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By
1997, business had gotten so bad that Brad Bengson,
president of Brown Rental in Boise, Idaho, was looking
for buyers for the company that he had owned for more
than 18 years. The consolidations had finally caught up
with him, as one small rental company after another in
his area was taken over by the large, publicly traded
companies. Whereas once his competition consisted of
locally owned businesses, now five nationals had moved
in, driving rental prices down by almost 50 percent and
siphoning customers from his once-thriving aerial/high
lift division.
In
addition to lifts, Brown Rental has two other divisions:
small contractors/homeowner tools and party equipment
and supplies. But with this new pressure on one of his
most lucrative markets, his company was sinking fast and
Bengson believed that selling was his only option.
The
problem was, he recalls, the value of his business had
dropped to such an extent that he could not attract an
acceptable offer. Although he didn’t realize it at the
time, his luck was about to change.
“Around
this time,” Bengson recalls, “I attended a seminar
led by Don Taylor, who wrote Up Against the Wal-Marts
and writes a monthly column in Rental Management. After
his presentation, I asked if I could speak with him for
a moment about my business. I told him what was going
on, and after talking with him, I realized I was in
better shape than I thought. This meeting changed my
perspective. Before, I thought my business was a lost
cause, but after this, I began to feel that there was a
chance.”
Not much later, Bengson ran across Brenda Wood, Ph.D., a
Boise business consultant and owner of HR Diversified, a
human resources consulting company. Impressed by her
background and credentials, he hired her to help him
turn his business around. During the two years-plus they’ve
been working together, his company has undergone
significant and profitable changes.
“Her
approach was to focus on the employee aspect of my
business,” he says. “She told me that although the
national companies had financial resources that I didn’t
have, I had a greater opportunity to compete by offering
value-added customer service.
“But
she told me that to do this, I would have to stop hiring
bodies and focus on hiring the right people for the job.”
Given
the extremely tight employee market, Bengson was
apprehensive about making his interview process any more
stringent, but he went along with her suggestions.
His first challenge was replacing the manager for his
aerial
lift division. He placed a blind advertisement in the
newspaper, one that did not mention his company’s
name.
“We
wanted to avoid having qualified people automatically
rule us out as being too small to fully utilize their
skills or meet their wage demands,” he explains.
His
new interview process, devised by Wood, was structured
and objective. Each applicant was given the same
questions and the responses were scored. The job would
be offered to the applicant who accumulated the highest
number of points.
As
it turns out, Bengson hired someone who, under his
previous interview system — which was based on gut
feelings — he probably would not have considered. But
this turned out to be a fortuitous choice.
“His
skills started to show right away, and we started to get
back some of the business we had lost,” Bengson says.
“He had the knowledge we needed to help us compete
against the nationals.”
The
manager alerted Bengson to the fact that some of the
large competitors were selling their old lift equipment
at “unbelievable prices.” He suggested that rather
than buying new equipment as they had always done,
Bengson should consider purchasing the used equipment,
and theorized that after reconditioning, the equipment
could be rented out at cheaper — but still profitable
— rates, attracting price-driven customers back to
Brown Rental.
Bengson
tested this theory with just a few pieces. Pleased, he
got a loan and doubled the size of his fleet.
“Even
rented out at lower rates than our new equipment, we
make the cost back in a year,” he says. “We work
with equipment brokers, stick with the two brands we
have always carried and buy equipment that’s no more
than five years old.
“Now,
we buy all of our equipment from the national companies
and get a better return on our investment than we did
before they came to town. We took what we thought was
the enemy and made them our friend.
“And
because of their aggressive advertising about the
advantages of renting, they have brought new customers
to the market and, consequently, to my business.”
Bengson
still had to improve his hiring of entry-level
employees, something he had always found especially
challenging. Not only was he competing for the same
non-skilled labor that many other companies were trying
to attract, but his employees also had to be drug-free,
get along well with the public, have clean driving
records and be able to do physically demanding work.
Again,
Wood helped him create an interview process that was
objective and designed to quickly eliminate unsuitable
applicants. Those who did not have clean driving records
or indicated a reluctance to drug test were
automatically disqualified.
Applicants
who passed this first-stage requirement were given a
pre-employment test designed to measure, among other
skills, their ability to follow directions and find
street addresses. Those who passed underwent a reference
check.
The
next step was an interview designed to assess
customer-service skills and the ability to function as
team players, in addition to other
proficiencies.
Passing applicants were then drug-tested. The entire
process took one or two days.
This
helped him find the right
people,
but retention was still a concern. Wood suggested a
sign-on bonus.
“The
first full day a new hire works, they get a check for
$50,” Bengson explains. “After two months, they get
$100. At the end of three months, if they pass their
performance evaluation, they receive $150.
“And,
if an existing employee recommends someone and this
person is still there by the end of six months, the
referring employee gets a $200 bonus. This has really
helped us to get quality people.”
Wood
also advised Bengson to regularly evaluate employees,
something he had not previously done. Employees are now
evaluated every quarter the first year, every six months
the second year, and then once a year after that via the
“360-degree assessment” method. This includes
evaluations by peers as well as superiors, and
self-evaluation, too. Plus, supervisors are evaluated by
their subordinates.
According
to Bengson, employees look forward to evaluations,
because they represent an opportunity to significantly
increase their income.
Other
strategies he used to improve retention include
providing medical benefits, giving annual cost-of-living
raises and promoting from within.
“Our
involuntary turnover has practically stopped,” Bengson
says. “Now, we’re letting people go for poor
performance rather than them leaving us.
“And
since we’ve got the best people for the job, we’re
serving our customers better and have become more
competitive against big and small rental companies
alike. This year our business has increased by 25
percent over last year.
“But
most importantly, it has made running my business fun
again. Now I’m in control. It’s no longer a case of
the tail wagging the dog.” |
