What a Trust-based Company Looks Like
The tone of this blog is frequently critical. That’s probably because I believe we all learn much better from negative examples than from positive.
But if you don’t have any positive examples with which to contrast, we can easily forget why negative is negative. So the occasional positive blogpost is especially important. And this one is a real upper.
PSA: Pediatric Services of America
Last week I had the privilege of working with a very fine small company, PSA Healthcare. They deliver home health care for medically fragile people, mostly children. They have about 3,500 private duty nurses, operating from 50 locations in 17 states. What they do can make an enormous difference to families, allowing them to lead normalized lives under difficult conditions.
But having a great mission alone doesn’t make for a fine company. A lot of what makes PSA fine is that they are intentionally and consciously using trust principles to run the business. They are not only making a lot of people very happy and proud, they are doing very well by classic business measures. A fine case of doing well by doing good.
Let’s start with the metrics, go on to the principles, and end up with the real punch lines.
The Numbers. Jim McCurry started as CEO a little over a year ago, when PSA had been declining in revenue, market share, and profitability. Previous management was a classic top-down, measure-by-the-numbers team that had, simply put, failed.
The old style was that each month the bottom-performing offices were required to ‘justify’ themselves on a conference call to the top management. At the annual meeting, office heads were required to double-up on hotel rooms. Orders were given, decisions had to be approved up the line, and the style was management by FIN—fear, intimidation and numbers.
By the end of McCurry’s first year—at the tail end of a recession—revenue steadily increased, reaching a 20% annual rate of growth by year-end, all of it volume-based. The company increased profitability, more than doubled total profits, and turned the market share decline into market share gain. Staff morale is up enormously. Expenses are down.
Bottom line: really solid business results.
The Principles. How did McCurry do it? It was not the classic MBA turnaround medicine of tightening up, taking control, and cutting expenses. Instead, Jim told the staff the following:
“From now on, this company is run for the customer. The office heads work for the customer, and the rest of leadership works for them. Make your own decisions, and we’ll help you make them. Don’t wait for us to tell you what to do, you figure out what to do and do it—we trust you. No more intimidation, no more review boards.
“Our new mission has three parts: Action-oriented, Care-giving, and Trust-based.” (It spells ACT: coincidence? Of course not).
The annual meeting I was privileged to be part of was full of hokey-yet-fun skits, honesty, mutual helping, and positive energy.
The Punch Lines. McCurry is an MBA. A Harvard MBA, actually, from a year after Dubya’s vintage.
The company’s owners are two private equity firms; the head of one of these is dedicated to the business in large part because his mother had been born so prematurely that she likely would have died were it not for the in-home nursing care she received in the first weeks of life.
This is a profitable business, not a charity. It is being run like a real business; like a real business ought to be, I should say, because too many businesses are being run the way PSA used to be run.
It’s refreshing to see an example of the much maligned du jour—MBAs and private equity—using modern, “squishy” leadership and management principles to improve life and the bottom line in parallel.
Collaboration, ethics, trust, openness, honesty, integrity—these are not fuzzy phrases, uttered by bureaucrats, wealthy Hollywood stars, or mega-rich Googlish do-gooders. These are utterly workable principles that deliver the best results around. They give capitalism a good name. Collaborative capitalism, I like to call it.
McCurry and PSA Healthcare deserve their success.