Creating a Culture that Values People

In 1994, I became president of our consumer products business, and we were in trouble. Our overall corporate numbers were good, carried by the strength of Sally Beauty—our chain of 2,400 beauty supply stores—but consumer sales had been flat since the late 1980s, our overall profits were plunging, and our profit margins, because of a strong reliance on value-priced products, were in freefall.

Our Challenge

We knew we had internal problems as well. Good people were leaving, turnover was way too high, and there were some generational issues as well. My parents are great people and strong entrepreneurs, but they are also children of the Depression and ran the company in a paternalistic way. They felt they should share the good news, but keep problems to themselves. In the company’s early heyday years, our best people had been pirated, so my parents moved to a “need-to-know” mentality as a way to protect our people and new ideas. You could say they encouraged silos.

In the early ’90s, with our consumer business flatlining and people leaving, I asked our vice president of human resources to do a deep survey of people’s attitudes. While a few of the work groups felt pretty good about the company, the overall results were awful. People had no understanding of where the company was headed and how they could influence it. They didn’t know where to go with an idea. They didn’t even understand their benefits or where to get answers. I was devastated. I knew I didn’t want to be a part of a company where many people felt so confused and negative, so I brought together a group of people I trusted, and we started to brainstorm.

To put us on the right path we had three key goals:

1. To focus
2. To communicate; and, most importantly,
3. To inspire passion and a sense of ownership

Town Meeting

In 1994, within two months of taking over the USA consumer products business, I held a town hall meeting with every person on our U.S. team—factory and office—smaller groups of about one hundred people in a total of eighteen separate sessions. I spent ninety minutes revealing the issues and, frankly, shocking all of us into action. This was probably the first time in a very long while that the company’s top management had talked directly to our people rather than just issuing a memo.

When I first walked into the room, I tossed dozens of pennies on the floor. No one picked them up or much cared. Maybe this wasn’t the best message to our very diverse workforce, but you’ll see where this is going. My first question was, “What’s our biggest item?” Everyone yelled, “VO5 Shampoo!” I told them to pick up a penny. Then I told them that Alberto VO5 shampoo—the product that was running our factories around the clock—didn’t make much money. In fact, we made less than a penny on each bottle. Instead of pennies, I could have dropped bottles of VO5 shampoo—the same value for us. The challenge was that within one year we needed to turn those pennies into nickels: five times more profit. Well, we got close. We made four and a half cents per bottle one year later.

Confronting Real Issues

It was a core part of our new culture to confront the real issues. We couldn’t simply talk about it; we needed to air the issues so we could act on them. We lived in a world where our competitors had billion-dollar brands and spent $100 million on advertising. It was easy to freak, easy to think you couldn’t compete, and easy to lose track of the pennies. But believe me, pennies add up, innovation can trump big bucks, and you must always play to win.

Alberto Culver Consumer Products had to re-learn how to compete, how to innovate, and, very importantly, how to create a culture that helped us to find, attract, and keep great people.

So how did we do it? An important part was learning how to listen. As we approached our VO5 profit issues, we learned quickly. Our factory workers had answers as to how to run the lines faster. Our engineers, scientists, and packaging folks had answers. Everyone had ideas and everyone, once they truly understood the seriousness of our issues and once they understood they were in fact responsible for their own and the company’s future, came together. The walls came down, and we started to rebuild. We had to have the courage as a management team to ask for help. We had to lay all the facts on the line. Importantly, we showed our vulnerabilities as an organization and truly started to grow.

To recap: it’s all about communication. If you don’t tell your workforce the concrete truth, they will make it up: rumors will breed, and the untruths will suck time and energy out of the environment. When there is bad news, there are always bad vibes and no matter how confidential I asked people to be, some just couldn’t stay quiet. I find the best way to approach any issue is with in-your-face honesty. “The what” is important, of course, “the how” is important, but most important is “the why.” All the way down to the forklift drivers, people need to know why: how did we mess this up, what went wrong, why are we doing what we’re doing, and what is the raw truth? All of this must be out in the open—never behind anyone’s back.

Once we were truly listening and decided this approach was working, we needed to create a vehicle to drive change.

Advocates: Group Development Leaders

So we created a job—about eighty jobs, actually—and this is the story of the GDL.

GDL is short for group development leader (eventually we upgraded it to growth development leader). Simply, we raised to a whole new level the importance of people in our work place. We made the care and feeding of our workforce a huge priority. We became over-the-top passionate about it. And we measured it.

The GDL title was in addition to a person’s regular job. Each GDL was responsible for a group of ten to twenty people. Sometimes they were the supervisors, managers, or vice presidents of those people, but often not. While generally the employees for whom they were responsible were within the GDL’s day-to-day work group, sometimes they were not.

What was most important was that these new GDLs had to be good communicators and passionate about what the company was trying to accomplish. Senior management met with the whole group of GDLs about ten times a year. And when I say senior management, that means I was always there, and I built my calendar around these meetings, as did all our managers and vice presidents whenever possible. Tone at the top is incredibly important in every major initiative and process, but especially when trying to change a culture. This was all about two-way communication. We wanted to hear what their groups were talking about: what bothered them, what they didn’t understand, and what they were proud of. At the same time, we laid out new company plans, problems, initiatives, and things we were particularly proud of such as our charitable giving, awards in the marketplace, or how our stock was being viewed by the analysts. In doing this we had several goals. First, we needed to solve as many of the problems as we could, either immediately or on a given timetable (examples: we needed more computers and we needed better telecommunications so we had to determine how and when these needs could be resolved). And second, we needed to make sure that everyone heard the same and the full message. Rumors were discussed and dispelled, new programs or benefits were presented, and strategic thoughts were explored.

It was the responsibility of the GDL to meet with their groups and take this information back to them within two days of the meeting. Everyone in the building looked forward to hearing “new news.” We wanted our GDLs to be advocates for what the company needed, but we also wanted them to be seen as advocates for their groups, getting answers and carrying the group’s problems forward. We also asked the GDLs to work to create a spirit in their group, through celebrating successes, recognizing personal accomplishments, and even through organizing special outings for their group that the company funded.

As you can imagine, some people were great at this role while others weren’t. But it was essential that every group felt they had an advocate and were getting all the representation, information, and special activities that other groups received. So once a year we did an intensive survey of every employee. We asked them to rate the company, their vice president, supervisor, and GDL. Individuals were anonymous, but the group results were not. We reviewed these results intensively, and I read the summary sheets and made personal comments on all of them. The number-one lesson was that leadership is about engagement with your people. We had leaders who were charismatic and not only led the group on a day-to-day basis, but also engaged their folks after hours, treated people to snacks, remembered birthdays, and extended other personal touches. And we had super-quiet people who had great one-on-one relationships with their groups, but led “softly” and scored every bit as high as our more energetic people. The key is about integrity, trust, understanding the needs and desires of your people, and being there to help them succeed. If a vice president or supervisor was rated great, we celebrated it with public recognition and awards. If they were weak, we developed a program to improve skills in the areas of weakness. If a GDL was great, we had the same kind of celebration. If weak, we put them with a strong GDL to work together, developed a program for improvement, or, in some cases, if a GDL felt this wasn’t a job with which he or she felt comfortable, or we thought they couldn’t improve, we replaced them. That didn’t impact their basic job responsibilities, but we recognized that the GDL job required a specific set of people skills, real emotional intelligence, and a strong level of commitment. (You can imagine if GDL Tom returns to his group with five or six awards and GDL Lisa returns with none, the motivation to perform for next year’s survey is intense.)

Tools: Values and Individual Economic Values

We developed other tools that were important to our cultural growth.

Through a participatory process with groups of employees, we agreed on a list of ten values that were essential to our success. Beyond publishing and placing our values everywhere, we also had GDLs and vice presidents randomly ask people what the values of the company were—and when stated correctly, dinner certificates or a cash award were immediately presented. People memorized our values quickly.

We came up with the concept of Individual Economic Values (IEVs). In other words, what exactly were we paying a given employee to do. For the most part, people do whatever it is that you want them to do—if they know exactly what that is. We asked everyone to define their IEVs    Each set of IEVs started out with: “I grow sales and profits by . . . .” We found that all too often people didn’t really understand exactly what their bosses wanted them to concentrate on. For example: we had a marketing person who was growing one of our brands in a big way but was losing a fortune. We kept talking to her, but she was sure she was doing the right thing. Her IEVs were rewritten by her boss to say: I grow sales and profits by increasing our share of the market profitably. She finally got it.

When we asked our consumer relations group what their IEVs were, they said something like: I grow sales and profits by answering consumers’ letters or calls promptly, and I inform our labs or legal department if something is really concerning. All of that was good, but it could be better. When consumers called, or wrote, they were usually upset. We turned this group’s IEVs into: I grow sales and profits by turning every customer I touch into an Alberto Culver fan. We encouraged our people to give coupons, replacement product, or whatever they felt was fair. And we required a follow-up call a week or so later to make sure our customer was satisfied. We put “power” in the hands of our people, and they felt more responsible for our company’s growth. In addition, their jobs became more important, and we ended up with much happier employees and customers. Of course, we maintained the lab and legal department connection and had them do their job in a timely way.

One more example: my assistant was terrific and she was often the go-to guide for the whole company. Everyone talked to her, and she was like the master traffic cop. But in my mind, her job was to do two things: 1) save me time and 2) help me be open and approachable to all. (An assistant can wield a great deal of power, and I needed her to be part of my “open and approachable culture.”) When we talked about these roles and I started asking her to tell me each month what she did to save me time and how she was promoting the culture, she became a whole lot more focused on my needs rather than everyone else’s. Frankly, they paid me a lot at Alberto—so all the time she could save me was important.

All of this can be summarized into one important point: our people felt that at Alberto Culver they could really make a difference—a difference that would make the company stronger, ensure our future growth, and ensure their future growth and rewards. Once they realized we wanted their input and we would act quickly to implement good suggestions, a whole new team environment emerged. I have read that the single greatest predictor of workplace success is emotional intelligence. I personally believe it because I have seen it in action. Frankly, I am not all that smart. I am pretty creative, but overall super-smart—well, I am not. But here is what I knew: if my team and I could get even half of our people at Alberto to be more engaged in what we did, to take more ownership of our products, to think and work 10 percent smarter, it would be like adding hundreds of super-high-quality new folks to our workforce. And that is exactly what we did.

Recognizing and Validating People’s Higher Power

Now I need to switch to the personal for a bit. We have been talking about a business environment, business changes, passion for the business, and how we developed all of this into a cultural change. But it is critical to realize that for most people, as important as their jobs may be, they are also working for something that is even more important in their lives: I call it a “higher power.” It may be their kids, their church, or their community. Think about it. When you were in high school or college, the really strong performers did well in class and on the field, and they also ran the clubs. Their lives were filled with more than just schoolwork.

If this was where I stood—if without question my family was far more important than my job and I wanted everyone to know it—I knew there had to be just as compelling issues for the many other critical performers in our workplace. How could we build an environment where everything our people valued could coexist and be celebrated? Strong talent is hard to find and hard to keep. Could this be a competitive edge for Alberto Culver? Could this be the key to true engagement?

When employees realize that you get their “higher power,” it is so powerful. Do you have any idea how liberating it is for people to be able to proudly proclaim their kids will always come first? Families count. It did in fact become a competitive edge for us. But don’t ever get me wrong: most people at Alberto Culver worked harder and longer than they ever worked anywhere else.

We simply offered a place that recognized and celebrated the “what else” in people’s lives. 

At Alberto Culver, we were proud that we knew who we were and who we were not. As we set out to energize and change our culture, we had to face the facts: we were not saving lives, rebuilding the inner cities, or providing shelter to the homeless.

We made shampoo. But how could we get people totally engaged in selling more shampoo and making more money?

One of the ways we succeeded was by touching the hearts of the people who worked for us.

Powerful Growth Linked to Caring

Everything fun, warm, and wonderful about what we were as a company, we tied back to powerful growth. We had always supported hundreds of charities. In my company-wide message each year, we featured video clips of three or four of the groups we supported.

It was truly powerful for our people to hear Henry Betts, the head of the Rehabilitation Institute of Chicago share how we’d helped, or to hear Ralph Campagna of Off the Street Club, a nationally recognized program that gives kids who live in the most drug- and crime-infested areas of Chicago a place of hope, share how we had played a part.

We gave money, we gave time, we made Christmas special for kids and seniors, we tutored, we taught; and all this was warmly wrapped in video clips that featured a powerful message—a message that worked for our people and our shareholders.

That message was simply: powerful growth yields the privilege to care. Every new program we initiated, every benefit we offered, and every celebration we held was tied to powerful growth.

The more money we made, the more charities we could support, and the more employee benefits we could offer. Over time, I am positive this was key in driving morale and “employee ownership” of products and processes.

All of this works. I’m passionate in my belief that people drive everything. At Alberto, we said that we have people, and we have brands. I personally believe our culture change was the most important new product we launched in our fifty-plus-year history.

In June 2001, we were honored when the Harvard Business Review published our story on culture change: “When Your Company Needs a Makeover.” Our story was later reprinted in Harvard Business Review on Culture and Change (2002). In addition, the story of Alberto’s remarkable growth and culture change is profiled in Apples Are Square (2012), by Susan Kuczmarski and Thomas Kuczmarski, and in Resurgence: The Four Stages of Market-Focused Reinvention (2014), by Gregory S. Carpenter, Gary F. Gebhardt, and John F. Sherry.

To recap quickly: