Posted By John P. Palen, CEO & Founder of Allied Executives
A lot of companies claim to have a family atmosphere. I assume that's supposed to be a good thing: caring people, working together, sharing dreams? Well, not every family culture is like that. Some are competitive. Some are disconnected. Some are plain annoying. Before a company claims to have a family atmosphere or any other culture, leaders need to define and claim it. Then they must share and develop it throughout the organization.
Three brothers at a second-generation Plymouth firm did exactly that. In the process of acquiring equity from their father, brothers Troy, Justin and Matt Hanratty realized that they needed to agree on a clear future for Hanratty & Associates, an employee benefits consulting and brokerage firm.
They sat down and mapped out their definition of a successful company, who they were as leaders and how they would work together to achieve their goals in the business. They also wanted business goals to match their personal goals of building families. Their first priority was to invest in the company culture. They approached their father and CEO, Tim Hanratty, with a plan. He agreed.
"We chose the acronym CERVICE as a focus, with the C meaning Clients first," said Justin, who serves as president and has been with Hanratty for six years. "We wanted the spotlight to be on clients and how we would serve them." The other letters stand for Excellence, Relationships, Value, Integrity, Community and Empowerment.
The brothers communicated their goal to the approximately 50 employees. "We told them that we wanted to create a brand that was known as family-focused and that gives back to the community. And we wanted clients who valued their employees and valued our relationship with them," said Troy, vice president of operations who has been with Hanratty for eight years.
Justin focused on sales (with Matt, as part of the sales team). He set up weekly TOT meetings, which stands for "Tree of Trust," the acronym reminding staff to act with maturity. The goals of the meetings include helping each employee stay accountable, understand his or her role at Hanratty and align personal goals with those of the firm. Sales and service teams were set up with a focus on scheduling lunches and other interactions with clients beyond sales.
Troy focused on internal service to the staff and operations, sharing the brothers' goals and determining with employees how to accomplish them. One of the first employee-driven projects was the "Hanratty community crew," which determined several ways that employees could reach out to their communities. Some of their favorite causes include Feed My Starving Children, blood drives and emergency food shelves.
Employees also identified technology investments that would help them serve customers better and do their jobs more efficiently. Following these and other internal changes, Hanratty has succeeded in realizing zero turnover of staff since early 2010. "Relationships are stronger than ever internally and externally," Troy said.
Hanratty focused on clients by defining who they wanted as clients, the values that clients should share with them and what it meant for Hanratty to be a partner and friend with clients. Their marketing message became, "It's Personal."
Making some difficult choices, the brothers realized that clients who didn’t match the culture they were creating would probably find another service provider. They used the "It's Personal" benchmark to locate and attract clients who were interested in relationships and service, not just low rates.
Troy notes that relationships with insurance carriers have also changed for the better. "We explained our new core values to our carriers and our clients. We asked to be held accountable to them. We actually do something with the feedback they give us."
Response has been "magnetic," Troy adds. In 2011, Hanratty expects sales to double. After 35 years of running the firm, Tim Hanratty is stepping back from operations, while his sons continue to pursue a family-focused culture.
"We are excited to create something with our employees that is bigger than sales growth and profits, something we can be proud of as brothers and with our own families someday," Justin said. There are times when the brothers don’t agree on everything, but focusing on CERVICE has helped them reach their goals.
What values and culture drive your company? Define your culture and client experience - then follow through. It’s a proven model for success in business - and family.
Wednesday, November 19, 2014
Wednesday, November 12, 2014
Is Your Business About to Bust featuring Larry Haberman with V-TEK, Inc. written September 2011 by John P. Palen for Minnesota Business Magazine
Posted By John P. Palen, CEO & Founder of Allied Executives
It's no longer surprising to read about businesses filing for bankruptcy or restructuring or even failing in the last three years. What is surprising and unfortunate is that many of these companies have been around for 20 years or longer. For one reason or another, they are not making it in a very changed economy.
So it's refreshing when you come across a company that has faced similar challenges and turned things around through very strategic and time-tested methods. These stories are out there. The best ones provide a road map for other companies to follow. In the final analysis, these companies are stronger for having faced the challenges and overcome them - leading to a stronger economic base.
About 18 months ago, Larry Haberman was brought on as president of V-TEK Inc., a Mankato-based company that provides packaging of electrical components for the circuit board industry. Established 26 years ago, the company employed more than 200 people in Minnesota and several locations in Mexico. The owners, Dennis and Vivian Siemer, knew that they needed a fresh perspective to navigate the changes in their industry and the economy. They met Haberman through a mutual business connection.
After observing operations for about 60 days, Haberman described the company as "underperforming in every respect." But he was familiar with this kind of challenge.
A veteran CEO of several companies, Haberman set down five objectives to bring the company into a new level of growth and performance.
1. Maximize cash.
Focusing closely on profit and loss, Haberman zeroed in on opportunities to improve the P & L and balance sheet. "We pick one item at a time. It's more of a sharp shooter approach than a shotgun approach," he said.
Haberman relies on charting the progress of traditional metrics, from sales to gross margin to net operating margin, units per hour of labor and even profit by head count. It's no exaggeration when he says that he tracks about 30 charts and graphs every month.
2. Assess and align talent.
For this kind of turnaround, Haberman said that he "took everyone off the bus to determine who belonged and who should sit in which seats." A comprehensive assessment of talent across the company identified talent gaps. Then some tough decisions were made about replacing people with others who fit the needed skill requirements.
"We needed people to understand how transactions tied to cash and profits in order to compete. At the same time, I had to communicate consistently so that employees knew what we were doing and why in order to establish and build trust."
3. Revitalize sales and customers.
When sales are down, it can become self-fulfilling, as the sales team believes that "no one is buying and nothing can be done," Haberman explains. In addition to transforming that mindset within sales, Haberman also helped V-TEK identify the best customer opportunities.
"Customers do not want to hitch their A-team to a C-team wagon. We needed to prove that we were the A-team wagon for them."
4. Optimize products and services.
One of the ways that V-TEK proved their A-team status was by assessing and optimizing their entire product line. One surprise was that inventory was only turning over once a year. They set a goal of inventory turnover of no less than three times a year.
Some products were discarded as obsolete. "This was the most difficult phase of the turnaround process," Haberman admits. "Writing off obsolete inventory gave us less cash than anticipated."
5. Measure results.
Remember when I talked about those 30 charts and graphs? They came in handy as V-TEK monitored their progress on the previous four objectives. The rate of transformation was astounding.
In 18 months, V-TEK managed to pay down its line of credit in full, dropping its debt to equity by 50 percent. Sales have doubled in the last two years, transforming corporate profits from significant losses to above industry norms.
Another indicator of company health is the lack of turnover. After two years of frozen wages, V-TEK has begun a journey to return wages and benefits to competitive industry levels in order to retain its talent.
But most telling is the response of bankers to V-TEK's initiatives. Once considered a significant constraint, the company now has several banks competing for its business. "This actually took less than a year to achieve," Haberman says.
Not only has V-TEK and its employees found new life in a changed economy, the company's owners have gained an opportunity to pursue their interests in supporting higher education technology programs. Taking the leap to bring on outside leadership, the Siemers have succeeded in preserving what they've built so they can mentor future engineers, inventors and entrepreneurs.
If you are at a crossroads with your business, there is still hope. As V-TEK demonstrates, the decisions can be difficult in a significant business turnaround...but not as difficult as putting up the "closed" sign.
It's no longer surprising to read about businesses filing for bankruptcy or restructuring or even failing in the last three years. What is surprising and unfortunate is that many of these companies have been around for 20 years or longer. For one reason or another, they are not making it in a very changed economy.
So it's refreshing when you come across a company that has faced similar challenges and turned things around through very strategic and time-tested methods. These stories are out there. The best ones provide a road map for other companies to follow. In the final analysis, these companies are stronger for having faced the challenges and overcome them - leading to a stronger economic base.
About 18 months ago, Larry Haberman was brought on as president of V-TEK Inc., a Mankato-based company that provides packaging of electrical components for the circuit board industry. Established 26 years ago, the company employed more than 200 people in Minnesota and several locations in Mexico. The owners, Dennis and Vivian Siemer, knew that they needed a fresh perspective to navigate the changes in their industry and the economy. They met Haberman through a mutual business connection.
After observing operations for about 60 days, Haberman described the company as "underperforming in every respect." But he was familiar with this kind of challenge.
A veteran CEO of several companies, Haberman set down five objectives to bring the company into a new level of growth and performance.
1. Maximize cash.
Focusing closely on profit and loss, Haberman zeroed in on opportunities to improve the P & L and balance sheet. "We pick one item at a time. It's more of a sharp shooter approach than a shotgun approach," he said.
Haberman relies on charting the progress of traditional metrics, from sales to gross margin to net operating margin, units per hour of labor and even profit by head count. It's no exaggeration when he says that he tracks about 30 charts and graphs every month.
2. Assess and align talent.
For this kind of turnaround, Haberman said that he "took everyone off the bus to determine who belonged and who should sit in which seats." A comprehensive assessment of talent across the company identified talent gaps. Then some tough decisions were made about replacing people with others who fit the needed skill requirements.
"We needed people to understand how transactions tied to cash and profits in order to compete. At the same time, I had to communicate consistently so that employees knew what we were doing and why in order to establish and build trust."
3. Revitalize sales and customers.
When sales are down, it can become self-fulfilling, as the sales team believes that "no one is buying and nothing can be done," Haberman explains. In addition to transforming that mindset within sales, Haberman also helped V-TEK identify the best customer opportunities.
"Customers do not want to hitch their A-team to a C-team wagon. We needed to prove that we were the A-team wagon for them."
4. Optimize products and services.
One of the ways that V-TEK proved their A-team status was by assessing and optimizing their entire product line. One surprise was that inventory was only turning over once a year. They set a goal of inventory turnover of no less than three times a year.
Some products were discarded as obsolete. "This was the most difficult phase of the turnaround process," Haberman admits. "Writing off obsolete inventory gave us less cash than anticipated."
5. Measure results.
Remember when I talked about those 30 charts and graphs? They came in handy as V-TEK monitored their progress on the previous four objectives. The rate of transformation was astounding.
In 18 months, V-TEK managed to pay down its line of credit in full, dropping its debt to equity by 50 percent. Sales have doubled in the last two years, transforming corporate profits from significant losses to above industry norms.
Another indicator of company health is the lack of turnover. After two years of frozen wages, V-TEK has begun a journey to return wages and benefits to competitive industry levels in order to retain its talent.
But most telling is the response of bankers to V-TEK's initiatives. Once considered a significant constraint, the company now has several banks competing for its business. "This actually took less than a year to achieve," Haberman says.
Not only has V-TEK and its employees found new life in a changed economy, the company's owners have gained an opportunity to pursue their interests in supporting higher education technology programs. Taking the leap to bring on outside leadership, the Siemers have succeeded in preserving what they've built so they can mentor future engineers, inventors and entrepreneurs.
If you are at a crossroads with your business, there is still hope. As V-TEK demonstrates, the decisions can be difficult in a significant business turnaround...but not as difficult as putting up the "closed" sign.
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