If you ask Lynn Blodgett what the secret to growth is, he’ll tell
you it’s an entrepreneurial culture.
Blodgett, president and CEO
of Affiliated Computer Services Inc., has been with the company
for 11 years, and in that time, he’s watched revenue grow from
$650 million in 1996 to $5.8 billion for fiscal 2007, and he credits
that success to an entrepreneurial spirit.
“The company has always done very well at maintaining a truly
entrepreneurial culture,” Blodgett says. “It’s this idea of giving people responsibility and giving them authority and holding them
accountable, and then expecting a lot. … ACS is an entrepreneurial, results-oriented and ‘high reward for high results’ company. It
lets you bring in people who think the same way.”
ACS handles primarily business process outsourcing, including
human resources paperwork, medical claims and other similar
back-office tasks, along with information technology outsourcing,
and the company employs some 58,000 people around the globe.
Being an entrepreneur himself, Blodgett says much of the entrepreneurial spirit boils down to gut feeling. He looks for people who
have that same solid judgment who can help lead ACS to continued growth. He plans to lead ACS to $10 billion in run-rate revenue
by 2010. [Run rate is multiplying the current quarter’s revenue by
four to determine an estimated annual revenue.]
“To be successful at ACS, you have to be able to judge, based on
the facts available and not overdo it,” Blodgett says. “We have a
saying, ‘If we go 10 steps forward, and three steps back, we’re still
seven ahead.’ That encourages risk. It’s not so scary to say, ‘I don’t
have every ounce of data here. I could spend another six months
looking at this, but my gut says this.’ As long as people know that
they can make 10 steps forward and three back and still be ahead,
it encourages people to be more risk-oriented, which is a key to
entrepreneurialism.”
The company’s entrepreneurial culture hinges on three key
things. First is the way ACS pays people, which rewards productivity. Second is keeping the company open to new ideas and
culling the best ideas from its employees. Third is acquiring other
companies, which gives the company the growth it seeks and also
brings a fresh crop of free-thinking entrepreneurs to keep the company innovating in new ways.
“I’m constantly amazed at the things that people can do if you
motivate them correctly,” Blodgett says. “Making people feel like
they have ownership of what they’re doing is a big part of the
entrepreneurial culture.”
Paying for performance
Blodgett says pay isn’t the most important factor in determining
job satisfaction for most employees, but it is a strong one. The
right pay — and paying appropriately for performance — encourages people to continue stretching, reaching and challenging themselves.
“The money part has to be right, or most people will not reach
their apex,” Blodgett says. “They won’t do as well as they could do
if you don’t have the pay part properly aligned.”
ACS pays its top 500 employees below market rates for salaries
but gives bonuses that are above the standard in the industry.
Bonuses are based on how their unit does, whether or not they are
meeting their individual goals and how the company performs
overall. Blodgett adopts this method for those in top-tier management positions.
“These are people who are running profit and loss centers or people who are supporting those who run profit and loss centers,”
Blodgett says.
For production-level employees, ACS is fanatical about measuring productivity through software programs and compensates
people directly for what they really do, versus what they are
expected to do.
Blodgett says strong performers who work fast and well make
more money; less productive workers tend to leave the company.
Folks who Google away the day generally don’t last. Blodgett
declined to be specific about how the employees are paid because
he considers it proprietary and one of the company’s key secrets
to keeping its employees.
“The principle of this idea is know how to measure what people
do, and if they are more effective at what they do, reward them for
their performance,” he says.
Cultivating great ideas
Beyond productivity, great ideas are another thing that ACS
rewards, and Blodgett makes a point of trying to gather up all of
the ideas he can from employees.
He strives to keep ACS humble enough to recognize other good
practices, instead of stubbornly clinging to the things it’s always
done.
For example, when ACS acquired Unibase, ACS leaders looked
at some of the practices Unibase had and adopted them. Tracking
production-level employees and rewarding them for good work is
one of those things that ACS adopted from Unibase.
“The culture continues to get better because we’re open to adopting and incorporating things we see in individuals from the outside
or from companies we acquire,” Blodgett says.
The company also has “Spot” awards, which are given by the
ACS Continuous Optimization Initiative, which is the company’s
cost-saving effort. Employees can submit an idea, with any corresponding documentation, and if it is implemented, the employee
gets a portion of the savings for the company.
“We have paid out through that program hundreds of thousands
of dollars this year,” Blodgett says. “It’s not just lip service. When
people come up with something and it helps us, we don’t want to
be piggish about it.”
ACS senior leadership gets e-mails virtually every day that tell
them about an employee who suggested an idea, what the idea
was, and congratulating and recognizing the employee for his or
her contribution to the company. That recognition is helpful in
ensuring that more suggestions come in.
“We make it a big deal and say it really helps us,” Blodgett says.
ACS also has a leadership conference call with its most senior
1,000 employees once a month. One element of that leadership call
is asking those 1,000 people to answer 10 direct questions about a
very specific issue in the company. A second element is allowing
time for employees to give solutions and input for solving some of
the company’s problems, all tied to the main issue.
“Today, we conducted an online survey, and we collected from
1,000 people, 10 answers to 10 direct questions,” Blodgett says.
“Then we took questions and answers from people. We were able
to see what people were thinking at that time.”
The results of that leadership call and corresponding survey are
used as the basis for the quarterly training call, in which ACS provides training to that same group of 1,000 and shares some of the
solutions provided by its own employees.
“You have to open up the channel to talk,” Blodgett says. “It’s them
talking and you listening, and sometimes you talking. It’s not all just,
‘Tell us all of your great ideas.’ There has to be a balance of listening and talking.”
When it comes time to executing new programs and ideas,
Blodgett says managers are made to understand that the company
is open to ideas that help the company operate more efficiently and
grow. He tries to strike a balance between making the employee
feel he or she is responsible for the success of the idea and making
sure he or she understands that sometimes, not everything works.
He’s OK with failure, so long as the process was followed.
“If the company says this is a great idea, and it’s worth us taking
a shot at it, and it’s done and done appropriately, and people are
informed, and it’s not some Wild, Wild West thing where someone
is violating our approval process, we won’t go and fire people if it
doesn’t work,” Blodgett says. “That’s not our culture. If someone
does something dishonest, we will fire people. But we can’t
encourage people to take risk and then terminate them because it
didn’t work.”
Acquiring knowledge
ACS regularly acquires other companies and often gains valuable
staff through those acquisitions. Blodgett particularly likes to keep
on board those who started the company that ACS is acquiring
because they are entrepreneurs, and they think in innovative ways.
Blodgett himself joined ACS as part of the Unibase acquisition.
For those without a business start-up background, Blodgett
looks at a person’s employment track record. He looks for someone who has been able to successfully grow a business.
“Growth is very important to us,” Blodgett says.
Those who are not entrepreneurial in spirit can have a place
at ACS. The members of the audit team, for example, are not
entrepreneurial, nor should they be. In some positions, skill
level is more important.
Blodgett says ACS examines companies closely before making a
buyout. He and other senior managers spend lots of time with the
company and its leaders. ACS also tries to take emotion out of the
process by looking at as much data about the company as possible.
“What it really comes down to is the company spends the time
necessary with a company before we acquire them,” Blodgett says.
“We are rabid about our diligence process. We don’t get deal fever
and forget to do our homework.”
An entrepreneurial culture is how ACS came to be what it is
today and continuing to nurture that spirit will be what brings ACS
to continued growth and success. Blodgett says continuing to look
for opportunities and growing the company’s own team will be
keys to getting to $10 billion in revenue by 2010.
“A great entrepreneur knows how to do all of that,” Blodgett
says. “They know how to get people onto their team. They know
how to get unbelievable results. A great entrepreneur knows how
to get great results out of their team. ACS’ entrepreneurial culture
will be the fuel that will drive the ACS ship.”
HOW TO REACH: www.acs-inc.com