Lying in the intensive care unit of Riverside Methodist Hospital, Doug Borror had plenty of time to think. About life. About family. About how lucky he was to survive the car crash that left him with severe head and neck injuries. Yet it was all he could do to focus on regaining his health.
He wasnt even able to worry about his home-building business, despite the fact that he had taken it public less than two months earlier.
When youre not feeling good, you think about these things, but you dont have the ability to focus on it, says Borror, who at the time was CEO of Borror Corp., now called Dominion Homes Inc.
As his days of recuperation turned into weeks and then months, Borror believed his employees when they told him the Dublin-based business was running smoothly.
You have no reason to think it wouldnt be fine, because people are telling you its fine, he says. But you have no energy to find out things arent going correctly.
In fact, the company was heading for its own spot on the critical list. Without Borrors leadership, it had continued preparing for what was expected to be the same 30 to 40 percent growth it had enjoyed in past years. There was just one problem: Interest rates skyrocketed, severely curtailing demand. Yet no one at Dominion made moves to slow the business in response.
Borror had been so much the sole leader of day-to-day operations that no one else noticed how far off course the company had wandered. In his absence, the company suddenly was on track to record its first and only annual loss to the tune of more than $3 million.
Not even Borror realized the scope of the problem until several months after he had returned to work, because financial results of home building show up long after initial investments are made.
By January 1995, Borror knew hed have to take some drastic measures to make the company profitable again and ensure that no ones absence in the future would have such a detrimental effect.
The fact that Borror had so much hand in overseeing the companys operations was, in reality, the root of the problem.
Dominion had three operating divisions for homes and condominiums, as well as divisions for lumber, accounting and administration, and land acquisition and development. Each department head reported to Borror, who had been named president in 1987 and took over as CEO in 1992. His father, company founder Donald Borror, was chairman, making deals but not active in the companys day-to-day operations.
Between 1989 and 1993 the four years preceding the younger Borrors accident the company grew from building 300 houses a year to more than 1,000 in the same time frame. To continue the growth, the Borror family sold 35 percent of the business in a public offering in March 1994, raising $25 million in equity.
It was a big growth story and a big success story, says Doug Borror.
The story developed unexpected chapters beginning May 6, 1994, when Borror and his wife, Olga, were run off the road by a semi-tractor trailer truck while driving to their summer home at Lake Erie. Their car flipped end over end and side to side, and the truck driver didnt stop at the scene.
Olga escaped with a broken shoulder. Doug, on the other hand, was flown by helicopter from Bucyrus to Riverside Methodist Hospital for treatment of a broken neck, serious head injuries and cuts that required 175 stitches. Rounds of surgery for his injuries ended only this past March.
Hed be out of work until Sept. 1, 1994, and the timing couldnt have been worse. Between the time of the public offering and Borrors return, interest rates went up seven times hampering demand.
The economics that drive our business would indicate our business was headed to a slowdown, Borror says.
Individuals at the company in a position to see the signs produced the necessary information and simply put it on his desk.
My job was to put all the information together and make corporate business decisions, which would have been to put the brakes on, Borror says.
Dominion board member Pete Klisares says even the companys board wasnt getting information quickly enough to take action. Because the company didnt have enough of a management structure in place, he says, no one could put all the pieces together as well as Borror would have.
When youre walking the streets every day touching every piece of the company, you are the mini computer. You bring everything together, Klisares says, adding that without that contact, You dont know exactly what to be concerned about.
Borrors brother, David, the companys executive vice president, called the situation a real blow to the company. Even he did not understand how the market was changing.
It hurt everybodys confidence, he says. My brother is somebody who, when people were in doubt as to a decision they had to make, they were used to having his guidance. Without him there, people were not used to keeping the process without his input.
He says other companies should take heed of the situation where one executive may be called indispensable.
If they really are indispensable, and truly the company is going to be in a bad position without them, that should be a red flag, he says. You have to have some sort of a contingency plan.
There was none at Borrors company at the time. So while business slowed, directors of the companys various divisions continued to operate under the guidelines Borror had given them during the growth periods before the accident.
They bought more land. They built more inventory homes, properties constructed before being sold.
When Borror returned, he got a rude awakening one he came to slowly, given he was still not fully physically nor mentally recovered from his injuries.
Our sales had dramatically dropped, inventories had been rising, he says, and things werent looking very good.
Borror spent the first four months after his return reconstructing the companys financials to get a look at how the different departments, which functioned so independently, were affecting the company as a whole.
By the first of January, we were out of cash which should never have happened, having raised $25 million less than a year earlier, he says.
Faced with a cash flow crunch it fell just short of a crisis, Borror says he first negotiated a short-term line of credit.
Then I proceeded to work very diligently over the next year to straighten out the ship, he says, noting that his first objective was to change the company from a family-run business to a professionally managed business.
He hired a professional headhunter, who recruited the companys executive vice president and CFO, Jon Donnell, a certified public accountant who was vice president and associate general manager with a Phoenix-based real estate and home-building company, Del Webb Corp.
Donnell, who later took on the COO title at Dominion, brought to the company operational talents to complement the customer and marketing skills of Borror, Klisares says.
Jon Donnell is a trained CFO and, therefore, has a great deal of discipline about the operational numbers of the business, about the cost of every aspect of the business, how best to finance the business. He also had a considerable amount of day-to-day operations experience, Klisares says. Donnell brings other aspects they need: a disciplined, procedural, evaluative, financial, computer integrated, system approach to really know whats happening in a growing business.
Since hiring Donnell in 19 95, Borror has continued to change management operations at the company.
Other than the land acquisition business, which is still run by my brother, all the people in key jobs then are not here now, Borror says, noting that all have been replaced with individuals with more training in professional management.
Through internal promotions and outside hiring, he says, we now have in place a staff and a business plan that would prevent this from happening again.
Changes in the company brought a struggle for Borror, first convincing family members that the company would run better this way and, second, adjusting to the concept that he, alone, could no longer take responsibility for every single aspect of operating the company.
It was a difficult transition. Once I realized we had to make the change, it was a difficult transition for the rest of the staff to make, Borror says. It is an evolution we are still making.
This July, in fact, Borror became chairman and CEO of the company, and Donnell took on added duties as president and COO. Donald Borror is chairman emeritus.
Moving away from the family-run business model has meant demanding that employees be rewarded not simply for their efforts but for their results.
The companys style of operation is also much more structured now, Doug Borror says.
Decision makers have backups, and committee structures are set up so that groups of people know how and why each critical decision is made.
Today theres not one person in this business that we rely on solely, he says.
That also forces him to give up some control over the company.
One recent morning, for example, Borror was called into a meeting regarding a problem with an employee.
In the old days, I would have made the decision what to do, he says. Instead I brought in Jon [Donnell] and the head of HR to talk about this. I said, We have a problem, and I left the meeting. If they cant figure out how to handle it, I shouldnt be paying them.
He admits that he hasnt totally adjusted to the transition: He returned after the meeting to find out what was decided rather than waiting for his staff to report back to him.
Letting go of his stronghold on the company was hard for Borror at first until he saw the changes for the betterment of the company, and ultimately for him, his wife and their children.
Now, for example, he no longer works 14-hour days. Unsettled by the realization that the accident could have left his children, ages 5 and 6 at the time, orphaned or at least fatherless, he now spends more time with his family.
The changes seem to have brought Dominion back on course. In 1997 and 1998, the company reported record results in revenues, income and homes sold and delivered.
Klisares says many companies will be fortunate to
escape the situation that brought about Borrors personal and Dominions business changes. However, those businesses could face the same needs of professional structure and contingency plans simply because of significant growth.
Thats why, Klisares says, succession plans and crisis plans cant be put off.
No matter how small you are and how sensitive it is and how difficult it is to deal with, you really have to anticipate the worst in order to get the best, he says. You hate to work for something 20, 30 years and build it up and lose it all when you could have salvaged a significant portion of your value by being prepared for it.
Joan Slattery Wall (email@example.com) is a reporter for SBN.