Building family Featured

11:15am EDT March 29, 2006
You don’t just get a job with 84 Lumber, you join the family.

That’s not merely a figure of speech or a reference to the fact that leadership of this privately held company passed from father to daughter in 1992. It’s a philosophy that inspires Maggie Hardy Magerko and shapes the way she has run this business since she became its president.

“I know it sounds corny, but I really do try to create a family atmosphere throughout the company, in which we are all helping each other,” says the 40-year-old executive, wife, and mother of an 11-year old son. “We don’t believe in politics around here. I want people to be open. If there’s a problem, my attitude is, let’s come together, talk about it, figure out how to fix it and move on.”

Magerko says one way to maintain this mutually supportive culture is to advance employees up the company ladder.

“We promote more than 90 percent from within the company and consider every hire, other than our outside sales force, a manager trainee,” says Magerko. “Members of the sales force have a separate ladder they can climb.”

She says when employees have opportunities for career advancement, they are more likely to stay, and this creates a cohesive, consistent, and loyal work force familiar with the firm’s procedures and values.

This idea, like just about every other one she’s put into place, has had a positive impact. The company posted $3.92 billion in sales for 2005, a 13.5 percent increase over 2004. The new numbers mark the 14th consecutive year that 84 Lumber has broken its own sales records while expanding at a rapid rate.

The building materials supplier added 33 stores last year and now numbers more than 500 locations in 40 states, including 19 plants for the manufacture of trusses, floor components, and wall panels. The company expects to open 50 additional stores in each of the next three years, with a concentration on the Southeastern and Western United States, where housing markets are strong, and in the hard-hit Gulf Coast region to meet the area’s most pressing and long-term needs.

This year marks the company’s 50th anniversary, and with Magerko at the helm, it’s become a very different operation than it was when her dad and 84 founder Joe Hardy ran things.

He started a cash-and-carry lumberyard in the rural town of Eighty Four, Pa., in 1956, and the company is still headquartered there. Within five years, Hardy’s low-overhead, no-frills approach had taken off, and he embarked on an expansion program.

Over time, the focus shifted, and the original customer base of homebuilders was replaced with do-it-yourselfers. But by the early ’90s, 84 Lumber was losing its market share to Home Depot and Lowe’s.

Realizing that their company couldn’t win in a battle with these big-box retail giants, father and daughter decided to change directions. At the same time, Hardy ceded day-to-day control to Magerko.

“When I took over, we immediately started targeting professionals again and implemented credit services,” says Magerko. “Now, 95 percent of our sales are to contractors. Instead of just sitting behind the counter waiting for shoppers to come in, we go out and get the business aggressively. And then we provide the pros with incredible service, every step of the way.”

More than 10,000 employees nationwide are responsible for delivering that service, and hiring the right people is critical to the company’s continuing success. Magerko wants individuals with passion, energy and “a twinkle in the eye.” And she says she can always pick out the 84 type in a crowd.

“They’re the ones that look at you, not down at their shoes,” she says.

In interviews, potential members of the 84 family must show that they are career-minded rather than job-oriented, and demonstrate an entrepreneurial spirit.

“Our managers have a lot of autonomy because I’m convinced a store only does as well as its manager,” says Magerko. “These are the people who really make the difference. So I want them to feel like they own the place.”

To attract these kinds of people, hard work and loyalty are rewarded. 84 Lumber offers young people great earnings potential, training that includes a home study course and a profit-sharing plan — available to all full-time associates with one year of service — that’s fully vested after seven years. When a store meets its monthly quotas, every staff member gets a bonus.

Magerko is a very hands-on executive. She doesn’t believe in leading from an ivory tower or a corner office.

“You can sit at your desk and read reports, analyze the numbers,” Magerko says. “But you don’t know what’s really happening unless you’re talking with the people who create those statistics.”

Six regional vice presidents report directly to her, and each is responsible for 60 to 90 stores. Area managers, who report to the VPs, deal with six to 18 stores each. And to keep the communication open, she regularly holds what she calls regional Town Meetings.

“Everyone gets a chance to offer their ideas about how we can improve the company and bring issues to my attention,” she says.

84 Lumber is the opposite of a top-down enterprise. Because of Magerko’s conviction that the company’s success is determined at the store level, the mix of products and services at each location is customized to meet local needs.

In a sense, every site represents a niche market, with inventory and even layout tailored to the specific demands of area homebuilders. Insight about each community comes from the people who know it best.

“Everyone works for the store managers, even me,” Magerko says. “Listening to them is the No. 1 thing we do that helps us grow and grow healthy. I learn from them every day.”

If margins go down even slightly, Magerko hits the road.

“I make it my focus,” she says. “I meet with area and store managers. We go over financials together. I find out who needs help. With this approach, we’ve gotten ourselves back on track in as little as two weeks.”

These visits also give her a chance to deliver her own special brand of inspirational encouragement.

“My strength is motivating people to believe in themselves,” says Magerko. “Mental attitude is everything. Each person can become exceptional, and I let them know we’ve got their backs and we’re here to help.”

Her style is the opposite of her father’s. She ruefully admits he was an old-style manager who ruled by fear.

“When he got angry, you knew it,” she says. “He could make the walls shake, and he did just that on many occasions. I don’t believe in doing things that way. I’d rather energize people to sign on to our program and our goals. Nothing makes me happier than to see average-performing people become extraordinary and extraordinarily successful.”

One of the primary responsibilities of area managers is to hire smart. The company runs lean, and vacancies can really hurt. By identifying capable individuals who fit the profile and are in it for the long haul, and then giving them on-the-job experience in every aspect of store operation, from cold calling to order fulfillment, 84 Lumber creates its own pool of applicants for every position.

And managers can easily find out who is willing to relocate. A recent investment in a computerized database containing bios of all of its employees is paying off.

“We can match an opening in California with an associate in Florida who has family on the West Coast,” Magerko says. “That tells us they might be happy to consider a move out there. So we can now find a promotable person within our organization very quickly.”

84 Lumber has the resources to continuously open new stores. In fact, Joe Hardy, who turns 84 next year, is constantly scouting potential locations. But the critical factor is whether the company has managers capable of staffing those locations.

The plain-speaking, straight-talking Magerko doesn’t even have to stop and think when asked what makes a good manager.

“You’re willing to bust your butt to get the job done,” Magerko says. “You fulfill your promises. You lead by example. You’re the first one in and the last one out. You know that service means going beyond the ordinary. And most important of all, you genuinely care about your people.”

How to Reach: 84 Lumber, http://www.84lumber.com or (800) 664-1984