A FORMULA FOR BUILDING A WINNING ORGANIZATION

Identify, Execute and Measure the Effectiveness of Your Strategic Vision

By: Scott D. Brabant, SVP of Finance and Information Management at ArchivesOne, Inc.

Building a winning organization does not come easily. At ArchivesOne, our team firmly believes that to be successful, it must be able to take a step back from the fast paced work environment to formulate, execute and evaluate the effectiveness of its strategic objectives. In the records management industry, since we constantly face new challenges and competition, we must be able to identify and adapt to our customers' needs and ensure that our infrastructure supports our long term goals.

Having the necessary capital to fuel our growth is also important, and creating metrics to measure our financial and operational performance is also critical. We take pride in our successful formula: superior customer service + flawless execution of core operating procedures + strong flexible capital structure + identification and reaction to critical data.

Building a winning organization also comes from building a strong brand and ArchivesOne has worked hard to reach that point. During the past year, thanks to the encouragement of one of board members, we explored our brand identity and what it is we wanted to accomplish during the next three years. Our efforts resulted in the following vision and mission statements:

• We act with integrity.
• We foster fairness and commitment among team members in a positive work environment.
• We act profitably We enthusiastically provide systematic customer service.
• We are open to new ideas and foster change through consensus.

We approached this brand-building process by first asking our management team for their perspective on the overall strategy and vision for ArchivesOne. We questioned whether we had the necessary internal resources and capabilities to execute our strategy and identified external environmental factors which might influence the success of our implementation. Next, we conducted training sessions to educate our staff on our vision and finally established measurements and processes to evaluate our effectiveness with implementation. Those collective efforts created a foundation for a winning organization.

Identify Your Vision. A winning organization needs to decide what is it that its management wants to accomplish over the short and long term. A strong first step is to take an inventory of the company's core competencies.

The resulting vision or mission must be focused and reflect what the company is and what it is capable of achieving. Perhaps the mission is financial in nature. For example, you may want to achieve a certain revenue or net income target, or you may want to be the low cost provider. Or the vision may be operational in nature, i.e. the management team may want to reduce direct or indirect costs. Management may want to utilize the latest in technology or become a leader in customer service. At ArchivesOne, for instance, our vision and mission was to exceed the expectations of three constituencies: our customers, team members and shareholders. We are building strong customer relationships by constantly asking our customers what is they want and expect in a records management company.

One of our approaches is to provide an industry-leading training program for our staff and recognize employees at all levels for their contributions. In addition, with profitability as the end result, we have built sustainable relationships with our key stakeholders.

No matter what the company's strategic vision becomes, the senior management team should be able to identify a sustainable, competitive advantage and execute. In particular, being systematic in the delivery of your products and services, creates a platform for flawless execution and satisfaction of your customers needs.

Execute. Once the vision and mission statements are developed, communicating the information to staff is equally important. At ArchivesOne, we have been extremely fortunate that many of our team members have been with us for years, sharing in our success along the way. As a result, they have a true appreciation of what it takes to be successful and are committed to our vision.

Because we have a strong commitment to building a premier records management company, we frequently evaluate the abilities and commitment of our team members. We consistently ask ourselves the following questions. Do we have the appropriate number of individuals? Are they adequately trained and motivated? In which functional areas are we particularly strong or weak? At ArchivesOne, we are constantly building a network and backlog of internal and external talent, because we never know when we'll be faced with an immediate need for a particular kind of professional.

Equally important to finding individuals who support an organization's vision is providing the resources to existing team members who exhibit the desire and commitment to make the company a success. For instance, we began a comprehensive training program this past year that involves members of our leadership team, specialists within our own organization and capable third party partners who focus on certain functional areas outside of records management.

Specifically, we regularly train our drivers on road safety. We identify proper lifting techniques to ensure the safety of our records center workers. We conduct software training to enable our customer service representatives the flexibility to provide what our customers want, when they want it.

We consistently evaluate other facets of our infrastructure to ensure that our records under our care are safe and secure. We identify weaknesses in our real estate, establish immediate corrective measures and execute. Our customers must be confident that their records are properly cared for and protected.

To ensure that our customers' needs are being met, we have challenged the effectiveness of the procedures and systems we've put in place to serve our customers. We initially developed a core operating procedures manual two years ago, but find ourselves constantly refining our processes and procedures as a result of the collaborative efforts of our team members. We have successfully implemented the best practices of many of the records center companies ArchivesOne has acquired in the past few years.

External factors also impact winning companies execute their vision. For example, we constantly challenge ourselves with the following questions: How do we differentiate from our competitors? Are we exceeding the expectations of our customers? Do we have the right capital structure to support our growth?

As we develop answers to our questions, we find that different companies elicit feedback in different ways. GE, for example, conducts town meetings to find out from staff and customers how they can make improvements. Dell CEO Michael Dell enters Internet chat rooms to anonymously research the effectiveness of Dell's products. During our sales efforts, when courting new prospects, we frequently ask what it is they like about their current vendor and more importantly what it is that they could do better.

And ArchivesOne frequently questions if it has the right products and services. Do our clients want imaging? Destruction services? E-vaulting? Once we have identified these complimentary services, we evaluate whether we have the talent and infrastructure in place to provide these internally or is it more efficient and economical to form strategic partnerships with those companies who have already built successful business models.

Maintain Fiscal Health. Winning organizations recognize that having the right capital structure is critical to success. The senior management team needs to ensure that the company has the proper financial resources and mix of cash, debt or equity to support your short and long term objectives and growth needs.

For ArchivesOne, our stakeholders are actually one of our most important resources. We provide information to them in timely fashion and are always honest, forthright and conservative in our approach. They help us identify weaknesses in our strategy and offer viable solutions. They are an important source of networking opportunities as well.

On a monthly basis, we provide our team leaders with profit and loss statements, revenue by customer by month and vehicle expenses. They also track overtime hours and report on negative variances. We educate our team members on the fundamentals of profit and loss statements and how their job duties impact the financial performance of the company. This data arms them with information to help identify trends and maintain profitability. Our team members also receive a report that calculates an efficiency measurement called "touches" which identifies the number of boxes and files that are touched as a component of direct labor hours. Each record center has access to this metric for all other locations.

There are other key data points unique to our industry. We identify who are fastest growing customers are, who are not growing, who have joined us, and who have left us and why. We measure accretion by location, or the number of net units added to existing customers. EBITDA (Earnings Before Interest Taxes Depreciation Amortization) is measured at the location level and on a consolidated basis. We project EBITDA on a calendar and on a rolling twelve month basis. Storage and service revenue growth is analyzed by location on a month over month basis. We also plan for capital expenditures. Sources and uses of cash should be appropriately managed to ensure growth needs are adequately funded. Real estate capacity is calculated and reviewed at least quarterly to ensure that we have the appropriate shelving and available real estate space under lease or ownership to support the number of units coming in.

Managing cash flow is paramount. We have a systematic approach in our collection efforts. A combination of telephone calls, emails and letters and most importantly promises made by our clients are tracked electronically. We treat our customers and vendors as we would expect to be treated, with respect and courtesy. We ensure prompt payment of our bills and look to strengthen our existing vendor relationships through constant communication.

Measure. In order to effectively measure our performance, ArchivesOne has established a number of processes which routinely gather and analyze data and providing key individuals with information regarding the effectiveness of certain business processes. These results, as well as those mentioned above, are tallied on our "ArchivesOne Management Data Bible" which we carry along with us wherever we go.

We survey our customers at least once a year about how we are doing, or how we can improve on our level of service or product offering. Our management team also participates in a national "Road Day" program in which managers at all levels accompany drivers on their various deliveries during a day to keep in touch with our customers. Managers will load and unload boxes and handle other routine tasks. According to our clients, we consistently meet or exceed their service, operational, technological and financial objectives.

This year we also began our "ACE" program, an acronym which stands for ArchivesOne Customer Excellence. Members from our leadership team are "ACE Agents", responsible for the happiness of selected customers who have achieved high marks on certain profitability indicators. We utilize internally developed business intelligence tools to extract, compile, analyze and report this data. Our ACE agents communicate with our customers across a variety of channels; telephone, email, letter, face-to-face visit, etc. and constantly thank our clients for their business, referrals and feedback.

To reinforce the work we're doing with customers, we survey our team members once a year. Our team members have told us that they like working at ArchivesOne, specifically with their team members, and they appreciate that management listens to their opinions and reacts appropriately to their concerns.

Our team members have exhibited a spirited level of enthusiasm and competitiveness to be the best and have the highest level of touches. They are often rewarded for their creativity and overall contribution to the success of the organization.

Building a winning organization in the eyes of customers and team members must be a daily commitment beginning with the senior management team. At ArchivesOne, the foundation for that success begins in the CEO's office and spreads throughout our external and internal operations. Without that total commitment and motivation at every level of any organization, the potential chance for failure will surely increase.