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Driving change Featured

8:00pm EDT September 25, 2008

Brian E. Hall came to the realization that Industrial Transport Inc. had reached a plateau. Client contracts had grown stale and new business wasn’t coming in fast enough, meaning both were failing to keep up with rising costs.

This left the company out of working capital. “We ended up with a heavy mix of contracts under old rates that were trying to support employees who were now making significantly more money,” says Brian E. Hall, the company’s chairman and CEO. “Our costs had risen and our rates were flat.”

Hall knew things needed to change. The company, which manages freight yards and trailer switching at trucking terminals, needed to diversify its service offerings. At the same time, it needed to narrow its focus. The end goal of this divergent predicament was to help the company increase revenue.

While Hall had some ideas about what to do, he needed to formulate a plan that he could share with his 450 employees to get them on board with what had to be done.

“If you equate it to taking a trip to California, you have to know how many miles you are into the trip, when you’ll have to stop for gas, what your fuel mileage is, how many miles you can drive before you’re too tired and what time you’ll be there,” Hall says. “Without the metrics along the way, you’ll have no idea.”

Hall set out to gather as much data as he could to get a clear idea about what had put Industrial Transport in this difficult spot and how to get out of it.

“There has to be a common set of metrics,” Hall says. “Those have to be monitored both at my level but, more importantly, at the closest level where the cost is being spent or the revenue is being derived.”

One problem area was the assignment of job responsibilities. “In some cases, we were asking people to do things that were maybe beyond their skill set,” Hall says. “They weren’t ready to accept change.”

Hall and his team met with the company’s bank and with consultants and figured out which customers had the potential to move the company forward again and which ones were dragging it down.

“It’s not easy to walk away from a customer, but sometimes, that’s what you need to do if you can’t get what you need in return out of it,” Hall says. “At the end of the day, we’re in business to make money. The things that naturally impact our ability to make money, there is no magic to the process. It’s those things that take away from making money or help us to make more money. You measure those things that are related to the outcomes you want.”

With the key information in hand, it was time for Hall to deliver the plan to his people and get busy turning around Industrial Transport.

Know your audience

Before you can begin communicating, you have to figure out who your audience is.

“A big part of communication is listening and understanding the needs and expectations so that as you’re communicating or speaking, you are making sure you are delivering a message that is being received versus simply a message,” Hall says. “You start by understanding what the expectations are of the audience, whichever one it is.”

In this instance, employees wanted to hear about Hall’s plan to make the company better. They need to know what the vision is and what their role will be in making it happen.

“We might start by saying, ‘Here is what I’m going to need from your area to get there,’” Hall says. “That becomes a joint discussion of, ‘Here’s what we should be taking a look at,’ or, ‘Here’s what our objectives should be.’ Every area, from leadership on down, should have some overall targets to hit.”

The idea is to get employees setting objectives themselves about how they are going to accomplish the company goals.

“That’s empowering,” Hall says. “They have to see the passion from the leader, either through the example that he or she sets or just through their own energy toward that. It’s developing relationships and understanding how each person feels rewarded.”

You need to spend time with people, both in group settings and on a one-on-one basis, to help learn what motivates them, what they expect out of their jobs and what they hope to accomplish in their lives.

“I have used lunch to just have a chance to spend uninterrupted time with people, both at the high levels of the organization and with drivers at some of the sites,” Hall says. “That’s a chance for them to get to know you as a person and maybe get to know a little more about the history of the business.”

Hall will also sometimes go around the table and ask everyone to share something outside of their work lives with the group.

“Those are attempts to show that we can connect on different levels,” Hall says.

The idea is to get them to care about your company and feel as though they have a stake in its future.

“There has to be some time invested,” Hall says. “Hopefully, you can build a culture where that’s happening not just between the leader and different people in the organization but also between the next level of leaders and people in the organization.”

It’s critical that your people feel that they can approach you with their ideas on the company.

“If you only just share, ‘Here’s where we’re going,’ not, ‘Here’s why we’re going here’ and, ‘Here’s what I think is going to happen when we go this way,’ and, ‘Here’s why I think this is the best thing to do,’ and ‘I’m interested in hearing what you think about it,’ those become blockers,” Hall says. “It’s one-way communication and not listening.”

Along with communication, you need to have a vision. “A leader has to be able to understand how all the moving parts come together and work together toward the ultimate objectives,” Hall says. “That goes back to the communication. That’s what you’re communicating to everyone on a regular basis so people understand their role in it and where they are in the process.”

Don’t be afraid to change

One of the company’s goals was to retain its current business with its solid customers and provide them with opportunities for additional service.

“We were in some lines of business that weren’t as profitable as they could be, and we needed to think strategically where the sweet spot was for our company and try to narrow our focus,” Hall says.

To make that happen, Hall and his team reached out to their customers to sell them on the additional opportunities.

“We just changed the view of what sales are,” Hall says. “Our customers were more interested in a solution set and what the value proposition was of that solution set. We started communicating that through our business reviews with our existing customers. Trying to demonstrate with our business reviews both how we’ve done but also selling them on our capabilities.”

The company also took a different approach to drumming up new business by going without a person directly responsible for sales.

“It works for us because of our industry and because of the size of individual contracts,” Hall says. “Some new contracts could cause our growth to be 25 percent for just one contract. I don’t really need to have someone knocking on doors every day because if they were successful, I’m not sure we’d have the capacity to keep up with it. For us, to land two or three new accounts each year probably is consistent with our capacity.”

The lesson for Industrial Transport was that you need to assess your own needs and not just conform to what everyone else has done in the past.

“Although we don’t have a person on staff that is sales, through myself and the president and even some of our field ops people, we do make contact with companies and introduce ourselves so that we’re not just fishing from our current customer base,” Hall says.

The company does take steps to stay in touch with its current customer base. Meetings are set up at least quarterly, and sometimes monthly, between Industrial Transport and its customers to assess their relationship.

“You’re never so far out of whack that you’re caught by surprise,” Hall says. “It creates a level of communication where people don’t hold in. If there is something that’s not working, they pick up the phone in between those meetings. People are talking on a regular basis about the aspects of the business that are important to the customer.”

Learn from your failures

One of the final steps in the turnaround at Industrial Transport was when the company purchased a majority interest in Innogistics LLC in 2005. The purchase was able to be made through a restructuring of its debt, cost reductions — which included a cut in salaries of the owners — and some personal capital infusion.

“Part of our strategy and vision of where we were going was we would now be able to serve our original Industrial Transport customers in another line of business,” Hall says. “We had to obviously announce we were in this business, visit and do presentations about the new business. We not only deepened the view of our sales from our customers, they also saw us strategically lined up with one of the leaders in the industry.”

In purchasing Innogistics, Hall made the decision not to merge the companies together.

“They are separate entities jointly managed by me and they have individual operating and sales efforts and financial accountability,” Hall says. “It’s accomplished what we want because it creates a stronger image in the marketplace of the benefit of the relationship between the two companies.”

When the company set out to find a business to fill the slot that Innogistics eventually did, its failures along the way ended up leading to final victory.

“There were several options of how to do it, and we tried some that didn’t work,” Hall says. “We were finally fortunate to have this relationship opportunity come to fruition. In part, it was our pursuit of this type of business that made others aware of what we were looking for. Someone contacted us and said, ‘We know what you’re trying to do and here’s an opportunity.”

At the end of the day, it’s all about getting the information in front of you and making decisions based on what the information shows.

“You’ll still make some bad decisions, but it will be better with good information,” Hall says. “We have undergone and continue to undergo a process of trying to bring in more talent and better talent and knowledge to not only gather the information but to use it at the lowest point in the organization possible.”

HOW TO REACH: Industrial Transport Inc., (216) 881-5052 or www.industrialtransport.com