The founder of Hire Quality recounts how he turned his business around by learning to manage information instead of people.
From the Front Lines: A CEO's Take on Technology
Letting go of people and grabbing hold of information helped turn one CEO's business around
I was taught, like many entrepreneurs, that to be successful in business you have to be good at managing people. Now I believe that what matters most is being good at managing information. I learned this the hard way, after taking both types of management to the extreme: over a span of eight years, I went from managing an army (literally) of men and women for the U.S. Marine Corps to managing reams of information--thousands of job histories and employers' criteria--for my company, Hire Quality, a $1.5-million recruitment firm for honorably discharged military personnel. What worked (though inefficiently) in the first case was a near-disaster in the second. Here's how I turned myself around.
In 1993 I was the ultimate people manager. I was supervisor of total quality control for a $1-billion Department of Defense procurement test of the Javelin missile, a handheld antitank weapon. I had a staff of 24 controllers. Their job was to shadow military units that were deploying the new weapon in a war game. Before each exercise I'd carefully explain to the controllers what information to track--there were 20 data points' worth, covering everything from the time it took to fire the weapon to whether a hit on a target constituted a "catastrophic kill." Then after each exercise I'd hold a daylong meeting to collect the findings. My three assistants would enter the information into a spreadsheet, and I'd map it onto charts and graphs, which I'd present to my boss, who would then present them to his boss. It usually took three days for the information to get to the person who actually decided what to do with it.
I did all the thinking, told everyone what information to get and how to get it, and even told the data-entry people how to key it in. I told my boss what the information meant and gave him three options for using it. I was very effective--or so I thought.
Fast-forward two years. I had been honorably discharged from the military and had set up Hire Quality, in Chicago. In the beginning, I ran the company exactly as I'd run the weapons test: I spent weeks training new staffers--after all, I had to tell them exactly what to do and how to do it, right? I drew up detailed instructions on everything from the steps to take to enlist job banks to the questions to ask job candidates. I held full-staff meetings every day at 8 a.m. and then again at 5 p.m. to find out exactly what was going on. I barely had time to think, yet I was unilaterally making all the decisions.
Then lightning struck. By 1996 we'd grown to $1 million in sales. I'd turned over my sales department to my lead salesperson, but after six months of his tenure, sales had begun to decline. I moved out of the corner office and into the sales office, planning to "lead by example." To me that meant continuing to tell my new manager what to do. "Make more cold calls," I advised. The staff did. Sales plummeted, and the manager, one of my oldest and most valuable employees, handed in his letter of resignation.
Suddenly it hit me. I wasn't leading by example; I was micromanaging people--just as I'd always done. In desperation I tried managing sales data instead of sales people. I gathered together every invoice we'd ever sent and began tracking things: the number of sales we'd closed from cold calls, the number we'd closed from clients' calling us, descriptions of our best contracts and how we'd gotten those contracts. The graphs I sketched out from the information couldn't have been clearer: when prospects called us, we closed sales more than 79% of the time. Obviously we needed to improve our marketing efforts to attract more quality prospects.
As the founder of a high-volume company, I'd known from the start that I'd have to track everything on the service side of the business. So I'd laid out almost $400,000 on technology, installing a system centered on a massive database that combines Borland International's InterBase (an off-the-shelf database engine) and HQNet (a proprietary interface). But I'd neglected to bring the sales department into the loop, leaving its staff grinding out proposals and contracts on individual versions of Symantec's ACT!, a popular contact manager. After the cold-call fiasco, I tore into information management with a vengeance, upgrading my salespeople to GoldMine Software's GoldMine, a contact manager with excellent network capabilities; setting up dynamic-data-exchange links to automate sales letters, proposals, and contracts; and arranging to connect GoldMine to our accounting software to automate invoicing.
I know now that the way to succeed in business is to lead people and manage information. Instead of telling my employees what to do, I describe each objective (for instance, "We need a better system for automating sales") and leave it to them to decide how to proceed. To give them an edge in their decision making, I've opened up our books. All reports are available, in real time, to everyone over the company intranet, and employees are encouraged to refine them in any way they see fit. Hiring, scheduling, and training decisions, too, are all-company affairs.
I liken my transformation to the one the U.S. military went through after the Vietnam War. The Vietnamese, a small guerrilla force, operated in independent units of two to four people. The units took mission-type orders ("We're going to flank the enemy--good luck") and ran with them; no one told them what to do. In the end they were a hundred times faster than the U.S. forces and won the war--even though they rarely, if ever, won a battle. That the United States took the lesson to heart was evident during the Gulf War.
Today I have 35 employees working in three far-flung offices--Washington, D.C., San Diego, and Chicago. Every week I register 2,000 new job candidates and send more than 600 preinterviewed candidates to work. Yet I manage the organization with just one 15-minute meeting a week and one 60-minute companywide address. I continue to marvel at how much more effective I am now that I spend my time concentrating on the right questions to ask, rather than on providing all the answers.