How Richard A. Chaifetz helped ComPsych chart new growth path

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Richard A. Chaifetz, Chairman and CEO, ComPsych Corp.

Richard Chaifetz didn’t realize how many troubled people there actually are in the world when he first launched ComPsych Corp. But as the business took off, he got a clearer view of society’s ills.
Instead of just focusing on treatment and counseling for things like drug and alcohol abuse, depression, and marriage problems, Chaifetz saw there was even more he could do to help people.
“People’s problems don’t stop at those four or five issues,” says Chaifetz, the company’s chairman and CEO. “And in fact, if you have issues related to stress or depression or you’re using drugs or your kids are using drugs, it’s impacting you in many more ways.”
Chaifetz had a built a network of successful psychological service centers that were meeting a need with the general public. He had more than 250 doctors working at about 20 centers in the Midwest region. But he thought he could do more by branching out to work directly with employers.
It wasn’t that he wanted to abandon what he had built. He just felt this opportunity was too significant to pass up.
“That’s how you stay relevant,” Chaifetz says. “Companies that don’t change and don’t respond to the marketplace become obsolete and they die. That’s the biggest challenge for most entrepreneurs going from an entrepreneurial business into a maturing business and being able to reinvent yourself appropriately while holding on to your core competencies and being able to expand out into new markets and remain relevant to the marketplace.
“That’s why most entrepreneurs can’t transition into running a more mature company. They don’t have the leadership capability. They are idea people and are good at startups, but they may not be able to move the ship in the new direction as the demands of the marketplace and the vision necessitates that.”
Chaifetz worked with his team to make the transition and made a concerted effort to figure out what his potential clients actually needed, rather than just telling them what he could provide. The result is 13,000 organizations covering 35 million people who have benefitted from his services.
Here’s how Chaifetz was able to adapt his company to meet a newly identified need and grow as a result.
Think through your ideas
As Chaifetz saw the opportunity to expand his services, he didn’t let his excitement get the best of him and force him into making a rash decision. He realized he already had a pretty good thing going with the company he had built.
“We had a very viable and large business,” Chaifetz says. “I just didn’t think it had viability very long term based on what I saw changing in the marketplace in terms of reimbursement and other kinds of pressure.”
The key to making a good appraisal of whether a risk is worth taking is that you first make sure you know what you’re already good at.
“You have to look at two things,” Chaifetz says. “What are your core competencies? What are you good at doing? You don’t necessarily get rid of what you’re doing today to fully embrace something completely different unless what you’re doing today is basically gone or is going to disappear very quickly.”
Chaifetz did not believe his existing business was going away any time soon and perhaps not at all. But he saw an opportunity to make his company better and he felt it was an idea worth pursuing, albeit with caution.
“You have to make sure that there are legs to your new idea,” Chaifetz says. “People get caught up in the excitement of something that they think might be viable and go straight forward on that without looking long term at what that might be.”
Chaifetz wanted to identify potential obstacles he might face in advance, before going forward with any concrete plans on this new direction.
“Sometimes people look out a year or two in front of themselves and don’t try to anticipate what the challenges may be three, four or five years down the road,” Chaifetz says. “That’s the problem with a lot of these startups that want to go public real fast and they blow up. They disappear either before they go public or after they go public; they are not sustainable businesses. They don’t have a model that’s long term in nature.
“When somebody looks at their business, they have to extrapolate out what the challenges are going to be from a competitor perspective, an investment perspective and a viability perspective. What’s the revenue potential for the business?”
If you are the kind of leader who regularly skips these steps in pursuit of the “flavor of the month,” you may have a hard time garnering much support for your next moment of inspiration.
“I very regularly and quickly evaluate whether the direction I’m going is viable and is making money for me or if I need to tweak it,” Chaifetz says. “If it’s a wholesale change, then I’d go back and rethink it so you’re not spending fruitless time or wasting time trying to rejigger something and causing distractions for other things that you may be doing. The flavor of the month is just a distraction of the month, as I call it. The flavor-of-the-month mentality results in a distraction and everything else gets affected, such that nothing is successful.”
Encourage debate
You may think silence is a sign of approval when you bring a new idea to your people. You’ve done such a good job laying out your case for this idea that you didn’t miss a thing in your presentation. Maybe you are that good. But more likely, you’ve unknowingly created an environment where people don’t feel comfortable asking you questions.
“If I sat with a group of my direct reports or a larger group and no one said a word, I would challenge them on that,” Chaifetz says. “The first thing I’d say is, this silence is concerning to me because I can’t believe everyone accepts every word I said to them. I’d like you to tell me what you’re thinking or I’m going to ask you more questions. We’re not going to leave this room until we get some people to share what’s going on. I can’t believe there are no questions about this. You’ve got to be willing to ask those questions.
“Unfortunately, a lot of leaders just want to hear what they want to hear. When there is silence, they assume there is acceptance and they move on. The silence can be a total rejection of your views.”
Chaifetz wanted his team to challenge his plan to take ComPsych in a different direction.
“You have to be willing to ask for feedback from the people in your company,” Chaifetz says. “You have to be willing to listen to it and you have to be willing to be challenged. You want to be challenged. It doesn’t mean you don’t fight the challenge or argue or have healthy discussions, which I certainly do. But you have to hire people who are willing to challenge you. If they aren’t, they are yes men and women and they are automatons and they’ll just follow you down a path that could lead to self-destruction.”
In the way you act, the way you speak and the way you listen, you need to demonstrate strong interest in receiving employee feedback.
“I have very strong opinions about things,” Chaifetz says. “But I’ll also be very candid and tell them, ‘Here’s my view on something, but I really want your feedback. It’s not set in stone.’ If you demonstrate a track record of listening to the people that work for you and you modify your views based on that, they can see that their input is important. You have to respect all those views, you have to give them a chance to talk about them and if you’re getting silence, you have to address the silence.”
Just as you don’t want silence from your employees, you also don’t want to hear dead air when you’re talking to potential clients about a new service you want to provide. So don’t just ask, ‘What do you think of our new idea?’
“Asking someone to respond to something will give you exactly what you’re asking for, a response to that question,” Chaifetz says. “But it doesn’t help you decide what it is that is going to be the next great thing in the marketplace or what’s going to be cutting edge.”
So you can’t just ask a customer if they like your new idea. You’ve got to dig deeper than that to see what would really help them.
“Our primary interest in talking to them is to find out and ask them questions about things they like and what kind of challenges they face,” Chaifetz says. “More in the scheme of trying to understand what’s important to them so we can build a product around it. That’s as opposed to taking a product to them to test. … When you function in a silo and constrict yourself to just what you’re interested in at any moment without expanding your horizons and challenging yourself to be open-minded, you get that constriction in your products and services and you become staid and not relevant anymore.”
Solidify your team
When you’ve gathered feedback, engaged in open discussions with your team and reached a decision to move forward with a plan, you need to make it known to everyone what you intend to do and what the goal is.
“A good leader makes it clear where you want to go and reinforces the behavior that is consistent with that,” Chaifetz says. “A good leader quickly makes sure they provide input when the behavior is not consistent with that and makes sure the people on the team are aligned both emotionally and cognitively. They buy into it from a passion standpoint and they understand it and embrace it. Be willing to take people off the bus.”
In other words, if you find there are people on your team who are reluctant to be part of your plan after it’s been fully discussed, you need to make a change.
“Either move them into a different position or take them off the bus completely if they are not aligned,” Chaifetz says. “I had several people I had to move either into different positions or out of the organization early on when we made the shift because they were set in their ways, old-school thinking, and they were not willing to embrace the new direction we were going.”
Often, you’ll find people are nervous when your company moves in a different direction. But they’re likely to find confidence in your confidence as the leader.
“Make sure the people who are on board, that you reward them appropriately,” Chaifetz says. “Motivate them. You’re enthusiastic and having that enthusiasm and passion is contagious. It’s a very strong part of leadership. People pick up on the commitment of a leader to a direction or to a view or to a decision.”
If you’ve been honest with yourself and your team throughout the process, odds are that you’ll succeed.
“You will sometimes fail,” Chaifetz says. “But for the most part, if you do your homework in terms of understanding the marketplace and going with your gut if you have a good gut, typically, you’ll be successful.”
How to reach: ComPsych Corp., (312) 595-4000 or
Richard Chaifetz, chairman and CEO, ComPsych Corp. 
The Chaifetz File
Born: New York
Education: Graduate of Saint Louis University; Doctor of psychology degree, Illinois School of Professional Psychology
Chaifetz on being patient: I’m impatient. My impatience has not changed. Our ability to wait is certainly greater because of the resources and the depth and breadth of our business. But my impatience has not changed. I still evaluate things the same way. What happens is when companies get big, they become less impatient and more tolerant. They are able to spend money and look back years later and think, ‘Oh my God, I lost $100 million on this venture. We should have probably cut it off earlier.’
When you’re gritty and you’re newer and you’re younger in your business, you can’t afford to be patient in that way, because you run out of capital and resources and other things. I’m still impatient for that reason. I don’t like to waste capital and resources.
Chaifetz on hiring: We hire people who are bright, inquisitive, have high energy and high integrity and one of the most important things is what I call intellectual curiosity. They are interested in what’s going on around them. They read a lot. They try new things. They experiment in their personal lives with different kinds of activities and learning experiences and travel and such. If you get people like that in your organization who embrace challenges and are intellectually curious, they kind of have a feel for what’s going on in the world and it mimics my view of things and that’s how I am. You can’t help but then be able to get a sense of what may work.