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Operations Culture

Elliott Cook is a partner in RHE Technologies. Jack Baron serves as an executive vice president for Paetec Communications. Wedge Greene works as CTO for Mission Assurance Corp. And Jim Sturtevant works with Neopolitan Networks. Their panel discussion at WTF 2004 focused primarily on a case study of Paetec’s corporate culture and how it affects their operations. What follows is a partial transcript of their remarks.

Elliott Cook is a partner in RHE Technologies. Jack Baron serves as an executive vice president for Paetec Communications. Wedge Greene works as CTO for Mission Assurance Corp. And Jim Sturtevant works with Neopolitan Networks. Their panel discussion at WTF 2004 focused primarily on a case study of Paetec’s corporate culture and how it affects their operations. What follows is a partial transcript of their remarks.

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Elliott Cook: We deal with a lot of providers, and we’re always looking for the perfect provider, the good provider. We’ve stumbled on one, which is Paetec Corp. Jack Baron is going to provide an overview of their entire corporate culture.

Jack Baron: There’s a group of us who worked for ACC Telecom in the ’90s. We were bought by Teleport, which was bought by AT&T. It has to be one of the worst acquisitions of all time. Within about 120 days. 35 senior managers around the world left. Some of us started up Paetec Communications. About a third of it is owned by employees. Our vision is to be the nations’ most customer- and employee-oriented communications solutions provider. Our key objective is to exceed customer expectations and bringing a higher set of customer service. That sounds like corporate dribble. It’s just a mission statement. There’s nothing sexy. But there’s nothing new about treating your customers well, and so few companies do it.

We have 1,100 employees. We focus on medium-sized and large business customers. Our revenue mix is 50% local, 20% long distance, and about 15% Internet. And we’ve been profitable for the last year. But people are the key. The 12 folks who started the company have an extreme degree of trust. Three of them are my best friends. That makes a huge difference. We also aim for fairness. Share the wealth creation. Balance. Paetec is not the most important part of life. Six months after we started the company, I had a herniated disk in my back. We’d hold meetings at my home, with me lying on the floor. You need to make people feel like it is their business. It is their business.

We gave up our initial salaries because we needed the capital. We have a common bonus program. We don’t have executive perks; there are no company cars. And we try to promote from within. We’re huge on community service and family events. Charity is also a huge piece of what we do. Anyone who wants to hold a charitable event in our offices can do so for free, and we’ll pay for the food.

All that is good, but what are our key elements of success? Hire great people, smart people. Listen to your customers. You’ve got to have great processes. We’re ISO 9000. We’re the only one in the industry. We did that five years ago. Next year, we’re going to pursue Six Sigma. When we built the company, we did not go out and look at AT&T, we looked at Nordstrom and the Ritz-Carlton to see how they treat their customers. We focus on building our products in response to what the customers want. That makes us relatively agnostic to technology.

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Processes come from ideas. Early on, we had the idea that we would answer every customer service call with a live body within 20 seconds. We also need to drive down costs and make the processes as efficient and lean as possible. We run at about $400,000 in revenue per employee right now. Not many companies can say that.

Jim Sturtevant: The company I’m with today is 10 people. We’re still establishing our core set of values. The company I was with before competes head to head with Paetec, and we respect them a great deal. It’s no small feat that you’ve accomplished what you’ve accomplished. We’re all consumers, and it’s easy to say that it sounds like motherhood and apple pie, but if you build a company that puts the customer first, you can do a lot.

Wedge Greene: I grew up with MCI and lived through the respective mergers with BT and Worldcom. I’ve seen organizations that were doing very well tank. I’ve also never been part of a core group in any company. I never realized that until I lost $600,000 at Worldcom. I was a corporate resource. My voice was always being heard, funded, worked with, and spouted. While we were in, we kept going because we thought we were being heard and directing a company. When push came to shove, that turned out to not be the case.

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