Today we dip back into the programs we've done in the past to give you the very best thinking on the people part of running a business. There is some science to this, but there's more art than you might imagine. Smart business owners have specific techniques for getting started on the right footing.

HATTIE: Leonor Ferrer says attitude is more important than skill.

LEONOR FERRER: I would rather have somebody that's fresh out of school, that has no experience, has absolutely a blank mind, and then I like to train them with my philosophy of work and the way I like to do things. And so that's why I have such a, you know, low turnover, because they know. They know exactly what I expect from them.

HATTIE: Well, you don't have to then undo the old habits that some other broker...

LEONOR: Exactly. Yeah. You know, one time I hired a person from another broker and she spent three months telling me how the other broker did things, and I don't do that well.

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HATTIE: Bill Sugars says he hires people who can read the customer.

BILL SUGARS: I think when we hire people we're very specific on who we hire. They have to have a certain personality, 'cause you can't teach people to be--they don't have to be funny, per se, but they have to be pleasant. They have to smile, they have to be willing to interact. Body language is extremely important.

HATTIE: So when you interview, do you look for those things?

BILL SUGARS: Absolutely.

HATTIE: You're looking for people to--like eye contact?

BILL SUGARS: Absolutely. And people that will read my body signals and give me feedback on that, because if they can't read my body signals, they're not gonna be able to read a customer's body signals.

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HATTIE: Judi Jacobsen hires people others may overlook.

JUDI JACOBSEN: I really feel one of the best things you can do for people is giving them meaningful work, and I saw that. We had people working for us that probably wouldn't be working for anybody else.

HATTIE: What do you mean?

JUDI: We had refugees from Cambodia that didn't speak English, but they could package cards. We had a Down's syndrome young man. Now we have deaf people. (To employee, speaking and using sign) Do you know if it's gonna be a boy or a girl?

Unidentified Employee: I won't know until the baby arrives.

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HATTIE: Wanda Brice of Computer Directions hires hundreds as she is a staffing service. She is always is looking for people who have good energy and has her own quick way to detect it.

HATTIE: You have surrounded yourself with great people. How did you get them? Because other people can learn from you. What do you do in the interview process?

WANDA: Well, I have three criteria. One is I look for a quick study, somebody that really gets what you are telling them.

HATTIE: And how do you know that in an interview, though?

WANDA: In their communication and in their face. You know, you can see someone's eyes. Do they get it. And people sometimes make the mistake of not listening in an interview. They're thinking about what they want to tell you to sell about themselves, and they just need to listen and respond to what you're saying. Because an interviews, I always tell someone, is a two-way street. You need to be happy working for me as much as I need to be happy having you work here.

HATTIE: And so the second thing you look for?

WANDA: The second thing is energy.

HATTIE: How do you know discern energy?

WANDA: Well, my acid test is the handshake. If I can't feel your energy, then it's not going to work. Because people with a high energy level get things done. And the third thing is the hardest to define, which is a nice person. And I really want someone who is a nice person. I guess everybody's got their own subjective definition of nice, but I want someone who likes people, who has a positive attitude, who is going to look at the best side of things, who is optimistic. But a nice person.

HATTIE: Do you do start a person with a trial period?

WANDA: Yes. Everybody's here on a trial period. The first 90 days are a trial period.

HATTIE: So no one is hired for sure until 90 days. WANDA: Right.

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HATTIE: TMC Design goes after bright students.

TROY: (Voiceover) We have an excellent co-op program with the university. Mechanical engineering students when they come over here--two gentlemen over here are mechanical engineer students. They work in the machine shop for the first couple years that they're here. That way, when they graduate and they design a part, they know where or not it can be machined.

HATTIE: (Voiceover) Leroy Gomez, Chris Ham and Troy Scoughton are owners of TMC Design, a fast-growing company based in Las Cruces. They primarily design and build custom systems used by the military for electronic warfare. HAM: This is one of the modulator circuit cards that we design and build that goes into a signal generator box that we build for the Air Force.

TROY SCOUGHTON: This is a typical monopole antenna. It's just like you have on your car. This is a dish antenna. This is a horn antenna. That one in the corner over there up on the wall, that's a big log periodic antenna. Let's pick this up first.

(Voiceover) Without boring you with all the technical details about this, what it does is allows our customers to specify exactly what they want to do... So these are 5/16ths. (Voiceover) ...and exactly... TROY: It's a total concept. We have 100 percent paid health insurance. We have 401(k). We have paid annual leave. We have 11 vacation days a year. Our benefits are excellent. Our salaries are very, very good

TROY: Everything is important--the marketing, making sure that you track everything, making sure that you treat your customers properly and making sure that financially you're doing smart things, and then, of course, taking care of your people. And if you don't take care of the business, you're not going to be able to take care of your people.

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HATTIE: (Voiceover) At Nicole Miller, many designers are interns working for no pay before they are added to the payroll.

NICOLE MILLER: That dress should be $275 and that one should be the same.

BUD KONHEIM: $275 – I would sell it for $275 and it will be a hot dress.

HATTIE: Bud Konheim and Nicole Miller started the Nicole Miller Company in 1982. Today they have 165 employees working either at headquarters in New York City on 7th Avenue, in the warehouse or in the retail stores. There are 30 Nicole Miller Boutiques around the country – 15 owned by Nicole Miller and 15 owned by licensees. Neiman Marcus, Saks Fifth Avenue, Nordstrom and other large retail operations also carry the line.

NICOLE: My clothes look ageless. I've always been against clothes that make you look old. And I think a lot of times expensive clothes tend to make women look older and more mature. And I've always been against looking older than you are. And I don't think you should be dressing like a teeny-bopper either because I think women shouldn't dress so that they look foolish. But I think they should always dress so they look youthful.

BUD: That is the business we are in. We're trying to make a product that makes somebody happy. If it doesn't make them happy, they are not buying it and your out of business. So the whole thing is about delivering a "feel good." This is what it is all about. Now you get that feeling when you are dealing with a customer one on one and she is dealing with her customer who is in the store at the same time you are.

HATTIE: (Voiceover) Fashion. It's tough. Dog eat dog. Squeezing profits from seams. The business is unrelenting and unforgiving, but somehow Bud and Nicole have built a place where people want to work.

NICOLE: Everybody I have here now, started as an intern. I have taken a lot of people from Rhode Island School of Design, which was where I went. I have two from there... another girl Parsons. I have so many interns passing through here that if somebody I think is really good – then maybe when they get out school, I hire them.

NICOLE: "...so let's take that one."

HATTIE: So when you see her sketches, you probably know what she is thinking.

TATY: Yes, I am supposed to.

HATTIE: Do you have fun doing this – is this fun for you?

TATY: Yes – I love it – I love my work.

HATTIE: you are the person who says, "this works with this fabric or it doesn't."

SUZY: Right.

HATTIE: Is it fun?

SUZY: It is – I enjoy. For me, this is like my home and my co-workers are like my family.

NICOLE: So everything else on this chart is pretty much done.

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JUDY: It is your life and you are here working more than anything else you do in your life.

HATTIE: Judy Scarpola is senior vice-president of Sales

JUDY: My thing is always about opportunity. I came here as like the fifth wheel in the sales department and 15 years later I am senior vice-president and it is a new title that has never been given to anyone. This is on a silk knit – so we don't want to duplicate the idea with the georgette. As far as Bud, you know -- he is an amazing person to work for. He's better than a dad and he is better than a husband. Well, I usually go in and tell him the ten things I need him to do. And he says, "Oh, all right, I'll get to it." "You need to put pressure on this person because they are not doing this." It's not always about money for people, it's uh – again, it's the freedom to do it. To have the opportunity to see it from A to Z.

BUD: It is a baseball story. If we have nine players and they are all good and we like them all and we have been playing with them for a long time. And we are up against a team that has 8 good players and one great player – we lose. So, we have to – and that's a serious consideration. And when we are looking at the people here, we have got to have the greatest people to win this game. We are up against a lot of big businesses. We are not a big business, but we are up against a lot of big businesses. And everybody here doesn't have to do their job – they have to do more than their job. (Meeting discussion)

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HATTIE: (Voiceover) Tom Gegax and Don Gullet started Tires Plus in 1976. Both left Shell Oil and each put up their own cash to buy three gas stations which they converted to tire stores. When they sold the business in 2000, there were 150 stores with 2,000 employees generating 200 million in annual sales. Tom Gegax tells us what he thinks they did right.

HATTIE: What were some of the key decisions that that two of you made that you know now looking back were the right things to do?

TOM: Well, the decisions were: Have an environment that people were able to feel comfortable. Really spend money in having the store environment to look nice. Spend a lot of time, effort, and effort in hiring people that we call COPS -- people who are: Caring, Optimistic, Persistent, Passionate, System discipline and Spirit filled. So, we found people like that would come in and we trained them well.

Employee #2: The reason I'm here is I want to find out what makes.

TOM: (talking to his teammates) We have Tires Plus University, a place that takes what you're already able to do but enhances it. I sleep better at night seeing the quality in this room, because you're our future. This kind of goes in tandem, because the more that our company's reputation is built, the more people would want to be involved with.

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TOM: We also did a referral process, because we felt that when we had a group of people with us that we felt were COPS. Well COPS know COPS. So we gave them a $500 referral fee for anybody they brought in, that they recommended to come to our company whom we hired. And after 90 days, if they're still there and everything worked great, we paid them. So rather than go pay a recruiting, employment agency, I'd rather see our own people get that. Now, as far as the interview, it was critical to be able to find out, are they really COPS? And we did it in two ways. We asked them out of the box questions that were very different.

HATTIE: For example?

TOM: We will ask, what makes you happy? What makes you sad? What makes you mad? Also, got into role playing situations with them. Where we actually said, 'Don't tell me how you sell, sell me this pencil. Sell me the product.'

HATTIE: So you really almost do an audition then more than an interview.

TOM: It's a combination.

TOM: An out-of-the-box interview plus audition.

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HATTIE: Once you've hired a person, what should happen next? Albert Black says we need to do four things: teach, preach, coach and counsel.

ALBERT BLACK: I think you need to start with listening. And have that become a learning experience. To teach is to come from the intellectual side, for me. Preach is to be emotional. We need emotion in business. Coach is to be able to control and direct. Counsel is to be able to be empathetic to people and give them some sort of advice and direction as they move forward with their careers.

HATTIE: Tell me what my field of dreams is. What am I walking into if I come to work for On Target?

ALBERT: On Target Supplies and Logistics promises people three things. We promise people an educational income. If you come to work with us, you will know how to run a business. We have absolute open-book accounting. You would know every expense in this business. You will know every revenue stream. You will know all the cost of sales. You will know how to run a business in a couple of years. That's the educational income. We'll also pay you a psychological income. We want you to feel good about what you're doing at On Target Supplies and Logistics. Just coming in with that spirit de corps, that attitude that says, `Together we can climb mountains and win battles'--that's what we offer people, that psychological income of making a contribution every day that makes a difference.

The last thing, and the most important thing for some, the least important for me, is the financial income. We will pay you above market. We do not want you to think that coming to work for On Target Supplies and Logistics means that you've got to give up the opportunity to earn maximum salary. We like to bring people in and, over the course of their career here, get them above the industry average and then so above the industry average that their desire to leave is based on the first two, psychological and educational, and not financial.

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HATTIE: At Gadabout Salon and Spas, founder Pam McNair invests continuously in technical and personal growth education.

PAM: We have a culture here, and you can't just walk into it and be hired and be part of that culture. You have to grow into it. So everyone who comes to work for us knows up front what our expectations are. What this allows them to do is, over the long run of their profession, is it allows them to be in the profession longer. It also allows them to make more money so that they're better prepared, not just--technically, anyone can learn how to cut hair. But it's the people skills that aren't necessarily there when you get out of school because you haven't had the experience. So there's a number of things we have to learn.

HATTIE: Tell me why you think working here is unique.

Unidentified Woman #2: There's many benefits: Pam, number one, of course; all your other co-workers. They're trained, they're knowledgeable.

HATTIE: So you feel you're working with the best of breed.

Unidentified Woman #2: Yes, absolutely.

HATTIE: And that makes you probably feel proud. Unidentified Woman #2: Yes.

HATTIE: So many people feel their lives are different. I mean, that's just, like, something huge to say about a workplace.

Unidentified Woman #3: Oh, definitely.

Unidentified Woman #2: Well, it's one place you can count on in your life.

GLORIA: We're a family, actually, and I think that makes a big difference.

HATTIE: What is it about her that makes people love to work here?

GLORIA: Oh, I think she's a great person. She stands behind us. We do a lot of education.

PAM: We've come up with a conflict-resolution package, which is four steps that you take if you work with us to resolve conflicts.

HATTIE: So everyone goes through a class?

PAM: They went through training, and now we have the four steps written in our policy so that when someone has a problem, this is the way we deal with it.

HATTIE: OK, let's role play. I've got a problem with you, Pam.

PAM: Yes.

HATTIE: What are the steps we go through?

PAM: The first thing you do is you feel it. You see how it feels, how you feel about it. You don't want to respond to somebody when you're highly emotional. So you need to calm yourself. The second thing, after you've felt it, is you need to deal with it. You need to go to the individual and say, `Do you have a moment? I'd like to speak to you when you're free.' So that you take yourself away from the situation where there aren't clients or other co-workers who can hear the conflict. Then what you do is you speak about it; you listen and you talk.

LAURIE: There's no reason why I have to go home with a knot in my gut.

PAM: If you feel good about where you work, you feel good about what you do, you feel good about who you are, you can be successful at anything you do because then you have the ability to be an excellent service provider. You really care about the client because someone cares about you. We have a number of programs in place that we've worked on over the years to create a culture by which anyone who works with Gadabout, hopefully, feels safe and calm and confident in not only what they do, but who they are because every individual is of great importance to this company.

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HATTIE: Jim Schell has started and sold four businesses.

JIM SCHELL: If there ever has been a Achilles' heel to a small-business person, it's `Training is where it's at.

' HATTIE: Why do you think?

JIM: We get killed in training, particularly compared to our Fortune 500 cousins. It's because we're too busy to train. We consider training as an expense rather than what it really is, which is an investment. I'll tell you a great story on training. We had a staff--in my last company, we had 17 salespeople. We didn't do much training, just because that's the way small business is. My 17 salespeople came to me, as salespeople are wont to do, screaming and hollering and saying, `Jim, we want to be trained.' `OK.' I trained 'em. Had a...

HATTIE: What do you mean you trained 'em? How'd you do it?

JIM: We hired a consultant, came in--a sales trainer. Over a period of two or three months, had a three-day program, follow-up and a follow-up. What happened was, Hattie, that we--our company went from being 10 percent increase in sales every year to wham-o! All of a sudden it's 35 percent, as a result of training our salespeople. I'll give you a quote that I didn't say. I wish I had. People complain about training because you train an employee and then they leave, and this quote, by whoever it was: "If you think training employees and watching them leave is expensive, try not training them and watching 'em stay."

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HATTIE: Once you have good people and they know how to do a job, Marty Edelston's techniques will work to keep people continuously improving.

MARTY EDELSTON: Well, I-Power is a simple suggestion system that's sort of automated. It was something that Peter Drucker suggested, not with that name, but he said, `Make your meetings more interesting. Ask the people at your next meeting for two suggestions,' which I did, and I was just knocked over by the suggestions. They were just so fantastic.

Unidentified Man #1: I have two ideas today. We have many premiums in inventory in very small quantities that are still usable, but they're just not being used. So my idea is, why not test a premium offer for bottom-line personal and money's worth, in which we give a mystery gift of six different premiums, our choice? What it does is it utilizes dead inventory and conceivably may be a premium that improves response, so I think it's testable.

MARTY: It's just amazing, and it's not just the suggestions; that's the detail. It's how we get people to think, and it brings about a huge amount of cooperation.

Man #1: You can use premiums that are...

Unidentified Woman #1: Older, like two or three years...

Man #1: ...older or--yeah.

Woman #1: Yeah.

Unidentified Woman #2: Yeah, that's a good idea.

Man #1: Or that, you know, relate to other books that these people might not have received. MARTY: But at some of these meetings you'll come out with an idea and someone else will say, `But we could make it blue,' and then someone says, `Yes, but we can put yellow polka dots on it.' And obviously, I'm saying it wrong. But it's just so exciting when that building goes on.

HATTIE: The give-and-take and the back-and-forth between departments and between units who would not normally talk to one another, and then maybe eventually jeopardize each other's productivity, not on purpose, but just because they weren't talking. But the I-Power gets them together to talk.

MARTY: And we've used it; once you become adept at it, you can use it in other ways. We've had differences between people here, some really unpleasant situations, where you're gonna have in any business. We had it, too. And others have tried to solve it, and then I came in a couple of times. And I say, `Hattie, would you please give me five reasons, five things you can do that would make Marty's life better? And, Marty, would you please give me five things that you can do to make Hattie's life better?' `And also, Hattie, would you give me five things that Marty's doing that steps all over your feet, and vice versa? But give it to me. Don't exchange it. Give it to me. I'm in the middle.' `And then I will edit it out and change the language so it's acceptable.' And it's just incredible. It's just like magic.

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HATTIE: Joseph Semprevivo is founder of Joseph’s Lite Cookies. He has a working long-term strategy for keeping great people!

JOSEPH SEMPREVIVO (Joseph's Lite Cookies): I want to do something different. I want to tell my team members, 'You start with me, you can end with me. Your work with me the rest of your life until you retire." And they love that. And what we've found out is our team members care more about efficiency because they have lifetime jobs. They come to me and they say, `You know what, Joseph? If we eliminate this step in the process, we can save the company more money,' and I'm sitting there, I'm scratching my head, saying, `Wow, but that's actually reducing your workload.' `Yeah, I know, but my job is to reduce my workload so much, you'll create another job for me.'

HATTIE: What do you think about the future?

JOSEPH: Oh, just the sky's the limit. We're doing multiple of millions a day in cookies. We produce over two million cookies a day, but we're not stopping there. We are growing astronomically, triple-digit growth, and it's something that all companies would love to experience in the country. But you know what? Believe in your team members, give them great benefits and empower them, and you know what? They'll perform.

In the Studio

HATTIE: You have just seen for yourself the extraordinary dedication business owners have to building productive teams. These men and women never stop thinking about others. That is the true secret to their success with the people part of running a business. We'll see you next time.