A good business decision requires that all parties have all of the information and understand it.  To invest in this success, we provided a budget for each perspective owner to get outside legal advice.  The goal was not to modify or negotiate but to understand the terms of the commitment.  This process served us well.  Our ownership documents and process supported multiple transactions including the purchase of my majority ownership.

The guiding principle that I used in working through all of the questions, issues and challenges was “What’s good for the goose is good for the gander”.

Posted by: In: Ardent 1 comment

mail_image_previewMy personal mission statement has been

“To develop the best possible team, give them the best possible tools and get out of the way!”

I grew up in the swimming pool business. My father started Midwest Pool Management in 1963, the year I was born. I grew up digging ditches, acid washing swimming pools, lifeguarding and managing. As the boss’ son, I had more opportunities than most, but I would also argue that the expectations were higher than most. Through this experience growing up I developed a strong respect and interest in the entrepreneur. When I went to Indiana University it was with the intent of earning a Bachelor of Science degree in Entrepreneurship (it was a major at the time that has since been discontinued). After college I worked for Adam Aronson, CEO of Mark Twain Bank, in a management training program. Mr. Aronson was a dynamic leader that invested heavily in his team. I learned a great deal from him, and many of these lessons are a part of any legacy I have left at the organizations I have led.

In 1989, my father asked me to join the family business. I was eager to help. The advantage of joining a family business is that you get a head start on your career path. I would like to think I would have been successful on any career path, however, the family business allowed me to be tested by fire faster. It has been my experience that success of the next generation is more dependent on the senior generation than the younger. How the family patriarch communicates, shares knowledge, empowers and trusts the new generation is the critical component to success. My father was a master at laying the foundation for me to be successful.

In 1997, I approached my father with another team member to discuss buying the firm. While there were a lot of reasons we were not successful, I realized my father was not comfortable with partners. He was a brilliant visionary in the aquatic world and was exceptional at pushing the boundaries of aquatic design. But, at this point, the firm was at capacity because Dad was intimately involved in every project and there were just so many hours in the day.

In 1999, I was successful in purchasing 100% of Counsilman-Hunsaker. At that time we were licensed in 10 states and had 10 employees. I realized that for me to grow the firm, it would take a team that had the passion and discipline to build on the values my father established. Within the first six months we held our first strategic planning session, developed an open book corporate dashboard, began a formalized quality control process and created a shared fate culture where the entire team shared in the success and shortfalls of the organization. Over time this culture attracted some of the best talent in the industry. Counsilman-Hunsaker stood out as a home for talent where team members could make a tremendous impact.

By 2009, the firm had grown to 37 team members with three offices and licensed in all 50 states. Twenty percent of our revenue was from international projects. In 2003, I began offering stock to team members and by 2009 there were 12 partners. We had built a management team that could do just about anything and were poised for continued rapid growth. While hoping for the best, but preparing for the worst, the recession hit the aquatic industry in 2009. Industry publications indicate the swimming pool market declined 70% between 2008 and 2011. While Counsilman-Hunsaker did not experience this decline, we did have to manage challenges during this period. As we exited the recession in 2012, we had no debt, our market share had doubled and we were poised to enter new markets. Since 2010 the management team handled most of the day-to-day function of marketing, production and planning. My role as CEO was focused on strategic initiatives.

In our 2012 strategic planning meeting, we came to a standard agenda item of corporate stock sales. It was my philosophy to offer shares of stock each year to provide an opportunity to buy in the good times and bad. This seemed the most fair to me. In 2012, I owned 56% of the firm. I had always said I was willing to be a 51% owner, a 20% owner, a 0%owner but not a 49% owner. The plan was for me to go to 51%. I had also shared with my team it was my desire to do another start up and to build another team. This would bring my focus back to my passion for entrepreneurship.

Well, be careful what you ask for … a number of our junior partners expressed interest in becoming major shareholders. This would take me to the 20% ownership range. The fact of the matter was this team had the talent, skills and capability of taking Counsilman-Hunsaker into the future and make it their own. I believed in them and the bank did as well. The bank agreed to finance buying 100% of my outstanding shares. We executed the deal in less than 60 days. This could not have been accomplished without the years of communication, empowerment and trusting with confidence. These team members had already been owners in Counsilman-Hunsaker, both figuratively and functionally for a long time.

So why did I do it? Could I have made more money staying in my role? Absolutely. Do I miss having a highly skilled team of professionals around me? You bet. But it was time to walk the walk and talk the talk. The Counsilman – Hunsaker team was the best possible team, we had the best possible tools and they were making themselves better every day.  It was time for me to get out of the way.

Ardent means enthusiastic or passionate. That is how I feel about entrepreneurship and business leadership. During my business career I have lead eight companies and been involved in 16 mergers and/or acquisitions. My personal mission is to develop the best possible team, give them the best possible tools and get the hell out of the way.  Ardent’s purpose is to provide the information necessary to business leaders to turn their employees into owners.

A recent survey indicated that 80% of business owners plan to sell their business to family members or employees and 20% plan to sell their business to a competitor or outsider. What actually happens is the 20% that plan to sell to an outsider do, and the 80% that plan to sell to a family member or employee only complete the transaction about 20% of the time. Why?

It appears we have very good tools to transfer the goodwill and intellectual property from one firm to another. This is often a straight forward financial analysis and transaction. However, the ability to transfer the institutional knowledge, business management skills and trust to the next generation takes time and effort. To develop the best possible team and give them the best possible tools to carry forward takes communication, empowerment and trusting with confidence. The reality is that much of this planning occurs in a vacuum. Too often we confuse the urgent with the important and fail to make our own firm’s needs a priority.

By turning your employees into owners you have more options. A highly effective management team that is empowered and tested provides the business leader more options when planning for the future. It allows you to fill a wise counsel role and distance yourself from the day-to-day activities with confidence, make your firm more valuable to others, and it provides the foundation to transfer the organization to your employees.

When I ask business owners what their definition of success is, or when they will transition their organization to the next team, the knee jerk response is cashing out when I can get the best possible price. After thinking about it awhile, many reflect on leaving the organization in the best possible hands to carry on and build on the legacy they had built. There is often a desire to make sure the employees and customers are well taken care of. Ardent looks beyond just the dollar to meet your definition of success.

Not making a decision is a decision.