Stop, Look, Listen!

When I was in grade school, I lived in a town in northeastern Pennsylvania that had two industries: coal mining and railroading. I had to walk to school, which was about two miles away. On the way, I had to pass two railroad crossings. I was about 10 years old when we moved into this area. The first day of school, I was taken through a short course about the area and school rules.

One of the first rules I was taught was that if I had to cross a railroad track, I had to follow the sign that marked the crossing. On a post with two lights that turned red when a train was coming was an X-shaped cross with the words "Stop! Look! Listen!" This reminded everyone, pedestrians and automobile traffic, to look out for the trains and to cross only after they followed the instructions.

I think following the instructions on that old railroad sign is as important today as it was then. In order to be safe, take time to stop, look and listen to understand where the danger is and prevent possible injury or death. This advice is especially important in business as has been pointedly brought to our attention by customers, employees, vendors, private owners, corporate leaders and even CEOs of large corporations.

Let me give you a few examples of how useful these three words can be to everyone in business. In the December 2006 Harvard Business Review, there was a case study written by Lisa Burrell entitled "The CEO Who Couldn’t Keep His Foot Out Of His Mouth."

The hypothetical case talks about a CEO who was hired to make a day care providing organization called "Growing Places" more businesslike. His job was to make this company, which was barely surviving from quarter to quarter, into a financially stable and profitable organization. This CEO had generated great ideas and could put them into action, but he didn’t care about being diplomatic. He was in a "touchy, feely" industry but was more interested in the business aspects.

The CEO made inappropriate comments about mothers who breast feed, lesbian adoption and many other sensitive issues. This abusive attitude alienated his staff and clients. Even though the company became more financially solvent, it received a good deal of bad press and the staff and customers were very disenchanted. Thus, the company stock didn’t rise but fell and stockholders started to sell heavily.

The question asked of the readers of the case study was, "Should the CEO be fired?" Three experts who reviewed it all agreed: the CEO must be fired. One said try counseling, but the chances are he will be fired even after counseling. 

Real Life Story

Here is an example that really happened. You only have to read the Jan. 15, 2007 issue of Business Week. The cover story was "Blowup At Home Depot, Behind The Dramatic Fall Of An Imperial CEO." This is a real-life situation that exactly parallels the case study in the Harvard Business Review.

CEO Bob Nardelli took Home Depot from a $46 billion company at the time he was hired in 2000 to $81.5 billion in 2005, an average annual growth of 12 percent. Profits more than doubled to $5.8 billion in 2005. In his last year as CEO, he received $38.1 million in salary and bonuses. During this period of great increase in sales and profits, the share price of Home Depot did not increase. That’s six years of no increase in the price of the stock. Lowe’s (a smaller competitor) stock increased 200 percent during that period.

During his tenure, Nardelli streamlined Home Depot operations, modernized the logistics and in-store automation and centralized buying and other corporate functions. However, in all accounts, he was not a humble man. He was driven by business statistics, and he would often say, "Facts are your friends." 

People-Oriented Management

Nardelli certainly was not people oriented. Since 2001, 98 percent of Home Depot’s top 170 executives are new to their positions. In fact, 56 percent resigned or were fired. The store employees also were not happy. He reduced the number of full-time employees and hired part-time workers in their places in order to reduce labor costs.

His fatal mistake was to offend the board of directors and stockholders. At the stockholder’s meeting on May 28, 2006, the board of directors were not present, so Nardelli handled the meeting himself. It was a disaster! He gave a short, 15-minute presentation and then allowed only 15 minutes for questions. He limited each question to one minute. A digital clock timed each question and, after one minute, the microphone was turned off. The stockholders were furious, as were the board of directors who were told not to attend the meeting.

During the six years that the stockholders saw no increase in the value of their shares, the CEO received well over $100 million in salary. The board of directors met on Jan. 2, 2007 and announced the company and Nardelli had mutually agreed that he would resign.

The article indicated that, "on the way out the door, Nardelli negotiated another jaw-dropper, a $210 million retirement package." Some people say that he didn’t get a golden parachute, he got a platinum one.

Needless to say, the stockholders were very disturbed with this information. I’m sure some directors won’t be on the board much longer. Perhaps the board members should remember the old railroad sign, Stop! Look! Listen!

It must be very difficult for employees and vendors who gave up raises or had to reduce prices of their products to help Nardelli increase his gross margins from 30 percent in 2000 to 33.8 percent in 2005. At least they know where over $300 million of their money went!

I am very fearful for the well being of our industry when we put a large quantity of our product into mega-retailers that only look at financial figures and strive to buy as low as possible from vendors, making them sell below the cost of production. These chains also keep their overhead costs to a minimum and expect 30 to 35 percent gross margins. They do this at the expense of their vendors, their employees, their customers and even their stockholders so that their CEOs can capture $30 to $50 million a year plus their platinum parachutes of $250 to $500 million if they get fired or resign.

The book The Power of Nice by Linda Kaplan Thaler states, "Being mean is the last millennium." I hope this message spreads to the top management of the mega-chains. I have personally seen buyers for large chain stores, at the command of their bosses, lean on, threaten or intimidate vendors to either do as they demand or be eliminated. They need to stop, look and listen.

CEOs or buyers have to get to their destination on time and be profitable. Running over a vendor to get there is a small price for them to pay. You have to stop, look and listen to be safe.

Also remember that the mega-chains’ CEOs and buyers will someday also be gone. If they don’t pay attention to the Stop! Look! and Listen! sign, they can be run over by the train, too. I hope you will all pay attention to the railroad crossing signs for the sake of vendors, employees, customers, stockholders and for the well being of our whole society.

Leave a Reply

More From Finance/Operations...
Heating Roundup Feature Image

August 1, 2015

5 New Heating Options For The Greenhouse

Five heating systems manufacturers share their latest and greatest products. Tubing And Aluminum Heat Pipes (BioTherm) From Megatube and MicroClimate tubing to DuoFin and StarFin aluminum heat pipe, BioTherm is dedicated to providing heat solutions that can withstand the toughest greenhouse environments. The MegaTube and MicroClimate tubing options are easy to install and ideal for bench or floor heating. The tubing has a conductive heating surface that allows for maximum root-zone heating. The DuoFin and StarFin aluminum pipe options are great for perimeter heating and melting snow trapped in the greenhouse gutter. It can also be useful for bench heating. Both pipe options provide gentle, radiant heat for plants and don’t require welding. TrueLeaf.net Infinite Energy 2 Condensing Boiler (Delta T Solutions) With up to 98 percent efficiency, the IE2 condensing boiler boasts a stainless steel heat exchanger with larger waterways to ensure maximum heat transfer. The product’s design ensures flexibility while […]

Read More
Basil_Persian-AAS2015_620x329

July 31, 2015

All-America Selections Promotes Garden-Fresh Cooking

All-America Selections (AAS) has stepped forward with another first when promoting AAS Winners, this time in the form of cooking videos using vegetables/edibles that have performed extremely well in the AAS Trials. These days, a love of gardening is directly related to a passion for cooking. Tying the two together is a natural when marketing joys of cooking with fresh vegetables from the garden and farm market. After 82 years of conducting trials where only the best performers are declared AAS Winners, the organization now has more than 325 individual varieties that have been “Tested Nationally & Proven Locally.” It is some of these many varieties that culinary storyteller, entertainer and horticulture industry veteran Jonathan Bardzik will use in a series of five videos demonstrating cooking techniques with AAS Winning herbs and vegetables. “I am excited to partner with All-America Selections to show people across the country that AAS Winners perform […]

Read More
Burpee Home Gardens Brand Adds Flowers

July 31, 2015

4 Reasons Retailers Snub National Brands

Greenhouse Grower’s lead editor, Laura Drotleff, and I got into a debate about why garden retailers, especially independent garden centers, snub marketing efforts from breeders and growers. She was very much on the breeders’ and growers’ side, expressing frustration about how limited retailers’ vision can be on the topic. I’ve reported on the garden retail side of the industry since 1998, about the same length of time Laura has reported on growers. I’ve heard a lot of retailer views on this, so allow me to share the most common reasons why retailers decline free marketing: Costs. While the marketing materials are free, and sometimes advertising, participating in these projects usually requires minimum orders. From a grower’s perspective, the minimum orders are reasonable. If garden stores promote a plant line, they need to have enough supplies to satisfy demand. From a retail perspective, if inventory reports show a plant line can […]

Read More
Latest Stories

July 30, 2015

Spread Your Risk Beyond Spring Sales [Opinion]

Growers who participated in Greenhouse Grower’s 2015 Spring Crops Recap Survey said they have had enough of the uncertainty that the weather brings. They said it’s time to build up sales in other seasons like fall so we’re not so dependent on spring. As a couple of wholesale growers, both from the Southeast, very eloquently stated, our industry has mastered squeezing everything we can out of the spring season. And while this year happened to be a very successful one, thanks to the improving economy and elevated consumer confidence, they said, “now is no time to celebrate.” “Spring is still Christmas in the horticulture industry, but we have done such a good job focusing on spring that we have neglected other seasons,” one grower said. “Having so many eggs in the spring basket is dangerous. Fall will never be what spring is, but having a solid second season is in […]

Read More
Berns_Roberto Lopez_Purdue6

July 22, 2015

Cultivate’15 Greenhouse Learning Tour Showcases G…

Growers took advantage of the Greenhouse Learning tour held Saturday, July 11 at Cultivate'15 to see the strategies and technology two successful growing operations are using to tackle production challenges and come out ahead of the game.

Read More
thermoflor

June 16, 2015

Philip Schaafsma To Represent Thermoflor In The U.S.

Philip Schaafsma is a new sales representative for Thermoflor, a company with a lot of experience building garden centers worldwide. The history of the Dutch construction company Thermoflor goes all the way back to 1877. Since then, the company has been through a lot of changes, from simple conservatories to complex glass and steel turnkey projects. With a new sales representative, Thermoflor is well equipped to service the American market. Previously, Petitti Garden Center (Avon, Ohio), Chuck Hafner (Syracuse, N.Y.), Jacob’s Garden (Ottowa Lake, Mich.), Hicks Nurseries (Westbury, N.Y.) and Holes (Alberta, Ca.) were all built by Thermoflor. After a period of absence, the company is now  represented in the U.S. and Canada by Schaafsma, who has more than 40 years of experience in retail lawn and garden, greenhouse growing and the floral industry, and is a former board member of the Garden Centers of America. Schaafsma is the former owner […]

Read More

June 15, 2015

Hortica Insurance To Become Member Of Sentry Insurance …

Upon completion and approval of an affiliation agreement, Hortica Insurance (Florists' Mutual Insurance Company) will become a member of the Sentry Insurance Group, based in Stevens Point, Wis. As a member of the Sentry Insurance Group, Hortica keeps its name and brand and will continue doing business from its current headquarters in Edwardsville, Ill.

Read More
Cal-Poly fields

June 2, 2015

Cal-Poly Students Seek Continued Industry Support To Sa…

Agriculture students and faculty at California Polytechnic State University, San Luis Obispo, want industry members to continue to stand with them in their effort to preserve Class 1 agricultural land from being repurposed. The university recently released an update to its Master Plan that indicates that almost all of its orchards, horticulture facilities and field sites could be repurposed for buildings, including residential and/or recreational space. According to Joel Leonard of Students For Agriculture, an organization of Cal-Poly students in favor of saving the land, the Master Planning Committee will be meeting over the summer to form a final version of its plan and present it once more to the public in the fall, before it is submitted for final approval to the California Board of Trustees. Students For Agriculture’s goal in the meantime is to increase awareness and rally industry supporters to continue to send their input to the planning committee. Visit studentsforag.com to see more […]

Read More
Cal-Poly fields

May 27, 2015

Cal-Poly Students And Faculty Ask Industry To Help Save…

California Polytechnic State University, San Luis Obispo, has released an update to its Master Plan that indicates that almost all of its orchards, horticulture facilities and field sites could be repurposed for buildings, including residential, and/or recreational space. According to a letter from Scott Steinmaus, the horticulture and crop science department head, the proposed changes directly affect the current orchard plantings and other long term plans for the department. The department is committed to making sure that its facilities remain invaluable teaching environments that enable its students to learn about crop, fruit and horticulture production, food safety and pest protection, in addition to providing sites for externally funded research projects that benefit the industry. Industry members are invited to submit comments to the university. According to Steinmaus, a recent eMail to the Cal-Poly community from the university president indicates that all of the input gathered through the end of May will be studied by the planning […]

Read More
people-of-Battlefield

May 13, 2015

Battlefield Farms Receives MPS-A Qualification

Battlefield Farms, Inc., in Rapidan, Va., has been awarded the MPS-A qualification after becoming a participant for MPS-ABC in 2010. After four years of showing effort and improvement, the company has been awarded the qualification.

Read More
Barry_Sturdivant_columnpic

May 8, 2015

How To Survive Succession Planning And Resolve Conflic…

If you work in agriculture, you most likely work with family-owned businesses. This is especially true within the greenhouse industry. I’m fortunate to work for a company that specializes in financing and supporting such businesses. Family-owned businesses often have a level of commitment and support that helps during lean times. This is important for a company exposed to seasonality and events that are sometimes beyond management’s control. Business owners and management are constantly looking for solutions to the unique issues faced by these small but complex businesses. Specifically, how these issues affect the transition from one generation to the next. There are many family enterprise success stories, cases of harmony, health and longevity. Yet it’s no secret that family businesses can struggle with governance, leadership transitions and even survival. According to the Family Business Institute, only 30 percent of family businesses last into the second generation, 12 percent remain viable […]

Read More

April 30, 2015

North Creek Nurseries Welcomes Nikki Drake As New Finan…

Nikki Drake will fill the role of new financial administrator at North Creek Nurseries, with responsibility for the accounting department. She will also serve on the strategic planning committee.

Read More
Andy Huntington Pleasant View

April 29, 2015

Pleasant View Gardens Promotes Andy Huntington to Natio…

Pleasant View Gardens recently announced that Andy Huntington will be the company’s National Sales Manager. Huntington, who has years of horticulture industry experience, will oversee national territory and inside sales departments, while fostering strong partnerships with customers. “Our relationships with customers are central to all that we do at Pleasant View,” Huntington says. “In my new role, I am excited to work with a broader base of broker, grower and retail partners to understand their business needs. Pleasant View’s goal is to be so in tune with our customers that we are able to anticipate their problems before they arise.” Huntington has a history of growing sales and forming long-lasting relationships with a diverse customer base. For the past two years, he has been working as a territory account manager for Pleasant View Gardens, responsible for young plant liner sales in New England and New York. Prior to that, Huntington was […]

Read More
PittMoss on Shark Tank

April 22, 2015

PittMoss Wins On Shark Tank

Mont Handley, president and CEO of PittMoss, appeared on ABC’s Shark Tank on April 17 to try to get the “sharks” to invest in his peat moss alternative. Three investors from the TV show contributed $600,000 to PittMoss for a 35 percent stake in the company. Check out this clip from ABC’s website in which Mark Cuban, Kevin O’Leary and Robert Herjavec discuss getting on board with the product. PittMoss is an alternative to sphagnum peat moss, made up of a mix of proprietary additives and recycled paper rescued from landfill space. Handley founded the Pittsburgh-based company in 1994. What started as a small experiment grew into a full-fledged business with the help of funding provided by an EPA SBIR grant and Pittsburgh’s Idea Foundry. Today, PittMoss is available to commercial greenhouses and nurseries from Michigan to Maine to North Carolina, with plans to grow. To learn more, visit PittMoss’ website, or check it […]

Read More
Syngenta logo

April 15, 2015

Syngenta Names Chris Freeman Senior Key Account Manager…

Chris Freeman is the new senior key account manager for Syngenta Flowers, Home & Garden's Commercial Sales business in the Americas, effective March 2015. Freeman, who joined Syngenta in 2006, carries more than 25 years of experience in the agriculture and floriculture business.

Read More
Lake Buchanan_LCRA

April 10, 2015

USDA Designates Areas Of West And Southwest As Drought …

The ongoing drought has resulted in disaster area designations in counties across nine Western and Southwestern states, including Texas, where some reservoirs are at or near historically low levels.

Read More

April 9, 2015

Altman Plants’ Online Cactus Shop Shows Strong Sa…

Altman Plants recently opened its new Cactus Shop, an online retail store that sells a variety of cactus and succulents. The store is a take-off of Altman’s original wholesale business, as the company started as a mail order catalog.

Read More
Dummen

April 8, 2015

Dümmen Group Welcomes Jim Devereux And Andrew Konicki T…

Dümmen group recently announced the addition of Jim Devereux and Andrew Konicki to its team. They are the newest members of the Key Account and Broker Support team for Dümmen, and will be responsible for building, developing and maintaining current broker and grower customer relationships.

Read More
Gov._Jerry_Brown_California

April 8, 2015

California Institutes First Ever Statewide Mandatory Wa…

California Gov. Jerry Brown announced April 1 that, for the first time in state history, action will be taken to implement mandatory water restrictions, with the ultimate goal of reducing water usage by 25 percent. As Californians are pushed to conserve more, growers will need to think about how demand for products will be affected.

Read More
DNA-logo

March 31, 2015

DNA Green Group Will Acquire Rijnplant

DNA Green Group and Riknplant have finalized DNA Green Group's acquisition of Rijnplant, meaning that the breeding and propagation activities in pot and cut anthurium, bougainvillea and heliconia will transfer to DNA Green Group.

Read More
AFE scholarship_Ryan Dickson

March 25, 2015

AFE Educational Grant And Scholarship Application Deadl…

Apply now for American Floral Endowment (AFE) scholarships or educational grants. Applications can be found online. For educational grants for 2015-2016, applications must be submitted no later than June 1. Scholarship applications are due May 1. AFE will award $40,000 in scholarships for 2015.

Read More