High energy Featured

7:00pm EDT February 24, 2008

On his first day of work, Aug. 1, 2000, Jeff Morris was given the keys to a company that included 300 employees, one refinery and nothing else. The new enterprise didn’t even have a name.

“We started this company,” Morris says. “We didn’t have a name. We don’t have cards. We don’t have letterhead. We don’t have a payroll system. We have nothing. It’s me and 100 good people (at the corporate office), and we have payroll to make in two weeks.”

Morris had been head of a division that energy company FINA wanted to sell. ALON Israel Oil Co. purchased the division in 2000, creating ALON USA Energy Inc.

Morris was hired by the new company as the president and CEO, and he began to assemble his executive team before the purchase was complete.

“I always had a little bit of an entrepreneurial bent in me, and I thought that was an intriguing idea,” he says.

Morris and his new colleagues had two weeks to cut the first paychecks for the company’s 300 workers. He had 90 days to vacate the FINA office space, meaning he had to find new office space, sign a contract and build it out to the specifications he’d need for his coming staff.

“We went and found an office space in Dallas, built it out, installed a whole new computer system and moved 100 people in 90 days,” Morris says. “And we built and started up a complete new back office in a year. Over the first year, we created a company from fundamentally nothing.”

Morris accomplished all of this by creating a plan and sticking to it. He made a list of things that needed to be done, assigned tasks to each person, gave them a budget and set them loose to do the task at hand. He didn’t have meetings and discuss strategy or ask for daily updates; he simply let them go to work, trusting that they would make good decisions, and he knew that they would come back to him if they encountered problems or needed him to reallocate their resources. If they needed more staff, money or time, he worked with them to smooth it out.

“It taught me at that time the real professionalism and quality of the people with which I worked,” Morris says. “Any one of those tasks would be a challenge for any organization to do effectively. Finding a new office and moving and setting up a new e-mail computer system and moving in 90 days, nobody does that. Nobody builds a whole receivables, payables, back-office accounting system in a year. But the people here did that. It was a great experience but not an experience I want to repeat.”

Those early days set the path for a high-growth approach that is still very much in the style the company operates today.

“I’m a big believer in a disciplined business plan approach,” Morris says. “We have today a business plan that we set for the coming year. We spend a lot of time developing it. It has specific objectives inside of it with deadlines. It has operating budgets and capital budgets. It’s all part of the plan. We all develop it together.”

Here’s how he’s conquered the biggest growth challenges to take ALON USA to new levels of success.

Delegate authority

Morris says a CEO’s job is to allocate resources. “You have a certain amount of resources,” Morris says. “You have a certain amount of people. You have a certain amount of money. You have a certain amount of time. What you have to choose and prioritize is how to use those resources. You always have more to do than you have resources to do them.”

Great CEOs know how to delegate resources, especially people, and empower their staff to make decisions. They trust their staff but keep an open door to offer assistance if need be.

That’s been Morris’ job since he built ALON USA from the ground up starting in 2000, and the company reported $3.2 billion in revenue in 2006.

He says there are two keys to getting a high level of performance from a team. The first is hiring great people. The second is trusting them.

“You have to say, ‘Go do the payroll system,’ and you can’t be asking every hour on the hour, ‘How are you doing?’” Morris says. “It’s not a management-by-objectives system. It’s not something where you set objectives, and you have weekly staff meetings to see how people are doing, and you update and have interventions to make sure you stay on course. We didn’t have time for weekly staff meetings. We are a group of doers. We hire doers; we don’t hire watchers. I don’t have anybody around here whose job is to make sure that something happens or that XYZ person is doing their job or following up.

“We have doers. If you are the HR person, you do the HR. If you are the IT person, you do the IT. If you are the top mechanic, you fix the pumps, and we aren’t going to have someone stand over your shoulder and make sure you do it appropriately. That’s really helped our cost structure, but it’s also created a culture of doers. You can trust them if they perform, and they do.”

So what happens if someone doesn’t do their job? It happens, Morris says, but that is a situation that usually doesn’t require his intervention.

“What would happen is that everybody depended on everybody else to such an extent that no one could fail in their assignment because if they failed, everyone failed,” Morris says. “If a person was not carrying their load, very quickly that person would become very uncomfortable if they were not contributing and would likely resign and move on.”

Execute quickly

Morris says the company’s swift action keeps it growing. ALON USA approached its need for capital in much the same fashion as its start-up: Company leaders determined a course of action and executed quickly. In 2005, Morris took the company public through an initial public offering of stock, mostly to help the company obtain the capital it needed for growth.

“From the time that we called investment bankers and said, ‘We are ready to start this process,’ to the day we priced the shares was 91 days,” Morris says. “No one does it in 91 days. It was an amazing pace.”

To accomplish this, Morris put together a team of six people and tasked them with focusing most of their energy on the initial public offering. That team included himself, plus the company’s general counsel, the controller, the head of mergers and acquisitions, the head of the supply group, and the chief financial officer. Morris says this kept the rest of the company from becoming distracted by the IPO and losing focus from the things that it was doing well.

“The last thing you need during the process of going public is to have some event or issue occur,” Morris says. “We didn’t want to dilute that focus.”

Morris and his colleagues set up a series of deadlines for tasks that needed to be accomplished to hit those goals, and much like he approached the company’s start-up, he doled out the tasks among the team. And they didn’t waste much time with more meetings.

“Because of the pace we [were] working at, we didn’t have time for spreadsheets and follow-ups and weekly status meetings and things of that sort,” Morris says. “We would know that the S-1 needed to be filed on Friday. Well, the general counsel knew his work had to be done on Friday. He would get it done. He didn’t worry about our controller because he knew our controller would have her information ready by Friday for sure because he could rely upon her and vice versa.”

Quick pace is important when doing an initial public offering because the market changes fast.

“You never know what the market is going to do,” Morris says. “The pricing was right; the environment was right. This is a very volatile business, and you never know what might occur. There have been many, many, many IPOs that have failed or were not priced well because the business environment varied substantially from the time they started until the time they finished. When you can do it, you do it.”

Going public allowed ALON USA to continue to grow through acquisitions and buyouts. Morris particularly likes to buy companies that are what he calls “good steel,” meaning built well, but undermanaged. Poor management is easier and cheaper to fix than the physical structure of a facility.

“When we buy something, we spend dollars, money equity, and we spend sweat equity,” Morris says. “The highest leverage is sweat equity. If we buy something that’s good steel and well-managed, then our sweat equity opportunity is less. It’s easier, but we don’t create as much shareholder value. When we do our best is when we buy good steel that is underman-aged.”

Say thanks

Morris recognizes that the reason ALON USA has been successful is because of his staff. He believes just simply recognizing people for their hard work and saying thank you regularly, goes a long way.

Morris spends some time once a quarter having lunch with the staff of the company, and every month, the company executives choose one event or accomplishment to celebrate as a theme for the luncheon.

After the company went public, for example, Morris recognized the members of the team who put the deal together.

“We had them stand up, and we had a little slide show, and we recognized them,” Morris says.

He also makes sure to individually thank people who are doing good work on a daily, casual basis.

“For high-performing individuals who hold themselves to a high standard, a simple thank you means a lot,” Morris says.

It’s all part of maintaining a culture made of people who “do” instead of observe, and it all starts with Morris.

“Companies have personalities,” he says. “Personalities of companies will be significantly affected by the leadership. That’s a very, very heavy and deep responsibility. It’s a fact that, in reality, the company will never perform any better than I do.”

Morris wants to continue to lead the company forward and has created plans that will continue to help the company grow.

“I’m very optimistic today, but we are at one of those critical transition points for the company,” Morris says. “Our objective is to double the size of the company, and then to double again after that. But to do that, when you grow like that, you have to sustain your essence. It is very difficult to do so, whenever you are growing at a very fast pace. This is where many companies fail. They grow, but somewhere along the way, they lose their essence. That’s my challenge today.”

HOW TO REACH: ALON USA Energy Inc., www.alonusa.com, (972) 367-3600