The Challenges of Leadership

Speaker Name: C. R. Skidmore
Speaker Title: Chairman and CEO
Speaker Company: The Dize Company

It's a pleasure to be on your campus, especially this time of the year--a time when the snow has melted and spring is in the air. And seniors have begun those annual rites of passage known as "getting a job." College students today are the best prepared physically and mentally to face the challenges of today's world. Every day I am more convinced of this.

With the sudden lurches we've seen in the economy and political systems throughout the world in the last several years, it can be an unsettling time for graduates to be embarking on a career. There are always going to be opportunities for bright individuals who are willing to work hard. All of you here have demonstrated that you can work hard, but can you continue to meet future challenges?

There's only so much that any college or university can do to prepare one for what's ahead. This lecture series, for example, provides an opportunity for leaders from various segments of the business community to share some of their experiences with you. After seeing the names of the distinguished leaders who have preceded me in these lectures, you may be wondering why the president of a relatively small business in Winston-Salem, North Carolina, was asked to speak.

I'll admit that I've asked myself that same question. In fact, I asked Dr. Peacock and Dr. Davis that question: Why invite Randy Skidmore to follow the likes of Ed Crutchfield, the chief executive officer of First Union Corporation, one of the nation's largest financial institutions; or Bill Lee, chairman of Duke Power Company, one of the nation's most respected utilities; or any of the other executives from major corporations who have spoken to you? They are the movers and shakers in North Carolina and possibly the nation. They are heavy hitters; they bat clean-up. What could I offer to you that an executive from one of the state's larger corporations could not offer?

As you might expect, I wouldn't be here today if Dr. Peacock and Dr. Davis had not given me good answers to those questions. Like the body builders on "Saturday Night Live," they pumped me up. They said the message may be the same but what is important is the perspective from which it is presented. The more different the perspective, the broader one's knowledge base will be. During my discussion today, I hope to share with you a perspective on the "Challenges of Leadership" that you may not have considered.

My company, The Dize Company, is a small business which is composed of three divisions:

The Awning Division manufactures and installs awnings and signage for residential and commercial use. Properly designed and installed, awnings will cause an old building or old shopping center to come alive. Blockbuster Video stores use back-lit awnings very effectively.

The Tarpaulin Division manufactures protective coverings for the transportation and storage industries. Our products are used to cover everything from baseball fields to garbage trucks.

The Window Fashion Division manufactures all types of indoor window coverings such as venetian blinds, vertical blinds and pleated shades for residential and commercial use. This is our largest revenue producer and our window coverings are marketed through 2600 dealers.

We employ approximately 110 people in Winston-Salem. We have customers throughout the United States but principally in the Southeast. We do a significant amount of importing; therefore, we are involved in international commerce. Each division has marketing, sales and general management which are responsible for their division's success. Our business has all the challenges of a large corporation--just on a smaller scale.

I do appreciate Dr. Peacock and Dr. Davis and others responsible for this Lecture Series asking someone from the small business community to participate. You must realize that my company, The Dize Company, is more representative of companies located in North Carolina than First Union or Duke Power.

In fact, more than 80 percent of all companies in North Carolina have fewer than 100 employees. Over the last 10 years, the average size of companies in North Carolina has dropped significantly. Today, the average-size company in our state has around 15 employees. Much of that is a result of the automation of factories--especially in the textiles industry--and the downsizing of major companies. This percentage in North Carolina is larger than the average in other states, primarily because North Carolina is number one in manufacturing employment.

Let me put those numbers into perspective. For every company the size of R. J. Reynolds Tobacco Company, there are more than 800 other companies in North Carolina with less than 15 employees.

Part of the decline in the average-size company in North Carolina is a result of the entrepreneurial spirit that's alive and well here. Our state is one of the leading states for new business startups. In recent years, 75 percent of our net new employment has come from companies with fewer than 100 employees.

It's important for all of us to understand and appreciate small business for at least two reasons. First, small business is the basic fabric of the United States economy. Most of the nation's large businesses at some time were small. And, secondly--and possibly more important to you--you may become an owner of one of these small businesses some day.

No matter whether the company is big or small, the challenge of leadership is the same. In most cases, you're dealing with people, products and markets. Successful businesses have good leadership. The major differences between leadership in small and large organizations are the size of the population with which you deal and the immediacy of the feedback you get. Not only do you get instant feedback in the small business, you get purer feedback because it's not filtered through many layers of management. You kick the cat and you immediately hear the cry or feel the claws.

While a career with a large corporation offers many benefits, there can be disadvantages as well. In some cases, you get on a certain management track that provides little satisfaction or potential for the future. The more rigid the organizational structure and culture, the greater the influence it's likely to have in shaping your professional and personal lifestyles and attitudes.

As a partner of Price Waterhouse for a number of years, I had the opportunity to observe many companies very closely. I was able to observe successful and unsuccessful leadership in both large and small companies. Leadership determines how a company is perceived in the marketplace. For example, two of the largest banks in the Southeast are NCNB and Wachovia. Both are excellent, well-managed banks. One is perceived as aggressive and growth-oriented and the other as conservative. Each reflects the leadership style of its senior management. In a smaller company, the leadership style is more evident and easier to alter when necessary.

The concept of leadership is different to different people, although the objective is the same and that is success. From my perspective, there are several key fundamental leadership qualities found in successful leaders and, hopefully, some of these qualities are found in the management of The Dize Company.

Leaders take care of their people. They need to thank them in the morning, thank them at lunch, thank them at the end of the day and provide them a good paycheck at the end of each week. Leaders must remember who makes the product and satisfies the customer. These are the people who are most important to the company. I can't make an awning. I cant make a venetian blind. But I know who can, and I am going to take care of those people.

At Dize, there is a strong feeling of family among the employees. That's due in part to the size of the company, but I hope there's more to it than that. For example, one of the benefits we provide to our employees is a hot lunch each day in our cafeteria. Every day that I am in town, I try to have lunch with the employees from one of our divisions.

Also, I hope our personnel practices contribute to it. A few weeks ago, I was giving a visitor a tour of our facilities. He was impressed that one of our employees has been with Dize for more than 30 years. When I introduced him, the employee pointed across the room and told me to be sure to introduce our visitor to her mother. Her mother has been with our company for almost 50 years and is now in her eighties. That kind of loyalty and longevity is common in small businesses and contributes to our success.

Dize has been in business in Winston-Salem for over 75 years and has always had excellent, qualified, dedicated people. Part of my decision to acquire the company in 1986 was based on the fact that Dize had outstanding people.

Leaders are decisive. After weighing the options and evaluating the risks, a leader acts quickly and sticks with his decision. During my years at Price Waterhouse, I never seriously saw myself owning or operating a small manufacturing company. The prestige and power seemed to be with larger companies, but the personal satisfaction is generally not.

I saw the acquisition of Dize as an opportunity for me to practice what I had preached for so many years at Price Waterhouse and as a challenge for me to turn a staid and stodgy company into a more profitable, market-oriented business.

When a decision comes to me, it has been well researched by divisional management. They need an answer and delay is not an answer. Risk-taking is essential to being a good leader. But, before a risk is taken, a good leader determines that the reward is greater than the risk. If a leader can't make a decision, what does he add to the enterprise? A good friend of mine says, "You can't get anywhere standing still." There is a lot of truth to that!

Leaders are good listeners and good communicators. You must be willing to share insights and experiences with your employees and to help them mature and develop their creative skills. You are only one and they are many. It's your job to get their creative juices flowing. At Dize, we frequently communicate with all of our employees. We want to know what they think about every aspect of their jobs. We are serious listeners and we take action on what we learn.

Our management group makes a big effort to let our employees know why something is done. When people understand why, they will do a better job. When you have a good dialogue with your employees, they feel more a part of the success of the company. I personally make a strong effort to be visible so that every employee knows me and feels comfortable bringing things to my attention. This gives me a true feel for what's happening and enables me to be a more effective leader. It also tends to keep divisional managers on their toes.

Leaders are open-minded and alert for realities that differ from perceptions. For example, we were concerned about the amount of time that our employees were taking away from their primary work stations. They were concerned about the length of time it took to locate materials that they needed to do their jobs. While our managers tended to think that the workers were loafing, the workers felt that productivity must not be very important if they were forced to leave their work stations frequently to get materials. This was a classic "Who shot John?" The fact was that both parties were right but the company was the loser.

Our response was to reorganize the work area so that no one takes more than five steps from the work station to get materials or to pass the product along to the next station. We also created a position of material handler whose job is to see that each station is fully stocked with the right materials every day.

The net result is that our productivity rose from less than 70 percent to over 90 percent and the employees are much less tired at the end of the day. This was a win/win situation which could have easily been a lose/lose situation if management had not been willing to hear the employees side of the issue.

Leaders motivate their employees. Over the years, corporate management has always used fear--fear of losing one's job--as the paramount motivator for people to work harder or to do a better job.

The risk of losing one's job is a good motivator until the unemployment rate drops below 2 or 3 percent as it did in Winston-Salem several years ago. We found that almost everyone in our company could literally go next door and get a job paying the same or more; therefore, they didn't care if we fired them. Full employment creates as many problems as does under-employment.

All of our divisions are labor-intensive which creates an interesting challenge for our managers. How do we keep good employees while maintaining an appropriate relationship between personnel costs and revenues?

From interviews with our employees, we found they are happy with the benefits and the work and loved the family atmosphere, but money was the motivator. They wanted a more direct tie between effort and compensation. The point was that when Sally Jane worked harder and produced 25 more blinds than Mary Lou, Sally Jane wanted more money. That was a reasonable request. The person who works harder should get more money.

As a result of this, we created an incentive system that monetarily rewards the good, fast worker and encourages the marginal worker to become more productive. The employees didn't tell us specifically that they wanted an incentive system. But we, as listeners, were perceptive enough to understand what they were saying and to know how to address their needs with sound business strategies.

After two years, our productivity has risen without significant investment in new technology. Our quality has improved as has absenteeism. Our turnover is almost zero.

Leaders are visible and approachable. It's always easier for a manager to leave his office than it is for the worker to leave his station. The employee will always be more comfortable making suggestions when he's on his own turf. Many managers feel uncomfortable outside the protection of their offices and their secretaries. A true leader is one that can operate in any environment because he is comfortable with himself and he truly wants input.

Most of our manufacturing employees did not go to college. In fact, some did not finish high school. No matter what their education level, they have a real quest for knowledge. As a whole, they truly want to learn and do a better job. They want to better themselves and they appreciate your taking time to listen and teach. The more visible and approachable you are, the more input you will get. The more input you have, the better your decisions will be.

Leaders avoid being problem-solvers. Most decisions can be made by subordinates. It enhances their self-esteem and gives them a greater feeling of worth to the company. An effective leader guides the decision-making process so those participating feel that it is their decision. When it's their decision, they will get it done.

Managers need to be intentional in developing the decision-making skills of their people and giving them the opportunity to use those skills. The workday at Dize starts at 7:00 a.m. But I make it a practice not to arrive until around 8:30. I've learned that most of the nit-picky problems surface early in the workday. By the time I get to my office, most of those problems have been taken care of by people who should be making those decisions.

Although my workday starts around 8:30 a.m., it seldom ends before 7:30 p.m. By that time, everyone has gone home, including the janitor. I remember being at the office around 7:30 one evening when the phone rang in Customer Service. I answered and said, as I usually do, "Im just cleaning up around here but I can take a message." I never told the caller who I was.

The caller was a customer who had an exhibit at the Furniture Market which was opening the next day. She indicated that she had made a terrible mistake and needed help to correct it. Anytime you're fortunate enough to have a customer admit he or she made a mistake, you need to respond as quickly and positively as you can. I told her not to worry and to bring the order back at 7:00 in the morning and see our manufacturing manager who I guaranteed would take care of it. Remember--she thinks I am the janitor.

As things worked out, we were able to replace the blinds and deliver them to High Point the next day. She had the re-made blinds installed by the time the Market opened and she was happy. She called our manufacturing manager back later that week to thank him for his help and told my manager, "You have the most intelligent janitor I've ever talked to. You should promote him to Customer Service some day."

Leaders must have a good sense of humor. You should let people know that work is not so important that you cant have a little humor. Humor is a great reliever of tension. It will relax you and the people with whom you are dealing.

Leaders must establish strategic direction and provide vision. The best way to ensure that a company is prepared for the future is through systematic long-range planning. Although you may be knee deep in alligators, you must plan for the future.

In a small business, the owner works on his own ticket. A small business person doesn't always have access to the wide range of information that the leader in a larger corporation does. Many small business owners overcome that handicap by establishing and maintaining relationships with people who can provide that access. I know I do.

One of the exhilarating parts of running a small business is the risk and responsibility that's involved. It's the kind of thing that gets you up in the morning. And keeps you going, sometimes well into the evening. The buck truly stops at your desk.

There's something special about being small. It seems that today even the big businesses are trying to become small--in their approach, if not in actual size. You see management techniques made popular in Japan adopted by many U.S. companies.

Many large organizations establish small groups, teams or task forces that identify problems and opportunities and develop responses. In effect, they are addressing problems the same way that small businesses do. Greater responsibility is being pushed down to the manufacturing floor where workers are given the authority to take certain actions without the approval of supervisors.

This is a sign of good leadership which is the same wherever it occurs--in service organizations or in manufacturing plants, in multinational corporations or hometown shops. The more effectively you meet the "Challenges of Leadership," the more successful you will be no matter what the size of the environment.