The Business: Barrett Distribution Centers
Annual Sales $36 million
Headquarters: Franklin, Mass.
EXECUTIVE TEAM ALIGNMENT
A special Build supplement in the November 2013 issue of Inc. magazine.
To demolish silos and intra-departmental communication vacuums, Barrett Distribution flattened its management structure about five years ago. Decision-making became democratic. Passionate debate was welcome. Priorities were made clear. “Whatever we are working on together is our most important work, and we need everyone’s input to get it done,” says Tim Barrett of the executive team.
When “open-book management” joined the Inc. lexicon 20 years ago, it was heralded as the next business revolution. It hasn’t quite worked out that way, but there is little doubt today’s management strategies are heavily influenced by a kissing cousin, “transparency.”
In a recent Build survey of 146 chief executives at growth companies, in fact, 82 percent said that transparency helps a company grow and 54 percent said that it’s a vital part of their business.
How does openness translate into actual growth? One telling case study is Barrett Distribution Centers, a 72-year-old logistics and fulfillment company run by brothers Arthur and Tim Barrett. Fifteen years ago, it had a handful of employees and $600,000 in annual revenue. Today, it employs 250 people and brings in $36 million in revenue from 120 clients.
What happened? Openness — and lots of it. Here is a summary of the Barretts’ four-tiered approach to powering growth through transparency that permeates not just the entire company, but beyond as well, to customers and even competitors:
1. Devise a financial curriculum.
Research suggests that absenteeism, payroll taxes, health care costs, and turnover all decline with a financially literate workforce. For Barrett Distribution, a companywide financial education program was a prerequisite to opening the books. “At the start, we used a personal financial statement to show income and expenses like car payments,” Tim says. “By the end, our employees understood the amount of capital it takes to sustain and grow the business. Then we shared the financials.”
2. Make the numbers personal.
A weekly financial report tracks the company’s progress toward its primary goals and includes important metrics, such as time to shipping, inventory accuracy, and items damaged in transit. To make the numbers personal, one team member travels to each of the company’s 14 facilities every quarter to field employee questions, launch process-improvement projects, and assess engagement. Barrett Distribution’s incentive program also rewards all employees for achieving companywide goals.
3. Aim for solutions, not satisfaction.
Barrett Distribution’s biannual customer survey is built around one simple path: Ask customers what metrics matter most; find opportunities to wow each individual customer; and repeat until you earn the title of “trusted adviser.” The surveys “help us understand how our customers make money and what’s important to them,” Tim says. “And that allows us to be proactive in looking for opportunities.”
4. Treat everyone as a source of referrals.
When a software vendor asks to tour potential clients through the Barrett distribution facility, or a regional logistics company calls with a question, Tim says he doesn’t hesitate. “Operations managers are a source of referrals. Truckers are a source of referrals. Anyone who comes in contact with us is. It all comes down to treating people really well. Sometimes, that means sharing ideas with competitors. . . . If we are doing a good job for our customers, they will remain loyal.”
Aligning employees behind a common mission is easier said than done, unless you’re Duane Jebbett, CEO of Rowmark, a Findlay, Ohio-based manufacturer of sheet plastic. Faced with falling sales, Jebbett retooled the company culture around important metrics that he credits with its turnaround. Here are his six tenets for keeping employees focused on the numbers that matter most:
1. Adopt a simple slogan. (“You can’t manage what you can’t measure.”)
2. Reinforce metrics at every meeting.
3. Use lots of visuals.
4. Solicit employees’ ideas.
5. Offer rewards.
6. Understand the limits to metrics.