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Employees First, Customers Second
Focusing Inward Yields Success for Rosenbluth Travel

NFC: In 1992, Rosenbluth underwent a massive redesign of the company, people were laid off. In particular for a company noted as a caring company, there must be a survivor impact. Did any of that play out?
McFerrin Peters: It was horrendous. I think the only thing that made it feel better was the way it was done — with the right intention and complete fairness. Regarding right intentions, we didn’t just sit down and say, “To reduce costs, let’s cut X percent of our workforce.” We said we’ve had a great first 100 years but the future’s looking very different. Let’s sit down and literally redesign our company around the future — our clients. We asked what structure will support this goal and what skills will we need surrounding our customers. Then we worked backwards to headquarters to support the field. This created a new efficiency model that showed some redundancies. You can’t have and ensure long term employability for your people if you aren’t moving forward. If you want to be around for the next 100 years and be a growing company, you’ve got to evolve. Those were the right intentions.

From there, we took fairness through to all the processes. There was no favoritism. We said this is the skill set you need for each job and everyone must apply for these jobs. We all felt very unsettled.

It’s hard to do your current job for the customer while interviewing for a job with your company and while trying to redesign what those jobs are. It was a terrible year but the result was unbelievable.

NFC: Before selecting individuals for these new jobs, you assessed all of the successful people in the company to identify their core competencies. These competencies were result orientation, flexibility, commitment to continuous learning, commitment to the values, teamwork and client focus. Wouldn’t any business need those?
McFerrin Peters: Yes, but like most companies we looked for them by instinct. We never had them written down or clearly identified. Gut feel worked great when we were a company of 50, or 500, but when you become a global company of nearly 5000, you do have to have some science. That’s one of the secrets of keeping the small company spirit and fire as you grow to be a very large company.

NFC: You're basically working with friends. You hire friends. It's very easy on a group of six. I'm intrigued by how that translates to a group of 4,000.
McFerrin Peters: Certainly the friendships strike out mostly in your work group, your unit, or department. However, when a company really stands for some strong, bold values and when they hire toward those values, you’re going to have a lot in common with the other people you work with.

It doesn't mean that everybody thinks alike or looks alike, that's not it at all. If you go over to France for 10 days to set up a project, you're probably going to like those people over there because they're all working toward the same goals and they have similar values

NFC: Rosenbluth was one of the early pioneers in knowledge management.
McFerrin Peters: Yes, we have always believed the key is not the equipment, the products, the processes, but that it’s always the thought leadership — maximizing brainpower. I think that’s a fascinating field and one that more companies are going to pay attention to especially as we become a more decentralized society and people are working from here, there and everywhere. Employees are going to be measured more on their knowledge than the time clock and their hours in an office.

NFC: As part of your approach to knowledge management, you’ve developed a database of each individual’s skills?
McFerrin Peters: Yes, we began with a baseline to assess current skills based upon a questionnaire that asked these things. What foreign languages do you speak? What programming languages do you know? What continuing education classes have you been taking? What core competencies do you have? Then there was a more open-ended question that asked: what other skills should we know about?

In many ways there were a lot of very nice surprises. You might have somebody working in accounting and you knew they had accounting skills, but you didn’t know they spoke French. When it’s time to open a new location in Paris they’re a great person to send. It doesn’t have to be a person who normally opens offices. It opened up a whole world of using skills that people were not hired for. It was about making those skills blossom and sharing those skills with others. We learned a lot about tangible skills.

We also are going to move toward putting intangible skills on the questionnaire. Some of those you-know-it-when-you-see-it type skills; leadership, advocacy, conflict resolution, interviewing and others that may not be part of your core job. The database tells you where you are today—what types of skills you have.

NFC: Some people say, ”I am a designer, I can design publications,” but they really aren't. Did you have to deal with this?
McFerrin Peters: I think on some of the skills such as a foreign language or programming, they're not likely to say they have the skills when they don't. Especially with the value and the ethic at that company, they know if they say it, they're going to find themselves in France. I'm sure there had to have been instances when people didn't explain their skills in the way they were interpreted but it’s still worth the effort to bring those skills forward.

NFC: You have this database and you identify what the needs of the company are and you do a yearly budget of time.
McFerrin Peters: The time budgets began as a twice-a-year process. It may have shifted to once a year because it’s so painful. It involves literally keeping a log on your desk and saying, “Okay I just spent five minutes on email.” You can’t imagine how many time wasters are revealed and that brings opportunity to streamline things as a company.

It’s an eye-opener when the information is consolidated and the senior leadership looks for trends. They may say, “Okay we’re spending X amount of time on this function.” When you look at our priorities we’re spending too much time on this and not enough on that. It’s very productive. You can ensure that you’re maximizing your assets.

NFC: Your time is your inventory?
McFerrin Peters: Exactly. In the service industry, your time is your inventory but some sectors of the service industry have more discipline than others. The next piece is to meet with clients in a very detailed business planning process to say, “What are your short and long range strategic objectives?”, and make sure we understand what they are. We then match those back to how we are spending our time (from time budgets) and what skills we possess (from the database.) That completes the circle of doing exactly what your clients need you to do.

NFC: Rosenbluth uses a 360-degree evaluation. I’ve never sat down with a friend and said it’s time for your annual 360-degree evaluation.
McFerrin Peters: First of all, it’s in writing and it’s anonymous so people feel that they can be brutally honest and won’t be singled out for their answers. The questionnaires go to each person’s leader, each person’s peers (a person on the same level but not necessarily within their department), their direct reports and to outside clients. If you have an internal department like accounting, your outside clients are other people in the company.

The surveys are sent to an outside company that tabulates the scores. You receive marks for what each category thought of you as well as a total score. More important than the absolute numbers are the disconnects; where one group thinks you’re fabulous and another group thinks you’re terrible. It’s those types of inconsistencies that make for problems in the workplace and offer the greatest chance for improvement.

When the scores come back they go directly to your leader, not to you. The leader then sits down with you and says here’s how I interpret what I see and here are some things you can do. Each person comes up with their own individual development plan for the next six months that specifically addresses those issues where people around them thought they needed to improve.

NFC: If we are friends, why does it have to be anonymous?
McFerrin-Peters: Anonymity is necessary to ensure complete honesty. When it comes to the issue of fairness, let me share my favorite analogy. My husband was a Wall Street trader forever. He now directs trading for a pension fund, but for years he always worked down in the trading pits. I would go to watch him sometimes. Millions of dollars were traded on nods and hand signals and eye contact. I would say to him, “What if it would turn out to be a bad trade. Do people just say, ‘I never nodded at you?’” He said, “Yeah once. Once. If they do it again they’re never trusted again. They’re ostracized from the trading pit.”

It’s an honor system that works. It fascinated me that all these people that don’t know each other very well would do it on a nod and on eye contact. I think it’s the same with these anonymous tools. You might be able to slam somebody once, but if you do, it comes back to haunt you in the end. You’ll see yourself slammed in your surveys. Because people are happy to have those tools, they pretty much honor them and act like adults.

NFC: Does Hal Rosenbluth receive a 360-degree evaluation as well?
McFerrin Peters: In fact, it all really started with him. About 10 years ago, when he started the vertical reviews in the company, he asked the seven of us that reported to him to review his performance. We started asking those who reported to us to do them for us. We didn’t invent vertical or 360’s , but we’ve jumped on them and have had great results.

NFC: In your book you and Hal Rosenbluth looked at 14 companies that were also part of “The 100 Best Companies To Work For.” What was the most thing interesting you learned?
McFerrin Peters: One thing, in particular, was very interesting to me. We looked at companies that were in every industry from manufacturing to service, big and small and geographically diverse. Across every company somebody in the organization said something about the Golden Rule. Every company had that as a core value. More than half the companies specifically cited it as such. It was a caring, a respect for the individual that permeated the workplace which made them dominant in their industries.

Individual programs and ideas that sprang forth were fascinating to me as well. Hallmark Cards for over 40 years has had a daily employee newsletter. They also have a work and family services department.

I feel one of the most important issues for the future of businesses and peoples’ lives is the balance between work and family. Companies are going to have to make it a priority because it’s the right thing to do and because they can’t expect productivity out of people who have worries on their minds.

Hallmark also has a program called “A Moment’s Notice,” where if you wake up and there’s a couple feet of snow on the ground or your child is sick they will make immediate and excellent child care arrangements for you so you can get to work. They really try to alleviate stress.

NFC: I believe Hal Rosenbluth said rather than hiring quality experts and teaching them about the company, you hire people that fit the company and then train them to be experts in quality. Can you talk a little bit about any quality programs you have?
McFerrin Peters: Many years ago we hired some quality experts. I remember the process of selecting them. We wanted to choose someone that had a good sense of humor that would make it fun because quality is largely math.

We had a two-day orientation which was completely attitudinal, philosophical, a lot of fun and ice breaking. Then in the very middle of these two days, we stuck a day of quality. It was “Oh I’m having a ball, then I’m doing math then, I’m having a ball again.” Surveys on our orientation asked if people were using the quality tools and everybody wrote “No.” We thought, “We’re spending all this money bringing all these people in, training them in quality and they’re not using the quality tools.”

Then, somebody had a hunch. They sent out a different questionnaire to the same people, naming specific quality tools. It asked do you use process flowcharts, do you have agendas for your meetings and do you map things. They said, “Of course we do.” They weren’t recognizing that they were using quality and that’s the beauty. We removed it from orientation.

We do still train in quality but more than anything else it happens on-site, on the job, with people who are using the tools saying, look at what a great tool this is, it helps us in this way. They’re learning it where they work. That’s our approach to quality in a nutshell.