The Keys to Leading a Change of Corporate Norms
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Episode 17 Transcript:
Chris Curran: Growth Igniters Radio, episode 17: The Keys To Leading A Change Of Corporate Norms.
This episode is brought to you by Business Advancement, Incorporated, enabling successful leaders in companies to accelerate to their next level of growth. On the web at www.businessadvance.com. And now, here’s Pam and Scott.
Pam Harper: Thanks, Chris. I’m Pam Harper, Founding Partner and CEO of Business Advancement, Incorporated. And with me, looking right at me, is my business partner and husband, Scott Harper.
Scott Harper: Hi, Pam. It’s wonderful to be here − and if this is your first time listening to Growth Igniters Radio, our purpose is to spark new insights, inspiration, and immediately useful ideas for leaders to take themselves and their companies to the next level of success. So Pam, what’s on our agenda for today?
Pam Harper: Leading a change of corporate norms. As you know, when we work with CEOs who are new in their positions, and even sometimes when they’re not so new in their positions, they frequently have a priority of leading a cultural transformation. It seems to be something that’s happening more and more as the world is changing.
Scott Harper: They want the organization to be on board with what they’re doing to advance their goals and objectives; yeah, that makes sense.
Pam Harper: That’s right, and oftentimes the norms that make up culture come from not just inside the company, but from the industry, and even the country culture.
Scott Harper: Sure.
Pam Harper: Today we’re so delighted to be speaking with Sabrina Parsons, CEO of Palo Alto Software, about her passion in leading a change of corporate norms, not only in her own company, but in the technology industry as a whole, and even the world.
Since its creation in 1988, Palo Alto Software has grown to be a respected provider of small business tools worldwide, with the single goal of helping other small businesses grow and become successful. Sabrina, who became CEO in 2007, is a successful Internet expert, has held positions of leadership in several technology enterprises including a UK-based software company that was eventually acquired by Palo Alto Software in 2002. There’s much more about her background on the page for this episode.
Pam Harper: Welcome, Sabrina.
Sabrina Parsons: Thanks so much, guys. I’m so happy to be here and excited to be talking about all of this.
Pam Harper: It is a fascinating topic. But before we really get into that, let’s start out just talking about your transition into the role of CEO of Palo Alto Software. Now, you succeeded your father, Tim Berry. Did you always know that you wanted to be the CEO?
Sabrina Parsons: Oh gosh, no, I definitely did not always know that. The business was started while I was coming out of middle school, and so sometimes I get the question of, “How long have you been with Palo Alto Software?” It’s a hard question to answer because I’ve actually been an employee since 2003, and I took over as CEO in 2007. But, you know, it’s been part of the family, and the family business for so long − and when I went off to college when I was graduating in 1996, my dad would say, “Well, so you’re going to come work with me, right?” And my response was always, “No way. That planning stuff you do sounds so boring.” And when I graduated in ’96, the Silicon Valley was blowing up, and so I headed out to the Silicon Valley after graduating from Princeton and just jumped right into start-ups and tech. So no, it was not something I ever thought I would do.
Then, after moving to the UK and starting the business in the UK and distributing software and working with small businesses, [I started] understanding how cool what Palo Alto Software was doing really was − that it wasn’t some boring, intellectual, consulting business planning − that actually what it was, is every day being involved in start-ups and entrepreneurs, and helping them succeed in business, that you got to be that entrepreneur. And it just all of a sudden kind of came together in my head and I was like, “Oh my God, this is the coolest thing. I can be involved in this company that my dad has been running, and I can help people every day, and I can be part of a start-up in that sense, but every day!”
Scott Harper: Wow.
Pam Harper: So you fell in love with the business.
Sabrina Parsons: I did. I fell in love with the entrepreneurial spirit of the business. I just fell in love with the idea that you could be in a business, you could work and treat and act like it was a high growth start-up, even though it was an established business, but that also part of what allows us to understand and build the right tools and produce the right content for start-ups and for entrepreneurs is that we have to live and breathe them. It builds for this really exciting atmosphere in our company every day.
Scott Harper: That’s great. How did you and our dad decide how the transition would work?
Sabrina Parsons: My dad more decided. I would say maybe a year before, my husband and I were both working with the business, because we had started the UK company that was acquired by Palo Alto Software. Probably around ’06, we had a discussion with my father just saying, “Hey, we feel like we’ve done lots of things here, we’ve helped this business, it’s exciting, it’s great, it continues to be such a strong, healthy business, but it’s your business. And that’s great, but eventually we want to run our own thing. So in the next few years let’s talk about maybe a transition, because we don’t want to just work for you our entire lives − not that there’s anything wrong with the business, but just we’ve got that entrepreneurial bug.”
Scott Harper: Right…
Sabrina Parsons: My dad said, “Great, I totally get that, I understand that. I’m definitely not ready to step down for at least 5, 8, maybe 10 years, so I understand what you guys are saying. Let’s just touch base a year from now and let’s see what we’re going to do.”
A year from then, in ’07, one day in April my dad called me into his office and said, “Well, if you were the CEO what would you do?” And I started outlining all these things that I would do, and he went, “Great, because tomorrow you’re going to be the CEO.”
Scott Harper: Oh, my goodness! Yes… succession planning in action, I guess.
Sabrina Parsons: Exactly.
Scott Harper: Wow, so − real time, live action succession. How did your role and your dad’s role transition over time?
Sabrina Parsons: You know, it worked really, really well. I think for us − not having a long kind of space of time when we were talking about the transition, where he was still in charge but I had all these ideas but I couldn’t implement them because I wasn’t in charge. I think that the transition from one day to the next made it cleaner, made it easier. He remained involved, doing lots of writing, speaking, being an expert in business planning. I would say the first couple of years he was very involved as founder, expert, and my chief advisor, but as time went forward and we did the things we needed to do to keep Palo Alto Software healthy − bring in new technologies, bring in new products − my dad got more and more comfortable with, “Great, I can blog, I can do workshops, I can go to speaking engagements, and I don’t have to be involved in the day to day.”
It was a really nice, natural transition. He was never told, Well, you have to go golf or fish. He was always involved, because that would not be up his alley, but he took a couple of years handing it off − but with the very clear idea to all employees that I was in charge. And he really truly stuck to that.
I think the big test came in the fall of ’08 during sort of the great recession. My parents were very − for obvious reasons − very nervous. They had gone through the bubble bursting in the Internet in ’01, and had to lay off 6 or 7 people on one day, and so when the recession happened, our website traffic remained high, but conversions went way down. People were just absolutely paralyzed and not buying, and my parents said, “Well, you need to get your layoff list. Where’s your list? Like, this is making us really nervous. We need to transition this better than we did prior. I don’t want 6 people in one day. I don’t want to feel surprised, and clearly you’re going to have to lay people off.”
What my husband and I said is, “Look, let’s eat our own dog food. We talk about being a company that’s all about planning and managing to the plan. Let us come up with a forecast that includes expenses and takes in account the fact that our conversion rates have gone down, and if we meet our numbers, and we can stay profitable and cash-flow positive without laying people off, we’re not going to lay people off. And you guys are going to let us run the business as long as we meet our numbers.” This was in about October of ’08, and it was, I think, the final sort of cutting the umbilical cord with my dad, because he said, “Okay, I’ll buy that. You’re going to have to lay people off, but okay, we’ll do it your way,” and my husband and I managed the plan.
We kind of battened down the hatches. We renegotiated as many fixed cost expenses as we could, and people were willing to negotiate, and we didn’t have to lay anybody off. We made our numbers every month, and it was this great way to really completely transition running the business to my husband and I from my father, because he watched us manage the recession, not lay people off, and in fact, by the next fall, we were growing the company.
Pam Harper: That’s quite a story. I guess to sum it up, it sounds like having that clear communication between you and your father, and having clear metrics and ideas of what had to happen in order for that transformation to happen successfully, got you through the storm, got you to the next point, made the transition happen. You are a product of your product.
Well, we’re going to take a quick break, and when we come back we’ll talk more with Sabrina Parsons, CEO of Palo Alto Software, about lessons she’s learned about leading a change of corporate norms after she took over as CEO. Stay with us…
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Pam Harper: Welcome back to Growth Igniters Radio with Pam Harper − that’s me − and Scott Harper. We’re talking with Sabrina Parsons, CEO of Palo Alto Software about her transition to CEO, and leading the change of corporate norms in the company in the following years.
Sabrina, how can we find your company?
Sabrina Parsons: If you go to www.paloalto.com − that’s our corporate website, and you’ll find all about our company. But if you want to see what we’re doing − our latest and greatest product − go to www.liveplan.com.
Pam Harper: Okay, LivePlan it is.
Well, in the first segment, we discussed your transition to CEO of Palo Alto Software, and now let’s fast forward a little bit. You started to lead a change in corporate norms. Now, is that something that you knew you were going to do straight on after you became CEO, or was this a gradual calling?
Sabrina Parsons: You know, I wish it was a more premeditated strategy. It was one born out of necessity. It happened because when I started working with the company in 2003, I was married, but had no children. By the time I took over the company in 2007, I had two boys, little at the time. When I took over the company my boys were 3 years old and not quite 1, and in 2009 I had my third boy, so I was CEO and pregnant − which was a lot to do. The cultural change for the company grew out of my realization of how corporate America is really just not set up for the working woman and the working mom. I didn’t want to not be a good mom, but I didn’t want to not be a good CEO. I just started doing things that worked for me, and I realized it’s things that would work for a lot of parents, and not just mothers − working dads as well.
Scott Harper: Yeah.
Pam Harper: Yeah − Scott’s very glad that you said that.
Scott Harper: I was a working dad, and I had a real hand in when our children were small too, so you’re absolutely right − working parents of all kinds. So how did you do it?
Sabrina Parsons: You know, it started with my inability to leave my first son home when my 3 months of − I guess you could call it maternity leave, but it really wasn’t − was up. I worked from home for 3 months after my first son was born in 2004. I wasn’t running the business − my dad was running the business − and when I was pregnant, he would ask me, “Well, what are you going to do with the baby? What are you going to do with the baby?” And I would go and look at daycares, and I just couldn’t bring myself to sign my tiny little newborn son up to one of these daycares. I just couldn’t leave him, and so I worked from home for 3 months − and really did work, and did conference calls and did everything − would occasionally come in for meetings but did almost everything from home − and when the 3 months were up, I basically just brought him to the office, and my dad would say, “What about daycare?” and I would say, “Oh, yeah, yeah, I’m working on that, I’m working on that,” and he would say, “Babies don’t belong in an office. I think you need to deal with that.” To be fair to him, I think that he really truly felt like, “Wow, is this professional?” but at the same time he let me do it, and as I did it, his opinion about it was, “Look, as long as you can get your work done and it’s not keeping other people from getting their work done, at the end of the day, I get it. You’re trying to do everything.” And so my first son came into the office with me until he was about 7 months old. It worked beautifully, and as I did this, I realized this is what I’m going to do. I’m not going to leave my 6-week old baby in a daycare. I’m just not going to do that, and there’s no reason I have to. And shortly thereafter, there were a couple other women who were pregnant and got the same treatment as I did. We made sure they had a place, a little private office even if they were cubicle employees and not somebody with a private office. It’s worked out, and it’s made a huge difference in the lives of working moms who’ve had babies. And then as the kids have gotten older and grown up, we’ve extended that, and we allow kids to come into the office. I would say that the change started before I was even CEO, and then after I became CEO and I was pregnant again, I pushed the envelope a little bit more, but little at a time to make sure that it was working. And it’s made a tremendous difference in loyalty, in turnover, and in employees who are just really happy to work for us. And, really, very interestingly, it’s made some of the biggest difference in the lives of single dads in our office. That’s been really cool to see, you know, talking about Scott and the man, and the fact that I think in this conversation oftentimes we don’t talk about the pressures on a working dad.
Scott Harper: Yeah. What’s really impressive to me is that you didn’t just keep this to yourself − “Oh, I’m going to do this because I’m at the top, and all you other people just figure it out.” You really changed the norm in your company, and you found that a happier employee is going to be more productive and more valuable over time, when employee retention is such a big issue. Did you change any other norms along with the issue of taking care of children?
Sabrina Parsons: Yeah. I mean, I really looked at − and I would say my dad and my husband were very involved in this − is treating employees like whole people, and understanding that whatever we want to say, and however we want to look at things, at the end of the day there’s something wrong if work is first, no matter who your family is. Whether you have children or you don’t, whether your family is a close group of friends, whether your family is your grandparents, your parents, your siblings, or whether you have children, you should not live to work, and maybe you shouldn’t just work to live. There’s a balance there that you should do things that you love to do, but at the end of the day, when push comes to shove, you and your family are going to come before any job.
I felt that it was important to acknowledge that, and to never make an employee feel like they had to choose work or personal life − to be able to set up an office environment that allowed them to do both − and so we thought [about providing] really excellent health care. We find it to be one of those core values that goes alongside of what we’ve done with flexibility and parents and kids. We want everyone to be covered. We really wanted people to not have to worry about health care, and to be healthy people. We also offer corporate gym membership to the gym that’s right across the street from the office, and we incentivize people to go by paying more of the already discounted corporate membership the more times they go.
Scott Harper: You’re spending some money, but I’m sure that you make money off of this too − because healthier employees are definitely a cost savings to a company.
Sabrina Parsons: Exactly. We want our employees to understand that we really mean it, we’re not just saying it. We’re not just saying “go work out,” we really, really mean it. We try to focus on a results workplace where we’re not about face time and how many minutes you are in the office. We’re about do you produce results? Are you responsible for your job? Do you get your stuff done and go above and beyond in your job regardless of how many minutes you spend every day or hours every week or days in a month? We want to put our money where our mouth is, and so by doing things like saying, “Hey, you go to the gym three times a week, you only have to pay $20,” people know that we’re serious about that. That we’re not just saying go to the gym and then quietly watching and check-marking, “Oh, did you see he was gone for an our at the gym?” No, we reward you for going to the gym, and it builds a phenomenal culture and happy employees and very productive employees.
Pam Harper: This is so impressive to me because, number 1, you are not a huge company. The kinds of things you’re talking about, some people might say, “Well, you have to be a very large company to be able to afford …”
Scott Harper: “This is Google stuff.”
Pam Harper: … Right, and you’re not that. I think we have to remind people of that in this case, is that it is helping you as a business to grow. It’s helping for you to attract and retain the talented people, and it’s making everybody come alive, and it sounds like even more than that, it’s living into the cultural values that you care so much about. My hat’s off to you − it really is wonderful.
Sabrina Parsons: Oh, thank you. I appreciate it.
Pam Harper: We’re going to take another quick break, and when we come back, we’ll continue our conversation with Sabrina Parsons, CEO of Palo Alto Software, about actionable steps to lead a change in corporate norms in your own company. Stay with us…
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Pam Harper: Welcome back to Growth Igniters Radio with Pam Harper and Scott Harper. Over the last two segments, we’ve been talking with Sabrina Parsons, CEO of Palo Alto software, about the remarkable story of her company’s growth, and leading a profound change of corporate norms.
Sabrina, can you tell us again how to find your company and LivePlan?
Sabrina Parsons: Yeah, you can go to www.liveplan.com and you can see our latest and greatest product that will help you succeed in business, or you can learn about our company itself at www.paloalto.com.
Pam Harper: Okay, thank you. Now, getting down to specifics, what are steps that company leaders, CEOs, could take right now to lead a change in corporate norms? What is the first thing that would come to mind?
Sabrina Parsons: I think the first thing is to have the management team really clearly understand how they’re going to measure their employees. I think if you look at, for instance, benefits that companies like Google or Apple have put out there − with a lot of those benefits, the goal is to keep you at the office as long as possible. So I think the first step is for the executive team, the leadership − it might be just you, the business owner or maybe there’s three or four of you − to sit down and say, “What is our ultimate goal in giving benefits to our employees? Is it because the government requires us to? Is it because we want to work longer? Is it because we want to reduce turnover?” That’s where we started. We said our goal is to create an office environment where we would like to work, where we would want to be employees. We want to treat people like whole people, and we want to measure them on results.
So I think that’s the first thing, is to really understand what you want out of your employees, and then when you do that, you can start to put together the benefits that might be most important. For the very small businesses, it sometimes is hard, and offering health care and offering benefits can feel like it costs a lot. There’s a lot of creative ways to offer health benefits. At our company, for instance, we actually have a much higher deductible, and we self-insure through an HSA service because we have a demographic of employees where probably the average age is maybe 37, 38, and so it isn’t super-risky for 55 employees. We’ve got a deductible that’s $5,000, but we will buy it down, and in the end we win, and we end up giving better health care to our employees without having to pay the astronomical rates that small businesses have.
You can get really creative and get experts to help you understand how to provide cost-effective benefits that really work for your company, and I think small businesses sometimes just get scared and think they can’t afford benefits.
Scott Harper: The first thing that you said that’s really, really important is you have to define your objectives and the outcomes you want, and then shape the cultural norms and the benefit norms around that, and that will drive however you’re going to do it.
Pam Harper: Okay. What’s a second point, Sabrina?
Sabrina Parsons: I think the second point is to involve your employees. I think there’s sometimes a propensity for management or owners to just kind of say, “This is what everybody wants,” and so really make sure that your employees are involved. We survey employees once a quarter. We have a suggestion box, it’s a digital one, but it’s anonymous, people can put in suggestions. Our CFO manages all of our HR, and is the type of person that people trust and they know he’s going to keep things confidential, that anything they tell him that he’s not required to tell me, for instance, he’s not going to tell me. And so we involve our employees, and we find out what’s really important, and so we really, truly try to listen to our employees and then react to what they say.
So number 2 would be involving and surveying your employees, and understanding what’s the most important things that they want, so especially if your budget is tight, you implement the right benefits.
Pam Harper: So the more that you understand what’s important to them, the more you can come up with something that’s going to give you a good return on your investment. I’d love to keep going on this but we’re running out of time for today. Do you have any last thoughts you’d like to share with us on making this happen in your own company?
Sabrina Parsons: You know, I would just say to not have any preconceived notions about what you can or can’t do because of the size of your business. I think that would be the big thing to leave everybody with. There’s a lot of opportunity to make changes and do some really cool things, but you have to be able to think outside of the box.
Pam Harper: Okay. Well, Sabrina, thank you again for being our guest. If you out there have any questions related to today’s episode or any episode of Growth Igniters Radio, go to Open A Conversation With Us at the bottom of the episode page. To find out who our guest will be next Wednesday, go to www.growthignitersradio.com, and look in the sidebar for a schedule of upcoming episodes over the next few weeks.
Scott Harper: Thanks for listening to Growth Igniters Radio with Pam Harper and Scott Harper. To check out resources related to today’s conversation, share on social media, or open a conversation with us, go to www.growthignitersradio.com and select episode 17.
Pam Harper: Until next time, this is Pam Harper …
Scott Harper: And Scott Harper…
Pam Harper: … wishing you continued success and leaving you with these questions to discuss with your team:
Scott Harper: What has to happen differently or better to speed our journey to the next level? What will it take to get us started?