SMART BUSINESS / MARK SCOTT
Alco Packaging was a troubled company when Melvin Berlin purchased it in 1988. At the time, he offered his son, Andrew, the chance to be part of the negotiating process and then serve as general counsel and director of marketing at the newly acquired company. Within a year, Andrew became the company’s president.
A second-year associate at a Chicago law firm, Andrew had grown up soaking in every bit of knowledge he could from his father about how to succeed in the working world.
“I didn’t know he was my mentor at the time, I just knew he was my dad, and I looked up to him and respected him greatly,” Berlin says.
“The thought at that time was we would be in this company together and would turn it around, make it a nice company and flip it in a few years,” he says. “But here we sit 25 ½ years later, and I never got around to flipping it.”
When the Berlins bought Alco, sales were at $69 million. Today, the company — now known as Berlin Packaging LLC — is pushing $800 million in sales and has 535 employees.
“I give my father a lot of credit,” says Berlin, who now serves as chairman and CEO. “He had a lot of faith in me, gave me the opportunity and trusted me enough to do what I felt needed to be done to turn the company around and not only make it profitable, but turn it into a juggernaut.”
For many leaders, the success Berlin achieved rebuilding the packaging business would be enough to leave behind an impressive legacy. But it wasn’t enough for Berlin.
In 2011, he bought the South Bend Silver Hawks, the Class A affiliate of the Arizona Diamondbacks.
Based a little more than an hour away in South Bend, Ind., the team was another troubled organization that needed an infusion of strong leadership and passion to get things turned around.
Berlin, who is also a limited partner with the Chicago White Sox, was confident he was just the man for the job.
“What I provide is a lot of money and a lot of tyranny,” says Berlin, the minor league baseball team’s chairman and owner. “And tyranny is with a small ‘t.’ It’s not really tyranny. I just have a lot of great ideas.”
Put your cards on the table
When Berlin got his first taste of leadership at the company that would soon become Berlin Packaging, he had two things working against him.
“I was young and I was a lawyer,” Berlin says. “It was very difficult, but the company was sinking, and we had to make dramatic changes. But I learned how to be a good recruiter. I focused on creating a sense of Camelot where you could finally do and be and behave and accomplish the things and engage in your dreams in a way you never could before.”
The key component of Berlin’s turnaround plan was the psychological contract he made between the company and its employees. It would later become the subject of a case study in the book, “The Human Equation: Building Profits by Putting People First” by Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business.
It lays out a series of promises that the company will make to its employees. In return, there is a list of expectations to which the company will hold employees accountable.
“It’s a deal we make on day one,” Berlin says. “I promise to give you these things and you promise to give me all these things. This is how we’re going to govern and measure our relationship.”
“At the end of the day, we didn’t hold any patents where nobody else could sell the product we were selling. It was a very competitive industry. So we had to create a competitive advantage through our people.”
Here are the five things Berlin promised his employees:
- Outstanding compensation — “We’re going to pay you superior compensation, not competitive compensation. I’m talking about significantly more pay for the same job than anyone else.”
- Growth — “We will give you a chance to grow in your position, your compensation, your title and intellectually, we will help you grow as a businessperson.”
- Strong leadership — “This company is going to invest dollars, time and energy in making sure not just that good leaders are in the executive suite, but at every level of the organization.”
- A helping hand — “We’ve had instances where family members passed or someone needed help with money or their home burned down, and we wrote them a check to help them replace their wardrobe overnight without expectation of being paid back.”
- Skill development — “We’re going to invest in training. That won’t get cut because it’s important you be better the next day than you were the day before.”
In return for these promises, Berlin laid out his own expectations for his team.
“I expect you to help us increase our profit,” Berlin says. “You either have to help this company sell more, reduce our operating expenses or improve our productivity. Those are the only three ways to be more profitable.”
As an employee, you are also expected to be productive, be a contributing member of the team-oriented culture, embrace innovation and be 100 percent loyal to the organization.
“Only when there is trust can you criticize each other,” Berlin says. “You can fight with your friends and your family, and it’s alright, as long as you trust each other. If you don’t trust each other, that conflict can get pretty ugly.”
The numbers would support the notion that Berlin’s contract with his employees has been a smashing success, but like anything in life, it hasn’t been perfect, and it has required significant effort.
“In order to pull this off, you need good leaders to believe it, teach it, intellectualize it, communicate it and hold people accountable to it,” Berlin says. “The process and the policies and the leadership around this T-chart took a lot of work to create. What a lot of companies get focused on is the short term.”
Berlin has never forgotten a saying from his father about the fleeting nature of great ideas such as the one he had for a contract between his company and its employees.
“My father once told me that anyone who has ever had a shower has had a good idea,” Berlin says. “Every company has a bucket full of good ideas. The difference isn’t the good ideas; it’s whether or not you’ve found the right person to execute them. Did you train them well? Do you have a retention strategy to keep them there?”
And are you willing to accept that all great ideas don’t need to originate with you?
Berlin found strong leaders at the packaging company, and he took a similar approach when he bought the Silver Hawks. He hired a strong team president named Joe Hart and let him do his job while keeping the focus on being the best. He figured out who had the best ballpark hot dogs, who played the best music and who had the most lovable mascot, and quickly adopted each item or concept for his own team.
And to gather names and contact information for a customer database, Berlin launched Flat Screen Fridays. At each Friday night home game, the team would giveaway a flat-screen TV every inning. Fans would fill out their contact information on each entry form and in less than two years, Berlin had more than 200,000 names that he could call on to see how he was doing in satisfying his customers.
“It’s doing everything first-class,” Berlin says. “It’s really focusing on that customer thrill, that surprise and delight and being able to measure it, quantify it and change the way you do business to get people to want to do business with you and to promote you, which helps you grow.”
Berlin looks deeply at each touch point in his business. At Berlin Packaging, it’s the conversation with a sales person, the delivery and the response when there is a problem. For the baseball team, it’s what you see when you drive up to the ballpark, what you smell on the concourse and what you hear when you’re sitting in your seat.
It all begins with a healthy relationship between you and your employees.
“Good ideas rise to the top, good people execute those good ideas, good people recruit good people,” Berlin says. “It starts to build the organism and the enterprise starts to flourish.”
Set clear expectations.
Build trusting relationships.
Be the best.
The Berlin File:
Name: Andrew T. Berlin
Title: Chairman and CEO, Berlin Packaging LLC; chairman and owner, South Bend Silver Hawks
Born: Highland Park, Ill.
Education: Bachelor’s degree in political science, Syracuse University; law degree, Loyola University Chicago.
Who has had the biggest influence on you? My father. He taught me the measure of a person is not based on a W-2. It’s based on a warm heart and a kind soul. To that end, I begin every relationship with the expectation that until someone gives me a reason not to, I believe in it.
Berlin on working hard without results: If you have an employee who is putting in the effort, usually you can find a way to turn that effort into profit and help them work smarter. Someone can work 10, 12 or 14 hours, but I’m not sure all of that work is smart. What are you doing during your day? Let’s do timesheets together to break into categories over the next couple of weeks what you’re doing, and how you’re doing it. Together, we might discover some activities that aren’t yielding results.
Berlin on creating value: If you’re going to do something, do it first class. I hate value engineering. I like going in and doing everything just so because I think my customer or my fan is going to appreciate that they get a first-class experience at a very fair price. That’s what leads people to say, “I’m spending this money on this, but I feel like I’m getting something really great in return.”