Bridget Shuel-Walker has felt the futility that is a part of trying to manage a business through a recession. You go out and you get a new contract and feel good that you’re giving your revenue a boost. But just as you are starting to feel better about things, another customer informs you that it cannot afford to buy your product anymore and now you’re right back where you started.
“We just have to continue to put that new business in the top, whether it is through new accounts or continued penetration with our existing accounts,” says Shuel-Walker, president and CEO at HP Products.
“We have been in business for 45 years, and it has been through many economic twists and turns. I do not believe there is any quick way out of this situation, so we will continue to do what we know and what our customers want. That focus on servicing the customer should continue regardless of the economy.”
Shuel-Walker says it is easy to get consumed with strategies and ideas on how to manage through difficult times. But if you focus on what you do best and continue to plug away at improving that, she says you will stand a much better chance of coming out the other end intact.
“We have become better businesspeople,” Shuel-Walker says of her $150 million company, which produces cleaning products, supplies and equipment. “It is about going out and taking share at this point. Our competitors are still surviving. We have got to go out and take the market share.”
Shuel-Walker credits her company’s adherence to its profit-and-loss statement as one of the keys to its ability to endure in difficult circumstances.
“We have looked at every expense there is to address,” Shuel-Walker says. “You look at that P&L and you go down the list and you address every one of the points.”
Here are some of the ways Shuel-Walker got her team of 400 employees to focus on the nitty-gritty details to keep HP Products moving through this most recent economic storm.
Work through your team
Each month, without fail, the executive team at HP Products sits down and reviews the latest copy of its profit-and-loss statement. The numbers contained in this report are considered a vital piece of just about any decision that Shuel-Walker needs to make regarding the business.
“We have looked at maintenance for our trucks,” Shuel-Walker says. “We have looked at where we rent equipment, be it forklifts or material-handling equipment or trucks. We eliminated all of that. We looked at casual labor, and we eliminated that. We looked at our health care costs, and we adjusted our program to have a premium program and a health savings account. You look at the P&L and you go down the list and you address every one of the points. You need to get into the nitty-gritty details.”
One of the key things Shuel-Walker is looking for is variance.
“If your sales are down, look at your variance from where your expenses are this year compared to where they were last year,” Shuel-Walker says. “If any of those are up and your sales are down, I would hone in there first. Or look at your biggest expenses first and try to hone in on those things where you can get the biggest reduction in expense.”
The key role you can play in this process is to listen and take in what your department leaders are telling you.
“Listen first and act second,” Shuel-Walker says. “That means listening to your customers, listening to your leadership team and to your employees. I do not think I have all the answers. I rely on our employees, especially the management team, for their areas of expertise. Their input is invaluable to the organization’s success.”
While the P&L statement provides concrete data, the decisions are not always easy to make. Shuel-Walker says meetings are often brainstorming sessions held to hash out the best decision for the company.
“We talk about different ways of doing things,” Shuel-Walker says. “Ultimately, it is a team decision. We are a privately held company, so we have a lot of flexibility built into our world. We can try different initiatives, and if they work, great. If something does not work, we can take a half step back and say, ‘You know what, that is not working so well. Let’s try to do something different, or let’s try to push it this way. The goal is to brainstorm on the things we’re not doing well and enhance the things we are doing well.”
When a decision needs to be made, Shuel-Walker utilizes change agents to spearhead the implementation.
“You have to have somebody at the top driving the initiative,” Shuel-Walker says. “You have one change agent for each project. They are the ones held accountable and the ones to drive the change. Those people have to get their team together and drive those strategies.”
Change agents are typically chosen by selecting the person who has the most expertise for the action that needs to be taken.
“We just looked within our different people at where the different areas of expertise are,” Shuel-Walker says. “They would go and actually do the project, and we’d come back and meet again as an executive management team and go over what happened.”
Shuel-Walker followed the change agent strategy to reduce a glut of inventory in the company’s warehouses.
“Our inventory was over $15 million,” Shuel-Walker says. “We just looked at how we forecasted, and he was able to meet with those suppliers, reduce any slow-moving or dead stock and improve the turns through our economic order quantity to reduce our inventory by about $3 million. We still have the same fill rates, but we were able to reduce our inventory and improve our cash flow.”
By taking the approach that she wants participation and openly asking for feedback in meetings and through regular dialogue with her people, Shuel-Walker empowers her employees to play a role in the company’s future.
“A lot of it is just brainstorming,” Shuel-Walker says. “Brainstorm within your group to identify what’s working and what’s not working and change that.”
It was through this open dialogue that HP was able to reduce basically all of its overtime costs for its drivers.
“It was getting out of control,” Shuel-Walker says. “So we cut a deal with UPS where we were taking our smaller packages, maybe a one- or two-box order, and we started shipping those out UPS. We completely reduced our overtime to nothing in the driver section. We’re also able to service our customer better so they are able to get their product the next day.”
Hold them accountable
Payroll is a large expense in most organizations, and HP is no exception, especially when budgets are so tight such as in a period of economic recession. But Shuel-Walker expects to get something in return for the money she pays out in salary to her employees.
“If we get out of control with hiring people, that is probably where we have veered off our P&L in the past,” Shuel-Walker says. “We hired these salespeople that we think can get us to the party, and they do not produce the numbers that we thought they could produce. What we pay somebody in the first year as salary, we expect them to offset that in gross profit in the first 12 months. So if that is not happening, our payroll expense could get out of line.”
The issue of accountability is a critical one to Shuel-Walker.
“For me, it is about follow-up,” she says. “We have follow-up meetin
gs and everybody brings back what they have worked on. We set timelines, and we expect those timelines to be met. If we have got some issues, we will talk about that. They will bring back what obstacles they have been facing.”
The follow-up step along the way is crucial to checking progress and possibly being able to get a project back on track before it’s too late to cause a problem.
“Make sure the people are doing the things you want done and are meeting the timelines that you set forth,” Shuel-Walker says.
But sometimes, it is just a failure for the person to come through and get the job done. That needs to be addressed to demonstrate true accountability.
“Maybe they do not have the skill set,” Shuel-Walker says. “Maybe you need to take a half step back and maybe somebody else should head up that project, because they do not have the skill set. It might be time to look at changing some of those people out. If they are coming back and nothing is being done, I guess that is the only way you could figure it out.”
Maintain open communication
Shuel-Walker had been hearing it for years and years from customers. They wanted to be able to simplify things by buying more products and services from fewer sources. In the midst of managing through a recession, it was finally time to make the change.
“We listened to that and, as a result, organized our business to better meet those needs,” Shuel-Walker says. “More than 40 percent of our business comes from manufacturing companies that rely on us as a single source for many of the products they need for a safe, clean and environmentally friendly workplace.”
The idea is to maintain open lines of communication with your people, whether it is your customers or your employees, to find the best way to lead your business. This is true whether it is a recession or not but can become especially valuable in tough times.
“We try to help customers become more efficient and more productive and more profitable,” Shuel-Walker says. “You solidify your relationship and you also differentiate yourself from the competition.”
When it comes to building a rapport with her employees, Shuel-Walker is not the type of person to say 40 words when 10 will do. So her thoughts on developing close bonds with her people were, not surprisingly, brief.
“You smile, you speak to them, you ask them how their day is,” Shuel-Walker says.
But the idea of building a bond with your team is something that Shuel-Walker recognizes as a valuable piece to the whole puzzle.
“If morale is high and people like coming to work, they are going to stay the extra 10 minutes they have to go get the job done,” Shuel-Walker says. “They are going to go the extra mile. If they need to throw something in the truck to drop off for a customer on the way home, they will do it.”
How to reach: HP Products, (800) 382-5326 or www.hpproducts.com