Unlike some businesses, LeasePlan USA hasn’t had problems growing. In fact, growth has come pretty easily, and the fleet management company’s revenue hit $1.18 billion in 2006. But top-line growth isn’t enough, and seven years ago, LeasePlan’s shareholders made their wishes known they wanted returns.
Despite revenue and market-share growth, LeasePlan USA’s returns severely lagged behind the returns of its Netherlands-based parent company.
“Yes, we were growing the business and had a bigger balance sheet and all that, but our returns were either flat or going down, and that’s a difficult ship to turn when you’re going in this direction, and all of a sudden, your shareholders say, ‘Great, you got the growth we need, and now we need returns on that,’” says David Dahm, president and CEO. “In our industry, that doesn’t happen quickly.”
At the time, Dahm was chief financial officer, but he had a plan, and once the board saw it, he was elevated to the top spot.
“We could continue to do things the way we’ve been doing them, and it’s like pounding your head against the wall,” he says. “The results aren’t going to change you need to do things differently.”
To get results, Dahm had to lead the company through a period of intense change, which, among many things, consisted of switching up his management team, creating a strategy and getting buy-in for his plans.
Changing the players
LeasePlan was stuck in a rut, and if Dahm wanted to get out of it, he had to replace some people. He looked at the people on his team, starting with his chief information officer and a division head.
“Their major weakness was they always looked at what the competition was doing and tried to replicate that,” Dahm says.
He wanted to eliminate that methodology, so he did what many consider scary and unthinkable he brought people in from outside the industry. Bypassing his own, he instead hired people who could understand how the company generated revenue and profits, which the past management had been unable to understand.
He also looked for people who had leadership in their areas of expertise. One person he hired had leasing management experience in a different product area, but he believed that person could easily apply his experiences to LeasePlan and learn the fleet management industry. This person brought a unique way of selling products and a knowledge of how to change customers’ thinking from price-focused to looking at the total cost of ownership. By making this one hire, LeasePlan developed new products for its customers, and it all started with just one person who had a different way of thinking.
“Don’t be afraid to go outside the industry,” Dahm says. “A lot of times, and it’s fairly easy to do, you default to someone you know in the industry. It’s good to branch outside of your industry and get someone who has a different perspective on things and a different way of selling or, ‘Here’s how we sold our products and maybe this will work.’ You just can’t keep relying on folks in the industry.”
When you go outside your markets, you often don’t have quite as large of a Rolodex, so to counter that, Dahm used an executive search firm. Using a firm has its strengths because it can work to draw successful people away from their current positions, often resulting in a stronger person who is more qualified.
Dahm also cautions that you need to have patience. One hire took him seven months to make, and another took more than a year. Taking the time and getting someone who fits in the organization is critical, so you can avoid wasting valuable time in repeating the hiring process.
“At that level, those people go through a series of interviews with my management team, so we were all comfortable with the person and we make sure we can work together,” Dahm says.
After many months of courting and eventually hiring, he had replaced everyone on his executive team except for one division head.
“That set the tone that we were in a period of change, and that helped the business understand that we can’t rest on what we’ve done in the past,” Dahm says. “We have to constantly reinvent ourselves.”
Getting a plan
Change starts from the CEO’s office. “It’s incumbent upon me to really help us and make sure we’re focused on the right things and call out our weaknesses,” Dahm says.
Communication is key to effectively determining strengths and weaknesses.
“Communicate a lot and often with your company, especially with your leadership team, and keep yourself open for suggestions,” he says.
Dahm talks to employees, customers, vendors, manufacturers and people he sits on other boards with to get a better gauge of his company, his people and the market.
“It’s always good to get a perspective from other people on how the industry is doing, how the company is doing, how we, as a company, are perceived in the industry, and it’s always good to keep your eyes and ears open to that,” he says.
Every quarter, the company selects part of its customer base to complete an extensive survey. LeasePlan rotates through that base throughout the year. It also has an advisory board made up of its top 25 customers and meets with the board twice a year to find out what its needs are and to get feedback about what LeasePlan does well and needs to do better at.
He takes this feedback and uses it to create strategic plans. He and his team went off-site to map out how they would increase returns. They analyzed the competition’s strengths and weaknesses, as well as their own strengths and weaknesses. They looked at how they could differentiate themselves from their competitors. He also used consultants to help facilitate honest thoughts about those areas.
“If we call out, ‘Oh, we’re strong in this area,’ that person will really challenge those individuals and say, ‘Why? What are the elements that make you strong?’” Dahm says. “It’s easy for all of us to pat ourselves on the back, but when you get right back down to it and look at our results and returns, are we still where we need to be? The answer has been, no.”
When creating a plan, Dahm found that it’s important to keep it attainable and talk about how to get there.
“In the past, LeasePlan used to have a history of putting a business plan out there and not meeting it, and our executive supervisory board started to get concerned about that,” Dahm says. “I made sure the story we told to our board and the business plans we put out there the short- and long-term ones were not only achievable but that my executive management team believed in it, and we made sure our senior management team could execute on it.”
The team goes off-site twice a year to go back and re-evaluate that plan based on new trends and feedback from customers. For example, customers consistently said that while some of LeasePlan’s processes were lacking, its people were great to work with.
“We started doing a focus on not only our weaknesses and our processes but our people, and we made sure we isolated our key performers and our high potential people and gave them more responsibility and different responsibility,” Dahm says.
As the company makes plans, it creates goals for employees and has an extensive eight-step process for managers to walk through with their employees, which shows the employees the company’s goals and then goes on to outline the specific things that individual person can do to help achieve those key numbers.
“We set those goals and objectives out for them and clearly communicate to them and review with them on a six-month basis so there’s no surprises,” Dahm says.
As LeasePlan works toward achieving its goals, it also works to maintain communication with employees to get their feedback, which affects the next review and helps them understand and keep up with the rapid changes. He does this through talking to employees, hosting meetings, and sending out newsletters and simple e-mail blasts.
“Communicate often with the employee group,” Dahm says. “It can come in different stages. It doesn’t have to be a structured communication, like an employee newsletter every month and all that.”
People naturally resist change, so Dahm knew one of his biggest hurdles would be getting people to buy in to the changes he was making.
“Keep the communication open and prove to the staff that this change will produce better results,” he says.
When he introduced a product that had been successful in Europe but wasn’t offered in the States, many people in the company said it couldn’t and wouldn’t sell. He talked to the people in Europe to find out why their clients liked it and used it, and he used that information to help springboard the product’s sales.
“Once we were able to do that and successfully get a few clients, it proved to our people internally that the product was sellable,” Dahm says.
If people didn’t get on board, he eventually replaced them with people who would walk into a situation and embrace the products that LeasePlan offers.
“We had people saying, ‘It will never sell,’” Dahm says. “If they believe that it’ll never sell, they’ll never be able to sell it. We brought people in that said, ‘OK, here’s the product, here are the selling points of the product, and here’s why clients would benefit from this product.’ You’ve got people believing in that and understanding how that product would benefit the client. It’s an easy sell then.”
Dahm says to look at customer feedback and how the employee relates to people in his or her department and other departments and look at an employee’s overall attitude to determine who’s buying in and who isn’t. If people are resistant, communicate with them.
“Why are you resisting this change? Tell me why the way you think you do it is much better than the way we’re proposing to do it or the way we think it should be done,” Dahm says to ask. “It really forces them to think a little bit more.”
Dahm has been at it now for seven years, and he says it took a solid two or three years before people started to have a little faith. Throughout that time, it was important that they saw him excited about the changes and believing in them.
“As a leader, you need to make sure you not only buy in to the change and support the change, but you have to make sure that your people see you as embracing change because the minute they see that you don’t embrace the change, they’re not going to embrace it.”
After much work, Dahm is confident again, but when he started, his outlook was bleak.
“I think our shareholders probably would have abandoned us or at least the U.S. piece of the business,” he says.
Instead, LeasePlan USA has maintained modest growth while increasing returns 55 percent since 2001, but Dahm says it takes patience and doesn’t happen in a few months.
“It’s something that doesn’t happen overnight. It’s like turning a big ship.”
HOW TO REACH: LeasePlan USA, (800) 457-8721 or www.us.leaseplan.com