Dr. Bharat Sangani and Patrick Barber tell Liz French how they organized this development and management company to run vertically and horizontally.
Eye on the Horizon
Many companies are either horizontal or vertical, but they can only handle going in one direction at a time. Encore Enterprises, however, has made duality an art.
The Dallas-based company is horizontal in that it develops and manages hotel properties for Marriott, Radisson, and Hilton; retail centers housing numerous brand names, including H&R Block, Lowe’s, Blockbuster, and RadioShack; commercial and corporate centers; condominiums; and townhouses. “If one market segment is down, we are present in one that is booming. That provides us with a deep sense of security,” said Dr. Bharat Sangani, CEO, co-founder, and chairman of Encore.
To maintain control over its horizontal structure, Encore Enterprises has created a series of subsidiaries. Encore Capital Management Group provides funding for numerous development projects, while Premier Properties serves as a real estate broker, finding land on which to build and selling or leasing developed properties. Once capital is raised and land is acquired, Encore Development grades and prepares the land for development, after which Encore Construction bring the hotel, retail, or residential project to life. Once it is built, Pineapple Management, which has about 125 support personnel in Sangani’s native country of India and 1,200 employees in the US, oversees the property. If the property is later sold, Premier Properties solidifies the deal, and capital earned is directed to Encore’s stock market division where it is invested. “Then the cycle starts again,” Sangani said. “When we take on a project, we are free of the hassles of outsourcing to subcontractors.”
Encore also differs from other development and management companies in that it doesn’t buy properties when a market is at its lowest or sell when it’s at its highest. Instead, the company waits for the market to reach either end of the spectrum and start coming back in the other direction before making a deal. Why? Because economic data indicates that every market does a complete cycle every five to 10 years.
For that reason, Encore doesn’t pull in and out of various markets. Instead, if a market is down, the company stays put until it re-energizes, finding profit elsewhere. “We invest in every market we feel comfortable in and ride the ups and downs,” Sangani said.
Delicate balance
Although Encore’s external structure protects it from threatening external forces, the company couldn’t stand without solid inner workings. According to Sangani, the company plans well, providing its 1,400 employees with the appropriate resources to achieve goals, and maintains a culture of performance and accountability.
When planning to take on new projects, Sangani and his co-founder, Patrick Barber, who heads up Encore Development, have to keep a delicate balance between optimism and pessimism. Goals must be well defined, as does the exit strategy. “If the project fails and you didn’t account for it, you have no respite. We go into every project with scenario A, scenario B, and scenario C mapped out on paper,” said Barber.
Once the planning phase is over, the company provides resources, which come in all shapes and sizes ranging from emotional support and skills training to a company car. “Before we make people accountable for their performance, we provide them the tools to succeed,” Sangani said. But the co-founders are keen on employees maintaining a sense of ownership over the company. To that end, Sangani describes his role in the company as a coordinator/facilitator. “Our employees don’t expect me to do anything for them other than provide them with the appropriate tools. Their actions impact our success, and in return, Encore is theirs.”
With the right tools in hand, employees (who are located between Gulfport, MS; Dallas, TX; Mumbai and Pune, India; and 37 hotel properties throughout 13 states) are held accountable for the actions. Every job description is posted on the company’s intranet, and progress is monitored daily. With the click of a mouse, anyone in the company can see what others’ responsibilities are and if they are meeting their goals.
If an employee is not meeting company expectations, he or she is asked to participate in an over-the-phone performance meeting with a supervisor at 8:00 every night until the issue is resolved. But, according to Sangani, s/he is given one to two days notice to remedy the problem. If the individual cannot do so on his or her own, the company provides the appropriate support, and no decision is made without the employee’s involvement. “Everyone has a right to defend his or her position,” said Sangani.
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Mother May I?
To maintain a sense of accountability and ownership among employees, Encore Enterprises operates using the rule of denial. Sangani explained that many companies have a parent/child relationship with their employees: employees can make requests, but the company ultimately decides whether those request are met or thrown by the wayside. But Sangani doesn’t believe employees should have to ask permission to do their jobs.
At Encore, if employees need something, they send an email to their supervisors describing what they need, why the need it, and how much it cost. They also give their supervisors a deadline. “They might say, ‘If I don’t hear from you by 8:00 tomorrow morning, I’m going to buy what I need,’’’ explained Sangani. Supervisors only reply if the request is denied. “Our employees have the power to execute unless someone stops them within a certain period of time. They have full ownership,” said the CEO.
Sangani also runs Encore Enterprises using a “culture of nine.” Every six months, the CEO sends an e-mail to all employees asking them to rate the company on a scale of one to 10. If they reply with anything less than a nine, they are asked to explain why, and the company does its best to resolve whatever issues have caused the dissatisfaction.
However, if the employee’s unhappiness is beyond the company’s control, Sangani and his team help that individual find new employment. “I do not want a single person whose happiness with the company is below nine – unhappy people spread unhappiness. We work out a deal where they can exit the company within a few months, and we pay them until they find a new job,” he concluded.
Corporate spotlight originally published on americanexecutive.com
