Build accountable systems
Maheswaran doesn’t use euphemisms when discussing the biggest challenge he had in reworking the culture at Semtech.
“The execution of the company was just not where it needed to be,” he says. “At all levels and all areas of the company, I found the execution to be poor at best.”
So before he could completely empower people to make their own path, he had to make sure they understood the new direction.
“That was a big challenge because this is not only a cultural shift, but it’s also behavioral and a people shift,” he says.
Semtech didn’t have any systems in place that pushed for higher efficiency or risk-taking. The result left processes feeling stagnant. When you’re dealing with that type of cultural idle, you can’t just give people marching orders and expect them to change course.
“The main thing is really enabling the people to shape the vision to help them see that in their own roles how they can help create a great company, so not only communicating the vision but communicating the shared common purpose,” Maheswaran says.
In order to involve them in that process, you simplify it and let the energy build by explaining what individual results mean.
“Break it down for the people,” he says. “When you’re trying to bring out the best in people, you really have to simplify things to show them how to get from A to B.
What you do is you set the vision and break the vision down and say, ‘If we can achieve at the end of this year this milestone, and the end of next year this milestone, we’re on our way.’ It’s the road map of how to get from A to B. There are always choices and there are different paths you can take, but which is the right path for the company? That’s really where the leader and the management team play a very important role in defining that road map.”
So you create an overarching vision and then ask people how they’ll step up and perform to it over whatever realistic time frame you set for significant change. Then, you measure that.
“The first thing you do is you start to measure things and you start to set milestones and you put metrics in place and you start to measure people and hold them accountable,” he says. “So I asked people, ‘What are you going to deliver next quarter?’ You tell me I’m going to deliver A. Well, if next quarter you deliver B, I want to know why, what’s the difference?”
Many employees will be enthused to set their own targets and take on new challenges. But when people don’t perform right out of the gate, give them time. Remember that people will still be a little shell-shocked by the adjustment from a stale culture.
“The trick is to watch out for the people that are actually very good and can execute well but they’ve been demotivated for so long that they don’t actually get there,” Maheswaran says. “So you don’t want to throw the baby out with the bathwater, right?”
So when they don’t perform you ask them what left them out in the cold and help them adjust so they know something like coming up short of stretch goals isn’t the problem. If they come up short again, you repeat the conversation but not ad nauseam.
“One quarter, two quarters, three quarters, you give people opportunity to take charge and you try to help them,” he says. “But, in the end, if it’s a continuous story, you end up saying to yourself, ‘Well, maybe the issue is not the company anymore; maybe the issue is you.’ I haven’t tried to build a culture of if people don’t execute one time that they’re out. It’s more of a, ‘Hey, look, this is not working. Here’s how we’re going to improve it; if that doesn’t work, let’s try something else,’ approach to get better execution. But, in the end, if you’re not delivering on a consistent basis, then something has to be done.”
During this time, you’ll have some changeout of staff right away because, frankly, accountability isn’t for everybody. But this is a double gift: You’ll lose underperformers and new people will help cement your systems.
“When you bring in somebody new with the right excitement level and the right passion, that is somebody who doesn’t know the old systems, the old culture, the old people, they don’t know the old constraints,” he says. “So, essentially, bringing in new blood is its own catalyst for change.”
Once you mix new blood and start seeing some refreshed experienced employees, you’ll get a second batch of people that self-select career relocation when the systems stick.
“Eventually what happens is the people who can’t (meet expectations) start to realize, ‘This is too tough for me’ or ‘This is too stressful for me,’ or ‘I’m obviously the weak link here,’ and they leave,” Maheswaran says.
With managers cascading a winning culture and employees owning their own goals, things have come a long way at Semtech, as a downturn hasn’t stopped a culture where people set their own internal stretch goals.
“The company has started to become more of an empowered culture where employees know they will be held accountable for poor performance and poor results, but they also recognize that they are part of a team that’s working toward a common purpose and that the rewards come from taking some risks and trying to do that something extra,” Maheswaran says.
The financials bear that out. The company posted a then-record $284.8 million in net sales in fiscal 2008, and then pushed through to post a new record of $294.8 million in fiscal 2009.
“There are still areas where we can do better,” he says, “but I feel good about it, and the proof is in the pudding. … Last year was a record year for us, the year before that was a record year for us, in terms of revenue, and so by delivering results on a continuous basis, you start to get a feel for are we really executing the way we want to execute, and that, to me, is the right sign.”
How to reach: Semtech Corp., (805) 498-2111 or www.semtech.com
