The salvage king Featured

8:00pm EDT August 26, 2007

It happens one day, every week at every facility in the company. Copart Inc. employees gather together, each one wearing the company’s color — blue — in some part of his or her wardrobe, to start the company’s “Blue Day” with a song and cheer.

“Old McCopart had a car, ee-aye-ee-aye-oh!” one department sings.

“Row, row, row your car, gently down the stream. Merrily, merrily, merrily, merrily, Copart’s but a dream!” another department answers.

Each department sings the cheer it has come up with for the week, and while the cheering and singing lasts just a few minutes, the effects last well into the day and build bonds between employees.

“It’s amazing how it takes sadness out of people’s lives in the morning,” says Willis Johnson, Copart’s founder, chairman and CEO. “They come in, and they might be having a bad day or a bad yesterday or a bad morning, and they have to sing a song with everybody clapping, and they realize the world has not come to an end. There’s still some cheer in the world. Then they walk away, and they may not be happy all day, but their attitude’s a little bit better.”

It’s this kind of focus on the employees that has helped Johnson post impressive growth numbers at Copart, which sells salvaged vehicles for insurance companies. Copart ended fiscal 2006 at $528.6 million in revenue, which was a 57.6 percent increase from fiscal 2003.

“Whatever kind of CEO you are, you should always have in your mind what’s best for your employee, not always what’s best for the shareholder,” Johnson says. “The shareholder comes and leaves. The employee is always there. If you have a happy employee, and the company is doing good, then by osmosis, the shareholder wins.”

Johnson’s keys to creating a winning organization are well-defined values, caring for people and building relationships with his 2,500 employees.

“You might spend a lot of time with your family, but you’re eight or nine hours with the other people in that company, and you like and you care about them,” Johnson says. “People who work together for a long time, they start caring about the company family, and if it benefits one, it’s going to benefit them all. I think if you get that culture going, they all want to move forward and do good.”

Creating values

When Johnson and his team set out to create the values for the company, they held a brainstorming session to generate ideas. But then they dug deeper to see what was truly important and what they were unnecessarily getting hung up on. He says evaluating what’s good for the company is just like evaluating a person.

“When you look at somebody, you always go to the right side and put all their good points on the right side and all the bad ones on the left,” Johnson says. “When your good ones outweigh your bad ones 75 to 25, you’re looking at a pretty good person there because people have some bad problems, but they have a lot of good stuff too.

“Don’t let a few little bad things outweigh the good side. Is this really peanuts we’re talking about, or are we talking about something big? Sometimes people let peanuts ruin an entire relationship because they have a hang-up here.”

Leaders could spend their time nitpicking every detail about the business, but when those peanuts fill you up, you don’t have room for the filet mignon.

For example, Johnson says he has some employees who don’t dress well, but he points out that it doesn’t affect their work, so he lets them do their job well and doesn’t pay attention to how poorly they dress.

“If you let the small things bother you with employees or the people you work with or the customer you do business with, you’re never going to get anywhere in life, so you just have to say, ‘This is how they are,’ and you have to live with it,” Johnson says.

Once the values were agreed on, Copart did what many companies do and included the new decrees in employees’ paychecks and had plaques made for all its locations, but the company also took a different approach. Copart had fun with it.

“We had contests and said, ‘We’ll meet you in the hallway. Can you tell us the values of the company?’” Johnson says.

Johnson and his team made the values simple by giving each letter of the company name a value that started with that letter, so people could easily remember them — commitment, ownership, profitability, adaptable, relationships and trust.

Employees didn’t get prizes or incentives for knowing the values but just the break from the day helps build excitement, and the desire to be verbally recognized helps employees learn about what’s important to the company.

“It was just awareness that you’re a part of the company,” Johnson says. “You don’t always have to give people stuff. You just have to give them attention.”

Caring for your people

Many of Copart’s values deal with how the company interacts with and treats employees, and Johnson says caring for his people is one of his top priorities.

One of the basic strategies is providing salaries that are above industry averages.

“I’m a real employee person,” he says. “I hate for employees to quit and leave because they got a better-paying job.”

But salary and benefits are just the starting point. Copart employees also have the opportunity twice a year to purchase company stock at a 15 percent discount. If the stock price stays the same, they make a 15 percent return, but more often than not, they earn a higher return, and they can sell it or keep it as they see fit.

Johnson also helps pay for employees to go back to school. He also started a foundation that provides scholarships to the children of any Copart employee who has been with the company for at least two years. If an employee’s child earned at least a 3.0 grade point average, he or she could apply for $4,500 in scholarship money, and as long as he or she maintained that average, the child could reapply every year.

“It’s helping their kids, and when you help people’s kids, it’s like helping them,” he says.

He also has a system to look at internal candidates first for open positions.

“We’ll look at them before we would ever hire someone from the outside,” Johnson says. “We would look within the company first to make sure they have that opportunity before anybody else because they have a love affair with the company.”

To facilitate this process, employees fill out a form that allows them to express which positions they would be interested in, should any openings arise. When an opening does arise, Johnson can go to that database and see who has an expressed interest.

“They may just want to go from a forklift driver to a dispatcher,” Johnson says. “You don’t have to jump way to the top because some people don’t want to move, or they don’t want to take on responsibility, but they want a little bit better-paying job, so they’ll put their name in.”

Many people change jobs because their company was unaware that they wanted another opportunity. This system helps make management aware of who is interested in what opportunities so the managers can keep their people, which creates consistency and grows the business.

“One day, I will retire, and I’ll keep a lot of my stock in this company,” Johnson says. “I’ll probably never sell it off, and the employees I bring up the ranks and the employees that work in the field, they’re the people who are going to keep my family and the long-term investors in the company in a good position because they were trained right, and they understand how the leadership of this company was started and founded and wants to go forward.”

Johnson says the key to creating better programs for employees lies in talking to other leaders. He regularly meets with the CEOs of companies that he doesn’t compete with to brainstorm and just talk to them about how they do things, and several of the programs he has at Copart came from hearing what these other leaders did within their businesses.

“You need to meet with other peers in your industry not to make money, just to brainstorm what’s good for them and what’s good for you because you never know what somebody’s going to dream up,” he says.

Building relationships

One of Johnson’s executives leaves a meeting in Chicago and now has to get to a 2 p.m. meeting at another facility. He calls human resources and discovers that tomorrow is one employee’s birthday, another recently got married and one’s mother is sick in the hospital. He makes special note of these three people so he can talk to them personally when he arrives.

When he gets there, he shakes hands with every employee, and specifically engages the three people he noted and talks to them about their lives.

Johnson calls these visits “executive drop-ins” and requires them of all his management team members whenever they’re near one of the 124 Copart facilities. The individual attention shows employees that leaders care about them, and it makes them feel valued.

During drop-ins, executives also give a short speech to update the employees on how the company is doing, so they feel informed and know how their jobs affect the business.

“Give them an insight into what the company is doing and where it’s going,” Johnson says.

Even employees at the lowest levels are interested in how a company is performing. They are depending on the company for their livelihood, and they want to know if the company is healthy.

“When an executive tells him, ‘Hey, we just bought seven (salvage) yards in England, and we got this going and this going,’” Johnson says. “They become part of the company, and that’s what you have to do — make them part of the company.”

Johnson says employees don’t want to have to worry about where the money is going to come from for their house or college tuition, so that information helps ease their minds and make them feel connected.

“They have to know they’re secure in a company that thinks and knows that we survive because of the employees who run the company,” he says. “They have to know that. You can’t just assume that people know that.”

HOW TO REACH: Copart Inc., www.copart.com