CEO Lessons: Culture, Values and Profits are Intertwined
(Editor’s Note: Today’s post is brought to you by our friends at Kronos, the global leader in delivering workforce management solutions in the cloud. Tens of thousands of organizations in more than 100 countries – including more than half of the Fortune 1000® – use Kronos to control labor costs, minimize compliance risk, and improve workforce productivity. Enjoy the post!)
We talk about the value of front line employees. I was just at an event where we were discussing the importance of developing middle management. Yet, we often forget about developing the CEO.
Which admittedly seems a bit odd, because sometimes it seems we’re quick to blame the CEO for anything and everything that goes wrong. It’s their support we want for projects. It’s their vision we look to for success. But being a CEO is a tough job. So on the tenth anniversary of becoming the CEO for Kronos, I asked Aron Ain if he would share some CEO lessons with us. Luckily, he said yes.
Aron, you mentioned once that “No one teaches you how to be a CEO.” For young professionals today that aspire to run their own companies, what top two pieces of advice, or CEO lessons, would you give them?
[Aron] Some people are groomed to be CEO. Others are serial CEOs who have led multiple companies. I’m neither. I’m unique in that I’ve worked at Kronos my entire 36+ year career, held a leadership position in nearly every functional department, and eventually worked my way into the CEO role. To people like me, I say, “The sooner you start acting like a CEO, the sooner you’ll be a great CEO.”
First, you must understand that you don’t need to ask permission, you need to act. When I became CEO in 2005 (moving from COO), I looked around and hesitated to make decisions. Perhaps I was looking for permission before making a critical decision. My lightbulb moment came when I understood the decision lies with me and I needed to act and act quickly to keep the organization moving forward.
These decisions cover all areas – and in particular they are often decisions about something that is not working and doing something about it. Great leaders learn to identify problem areas and quickly act to fix the issue. That goes for programs, products, strategies, and people. Sitting on something and hoping it will work out is far worse than making the wrong decision to begin with.
Speaking of hoping, my second piece of advice is: Hope is not a strategy. It’s an old business cliché – but few act on it. Once you have a strategy, you must put resources behind it. Before approving the budget each year, I make sure the goals we agreed on as a team are properly funded. If not, I challenge other leaders and ask, “Were we not serious about this goal when we created it?” Once the strategy is set and properly resourced, a great leader must become an evangelist for the strategy. Believe in your strategy and let your excitement permeate through to customers, prospects, and employees.
Obviously, an essential ingredient in running a successful organization is delivering exceptional customer service. Kronos has tripled its worldwide customer base during your tenure as CEO. What’s the secret to creating “raving fans”?
You also must have great people. A product might be able to “sell itself,” but people buy from people. And in our world of enterprise software, cloud technology, and software-as-a-service, building long-term, value-added relationships with our customers is what will make us win. Nobody is perfect – and neither is every customer relationship – but if the people on your team are committed to your company and building value-added relationships, issues that arise become speedbumps instead of roadblocks.
Having great products and great people isn’t any big secret. But it’s amazing how many organizations fall short in this critical area.
The last time you and I spoke it was about innovation. One of the ways Kronos has really innovated its offering is by moving to the cloud. How did you know when it was the right time to take the product line in that direction?
[Aron] Simply stated, our customers told us. They told us via their requests and demands. They told us by choosing how they buy from us. In the early 2000s you couldn’t open up an IT magazine without reading about the cloud. Even before that we began researching how new data storage technologies could and would reshape our industry. But since workforce management involves very personal data – and ultimately leads to how people are paid – industry decision makers needed to feel secure about the cloud before we rolled out any products. That time came around 2009 and 2010.
We started with zero cloud customers back then – keep in mind that we had tens of thousands of happy Kronos customers using on-premise solutions. While we knew that cloud was the future, we had to be thoughtful about migrating existing customers, since each case is different.
Fast forward to today and the entire market is rapidly moving to the cloud – with Kronos leading the charge. Over 90 percent of our new customer product bookings are now in the Kronos Cloud, and the majority of our customer base runs in the cloud. That’s no small feat for a 38-year-old software company with more than 25,000 customers worldwide. The cloud offers so many benefits for large and small organizations alike, and our customers are voting more and more with their purchase orders that they understand the value of a workforce management solution in the cloud.
Of course, none of it matters if the organization isn’t profitable. Revenue at Kronos has doubled during your tenure – reaching more than $1.1 billion. As CEO, how do you balance corporate culture and organizational values with the bottom-line?
[Aron] That’s an easy one, because culture, values, and the bottom-line are all intertwined. We can’t have the success we’ve had without great people. We can’t keep great people without having a great culture that keeps high performers engaged and feeling appreciated. We work hard at that. Our turnover for top performers is around two percent, while those who underperform – largely because they don’t mesh with our values – turnover much higher. We’re very thoughtful about it, and purposely keep it that way.
Our executive team works very hard at making Kronos feel like home. A big part of that is investing in the manager-employee relationship, and ensuring Kronites believe in our values. Since 2010, our engagement scores have skyrocketed from 61 percent to 84 percent today – far surpassing industry benchmarks for global IT organizations. Compare that trend to our bottom-line. It took Kronos 30 years to get to $600 million in annual revenue. In the eight years since, we’ve broken the $1 billion threshold. This is not a coincidence.
Last question, what do you see in the future for Kronos?
[Aron] I’m focused on several key pillars that will drive Kronos and the workforce management industry into the future: Cloud, product innovation, global expansion, and employee engagement.
We’ll continue to invest heavily in the cloud while migrating new and existing customers into the Kronos Cloud. But it’s just one innovation driving workforce management. Consumerization of enterprise software has given rise to crisper, cleaner, and more intuitive user interfaces. Social collaboration and gamification can help drive engagement. Mobile and, eventually, wearable devices will make the workplace safer and more productive. But perhaps the most revolutionary innovation will be the use of analytics to help people make smarter decisions and drive maximum value from their workforce management investment.
These innovations aren’t only reserved for large enterprise organizations where we have world class offerings. They are for organizations of all sizes. We have a product suite specifically geared for small and midsize businesses, and the need for workforce management automation has never been greater for SMBs because of increasing compliance pressures. We’ll continue to develop products specifically for the small to medium business (SMB) market to help them improve productivity and increase employee engagement on par with Fortune 500 companies.
Internationally, we currently have customers in more than 100 countries, and we will scale, invest, and provide support in these growing regions, especially where automated workforce management solutions are a need. We recently opened a new Latin America headquarters in Mexico City; relocated our India operations to a new 93,000 square-foot space; and unveiled our new and expanded EMEA and UK headquarters in Bracknell, England.
Our biggest future challenge, however, will be to maintain our high levels of employee engagement at Kronos. Engagement and our culture are strategic weapons. Our ability to recruit and retain great people means we can create better products and deliver better services. Based on our 84 percent engagement scores, our efforts are paying off – but we must continue to work extremely hard as an organization to keep these levels high, with a focus on the importance of the manager-employee relationship. Keeping our engagement scores in the mid- to high-80s is a challenge that our executive committee and I are happy to accept, and we’re fully investing in it.
My thanks to Aron for sharing his CEO lessons with us. I’ve worked with Kronos for many years and their openness to share their success stories always impresses me. If you want to learn more about Kronos, be sure to check out their website and follow them on LinkedIn and Twitter.
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