There were cheaper, easier ways to get the message across. They could have sent out a memo, headlining it "Company to Increase Commitment to Employee Education and Training," and left it at that. But that's not the way things are done at Scandinavian Design Inc. That's not enough "show-biz" for founder and president Bob Darvin, not enough "razzle-dazzle" for executive vice-president Judy George.
What they really needed, the pair agreed, was a vehicle -- some way to draw new attention to the company's existing education and training program and, more important, to generate enthusiasm for programs soon to be unveiled. Darvin and George mulled it over for most of last year. Then one of them -- they profess not to remember who -- came up with the idea of founding their own university.
Well, why not? There are hairdressing schools, they reasoned, so why not a school to teach retail furniture sales? McDonald's has Hamburger University, so why not Scandinavian Design University? A logo for the letterhead was all it took to make the school real -- that, and one of Scandinavian Design's Big Productions. "Stage directions, lighting, theatrics, excitement -- that's the way we do things," says George. Rolling her eyes skyward, she adds, "We're definitely Broadway!"
And so in January of this year, at hotels in New York; Mansfield, Mass.; and Secaucus, N.J., Scandinavian Design University was launched. There were red banners to wave, on which the letters "SDU" were emblazoned in white, and there were cheerleaders, borrowed from a Boston-area high school, waiting in the wings.
As their names were called, 200 of the company's 325 employees marched, one by one, across the three different stages to collect Certificates of Admission and photocopied pamphlets that passed for university catalogs. Some of them chuckled when they caught sight of the SDU seal on the front of each "catalog" and read of the five "colleges" that would make up the university. But the courses, incorporating dozens of topics from basic sales training to corporate strategic planning, were -- and are -- unmistakably serious stuff.
Isn't all of this expensive? "You bet it is," asserts George. "But we know we'll get every penny of it back, and then some."
Darvin agrees. "If we were losing money you'd say the things we do are crazy, but . . ."
But Scandinavian Design is not losing money. The Natick, Mass., company is the 22nd largest furniture retailer in the nation, and, according to the industry's annual ranking, it is growing faster than any other. In 1982, when competitors were closing stores and the industry as a whole reported a 21% drop in volume, Scandinavian Design opened 5 new stores and posted a 41% increase in sales, from $31.5 million to $44.5 million. The company expects to end 1983 with revenues of $60 million and a grand total of at least 30 stores: there are now 15 in New England under the name of Scandinavian Design, and 11 in New York and New Jersey called Scandinavian Gallery. But don't hold them to those numbers, Darvin and George protest. Other furniture retailers have asked to be acquired, and several conglomerates have suggested that Scandinavian Design license its name to them. All growth projections are subject to change.
It is that sense of almost unlimited growth potential that has Darvin and George so keen on the idea of employee education and training. "When you're growing this fast, you have to decentralize, yet you have to maintain your corporate culture," says Darvin. "We must develop a corps of middle managers who can make sure that the people in the newer stores in New York and New Jersey feel as involved as we do in New England. We've got to get others to believe what we believe."
"And how can we do that when we're losing contact with people?" George adds. "Until recently, Bob and I could personally teach and motivate our employees. But with this [growth] explosion, we can't touch people in the same way. We need to have a very formalized program," she says, gesturing to include the office, the building, the whole company, "to make sure all of this is nurtured and continued."
Paging through the SDU curriculum, one finds a program that is indeed formalized. Each group of employees has its own course of studies, and the list of topics covered reads like the management section of a business school library. The College of Business, for example, provides those in nonsales, support positions with training in customer service, responsive listening, and time management. Those eligible for the College of Management receive training in merchandising, inventory control, employee motivation, interviewing techniques, communication skills, and planning meetings. The executive staff attends the Graduate School of Retailing, with its courses in corporate strategic planning, organizational development, time management, and developing leadership skills.
And for those interested in academic training, there is the Continuing Education Program. Employees who take approved courses at accredited institutions may be reimbursed for up to 75% of their expenses for books and tuition, if they finish with a grade of B or better.
As with most universities, however, there are prerequisites. Salespeople, quite logically, have to take the basic sales-trainign course found within the College of Sales, and everybody -- from accountant to warehouse worker -- must complete orientation and product training.
There is a goal behind Darvin and George's careful structuring of SDU: Both believe they are building something that could become the model for education and training not only in the retail furniture industry, but in any industry. All it will take, they say, is time, talent, and lots of money.
Last year, prior to the establishment of SDU, Darvin and George allocated $150,000 for class materials, meeting space, and the ever-present buffet table. ("Are we big on food!" George crows. "When we train, we eat.") But if staff time, travel, and lost sales were added in, the company would probably find itself way over budget.
Darvin isn't concerned. "Whatever we're spending, it isn't enough," he asserts. He plans to boost the company's employee-development budget to $600,000 next year -- 1% of Scandinavian Design's projected revenue for 1983. It isn't a low-priority item, either. Darvin vows he would slash his advertising and promotion budgets, curtail his expansion plans, and even reduce his sales force before he would lay a hand on any expenditure having to do with SDU. Having seen employees' sales performance rise 13% to 20% after completion of just the three basic courses, he is convinced the budget is money well spent.
"Nothing will work without that training concept," Darvin says. "It's a matter of self-esteem. If you expect people to sell well, you've got to make them feel good about themselves." You do that, he says, by valuing their opinions, by celebrating their accomplishments -- by giving them "the tools they need to feel and act like professionals." And, he concedes with a grin, you have got to give them a bit of that show-biz, that razzle-dazzle.
Want to sell something fast? Tell your customer that teak is the color of dust. It's true! [With teak] you don't have to dust as often. And another thing -- Don't talk about the grain of the wood; use the word 'patina.' Patina. Doesn't that sound great?"
This is SDU's product training course, trainer Holly Jordan at the easel. As she flips through her visual aids, a dozen salespeople ("sales consultants," in the company lexicon) learn how Scandinavian Design's furniture is made, how it should be shown to the customer, and how to handle pesky subjects like veneer.
"Does anybody have a favorite way of dealing with those people who refuse to believe that veneer is better than solid wood?" Jordan asks. There are groans and sighs from the group. Scandinavian Design contends that veneer is a better buy because it is less likely to crack or warp, but to the chagrin of the sales staff, most customers refuse to believe it is used for any other reason than to keep prices down.
"I've got one way," answers employee Douglas Roy. "It's reverse psychology. If a customer asks me if this is veneer," he says, assuming a look of shocked solicitousness, "I say, 'It most certainly is, sir!" The room erupts in laughter, but most of the students jot down the tip in their notebooks.
The course in product training, like most at Scandinavian Design University, is casual and participative. Rather than poring over books and taking tests, trainees learn by watching filmstrips or movies and by taking part in class discussions. They are encouraged to share their selling experiences with each other, and role-playing gives tbem an opportunity to try out unfamiliar techniques.
"Each of our basic courses is intended to make our sales consultants feel comfortable with the company and comfortable with selling our products," says Jordan, during a break in the day-long program. "Everybody learns the rules. But it's equally important that, through the programs, they learn the unwritten rules. I'm talking about how to dress, how to act -- really, I'm here as a role model as much as I am a trainer."
Scandinavian Design doesn't hire outsiders to conduct training programs. Jordan and the other full-time trainer, as well as six others who train part-time, are seasoned furniture salespeople. Each has managed a store, and one of the part-timers -- the company's general sales manager for New England, Aud Kaalstad -- wrote sales exceeding $1 million for two years in a row.
"People in the industry ask us, what are we, crazy?" Taking million-dollar writers out of the stores?" Darvin says, laughing. "Well, it was a big decision. Deciding to use our own people was a bigger commitment than the allocation of the financial resources."
But there was a beneficial by-product of that decision. Moving senior salespeople out of sales and into training created another rung on the career ladder -- something particularly desirable to people itchy for promotion to scarce managerial and merchandising positions. But Darvin and George say they made the switch primarily for credibility's sake, believing that proven salespeople make better teachers.
Employee Douglas Roy will vouch for the truth of that. "When you take a course from Holly or Aud, these people are really on! They know what they're doing, and they're excited about what they're doing, so you can't help but get excited, too. They're real cheerleaders. Real rah-rah." Then, answering the obvious question, Roy adds, "No, it's not being put on, but it is calculated. This company knows exactly what it's doing."
Roy speaks with some experience. His family is in the furniture retail business, and he spent more than a few summers selling furniture at retail outlets. But it wasn't until he joined Scandinavian Design that he received any of what he considers to be sales training. "Most furniture-sales schools are nothing more than a young kid following around an old man for about two weeks. There really isn't anything like SDU anywhere else, because most people either haven't thought of it or think it's a bother.
"In a lot of places, [a salesperson feels] like a number. At Scandinavian Design, it's different. You don't feel like a number, you feel important."
Darvin and George pride themselves on ignoring much of the conventional wisdom of the retail furniture industry -- or any industry, for that matter. To start with, there is management style. The president and executive vice-President work as a team, making all the key decisions in tandem and delegating even the most routine tasks only reluctantly. They say they "never want to become administrators." They do, however, recognize the need for a second line of management, and they intend to meet it by promoting from within. Bringing in people from the outside would tend to dilute their influence on the rank and file. The pair would prefer to continue spending perhaps a year instilling their candidates with the "right stuff," and putting them through what is euphemistically referred to as the "vacuum test" (a selling stint that includes house-cleaning duties), before giving them any authority. But with new stores, which require new managers, opening at a rate of one almost every two months, that is too big an investment of time. That is why SDU was developed -- to train more people and to do it better and faster.
Then there is the company's human resources policy. Darvin and George say it is only happenstance, but Scandinavian Design's work force is young (average age, 27) and predominantly female (65% of the employees are women). They are paid on salary, not commission, and they are promoted to positions of responsibility quickly. The company also runs lean, staffing each store with one manager and five to seven salespeople. While other chains may have a buyer in each store and at least a score of department heads in the home office, Scandinavian Design has only 10 people in chain-wide supervisory roles, and Darvin and George do the majority of the buying themselves.
But perhaps the clearest contrasts with other furniture chains are found in the areas of marketing and merchandising. Scandinavian Design's stores are small, averaging 5,000 square feet, and they stick to selected contemporary pieces in imported teak and rosewood, as well as domestic oak. Other retailers troop to the manufacturers' market in North Carolina every year, but Darvin and George also take the relatively unheard-of step of designing some of their own pieces and coaxing manufacturers into producing them. And while other furniture operations dangle loss leaders, Scandinavian Design focuses its elegantly aggressive advertisements and promotions on its higher-ticket items.
It all works. Scandinavian Design is known as one of the most innovative furniture retailers in the country. The company's employees are perceived to be more knowledgeable, dedicated, and productive than most. While the average furniture retailer will generate about $60 in sales per square foot annually and turn over its stock around twice a year, Scandinavian Design boasts of selling an average of $377 per square foot, and it turns over its inventory eight times each year.
Darvin says he credits all of this to the company's commitment to employee education and training, which goes back at least seven years. He says he and George are regularly "scolded" by competitors for the "show-biz" of SDU, but he feels that is because other chains don't understand the value of a good education and training program. "People in our industry are behind the times. They say, 'Why should we bother to train people? These are entry positions, and they're only going to leave us for another job in a year or two. It's not worth the money."
That is the thing that has always bothered Darvin about selling. "It's a put-down position with longhours and low pay," he says. "Hardly anyone sees it for the marvelous occupation -- profession, really -- that it is."
Darvin got his first taste of the selling life while peddling insulating material to retailers for several years after he graduated Rutgers University's marketing program. "I was on the road, and I made lots of cold calls. Believe me, you never get over having a door slammed in your face."
He promised himself two things: If he ever got his own business, he would never refuse to see a salesperson (a policy he says he adheres to), and "I'd never let my people feel bad about themselves." Even then, in the early 1960s, Darvin felt he could develop confident employees through education and training -- not the kind he had received, with its heavy emphasis on the features of the product, the benefits of the product, and the pricing of the product, but rather a broader-based program that would focus on the abilities and attitudes of the individual.
In 1965, Darvin and his wife, Gretchen, opened the first Scandinavian Design furniture store in a rented, one-room house on Route 9, about 15 miles west of Boston. One of the first things they did was initiate a modest training program. But it wasn't until 1976, while acquiring another furniture store, that Darvin found a reason to expand and improve the program. That reason was Judy George.
"Judy was working for [the store Darvin was acquiring], and she came to me and demanded that I keep her," Darvin recalls, laughing. "She came at me with a list of 75 demands, and one of them was that I get serious about education and training."
George was hired, and the matter of improving Scandinavian Design's education and training program landed in her lap. Her first effort, she admits, was "a bomb." She spent $25,000 on a prepackaged training program that "made our people feel like robots." Not that there was anything so terribly wrong with the curriculum; Aud Kaalstad, then a sales consultant, still credits the program with increasing her sales by 36% in the first year. But there were widespread complaints that parts of the package had nothing to do with selling high-fashion furniture to generally upscale, young customers.
George's conclusion was that "buying a prepackaged program is a good way to get a training program started, but it can't truly be successful until you personalize it." She decided the package would have to go, although she wasn't prepared to toss $25,000 worth of material out the window. Instead, she launched a drive to customize the curriculum to Scandinavian Design's way of doing business. It was to be a gradual process.
But then came the first spurt of growth, and with it, Darvin and George realized they were going to have to move faster. Stores began opening without proper staffing, and what managerial talent the company had on hand became depleted. Because so many of Scandinavian Design's employees were young, few had held managerial positions before. Most of them needed fairly intensive training in leadership skills before they could be promoted. About the time George and her fledgling human resources -- department staff began planning for those needs, things started going wrong in some of the New York and New Jersey stores. New employees didn't understand what Scandinavian Design was about, and the company found itself continually hiring and firing. Turnover doubled -- from about 7% to nearly 15%.
Darvin and George took a number of steps to deal with the problem, including the institution of more rigorous pre-hire interviewing and testing. But they believe it was their improved education and training program that caused the turnover figures to stabilize. They were even more convinced of the wisdom of their decision to establish SDU.
Two years elapsed between the decision to customize the education and training program, and the establishment of SDU, and they were busy ones. A new curriculum was written, the old curriculum was rewritten, and Darvin, George, and the human-resources staff gleaned all the ideas they could from books and seminars. They established a library, and they created so-called train-o-grams, which contain monthly tips on selling, merchandising, and displays, as well as a recorded message to employees called the "talking book."
Then came the "big push," as George calls it -- the retraining of first managers, then employees. In the first five months after the debut of SDU in January, training was held on 93 separate days. Some 144 people went through the two-day sales-training program, and 170 attended the day-long product-training course. There were also factory tours, warehouse visits, special seminars, and training-oriented meetings in individual stores.
But one of the more important lessons learned from pre-SDU days is that training alone is not enough. "It's just the beginning of the cycle," George says. "You have to monitor each employee's performance and coach them on their weaknesses."
Scandinavian Design salespeople know that they are under constant scrutiny. Darvin and George sometimes drop in on a store or call with pointed questions designed to shed light on what is going on. They enlist their friends to go into stores and critique them. They also require outside sales representatives who visit the stores to fill out questionnaires detailing how the store looked and how the employees treated them.
Meanwhile, each employee's sales performance is tracked by computer. Regular reports chart sales figures by the month, for the year to date, and in comparison with previous periods, and the figures are posted in the back room of each store. Not only do employees know how much they have sold but they know exactly what merchandise they have sold. That tells them, their co-workers, and their superiors, exactly where they need work, where they need "coaching." It could mean getting some drilling from general sales manager Aud Kaalstad or perhaps doing some role-playing with the store manager. Books and tapes may be recommended, or the employee may be sent back to class.
"But the message is not 'You'd better shape up or you'll lose your job,' " says Darvin. "It's, 'Let us help you improve."
Darvin and George are still trying to improve SDU -- still fine-tuning the existing courses and adding new ones. But the focus now is on broadening the educational experience. Reciprocal agreements are being explored with other corporations, with an eye toward joint seminars and speaker exchanges. Mindful of the fact that only about 5% of Scandinavian Design's employees have taken advantage of the Continuing Education Program and its opportunities for study at local colleges, Darvin and George are attempting to develop closer ties with more institutions, some of which could result in jointly sponsored degree programs.
The biggest dream, though, is to build a structure to house SDU. Not only would it save Scandinavian Design about $400 a day in rented training space, Darvin says, but"it will [also] make it more likely that our employees will see it as a real school." He smiles wistfully. "Then, perhaps when they leave us, they'll put on their resume that they attended Scandinavian Design University for retailing. That's what I'd like to see."
You notice Darvin said "attended," not "graduated."
"We don't ever want people to graduate," says George. "We want to give them certain credits and completions, but learning is a lifelong thing. There'll always be something else. We'll always give them new challenges."