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"Why are some of our 2000 franchise stores exceeding our goals, while others aren't making the grade?" This question kept gnawing at Sergio Barbi, franchising coordinator for O Boticário, a fast-growing cosmetics and fragrance company in Brazil. He explained, "I see some franchise owners go on to open up three or four successful stores, while others stagnate with only one - one that's mediocre at best. And I want to know why."
Finding people to run a successful franchise operation is complicated. They have to be entrepreneurs, but they also need to work within the parameters of the organisation. It's a tricky combination. But it's a combination Barbi knew existed. He just needed to get better at identifying people who had the right balance. "We knew this was at the heart of our business," shared Barbi. "And, from the start, we knew we needed help to redefine our goals and vision, as well as to gain a solid understanding of what it takes to succeed in a franchise role."
So, O Boticário turned to Caliper for insight into what needed to change. As Barbi says, "We needed to hear from someone who's been there, someone who's helped other companies in situations similar to ours." He discovered that success has to do with hiring the right people, developing them, and being very clear about your goals. It's a continuous improvement process.
In addition to working with O Boticário directly, Caliper consultants thought it would be beneficial to put O Boticário in touch with Dialight, a New Jersey-based manufacturer of LED lighting products, who has made great strides in employee development and team building over the past three years.
The Meeting
Sergio Barbi flew in from Brazil to meet with Dialight's Director of Human Resources, Scott Ernst, to get firsthand information on what they've been doing to develop and retain successful employees.
Ernst: Welcome to Dialight. It's a pleasure to meet you. Please have a seat, and don't mind the pictures on the floor. This is a new building for us. We've been here about two weeks now and haven't even had a chance to hang our pictures on the walls.
When I was asked if I would meet with you, I thought it was a great idea. It's intriguing that Caliper has been helping each of our companies in different ways in two completely different parts of the world. So, tell me how I can be of assistance.
Barbi: I'd like to hear how you've been making employee development work for your company, and see if we can apply it to our situation.
Initially, our challenge was to see what factors contributed to the success of our franchises that were doing really well. So, aside from what typically comes to mind when you think of a store being successful - such as annual sales and market share - Caliper helped us determine a number of other factors that correlated with a franchise manager's success. Things like, number of stores, city size, relationship with O Boticário corporate, and willingness to take initiative while still accepting franchise regulations. We took this information and identified our most successful franchises. Those managers and owners took Caliper's personality profile, and with all of this information, we were able to ascertain what the ideal franchise owner looks like and the model for a successful franchise.
Now, our goal is to hire new people who match the ideal profile, as well as train existing employees, so everyone is performing according to the "model." But, we know it's not as simple as that. We're aware we need to change the way we're managing our operations. And this is where we're looking for some insight.
Ernst: I can certainly relate to that. We've gone through a number of changes here. Several years ago, the management at Dialight was very different. There was no communication at all. We went through three different presidents in a six-year period. As one employee here puts it, "We were on a need-to-know basis. And we never needed to know." We did a survey a couple of years ago, and communication was identified as our worst problem. Since then, we've instituted a communication committee, along with a new performance evaluation system, and communication has really improved. People like getting information. And once they start getting it, they want more of it. It's interesting how in the U.S. we look at information as individual power - the more I know and you don't, the better I am. I prefer the Japanese view: the more we all know, the better we all are. Educating people in the workplace is very important. We want to do everything we can to help people improve.
Barbi: What's involved in the performance management system you mentioned?
Ernst: Well, we knew communication was one of our biggest problems. And the way we had been handling evaluations - from the top down - was not helping managers improve their performance. Each review was done in isolation, with just one person's input rather than hearing from people throughout the organisation. We realised we needed to do something differently to identify people's key talents, determine their suitability for promotions, and help employees develop. So, we implemented a performance evaluation process that included a Caliper personality profile; a 360º evaluation - a process where peers, supervisors and subordinates share insights to help managers improve; a discussion of results; and a plan for change.
Barbi: The 360º piece of the process is one of the things we're considering. We really want to know our people and help them develop. But, one of our main concerns is introducing this kind of employee development program without hurting morale. I've heard of situations where this approach backfires - where feelings are hurt and bridges are burned. How do you know people are ready for it? How did your employees respond to it?
Ernst: Overall, I'd say it was received well. But, it definitely needs an introduction so everyone knows this is an open process with the ultimate goal of helping us all get better at what we do. And for this to happen, we will need to be both forthright and supportive of one another. When it was first introduced, people did have different reactions to the process. Workers on the floor thought it was great to be asked to evaluate the senior staff. The feeling was, "No one ever asked us what we thought before." It gave people who often feel they can't express their views about someone who's in a higher level position, a way to open up.
But, of course, with anything new there is going to be fear. Some people were skeptical. They were afraid of repercussions because their bosses would know who said what. We also had employees who really liked their bosses and were afraid that a negative comment would be held against them.
Barbi: Do you think people answer it honestly?
Ernst: I do. Now that we've moved to the online version of the 360º, the results go through Caliper and this "filter" keeps people anonymous. It makes them comfortable speaking their minds. Each year the process gets better, and people are more and more open. Especially since they see that their feedback results in improvements every year.
Barbi: I wonder if this would work for us as a franchise operation. People are in different locations, and right now many of them are just doing their own thing. Of course they need to work independently, but they also need to work as a "team" with each other and with O Boticário corporate. Brand consistency is important. You can't have people in one part of the country offering certain products and being on the Internet, and others who aren't. Getting the franchises to work together has been a major struggle.
Ernst: I really believe in working as teams, and that’s how we're set up here at Dialight. You always get better answers when you've got people working together effectively. Everybody brings something to the table. They complement each other and fill voids.
I've found that as long as you can get people to buy into the same goals and objectives, you're pretty sure to get them to work together. But, if they have different purposes, there will be problems. If the sales department has been forecasting around a product that lasts five years, for example, but the engineers are focused on making a product that lasts ten years, it’s not going to work. People have to be working toward the same thing.
In our yearly performance management reviews we go over a "goals and objectives" sheet that includes the names of people you will need to work with to get your objectives met. This reinforces teamwork. And because the members of the team know each other's strengths, they know how to work effectively with each other.
Barbi: That is definitely a problem for us. We have several different processes and they don't seem to work toward the same goals and objectives. For example, marketing wants to make things more beautiful, financial wants to make more money, and the engineers want to make things more reliable. They're each focused only on their one particular area - sometimes to the exclusion of others.
Ernst: One thing that has really helped us is that the goals of every individual are linked to the performance of the entire company. This has enabled us to redefine how we work together and evaluate performance. And when we combine that with the knowledge we have of each employee's personality strengths and potential, we come up with a very effective team.
Barbi: But when someone isn't performing as expected, what do you do?
Ernst: With the 360º, we can see if people have certain strengths and are using them. If they're not, or if there is an area where they're not strong, we show them what they need to work on. We're at that stage right now. Noticing the gaps, and deciding what actions to take. Where we see needs, we're continuing to explore what's available. They may take a course, go through training, or get coached on how to be more effective.
Last month we had a meeting where someone expressed a concern about the temperature in one of the plants being too warm. The manager responded with, "Ok. We'll fix that. We'll just shut the air conditioner off completely." There was actually a valid reason for the temperature setting, but his response sent a message - I'm in charge here and I resent that question. No one asked any other questions for the rest of the meeting. We talked for quite awhile after the meeting and I gave him feedback on how the situation could have been handled better. He's aware that his style of responding needs to improve, and he's working on it.
Barbi: Have you been able to measure improvement?
Ernst: Absolutely. Our managers rate employees once a year on a scale of 1-6, with 1 being poor, and 6 indicating the person can part the water, and then walk on it when necessary. This enables them to see from year to year if people are improving or staying stagnant - or need to leave.
I can actually see a more open communication channel between the people who have participated in the 360º process. Once people have gotten to know one another on a more personal level they seem to become more relaxed in the exchanging of ideas.
We have one manager who was seen as difficult to communicate with. People would say, "I don't feel like I get a fair hearing from him. He doesn't listen to me." One individual would go to him with a report, and when trying to explain things, the manager would listen for a minute, then grab the report and start writing notes and crossing things out - he just stopped listening. If it wasn't exactly the way he would've done it, he didn't want to hear what someone else had to say. We had him participate in a training program with listening at the heart of it. His listening has improved and the communication in the whole department is better.
From my own personal 360º experience, I can tell you that people mentioned I needed to work on personal organisation and time management. I know I'm not a detail guy. But I made a major effort to change the way I did certain things where details and paperwork were concerned. In my next yearly evaluation, the responses showed I'd made improvements and was getting better in this area, although I could still use some more work on documentation. So I continue to work on it.
Barbi: So where do you see your process leading from here?
Ernst: Well, I see our performance evaluation system as a continuous improvement process. We are currently branching out and conducting the 360º on our key positions in addition to the senior staff. But I could even see the 360º being sent outside of the Dialight organisation to get feedback from our customers.
Certainly, one of any company's most important responsibilities is hiring. But, for me, even more important is retention. Which means developing individuals. Employee turnover at Dialight has never been high - and we want to continue that. Our ultimate goal is to create an organisation that can respond to customer needs and keep business growing. This will only happen as people develop their strengths and work together.
Regardless of whether your company consists of one building, several branches, or a multitude of franchise locations, you can only achieve your goals if the people you have on board are performing at their peak individually and as a team. The companies who truly understand this, and are willing to invest the time and effort it takes to know and develop their staff, explore new possibilities and collaborate with peers, are already many steps closer to the success they hope to achieve.
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