| ||||
When Carol Lavin Bernick took the reins of consumer product giant Alberto-Culver, she knew she had a challenge—but didn't anticipate the complete makeover that was needed. In this excerpt she discusses what went wrong at the company—and how it was fixed.
How Did We Get Here?
I'll never forget the day it became clear to me that we were facing a cultural crisis at Alberto-Culver. In late 1992, our head of human resources had engaged an outside consultancy to survey a random sample of employees in order to gain input for our compensation planning. I told him, "Don't bother. If you want my parents' attention [at the time, my father was CEO and human resources reported to my mother], survey only the people they think are the 100 top performers. Those are the people whose judgment they'll trust." They were also, I thought, the least likely to have an ax to grind with the company.
To get the best of both worlds, the consultant surveyed that group as well as a more general employee group and reported the results in tandem. The satisfaction levels of the two groups differed, of course. But the eye-opener was that neither was very satisfied. Even our best people complained about noncompetitive benefits, opaque policies, and lack of family-friendly policies, to name just a few. I remember that day clearly because in less than an hour, I went from feeling pretty good about our company to feeling despair.
| We wanted to create a a new world of in-your-face honesty and shared ownership of results. |
| —Carol Lavin Bernick |
When I think of how far we have come since that day in early 1993, I realize we changed our culture by taking four major steps. First, we made an issue of culture, focusing attention and resources on something we had not previously thought much about. Second, we made fixing our culture a job—actually, about 70 jobs. Third, we fashioned ways to measure our gains on the cultural front and did so obsessively. And fourth, we reinforced our stated values by celebrating everything we wanted to see happen again.
Focusing on Culture
As soon as we heard the dismal news of our employee survey, I knew we needed to make cultural change a priority. I immediately asked for budget and other resources to attack the problem. I had no idea how much it would take, and I had little idea what I would even do—but I named a big sum. I only knew I wanted this problem to be on the radar screen.
Now, understand that at heart, I am a marketer. I began my career in the company in the new product department; Static Guard spray and Mrs. Dash seasonings are two innovations I brought to market. My first thought was that the problem with our culture was, to some extent, a matter of perception. Morale would be higher, I suspected, if we stopped hiding our light under a bushel. We went straight to work finding ways to get the word out about all the things we could feel good about as a company.
Finding positive notes to accentuate wasn't hard at all. We had long been a good company and a solid member of our community. In many ways, Alberto-Culver had been one of this country's success stories. It started in 1955 with a single product—Alberto VO5 Hairdressing—that did $100,000 in sales in its first year, not bad since we were competing with the likes of Procter & Gamble and Gillette.
The company took early advantage of television's broad market reach by sponsoring programs like What's My Line? and our brands quickly became familiar household names. Our first offering of shares on the New York Stock Exchange, in 1965, took off fast. My father appeared in Time in 1963, and in 1973 my mother was named one of Fortune's most influential businesswomen. I've often thought that those early days must have been like life in the heyday of the dot-coms. Even through the 1980s, we posted sales increases every year, and our share price grew 18-fold.
We knew that plenty of innovation and initiative was occurring in pockets of the company, but we had to find it and call attention to it. We held a celebration in our parking lot when we cut paperwork by 30%. Why there? To accommodate the bonfire, of course. And we made people more aware of the many ways we live our company ethics—from a robust program of charitable giving in which employees often get involved, to a fund for helping employees with unexpected financial problems, to our Jumpstart scholarship program that each year helps a number of employees' children further their education.
All this awareness-raising work was having an impact—morale was on the rise—but I also knew that the problem with our culture wasn't simply a matter of perception. We had some realities to adjust, too. We needed to turn members of our North American group into more committed team players. We had to develop a sense of urgency throughout the company and a real hunger for innovation. And just as important, we had to make working at Alberto-Culver more fun. Only if we could make these changes, I thought—and make them last—could our consumer products businesses begin to thrive.
In 1994, my father handed the day-to-day operating control of the business over to my husband, Howard, who became CEO, and myself. We knew cultural change had to be a priority, and we were now in a position to tackle it.
At the outset, my executives were arguing about logic: "Do we make people happy and then the business gets better; or do we fix the business, which will make the people happier?" It was easy for me to answer this: I firmly believe that people drive everything. As it turned out, we focused on both at once, and it wasn't a trade-off after all.
The key to doing both was to recruit everyone in the battle and get every single person focused on the same goals. After a long history of managements keeping its cards close to the vest, we needed to open up and explain the business to our people. Once the facts were on the table, we would find the people who were excited about responding to the challenges.
To get the process started, I invited every Alberto-Culver North America employee to a "state of the company" address, a two-hour intensive look at where we were and where we wanted to be. It's since become an annual event. As I waited for people to file in to that first one, I scattered pennies around the floor, then sat back and watched. Many people glanced at the floor, but no one bothered to pick up a cent.
I started the meeting with the announcement that we were all there to learn and then posed a softball question to the group: "Can anyone name our best-selling product?" The response came back in a happy roar: "VO5 shampoo!" I followed up with another one: "And how about our profits—where do most of them come from?" The group fell into speculation and confusion, and I left it that way for a moment. Then I spoke again. "Look around you on the floor, and if you spot a penny, pick it up. That penny represents our total profit on a bottle of Alberto VO5 shampoo." I then went on to explain that the chain of beauty supply stores called Sally Beauty—which the people in Alberto-Culver North America sometimes considered our side business—was, in fact, the powerful, growing, profitable driver of the entire Alberto-Culver Company and, indeed, was carrying the rest. The process of turning our employees into businesspeople had begun.
Over time, as people became more attuned to our business challenges, we also helped them see exactly how their own work fit in. In 1998, we developed the concept of spelling out "individual economic values," or IEVs—short statements that describe how individuals contribute to our profitability. It's a big deal to us to get these right. Let me give you an example. In her IEV, one of our consumer relations people specified actions like "I respond to any customer's call within x hours" and "I am prompt and courteous in my responses." All true, but not quite the perspective we need in an IEV. We talked about it and came up with "I turn every customer I talk to into a company fan." We want each employee's IEV to communicate—to its owner and to the world—that this is a person with the power to drive the success of the company. That consumer relations rep is now a person who can send coupons, make settlements—in short, take action. A lot of people here have their IEVs printed on their name badges.
If I'm telling this story clearly, you're starting to see the culture we were working hard to achieve. We wanted to create a new world of in-your-face honesty and shared ownership of results. And that wasn't all. We've developed a list of ten cultural imperatives: honesty, ownership, trust, customer orientation, commitment, fun, innovation, risk taking, speed and urgency, and teamwork. After we'd agreed on the list, in no particular order, someone came up with the acronym HOT CC FIRST—and thank goodness, because we want all our people to be able to recite these values by heart. As a mnemonic, it's not elegant, but I like it that way because it shows that nothing was added or subtracted for the sake of a better catchphrase.
· · · ·