Growth
Cleaning up
How Steve O’Hara changed the way Angelica Corp.’s employees think about the business
By Mark Scott
Smart Business St. Louis | March 2009
Page 1 of 4
A score of 99 percent is about as close to perfection as you can get.
It’s a solid A in school, a nearly unblemished fielding percentage in
baseball and a terrific response rate for a survey.
But the way Steve O’Hara looks at it, you’re either perfect or
you’re not. Thus, it’s not a near miss when a customer of Angelica
Corp., a provider of textile rental and linen management services
to the U.S. health care market, asks for 1,000 pieces of linen and
receives 990 of them.
It’s incomplete.
“We didn’t ship the last 10 pieces,” says O’Hara, the company’s
president and CEO. “That counts as a zero in terms of an order fill
rate. If we ship an entire order, but we don’t ship the doctor’s 10
lab coats, that customer is very upset, even though we shipped the
other 990 pieces.”
O’Hara felt this acceptance of small mistakes or material imperfections was threatening the trust between the 6,000-employee
company and its clients. Providing top-quality service was becoming secondary so long as financial goals were being met.
“Ultimately, the quality hospitals would have gotten fed up with
that and brought laundry back in house to do it themselves,”
O’Hara says. “It would have been a waste of their talents and energies because it’s not a core competency for them. It would have
been a low, value-added industry with cost being the dominant criteria.”
Angelica needed to change the way it did business if it was to
maintain relationships with its customers and continue growing.
“The fact of the matter is, our customers are experiencing
reduced patient counts, greater bad debts in their endowments
and their charitable giving is down,” O’Hara says. “From that
aspect, we’d be naive to think now is the time to go out and seek
dramatically higher pricing. We have to focus on items that provide
value to our customers.”
When you fail to think of your customers, you are asking for trouble.
“If you do not satisfy the customer long-term against their wants and
needs, you’ll see, over time, erosion of customer retention rates, lower
pricing increases and less acceptance of new products. If you have a
delighted customer, then they are much more receptive to renewing
to you at fair pricing and buying more products from you.”
O’Hara sought to turn things around by implementing a policy in
which the goal would be to fill orders 100 percent complete every
time. Each order would need to include everything the customer
ordered and each item would be shipped in pristine condition.
“You have to ask yourself, ‘How much of a shock do you want it
to be to the system?’” O’Hara says. “In the case of our 2005 change,
we did want it to be a reasonable, measurable and meaningful
shock to the system because we thought the system had to
change.”
O’Hara needed to develop a vision that would better serve his
customers, sell that plan to both the company and the customers,
and then track his success at implementing the plan.
