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...
Trays move on an overhead conveyor to the end of the production line, where workers carefully pack the cleaned, sized, graded, counted and sorted Calla tubers

November 29, 2016

Texas Judge Halts Overtime Rule; Here’s What It Means For Greenhouse Growers

According to Craig Regelbrugge at AmericanHort, the injunction against the overtime rule is welcome news for horticulture.

Read More
Craig Regelbrugge, senior vice president of AmericanHort - Feature image

October 25, 2016

Contribute To HRI To Help Honor Industry Advocate Craig Regelbrugge

In honor of Craig Regelbrugge's extraordinary contributions to the horticultural industry, AmericanHort and the Horticultural Research Initiative created a special HRI endowment fund in his name: "The Craig Regelbrugge - Advocates for Horticulture Fund."

Read More
Lucas Greenhouses Shipping

October 6, 2016

Greenhouse Shipping Costs Down, But Concerns Remain

Lower gas prices have led to lower shipping costs for some growers, but many continue to seek out ways to become more efficient.

Read More
Latest Stories
Trays move on an overhead conveyor to the end of the production line, where workers carefully pack the cleaned, sized, graded, counted and sorted Calla tubers

November 29, 2016

Texas Judge Halts Overtime Rule; Here’s What It Means F…

According to Craig Regelbrugge at AmericanHort, the injunction against the overtime rule is welcome news for horticulture.

Read More
Craig Regelbrugge, senior vice president of AmericanHort - Feature image

October 25, 2016

Contribute To HRI To Help Honor Industry Advocate Craig…

In honor of Craig Regelbrugge's extraordinary contributions to the horticultural industry, AmericanHort and the Horticultural Research Initiative created a special HRI endowment fund in his name: "The Craig Regelbrugge - Advocates for Horticulture Fund."

Read More
Lucas Greenhouses Shipping

October 6, 2016

Greenhouse Shipping Costs Down, But Concerns Remain

Lower gas prices have led to lower shipping costs for some growers, but many continue to seek out ways to become more efficient.

Read More
Pansy ‘Cool Wave Blue Skies’ (Wave)

September 20, 2016

PanAmerican Seed Settles Alleged Trade Sanction Violati…

PanAmerican Seed, a division of Ball Horticultural Co., has been charged with violating trade sanctions to Iran over a number of years. According to a release from the U.S. Treasury department, PanAmerican Seed made 48 indirect sales of seeds to two Iranian distributors. The company shipped the seed to consignees based in countries in Europe and the Middle East. PanAmerican Seed’s customers then arranged for the re-exportation of the seeds to Iran. The release states that the Office of Foreign Assets Control (OFAC) determined PanAmerican Seed did not voluntarily self-disclose the alleged violations to OFAC, constituting an egregious case. “We believe that the settlement was extreme; however the alternative was to litigate with the U.S. government, which would take months, if not years,” says Todd Billings, Chief Financial Officer for Ball Horticultural Co. When asked what Ball Horticultural Co. has done to ensure that violations to trade sanctions do not […]

Read More
young-plants

September 20, 2016

The Top Young Plant Growers, And Four Critical Challeng…

In Greenhouse Grower’s 2016 Top Young Plant Growers Survey, growers discuss the latest challenges and opportunities in fulfillment, shipping, labor, and crop protection.

Read More
Cavicchio Greenhouses

September 6, 2016

Cavicchio Greenhouses Wins Inaugural Sustainability Awa…

The Sudbury, MA, growing operation sustains more than 250 acres of annuals, perennials, and nursery stock, with a number of practices to mitigate its impact on the environment.

Read More
Charlie Hall Feature Image

September 6, 2016

10 Insights From Charlie Hall’s Green Industry Economic…

With the uncertain current economic climate, Texas A&M economist Charlie Hall says now may be the perfect time to invest — as long as you do it smartly.

Read More
Penn State Plant Bud

August 23, 2016

AmericanHort Is Helping Plant Importers Adjust To New R…

A report from Craig Regelbrugge at AmericanHort says the government is implementing a streamlined system for imports, in which all required data will be submitted electronically through a single window.

Read More
Plug Connection Assortment

August 9, 2016

AmericanHort’s Plug And Cutting Conference Will Feature…

This year’s conference, which takes place Sept. 19-21 in Carlsbad, CA, features discussions on water, pest and disease control, and production inputs, as well as a biocontrols workshop and tour of local cuttings facilities.

Read More
Cannabis In Greenhouse

July 27, 2016

The Top 5 Myths About Cannabis Production Cleared Up

There is a lot of misleading information going around about growing cannabis. Industry insider James Lowe makes sure you know the truth about cannabis production.

Read More
Joe Bischoff

July 26, 2016

SAF Partners With Cornerstone Government Affairs To Adv…

A new partnership between the Society of American Florists (SAF) and Cornerstone Government Affairs ensures that SAF will continue its highly effective work advocating for issues that affect the floriculture industry. “SAF and Cornerstone together provide experienced voices on Capitol Hill to protect our growers’ interests,” says SAF CEO Peter Moran. “We’ll continue to move major policy priorities forward on behalf of small business and agriculture.” Cornerstone is a public affairs firm specializing in government relations, strategic consulting, and advocacy. Its team of more than 50 senior professionals includes former senior professional staff from both authorization and appropriations committees and the U.S. Department of Agriculture (USDA), as well as veterans of the horticulture industry. Agricultural and horticultural issues of primary concern to SAF members include access to labor, immigration, crop protection, international trade and other matters related to the day-to-day operations of growers. Before she retired this year, SAF lobbyist Lin […]

Read More

July 26, 2016

AFE Releases New Videos Highlighting Industry Successes

The American Floral Endowment (AFE) recently released five new videos, created to highlight floriculture successes through industry collaboration, support, and participation. “Each video shares real stories from industry members on career development through scholarships and internships, and true examples of research solutions that have shaped how the industry operates today,” says Laura Shinall, President of Syndicate Sales, Inc., and AFE Public Relations and Development Chair. “We’re excited to be able to share some great success stories in an effort to increase industry participation.” The introductory video “Heard of the American Floral Endowment?” helps educate those who aren’t currently aware of AFE’s programs, while other segmented videos (retail, wholesale, grower) share how Endowment programs complement each group and why it’s so important that everyone in the industry participates: Retail Florists Share Why They Turn to AFE New Resources for Floral Wholesalers and Suppliers AFE Helping Growers Profit Ready for a Career in Floriculture or Horticulture? […]

Read More
Briscoe White, Growers Exchange

July 6, 2016

The Grower’s Exchange Unlocks The Secret to E-Commerce

In the Internet era, Briscoe and Kenan White knew they had to adapt or die and specialize to survive. Here’s how they took The Grower’s Exchange online.

Read More
Brie Arthur

July 6, 2016

5 Can’t-Miss Events To Watch For At Farwest 2016

Whether it’s classes on biocontrols and gardening trends, or networking opportunities in and around the trade show floor, there’s plenty happening at Farwest 2016 in Portland, OR, in August.

Read More
Cannabis states 2016

July 1, 2016

Adult Use Of Cannabis On The Ballot In 2016

25 states have legalized cannabis and public opinion is increasingly positive. Here’s where things may be headed as we move toward the fall elections.

Read More
Practical Software Grower Vertical

June 18, 2016

Practical Software Solutions Increases Accessibility, E…

Practical Software will demonstrate Grower Vertical, its customizable and scalable enterprise management system for the horticulture industry, at Cultivate’16 in July.

Read More
Battlefield Farms Company shot

June 14, 2016

Battlefield Farms Is A Finalist For 2016 Operation Of T…

Battlefield Farms in Rapidan, VA, is one of three finalists for Greenhouse Grower’s 2016 Operation Of The Year award and winner of the Excellence In Innovation award for 2016.

Read More

June 7, 2016

Ball Seed Offers Full Mobile Ordering Capabilities With…

The latest update for Ball Seed’s WebTrack To Go mobile app now includes full ordering capabilities for the industry’s largest assortment of seeds and plants. App users can also complete order fulfillment via seed count or package size, find product substitutions, get personalized “contact us” information, request plant tags, and more. “Upgrading WebTrack To Go to the full suite of ordering and management tools is where we’ve always wanted to be,” says Mark Morris, Director of IT for Ball Seed. “With this new roll-out, we’re keeping up with our customers on-the-go and providing them the information and access they need –- even while away from their desks.” The Ball Seed WebTrack To Go app lets customers: Check order status and shipment tracking 24-7 Access up-to-the-minute product inventory from hundreds of suppliers Place orders by seed count, packet size, and more Find product info, culture and photos when and where they […]

Read More
[gravityform id="35" title="false" description="false"]