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How Thomas J. Neri drove major change at Lawson Products Inc. Featured

8:01pm EDT May 31, 2011
How Thomas J. Neri drove major change at Lawson Products Inc.

Thomas J. Neri was facing two problems when he took over as president and CEO at Lawson Products Inc. First, he had a work force that had lost its desire to be innovative and wasn’t feeling any pressure to rediscover its passion. But that paled in comparison to the second problem, which was the fact that his company was being targeted by the federal government for improper selling practices.

It was under those inauspicious circumstances that Neri began his tenure at the top of Lawson, an industrial distributor of maintenance and repair supplies. The tricky part for Neri was that despite a seemingly obvious major problem, he still had to convince some people in the organization that changes were needed.

“The biggest challenge was building that burning bridge for the organization to say, ‘Look, we’re not as good as we thought we were and we have to change,’” Neri says.

“How do we get back to being what we need to be? How do we convince our customers that we are going to be a valuable and reliable partner? So you had the culture change. You have working through this legal issue. The other side is looking at what sort of people we were going to need to run this organization going forward.”

It wasn’t going to be an easy fix at the company, which now has 1,010 employees and 1,200 independent field sales agents. Neri needed to clean house on the senior management team and find people who could be more aggressive about growth, but do it in a way that would avoid any future entanglements with the federal government.

“We had to be very honest with ourselves and with our employees and our agents and, to some degree, our customers and our vendors that we weren’t as good as we thought we were and we were going to be much better,” Neri says.

You might be surprised to learn that as he began his effort to lead Lawson Products through this storm, Neri says he didn’t really feel fear.

“At the end of the day, you just have to say, ‘I’m open to changes,’” Neri says. “‘I’m open to opinions. I’m open to being entirely wrong.’ But what you hope to find is a compass heading that is the right way. It’s not going to be the exact map because it never is. Once you’re comfortable with the compass heading, you just have to charge ahead with it. The worst that happens is you get fired.”

Build your case

Neri did have to make wholesale changes on the senior management team, but the firings were not the first thing he did upon taking the helm at Lawson.

“There were a number of people that I was not sure if they would make it or not or would buy in to the vision,” Neri says. “So we didn’t make a lot of initial changes in the first six months in personnel. But once we got the story out as to what the burning platform was and where we had to go with it, it became fairly clear that we had to change people out if we were going to get there.”

When you’re dealing with a crisis, you need to approach it with patience and honesty.

“As we began to make some of these changes, we simply told the organization, ‘Not everyone is going to have a job when we’re done with this. We don’t know who will and who won’t,’” Neri says. “But what we did say is we’re going to provide training for everybody for some of these new positions and we’re going to pick the best that we can.”

As Neri began to talk about the areas in which the company had lost its way over the years, he bolstered his words with financial data.

“You use some very basic financial measures and performance measures as it relates to customer service,” Neri says. “Most of those are fairly easy to get. So the story came out pretty clear that at least in comparison to our competitors, we weren’t performing very well.”

He also reached out to customers and got some feedback from them about their perceptions of Lawson Products.

“The results came back and were pretty stunning for all of us in the organization, even those of us who were only here a short while,” Neri says. “A lot of our in-house perceptions were certainly not what the customer thought of us. When we thought we gave great customer service, it came back, ‘Well, it was OK,’ but it certainly was no better than other people. So as you start feeding them real data and real information, then you start applying day-to-day world things that they do, they start to see that we don’t measure up and some of the things that we do inside don’t seem to make a lot of sense.”

The lesson here is that when you’re trying to make an argument, you need to build a case and gather information and data that supports your cause. Then ask the people you’re presenting to, if they have concerns, to make their case as to why they think you’re wrong.

“We held a lot of employee and department meetings or a lot of different meetings with larger groups and small groups and began to lay the case out for them in relatively straight-forward terms,” Neri says. “We were pretty open in listening to what they had to say. We would lay out a problem or an issue and say, ‘OK, we believe this is right solution. You tell us why it isn’t the right solution and if it isn’t, tell us how you’re going to correct it.’ That first step is convincing them there is a problem, but the second step was going to them and having them help us tailor-make some of those solutions.”

Find people in the company who can help you make the case for those solutions that you support.

“I tried to find people who had been with the company for quite some time and were influencers throughout the company,” Neri says. “Even though they may not necessarily have agreed with all the changes, what I did was spend quite a bit of time with them convincing them that they can be a big part of it.”

It’s OK to seek out help if that help can make it easier for you to get things done.

“I tried to find four or five of those influencers who can make the case for me and had a lot more validity with the older organization because they knew them better,” Neri says. “When you talk about honesty, it takes quite a long time to get people to trust you. Until you get that trust built up, you need some other people in the organization to do that for you.”

When you’ve made that effort, look at where things stand and then plot your next step.

“There was a large cadre that said, ‘We don’t believe we’re as bad as we are,’” Neri says. “We don’t see the need for change and we don’t like the change you’re talking about.’ The old analogy is, ‘The train is leaving the station. Either get on or step off.’”

Manage the message

As you begin to roll out the next step, your plan for recovering from a crisis, you need to put a great deal of thought into how it will be presented and how it will be received by your employees.

“It really starts with our director of communications,” Neri says. “Part of this is making sure your messages are the same messages and you’re not contradicting each other. Part of it was putting a calendar together and saying, ‘OK, here are the messages we need to get out and here is the information or feedback we want to get back from them.’ So a calendar was laid out, and I would spend a great deal of time on the content, especially on the town halls. I would spend a lot of time going over the communication and what the presentations were and who is giving the presentations.”

You need to talk about the actual rolling out of information and the logistics involved in doing so, in addition to the meat of your plan.

“What’s the rollout look like for the next six months?” Neri says. “What are you going to be saying to the organization? How does that tie into the corporate initiatives? Then as we get closer, what are we going to roll out next month?”

You need someone in place who can help you manage your message. It’s critical that this is someone who you’re willing to listen to and abide by, even if you don’t always agree with them.

“You’ve got to really organize how messages get out and how you get feedback,” Neri says. “You do want someone who is adept at being able to work with you for about a month or two and can begin to understand your style. Someone who can understand that how I give a speech is different than how someone else gives a speech and that my writing style looks like this.

“They have to feel that same freedom to be able to say, ‘Yeah, I know you like to say it that way. But it really comes across badly. I really would like you to try it this way.’ It really becomes a symbiotic relationship. You’ve got to have confidence in each other and trust each other’s opinions.”

What you’re trying to do is create a picture of what it’s all going to look like when you’re finished with your plan.

“It doesn’t have to be that solid of a picture, but it has to give people an idea of where this is heading to,” Neri says. “My style is to say, ‘Here are the guts of what it is. Now I need your help in reshaping that and changing the face of it a little bit.’ You do have to give them some sense of what it’s going to be like out there.

“Just as importantly, what is going to be my role in this? Why is it going to be a benefit to me if you make these changes? What do I get out of this from a working perspective or a career environment perspective? You have to do both of those in tandem. People aren’t really sold until they understand how it impacts them.”

To help in this process, Neri transitioned his human resources department into an employee advocacy department.

“That position had a dual reporting relationship to myself and the chief operating officer,” Neri says. “I made it clear one of the responsibilities of HR is to be an employee advocate and to do outreach programs to make sure that people are being talked to.”

As you move into the execution stage of your plan, make sure your employees have a major goal that helps tie all their efforts together. At Lawson, this goal was helping the customer.

“We went into a lot of explanation as to what that really meant at every level,” Neri says. “If you worked in the warehouse and you were lifting boxes or sorting things, we made it very clear to you how important that job was and how it translates into customer service.”

Keep in touch with your direct reports and encourage them to do the same on down the line as to the progress your people are making in their jobs.

“I will sit with the managers every once in a while and say, ‘How do you think Scott is doing?’” Neri says. “Is he meeting all the goals that we have? Are we pushing him along strong enough? Are we giving him the training?’ Based upon the conversation with those individuals, I’ll know whether they are having those conversations with those people.”

As Lawson entered 2011, Neri’s efforts were showing results. Net sales increased from $301.8 million in 2009 to $316.8 million in 2010. The federal investigation resulted in a $30 million penalty in 2008 that was paid over three years.

Neri is confident better days are ahead and are the result of a changed corporate mindset.

“Your jobs are very important, but what’s more important is who you are and how you go about that job and your attitude that you carry with it,” Neri says. “I’m a big believer that attitude is far more important than the technical skills.”

How to reach: Lawson Products Inc., (847) 827-9666 or www.lawsonproducts.com

The Neri File

Thomas J. Neri, President and CEO, Lawson Products Inc.

Born: Chicago

Education: Bachelor of science degree in accounting, University of Illinois at Urbana-Champaign

What was your very first job?

I was a paperboy for either the Daily News or the [Chicago] Tribune. What I learned was I really didn’t want to do that because my dad was not going to get up at 3 in the morning to help me wrap papers.

Who has had the biggest influence on you as a leader?

Sam McKeel. Sam had been publisher at the Philadelphia Inquirer for a long, long time. He retired and he came to the Sun-Times in 1989 or 1990. He taught me that the most important thing about leadership is who you are — not skill set, not who you know, not the technique. Being a leader is really about being a people person and understanding how you can achieve things through other people. You’re very limited in what you can achieve yourself. He just taught me a lot of good lessons.

What one person would you like to meet from all of history and why?

Winston Churchill. The thing that fascinates me is that he had such a checkered career. He was someone born with a silver spoon. He failed miserably during World War I. He failed in a number of different areas. He was out of favor politically for 30 years.

When World War II started, they brought him back in, and he was probably the strongest voice of freedom in resisting the Nazi party. After the war, he was shuffled off again. It would be fascinating to talk to someone who had seen the bottom and seen the top several times and always managed to move forward in his life.