Larry Pietropaulo Featured

12:03pm EDT May 24, 2006
When Larry Pietropaulo arrived at CJ Systems Aviation Group in 1989, there were just a half-dozen helicopters to manage.

Since then, the company has narrowed its focus and, in the process, expanded the business by nearly every metric as it shifted from general aviation services to air medical transportation almost exclusively. As a result of that transition, it’s doubled its headcount to nearly 700 and its fleet to nearly 120 helicopters, in the past five years. Revenue, expected to reach $140 million this year, and profitability, too, have grown commensurately.

Pietropaulo, president and COO since 2003, attributes that growth at least in part to a willingness to reinvest generously in the business, both in capital and human assets. The company will invest more than $350,000 this year in training for its mechanics, for instance, and has 20 helicopters on order.

And going beyond simply offering air transport services, the company has become a fully integrated service for some of its health care customers, providing everything from the flight crews to medical personnel and even the billing function for some of its contracts.

Pietropaulo spoke with Smart Business about communicating with a disbursed work force, delegating responsibility and the value of collaborative decision-making.

Communicate with employees through multiple channels. We start out bringing everybody when they’re hired through an orientation so they make sure they know everybody. Other than that, we have different ways to communicate.

We have an e-mail connect system, letting them know what’s going on in the company. We have regularly scheduled conference calls so mechanics can get together ... and discuss technical issues. It’s something we work very hard on and still probably don’t do it enough.

This e-mail system, as much as it makes me crazy sometimes, it’s very good for our business. The trick is getting people to use it. There are things we’ve done to force people to use it, make them log in to start their shifts.

From a managing and leading point of view, that’s the most difficult challenge, communications. All the surveys that we’ve done, the thing that comes up the most is we don’t communicate enough.

It’s across three time zones, thousands of miles, and then you have these little pockets of employees who will tend to lose contact with you unless you’re in front of them all the time.

Don’t outsource if you can do it better yourself. Two years ago, we started our own billing company. We have 20 people doing billing. It’s a complicated process ... (a customer’s) bill can be $10,000, and you might get $5,000. You outsource it and you give someone an incentive to collect.

Let’s say you give them 10 percent, but that is not enough incentive. So however you incentivize a billing company, to me it wasn’t enough to encourage them to invest in new billing software because it’s very expensive, it wouldn’t get them enough money. But for us, not only the bill but the timing, the cash flow, how quickly we could collect it, the days outstanding, that’s been reduced substantially. That’s exponentially more important to us than it is to an outside company.

Question conventional wisdom, even your own. Our initial growth spurt, when I first got here, we were really cranking it up and growing. We bought used helicopters. We evaluated our business and started looking at our costs and evaluating them and had better history.

Let’s say we’d buy a used helicopter for $2 million, but the maintenance costs we’re outstripping (the initial savings). About three years ago, we decided to go from used helicopters to new ones. On our traditional contracts, we not only get paid for flying, we get paid for being available.

So if we’re down for maintenance, either scheduled or unscheduled, you have to move in parts, people and have a backup. If you can drive that down, you increase your reliability, decrease your maintenance costs. It’s had a significant impact on our bottom line.

Learn to delegate and let go of control. I used to do everything. I used to call the customers, write the RFPs and do the contracts. I knew all the pilots and all their kids and dogs and cats.

My toughest thing is letting somebody else do it, letting somebody else have contact with the customer, let somebody else write the contracts, let somebody else make the decisions that I’ve had to make. You realize once you hire the right people that they can do it better than you, but it’s a tough transition, and it’s a transition that some people can’t make.

The reality is that even if you’re making all of the decisions, I think you have less control than you think you have.

Decide collaboratively. If we have a large customer and we’re making a big contractual change, adding helicopters and moving bases and pricing the product, we get together as a group and strategize how to do that. It’s not a cookie-cutter approach, so you need the technical people involved, your operations people involved, your financial people involved. And then we take all the input to structure the contract from a service perspective.

You have to take the input from them and lay out these contracts, really strategically lay that out, how you’re going to operate it, how you’re going to service the customer, how you’re going to back that up, how many helicopters you’re going to need, what type of inventory you have to lay in. All those decisions are made as a group.

Acknowledge that management skill doesn’t always scale. As this company has grown, the difficult thing I’ve had to do is replace people. I’ve had key people I’ve had to replace.

You let somebody go or you demote someone and they say, ‘Larry, I’ve done everything you’ve asked for the last five years and this is my reward?’ Then you change them, and you realize you should have done it two years prior to that. A director of maintenance at a company with 10 helicopters, it’s the same title when you have 100 helicopters but it’s a different job. Some people just can’t do it.

How to reach: CJ Systems Aviation Group, www.cjsystemsaviation.com