In November the Executives Breakfast Club had the honor of interviewing Tom Walter, CEO of Tasty Catering and Rich Panico, Founder and CEO of Integrated Project Management. Both men and each of their companies have received multiple awards and recognitions for their commitment to fostering a culture of ethics, trust, empowerment, and integrity. Tom recently co-authored a book titled It’s My Company Too! where Rich and IPM were featured as a case study. Below are some takeaways from their interview at the EBC.
EBC: What is a values-based culture?
Rich Panico: We have baseline principles that guide all our decisions, not just some decisions. When we talk about values-based culture it’s one in which principles are absolutely understood and are applied consistently regardless of the consequences. I truly mean regardless of the consequences because if you never have to really stand up or have the opportunity to prove that the values are real where its cost you money you will never gain the credibility as a leader that you really need to gain access to the heart. So in our organization honesty is at the top of the list. We tell candidates if you lie once in this organization you get fired.
One time I was presenting at DePaul to a graduate class and I made that statement and a gentleman in the back of the room, this elderly gentleman who I thought was a student and later I found out that he was another professor, he stood up and he said ‘That’s not very Christian of you’. And I said ‘Well, I’m not condemning this individual to hell, all I’m doing is firing him!’. He actually, at the end of class came up to me and gave me his card and said, ‘if you ever decide to go public give me a call, I’d like to invest in your company’.
Core Values of Tom’s company, Tasty Catering:
- We’re always moral, ethical, and legal.
- We treat all with respect
- Quality in everything we do
- High service standards
- Competitiveness- strong desire to be the best
- Individual culture of discipline (you’re responsible for your own area)
- You’re free and responsible within that culture of discipline. You can make decisions on your own but you’re responsible to everyone else within the organization.
Tom: We repeat those core values plus the culture statement before every meeting in our company. I’m firmly convinced that academia has it wrong. When I was in school they preached mission, vision, values were important. I’m firmly convinced it’s values then vision then mission. We hire and terminate people based on core values.
Rich: All our employees know our values. If you asked them what they were all their answers would be consistent. In fact, in our recruiting and interviewing process I ask candidates to go out there and test the culture by asking people what are the values of this company. Ask across the organization. And I also tell them, if you get once inconsistency if I were in your shoes I wouldn’t join this organization.
I’m confident everyone would say honesty, integrity, doing what you say you’re going to do and doing it in a moral, ethical fashion. And caring deeply is important. I would much rather have someone with an average IQ that cares deeply because they always win. They always win. If you have a phenomenal amount of talent but you don’t combine it with the heart, which really drives passion, that’s the catalyst in life, you’re going to fall short. Respecting others, treating others with respect and dignity, you would hear that too. And then you would also hear things that are more around the structure of our company and that is quality and discipline in carrying out your activities. That’s what we communicate in our hiring process. We tell everyone when they come on board “these are the things that you’re going to have to perpetuate, and if you don’t you’re going to find a short life here”.
EBC: So many of us wish our organizations had such consistent clarity about our values. How do you build and maintain it?
Rich: It’s not as difficult as we’re led to believe. It starts with the recruiting process. In our company, anyone who gets hired is going to have to go through at least ten interviews. At least. And that’s excluding a phone screening. Half of those interviews are targeted at trying to understand what people have in their hearts. When I interview people, typically every third interview people break down and cry. It’s not because I’m beating them up or being tough on them. I just ask them to tell me about what they most want me to know about what is in their heart. And then I ask them if they’re willing to share with me a significant heartbreak. And it’s not because I want to dig into their lives so much as I want to know how they processed. How were they able to process during that period? It tells me that they have an EQ- that’s emotional quotient- that they still have that instilled.
So it begins with that process when they come on board, staying close to them and making sure they are living in accordance with the values of our organization is important. We rely heavily on our managers to stay very very close to them. They’re told that they have a responsibility for helping us sustain and strengthen the culture.
Probably one of the most important factors is to make sure you promote the right people. I’ve been told ‘when you get to 25 people you’re not going to be able to sustain it [the culture], when you reach 50, 100, and I’ve had a lot of smart, professional people tell me this. Well, we’ve done that and we’ve surpassed that and the culture is stronger today than it ever was. But if you move the wrong person into a leadership position you become vulnerable. If you recognize that you’ve made a mistake, deal with it. I don’t care how strongly that person is contributing to the mechanics of the organization, you have got to cut them loose. And that is where companies fail.
We see it often. When someone will make the excuse that so and so is so talented and she is able to do this and that, but she is not a collaborator, she doesn’t espouse the values of the company. You’ve got to let those people go. It’s that plain and simple. If you accept people like that, you’re going to fail. And you keep reinforcing it. I’m certainly key to that. I feel like I’m “on” 24/7 both inside of work and outside of work. I’m very much aware of my behavior.
EBC: Do you have to be liked to be successful?
Tom Walter: I frankly don’t care if I’m liked. I think what is critical is respect. I think earning respect is far more important than being liked. As a leader you’re watched 24/7. You’re always watched, listened to, everything you say is repeated. The most important tool in your toolbox as a leader is respect. You earn that respect on a daily basis through your actions and your deeds.
EBC: What is Transactional vs. Transformational Leadership?
Rich: Transformational leaders are effective by being affective. Affective means that it’s not only about what we refer to as a managerial process and tactics that we learn in school or from companies we join- that’s process driven. It’s a script. And you can be effective to a certain degree in applying those principles and unfortunately there are many people that have the title of leaders who are nothing more than transactional managers. They’re playing to a script. It’s input output as though you’re working with machines. To be transformational requires you to appeal to an individual’s heart. That’s where the affective approach comes in. It’s much harder. It takes time. But it’s the thing that truly drives trust and loyalty, which is extraordinarily powerful.
In the end, the only true measure of leadership is the ability to gain an individual’s trust and loyalty and then to retain it. You don’t gain it once and keep it. It’s continually appealing to the intellect through the business decisions we make, and some are right and some are wrong, however no one ever questions the intent of those decisions because everyone understands that the baseline is honest.
We’re going to make mistakes, we all make mistakes, the best you can do is learn from them and move on. But transformational leadership is about inspiring people and truly gaining access to their hearts because that’s unstoppable.
Today you can buy intellectual property and ability, but the greatest competitive advantage that any organization can have is an inspiring, supportive culture. When people get bound to that culture even average performers will do things they never dreamed possible themselves. That’s transformational.
My wife and I could live in a box and be happy because I know what brings happiness and it affords me the opportunity to treat everyone with respect and dignity and it helps me take risks in business. I’m not afraid to lose what I have because I know what’s really important and no one can take that away.
Please join us at the EBC on Friday, December 14th for our next breakfast with special guest, Brian Baer, President of Dominick’s.