Building a team culture

Three brothers demonstrate that teamwork among owners can be a model for transforming a family company. At their computer consulting firm, it broke down barriers and opened up new business opportunities.

By Mark Fischetti

It's been only a year since the three Cogliano brothers took charge of Sullivan and Cogliano, a computer consulting firm in Waltham, Massachusetts. The brothers have traditional titles—Jay, 36, is CEO; Herb, 34, is president; and Jim, 30, is COO. But a lot that has been happening at the firm is untraditional, to say the least.

Balding at early ages and sharing a penchant for slick suits, the three brothers certainly look like a team, and indeed, they make all the big decisions together. What’s more, this non-traditional style of leadership is quickly flowing down through the organization. The brothers are pushing the vice presidents who head the firm’s four major divisions to work together, encouraging them to share prized resources, and are even offering incentives to other employees to work in this way, none of which has ever happened before.

For years the siblings’ father, John Cogliano, 65, had run the company as sole boss. As the firm grew, it inevitably developed specialties. The brothers, as they matured as managers, ran the divisions as separate fiefdoms. “We acted as if we were building our own corporations,” CEO Jay recalls.

But Sullivan and Cogliano has made a swift transformation to a culture of teamwork because the brothers realized it would be necessary if the company was to grow. In the past, the divisions—software (about 40 percent of revenues), network integration (40 percent), computer training (10 percent), and search and placement of computer engineers and executives (10 percent)—typically provided isolated services to mid-size clients. Larger clients, however, wanted a full, integrated line of these services. To offer it, the divisions had to work together much more closely, and “this need drove what executive structure would be best,” president Herb says. “The best way to leverage the strength of each division—and each of our individual strengths—was to run the company as a team.”

The new structure seems to be working. Under John Cogliano, the company had developed a strong reputation in the Northeast. But since his three sons took over last August, Sullivan and Cogliano has begun to win national accounts. Revenues for fiscal 1998 reached a record $183 million, up 29 percent from the prior year, while the roster of employees—primarily administrators, sales reps, executive recruiters, and staff engineers—grew to 380. The firm is also saving tens of thousands of dollars a year by consolidating operations that had been duplicated in the divisions, notably human resources, legal representation, and the purchase of computers, phone services, “everything right down to the coffee,” Jay says.

More and more family companies appear to be experimenting with co-leadership at the top—or considering it—often because parents do not want to give sole authority to just one of their offspring. The trick to making the transition, the Cogliano brothers say, is to let the business dictate what skills are demanded by the top positions. Then let siblings decide who is best to fill each role.

A fortuitous match of personalities helps, too. After several hours of discussion with this writer, it appeared that Jay, the chief executive, was indeed the natural salesman, the promoter, always upbeat. Herb, president, was the analyzer, waiting a moment to study a question and give a measured response. Jim, head of operations, was the accommodater, focused on ways to implement their common views.

Although the changes at Sullivan and Cogliano are only a year old, the firm’s experiences suggest that co-leadership can have sweeping effects throughout the organization that impact the bottom line. How the three brothers created an executive team, and how they are spreading the team model throughout the firm, thus becomes an instructive story.

 

Deciding on roles

The sibling partnership at Sullivan and Cogliano almost never happened.

John Cogliano had been director of personnel at a high-tech company in the Boston area before founding the firm in 1966 with a partner, Ed Sullivan. In 1984, John bought out Ed. Each of John’s three sons joined right out of college: Jay in 1983, Herb in 1987, Jim in 1991. By 1994, at age 61, John knew it would soon be time to step aside. His sons had more relevant experience than he did in designing, installing, and programming information technology systems for other companies.

John read articles about succession, talked with family business consultants, and kept finding the same advice: A company can only have one leader. He collected his sons and told them: “The experts agree: I’ve got to pick one of you to become CEO.” His sons were a bit stunned, but understood.

That’s when the atmosphere began to change. “Over the next three years, my sons began to compete with each other to stand out as the best choice for CEO,” John says. Jay admits, “We communicated less. We started building separate infrastructures within our divisions. And each of us tried to stand out as the person who created the most profit.”

John foresaw that this would only lead to “an uncomfortable relationship amongst us all.” So in August 1997 he again gathered his sons in his corner office. “This isn’t working,” he told them. “Forget about who will be CEO for now. I want to see you work as a team.” The relief in the room was palpable.

Prior to the pressure of trying to outdo each other, the siblings had worked well together. Over the ensuing nine months they found a new energy. More and more, they were making major decisions together. John was elated. In May 1998, he told them he would step down as CEO in three months, when he turned 65. He would remain only as chairman of the all-family board. Then he said, “You guys get together and decide who will be CEO, and COO, and so on.”

After meeting several times they returned with their decision. Jay, the oldest, would become CEO. Herb, second oldest, would be president and treasurer. Jim, youngest, would be COO. John wanted to be sure the decision had been mutual. He talked to each son privately. They told him this is what they wanted.

When Jay, Herb, and Jim first met to discuss a new executive structure, they were a bit confounded. But one practical concern spurred them on. “We all wanted to succeed financially as much as our father did,” Jay says. “For three people to do that instead of one, we knew we would have to grow the company.”

The best way to do that was to run the company’s divisions collectively. “As soon as we tested this idea,” Herb, the analyzer, says, “it made perfect sense.” The brothers had each been hiring people separately, creating their own purchasing and personnel departments, solving the same problems independently. There was an inherent efficiency in running the divisions as a team. They also had several good people who were ready to move up to divisional vice presidents. Most significantly, pulling the divisions together would give the company a single mission: To offer clients an integrated solution to their computing needs. “Suddenly,” Herb says, “we seemed like one big company, with one goal, that could compete on a world-class level.”

While joining forces made business sense, deciding which brother would take which role could be much more complicated, since individual talents and egos were involved. The Cogliano brothers took a dispassionate approach to the task. “We started by listing the top jobs that had to be filled,” says Jim, the practitioner. “CEO, president, COO. We described the talents each job required. Then we each talked about our past successes, to find out what each of our strengths were and which job they would match best.”

“This approach helped us feel like we weren’t really negotiating,” Herb says. “It was more a sense of trying to solve a puzzle; who fit which position better.”

Jim had always focused on operations, making many of the daily business decisions. Herb spent more time on strategic matters, such as vying for new markets or getting financing. Jay got involved in both operations and strategy. “I may not have been as strong in either area,” he says, “but I appeared to be the best at integrating the two.” It was becoming clear which brother belonged in which position: Jim as COO, Herb as president and treasurer, and Jay as CEO.

“We agreed this is how it would go,” Herb says. “There was no ego involved. Our father always encouraged us at work to put the company first, instead of ourselves. Accepting the decision of which role each of us would take was simply a matter of choosing the best combination to take the company to the next level.”

 

Telling Dad and the employees

When the brothers informed their father of their decision, he was pleased. “The main focus in any major business decision has to be the company, not the individual,” he says. “Ego is the biggest impediment to the ongoing success of a family business, or any business. They had sublimated their egos, put the business first. And when you do that, all the rest takes care of itself.”

To reduce the potential for stress, John and his wife, Audrey, who together held all the shares in Sullivan and Cogliano, divided ownership into five equal parts, one for each of them and one for each son. Their daughter, Helen, who had worked for the firm for 15 years before moving to the warm weather of Florida six years ago, would not have any ownership, but that’s how she wanted it. John says proudly, “She told me when she moved that she did not ‘deserve’ stock, because it wouldn’t be fair to her brothers, who would be working in the business.”

“Of course,” Herb chimes in, “we will take care of her as a sibling if she ever needs it.”

Neither father nor sons had any qualms about how soon to make the management change. “We were at a crossroads,” Herb says. “We could take 10 days or 10 years to actually cross it. We decided to just do it.”

The announcement to employees was a low-key memo from John Cogliano. It explained the new executive structure, and said it was being put into place to create “an integrated management approach for the corporation,” and to “more clearly define our focus” as a company.

The brothers began a series of talks with key managers to explain what these niceties meant in practice. They said that if the divisions didn’t integrate, the company would likely run into gridlock: One division might have a sensational year while the others did not, and the next year another division might do well and others not, leaving the overall company going nowhere. So Jay, Herb, and Jim would elevate themselves to an executive team. And key employees would be promoted to run the divisions, each reporting to the top team.

While employees greeted the news with some understandable wariness, most of them seemed excited about the prospects. “Rather than feeling like they were working with a different mission, goal, and sponsor than people in other divisions,” Jim says, “the employees could all have one common vision, led by one common team. Better cooperation across divisions would also create more career opportunities for them within the company.”

 

How three operate as one

The brothers’ success in operating as a team is due in part to their constant attention to how they are interacting. Herb says that people in sibling teams “mess up” most often because they fail to appreciate how the differences between people can be advantageous.

“When discussing issues, don’t think, ‘I’m good at X, and he’s not; therefore my view should prevail.’ And when your brother questions your opinion, don’t think, ‘He doesn’t like me,’ or, ‘He’s trying to fight with me.’ Realize that each person has his own point of view, and that taking what is smart from each point of view can be a great collective advantage. Once you learn that, it’s much easier to work together.”

For this kind of clear thinking, siblings have to establish an atmosphere in which people feel free to speak. “I’ve seen how some relatives in certain family businesses act and I’m shocked,” Jay says. “There’s name-calling, constant jabbing, decisions made purely on emotion toward other family members. If they were working for General Motors and behaved that way they’d be fired. If you want to be a big professional company, you have to act like one. Each of us can give an honest opinion, or vent, without fear of reprisal. And we try to remember that at times it’s okay to have disagreements, and agree to disagree.”

“It also helps to have some fun,” Herb says. “Go out and party with each other. Go to your nephew’s soccer game and root him on.” These kinds of activities “remind us of how much we love each other,” Jay says, “that we want to keep what we have, that we wouldn’t want to have a family squabble because there’s too much to lose.”

Doubters might question whether Jay, Herb, and Jim operate any more like a team than a traditional CEO, president, and COO. After all, they use these titles, and have divided responsibilities somewhat accordingly.

But the brothers do not have the rigid job descriptions that their counterparts in other companies would have. Jay says these “only form boundaries between people who are otherwise trying to work together.” The fact that the brothers also own equal shares of stock and are paid equally goes a long way, he says, to discounting any idea that one of them is worth more than the other, thus making true teamwork much easier.

The brothers claim to operate in ways other executives would find uncommon. For example, since Jay has a strong background in advertising, when it was time for the training division to devise a new ad campaign Jay worked directly with its marketing people, rather than Herb, who formally oversees the division. Yet Herb, who has a stronger financing background, advises the people in Jay’s staffing division on budgeting and forecasting. Few executives in other companies, they maintain, would willingly give oversight of their divisions to others, but that is the very nature of a team at the top. Jay adds that typical executives would also be unwilling to perform these kinds of duties for other people’s divisions. “What would be in it for one executive to spend a week of his time doing budgets for another executive’s division, since it wouldn’t affect his own division’s bottom line?”

Jay says the brothers also enjoy a higher proficiency as a team than unrelated executives might hope for, because their parents have encouraged them to work together in all aspects of their lives since they were young children. “How many executives have had the ability to work together for 30 years, and still have the energy of 30-year-olds?” he asks.

 

The payoff

After nearly a year as a formal executive team, the Coglianos are seeing a payoff from teamwork at the top. The company’s managers and employees are also beginning to see some of the benefits.

The brothers bring together the division heads for regular meetings about the company’s larger goals, and to review problems divisions may be having. “These meetings support the notion in their minds that they, too, are a team, with equal access to the top team,” Jim says. “The meetings also help them share experiences on, say, the best ways to recruit good people, or to deal with a difficult client. They’ve even swapped employees occasionally, when it seemed people could be better used in other divisions.”

The managers are encouraged to work across divisions when it makes sense. The brothers sometimes seed this process by starting a cross-functional initiative. For example, Jim networked the entire company’s systems so that divisions could call on one another’s databases when looking for contractors and software engineers. To help convince employees to work this way, the brothers started an incentive plan. If an employee in one division needs a certain kind of contractor, and an employee in a second division locates the right candidate, the second person receives a modest financial reward.

“Before,” promoter Jay says, “people in one division would not hand over names,” for fear that people in another division would steal their good contractors. “Giving each other leads has improved our efficiency. As we show these kinds of results to our managers, it’s starting to sink in that we’re all working together as one team, one company, with one profit line.” The culture, he says, is changing.

By combining the divisions’ previously separate databases of software and networking contractors, the firm is securing national accounts with large clients such as Nations Bank and Motorola. It now has one corporate-wide database of 2,800 contractors who can be dispatched to handle local jobs nationwide, in part coordinated through new satellite offices the brothers have opened in major cities such as Chicago and Pittsburgh.

“We’re beginning to compete with some of the large public companies like Arthur Andersen and Deloitte-Touche for big accounts,” Jay told Family Business in May. “This can be hard for us to accomplish, but it also allows us to raise our rates, say from $80 an hour to $135 an hour. It’s a huge jump, yet it still puts us at less than what the national firms charge. We’re in a great position.”

Some basic compensation practices reinforce the need to change. The three brothers are all paid the same according to the firm’s overall results. Similarly, they have tied the pay of division heads in part to company performance. Before,” Jay says, “if Training didn’t do well, Staffing didn’t necessarily care. We’ve now created rough parity in pay among our top executives, so they want the other divisions to do well also.”

Now, he says, if Training is considering which new courses to add to its syllabus, it asks Staffing which ones would benefit it as well. Staffing, in turn, keeps its eyes open for contractors who might make good teachers for Training’s courses. “When you start to put all these sorts of things together,” president Herb says, “they are changing the way we process ideas. For the first time, the vice presidents are really helping each other get the bigger job done.”

To further employee cooperation, the brothers are also beginning to form cross-functional work teams to carry out specific projects. For example, the company’s first Web site had been built by the staffing division, and the training division was hardly represented on it. The new site has been designed by a team with employees from all divisions, and it’s generating a much better return for the whole company, Herb says.

Now that an energizing teamwork culture is slowly emerging at Sullivan and Cogliano, CEO Jay Cogliano says the firm has to make sure the rest of the world is clear about the nature of the transformation.

“We had a meeting a few weeks ago with 19 of our top executives,” Jay explains. “We broke into groups, each with people from different divisions. We told them to tell us how they think our customers see us as a company. One group came back with a stick figure that had orange arms, blue legs, and a black torso—an integrated body of services. They said, ‘This is how we see our own company.’ But then they showed a stick figure that was all one color and said, ‘This is how our customers see us—as just a training company, or just a networking company in the Boston area.’ The point was that even though we saw ourselves as integrated now, our clients didn’t. It sent a powerful message about how we have to change the way we market ourselves to the world.”


Preventing rivalry

Studies of siblings who co-manage indicate that mounting rivalry is a leading factor that undermines cooperation. The Cogliano brothers have some tips on ways to avoid it:

Jim: “Don’t argue about the petty stuff. Pick your battles. Fight hard only on issues that really matter. Otherwise, realize that getting along is much more useful to the company than digging in.”

Herb: “Don’t make personal comments when discussing business issues, and don’t take your siblings’ business comments personally. Don’t bring your business problems home, because they can initiate trouble between spouses and at family gatherings. And don’t talk about a problem with your spouse at work, either, for the same reasons.”

Jay: “Make ownership and salary equal. We own equal shares of stock. Before the three of us took over, Herb and I made more money than Jim. After the transition we decided we should all make the same salary, because we are all working hard at relatively the same executive level.”


Making team decisions

A common criticism of team management is that is slows decision-making. Herb Cogliano has succinct advice on how to avoid this trap.

“There are two types of decisions: strategic and tactical. We don’t necessarily converse over tactical decisions such as whether to buy a computer, what the deadline should be for a job. But we do make the strategic decisions together: Should we change the funding of a division, open a new office? We also make all important hiring decisions together.”

When facing joint decisions, the Cogliano brothers do a lot of research so they can hash out options and concur on the best one. But when there is dissent, they’ve agreed that Jay, as CEO, will decide. “The buck does have to stop somewhere,” Herb says. “Our father taught us to give our honest opinion, and then to accept a decision even if it’s not what we want. Design whatever system you like, but then live by it. A lot of sibling teams don’t.”

-- M.F.