Cracking corporate rules Featured

12:33pm EDT April 25, 2003
Omer Yonel is the director and CEO of North Coast Energy Inc., a Twinsburg-based energy supplier. He has lectured worldwide about his management style, not just because North Coast has doubled in size since he joined it in 1993 or even because the firm was recognized in 2001 as the second fastest growing publicly-held company in Ohio and the 13th fastest growing in the United States.

Instead, his notoriety comes from his controversial business theories, which include cracking the corporate rules and taking a different view of success.

It's all based on growth, Yonel says.

"But growth is not the ultimate objective," he said in February at the Cleveland Engineering Society's Leadership Breakfast Series. "It is a means to something -- to keep stable employment."

Under Yonel, corporations are conglomerates of small profit centers, each responsible for its own success, and managed through individual boards of directors. It is a type of centralized control structure which Yonel explains as a supplier-based system that promotes greater efficiencies and, subsequently, greater profitability and corporate stability across the board.

Each profit center is empowered to buy and sell from external, as well as internal sources, which cuts through unnecessary paperwork and top-down bureaucracy, and creates tighter price controls. Each center is allowed to accumulate a profit that can be used for paying employees competitive salaries, developing financial incentives and financing continuing education initiatives.

"They decide themselves how to spend it to keep themselves competitive with external suppliers, not their bosses," says Yonel.

If a profit center fails to turn a profit and needs additional capital to operate, it can borrow money from the corporation and pay it back with interest. Each profit center pays rent for office space and passes financial statements, including profit and loss sheets, up the corporate food chain to Yonel every month.

Just as a CEO reports to a company's board of directors, so does every manager at every level of North Coast who has more than one employee reporting to him or her. Each board is made up of people from the profit center's level, plus representation from each of two levels up and down the company. Boards are responsible for making policy decisions for each individual group.

One outcome of this internal governance is improved communication. Says Yonel, "You can never make a decision that is in contradiction with the upper level boards because there's representation from those boards present." How to reach: North Coast Energy, (330) 487-6523