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Dream Machine

RJ Corvette is one of the fastest-growing private companies in America, but the real growth curve is being charted in employee expectations.
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You wanna know the secret to a good hollandaise sauce?" asks Rod Olsen. "You have to let the butter cool before you stir in the egg yolks. Otherwise, the eggs actually cook in the butter. That's what makes the sauce grainy. Let the butter cool, then add the eggs and stir that rascal like crazy."

Olsen offers this counsel while dousing a heavy volume of Tabasco sauce into a cup of fish chowder. There are groans around the table. Olsen glances up. "I don't know what it is about this stuff," he says. "I just love the taste of it." The restaurant, which is in Newport Beach, Calif., is crowded even on a Tuesday night. Seated with Olsen are three other employees of R&J Corvette Parts Inc., and Joseph J. Marlow, co-founder and chief executive officer. Together they make up roughly one-quarter of the Anaheim, Calif.-based company.

All of 26 years old, Olsen is the oldest and by far the most voluble of Marlow's dinner companions. He is also, Marlow says privately, the most promising. In Marlow's book, that means the young sales supervisor is long on honesty and hard work -- attributes that approach religious status at R&J. Perhaps more important, Olsen has the intelligence and drive for perfection that Marlow sees as part of "your classic Type A personality." Marlow is very big on Type A personalities.

Olsen, meanwhile, seems very big on everything. Animated, arms akimbo and legs bouncing on the balls of his feet beneath the table, he sends the conversation barreling this way and that, taking off from culinary advice and covering everything from corporate land-holdings on the southern California coast to how one can live like a king in Puerto Vallarta, Mexico, while spending almost nothing. As to the latter, it helps if you speak fluent Spanish, which, Olsen adds after a long pull on a Heineken, he does.

Such effusively cosmopolitan discourse is more than a little startling, coming as it does from someone who works 60 hours a week behind the counter at an auto-parts store. But R&J Corvette is something more than an ordinary purveyor of spark plugs and distributor caps. In seven years, it has grown from a tiny, family-run spare-parts store into a national sales and distribution operation that employs 21 people. The company now contracts with independent manufacturers to produce a line of authentic and custom-made parts for Corvette automobiles, which it sells at its own store and to a network of wholesalers, retail shops, Corvette owners, and Chevrolet dealers. In 1983, R&J ranked #313 on the INC. 500 list of the fastest-growing private companies in America. Revenues for the fiscal year completed March 31 were $3.2 million -- up nearly 60% from the year before.

The real growth curve at R&J, however, is being charted in employee expectations. Although most insist they could go elsewhere for more money, Marlow's staff members tolerate low pay, grueling hours -- and, it turns out, a few quirks in their boss's management style -- because they are convinced that they will one day end up with middle- and senior-management positions in the company. Those jobs literally don't exist yet, but from the employees' perspectuve, it seems only a matter of time before they do. "We've seen where this company is going, and we have a saying about it," explains 21-year-old Joe Marlow Jr. "We always say we're betting on the come."

In the game of craps, "betting on the come" allows a new player to get into the game by wagering on somebody else's roll of the dice. Whatever number comes up establishes the point the new player hopes will be matched before his competition wins. Or, as Rod Olsen diagrams the concept relative to R&J, "it's a way of betting that is really more of an investment in the future."

Marlow appears to be of a similar mind with regard to his employees' prospects. Anyone and everyone in the company, it seems, is a protege. While working on cash flow projections recently, Marlow put 19-year-old Jennifer Yocky, a shy and determined administrative assistant, to work collating some of the figures. Yocky asked what the numbers meant, and by the end of the afternoon, Marlow was explaining the whole revenue-forecasting process. "She may be able to do it for us by herself someday," Marlow says. Yocky, he adds, is a Type B personality, the sort of "detail-oriented person you need in an organization to help offset your As."

As easily as Marlow separates people into tidy categories, Rod Olsen abruptly divides himself from the dinner table in Newport Beach. This happens immediately on finishing his entree, but not before Marlow has ordered coffee and "snowshoes" for himself and the reporter who has joined the staff for the evening. Snowshoes are something of an inside joke with the people at R&J: three ounces of whiskey, a splash of peppermint schnapps, and a chorus of "Uh-oh. Snowshoes!" before the drinks are swallowed straight down in two gulps.

"Well," says Olsen, pushing back his chair, "time to take off. I've gotta work in the morning, and it's late." It is, in fact, not quite nine o'clock.

"That's one thing about Type A people," says Marlow. "Sometimes they're so obsessed with their work they have a one-track mind. Don't mistake it for rudeness."

An ex-cop and former U.S. Army Ranger, Joe Marlow brings a strange brew of military discipline and fatherly concern to his current line of work. Marlow has fined employees for being even a second late, yet is known around the office as an easy touch for a personal loan. He trusts his people enough to delegate most day-to-day decisions, but routinely requires them to take an annual polygraph test. A maker of ironclad rules, he has reversed himself when confronted with objections from subordinates. He demands long hours for low pay, but will not let any of his department heads work unless he is present in the building. Determined that his employees should further their educations, he has begun paying their way for night classes at several area junior colleges, but encouraged his own son to do a two-year hitch in the Army before coming to work for R&J. ("I wanted him to get his maturity first," says Marlow.) With virtually everyone in the company currently enrolled in school, books and tuition are running R&J from $2,000 to $3,000 a year, but that figure could multiply by 10 if people move on to four-year universities, as Marlow hopes they will. Yet their boss is so frugal when it comes to routine matters that he shares an office with the marketing manager and routinely books his own business travel on cut-rate 30-day tour packages.

This unlikely management style has won rave reviews and spawned high ambitions among Marlow's young employees. Last year when he negotiated salaries with his four-person sales staff -- Type A personalities every one, he says -- he offered an across-the-board increase of $1.60 an hour. They declined, asking instead for a $1-an-hour raise and .5% of sales beyond each month's projected gross.

"I told them they were crazy," Marlow recalls. "I told them there was no way they'd be better off. But what are you going to do? It's very difficult, from a management standpoint, to control a group like this. These are people who won't stop working and who won't take a pay raise when you offer them one."

In the first eight months of the fiscal year, the sales staff failed seven times to make more than they would have had they taken Marlow's offer. Things began to turn around in December, however. Working seven days a week from Thanksgiving through Christmas, the company turned in all-time record sales during the month.In January, which is normally slow, revenues dipped a neglible 2%.

"We may still come out ahead," says Rod Olsen optimistically. "But it was never the idea of the dollars and cents with us anyway. It was the idea of being rewarded for hard work."

That, more or less, was the same idea Joe Marlow and Richard White had when they started the company in Livermore, Calif. White, a 43-year-old former aircraft technician, is the president of R&J, which he and Marlow own on a 50/50 basis. Apparent opposites -- Marlow is tall, rail thin, and gregarious; White is short and almost painfully reticent -- the two shared a love for Corvettes and a dislike for working for other people. They met in 1974 and spent several years buying and rebuilding cars and often going to "swap meets," weekend gatherings of Corvette aficionados that draw as many as 10,000 car owners. The Corvette's emerging status as a classic was then generating a growing demand for authentic replacement parts, and Marlow and White began to collect a sizeable inventory. Their names were passed among other Corvette owners, and soon they were getting phone calls day and night from people in search of parts.

There is some good-humored disagreement between the two men and their wives, Betty White and Sheila Marlow, as to just how the company came to be started.

"Things just began getting a little out of hand," says Sheila. "Betty and I were finding spare Corvette parts piling up in our living rooms." The wives maintained, at first anyway, that all they asked their husbands to do was "store" their automotive supplies somewhere else.Joe and Rich claim they were told to "open a store," and promptly went out and began seeking financing for the venture. In those days, Marlow says, it was still possible to buy a used Corvette for $1,000. "I'd hate to admit how many times we haggled over $50 on the price of a car," he says. It took them three months to come up with two $5,000 loans to open a modest, 980-square-foot shop. Marlow remembers it as seeming an enormous amount of money at the time.

"We had no idea how to go about it at all," says Marlow. "Neither of us had ever borrowed money except to buy a house or a car. Besides, nobody we talked to seemed to have any confidence in the idea."

Their own confidence was limited enough that both Marlow and White kept their regular jobs while getting R&J off the ground. Marlow, a police officer working nights, ran the shop in the mornings. White took over in the afternoons as soon as he could get off from his job at the Alameda Naval Air Station. Sheila and Betty filled in the gaps -- gaps Rich White admits often amounted to most of the daytime hours. The store was open six days a week; on Sundays the two men would work area swap meets.

"We were always half-tired, half-awake," says Marlow.

Business, nonetheless, was good. The store was doing around $25,000 a month in sales against what Marlow calls "virtually no overhead." Marlow eventually asked for a leave of absence from the police department in the spring of 1979. Several months later, convinced that the automotive market in California was centered in the south, the two men opened a second store, this one in a nondescript industrial park hard by the smog-bound Santa Ana freeway in Anaheim, not far from Disneyland. Business was even better there, enough so that White quit his other job, Marlow made his leave of absence permanent, and they closed the Livermore store.

As the company has grown, Marlow and White have continued to share the work of financial planning and general operations, while dividing certain other management responsibilities between them. White, whose expertise lies in mechanics, does product development and makes manufacturing arrangements. Marlow has overall charge of marketing and personnel.

Their only major hurdle in the new location was a competitor called Corvette Specialists of Pasadena. A small operation run by a couple of automotive enthusiasts, Corvette Specialists had an excellent reputation for customer service. This obstacle, however, was eliminated in an elegantly simple maneuver. "We figured these guys were pretty much in it as a part-time deal," Marlow says. "So I told Rich, 'Why don't we just call them up and see what it would take for them to go out of business?"

As it turned out, it didn't take much. R&J paid Corvette Specialists $10,000 earnest money to close up shop, and bought its inventory for an additional $100,000, thus making the deal an "acquisition." Among the things acquired was a young employee who had worked for Corvette Specialists since he was 16: Rod Olsen.

The fortuitous hiring of Olsen was followed by much harder times in the recruiting of new employees. With an admittedly low wage scale in a part of California where unemployment is down to 3.5%, R&J has had to scramble to find people who could meet Marlow's standards. "We hire no one," he says, "until we find exactly the person we want."

After exhausting most conventional ways of hiring new people -- including $3,800 worth of national advertising in trade journals that netted only a single resume - Marlow has turned instead to an improvised system of word-of-mouth recruitment.

Jenny Yocky, whose father is a longtime customer of R&J, began at the company with a summer job while she was in high school. Yocky, an honors student and standout softball player, came recommended by Marlow's former basketball coach at nearby Savanna High School, where Marlow says he has at least two more prospects ready to be hired. "We knew we wanted Jenny before she ever walked in the door to ask for a job," says Marlow.

At the time, Yocky had other long-range plans. Having worked on her high school newspaper, she had intended to study journalism in college. But what began as a part-time job in R&J's shipping department -- a job she considered simply an alternative to "slinging hamburgers in some fast-food place" -- has now become a full-time career she describes as "thrilling." Her original inclination toward writing has lately been exercised in producing copy for R&J's catalog, and Yocky confesses that one day she hopes to have full responsibility for the company's advertising and promotion.

"They all seemed so eager to keep me here," she says, "that I realized maybe it could mean something. This is a small company, and the people who are in it now are going to be running it someday."

Longtime car buff John Woodbridge, a 28-year-old business graduate from Arizona State University who is now R&J's wholesale marketing manager, was brought to the company's attention about three years ago by his mother, who owns a small advertising agency next door. Woodbridge had been planning a career in real estate, but was persuaded to become a regional sales representative while he was still in school. Then, during his senior year, he got a call from Marlow to "get the hell out here and interview" for the marketing job, which was going begging for lack of a decent applicant.

Woodbridge describes himself as "the first outside professional" brought into the company -- and he may be close to the last. With the possible exception of a chief financial officer, Marlow says, there is no reason why he shouldn't be able to promote from within the ranks. Which, of course, is the same way most of his employees see things.

John Hudson, certainly no outside pro, calls himself something of a "prototype" employee at R&J. The 33-year-old shipping clerk joined the company last year after a court-ordered stay in the Phoenix Program, where he was undergoing treatment for heroin addiction. "In a way, the therapy I've had has been perfect training for this place," he says. "If we detect a negative attitude in somebody here, we'll talk to him about it."

Attitudes, in fact -- not Corvette parts -- are R&J's real stock in trade. Most of the time, the company seems less like a carefully managed small business than a big, raucous family, or perhaps a marginally disciplined platoon in a grade-B Hollywood war epic. But attitudes, both Joe Marlow's and those he has inspired in his young staff, make working at R&J a way of life infinitely different from "slinging hamburgers" or most of the other local options.

There is the attitude, for example, that self-discipline is important. Supervisors, who work for Joe Marlow, pay $20 when they come in late. The fines escalate in $20 increments for successive offenses within the same month, and the money is kept in an office kitty for future use at company parties. Marlow also prohibits swearing on the job, an offense fineable at 10? a word. "We've got ladies working here," he says. One day last year, Keith McFarland, who works in the back warehouse, came in a few minutes behind schedule to be greeted by a smiling Marlow. "Oh shit," McFarland said, "I'm late."

"Yup," said Marlow, "and it will cost you $20.10."

There is the attitude that perfection is the goal -- and that everybody better pull his or her weight. "I suppose you could say we get a little insistent with each other," says Olsen. "In sales we demand that the shipping department be 'error free.' What that means is that besides getting the address right, those guys have to check the prices and the parts as they go out. Of course, that's not really their job.

"The bottom line is that everybody expects 100% from everybody else. If you don't get it, you have a problem." A lot of companies would like to have such problems. Says Joe Jr.: "A good, average worker would be considered a loafer here. You're always striving to catch up with somebody. Any kind of bitching around the shop is always about somebody who could be doing better."

Woodbridge recalls one occasion when he had to step in between two employees whose discussion on how best to do things threatened to escalate into a demonstration of how they might rearrange each other's looks. "We do work as a team here," he says, "but because it's so young, people tend to get a little eager sometimes."

There is the attitude that responsibility must be shared. One often-repeated analysis of Marlow's management style is the rope metaphor, which employees routinely recite chapter and verse. "He gives us enough rope that we can trip and fall," says Joe Jr. "But not so much that we can hang ourselves."

"Rich and I remember what it's like to work for an employer," Marlow says."Your employees are your company. When you take away the latitude for them to make decisions in the best interest of the company, you only hurt yourself."

"I think Joe understands that management is like drinking wine," says Woodbridge. "You can drink a few glasses, but if you try to drink the whole bottle it's going to be tough to handle. So he's started to delegate."

And delegate he does -- although Marlow has made his own priorities so clear that there is rarely any doubt as to what he expects from his staff. At weekly meetings with his department supervisors, he hashes over his abiding concerns about job performance, the key to which is that employees are expected to "handle" things on their own.

Not long ago, the supervisors complained about a company rule forbidding employees to date one another. "They told me that they wanted the policy changed and that if a problem developed, they could handle it," Marlow remembers. "I said fine.So far, I haven't had to handle it." Meanwhile, Joe Jr. and Jenny Yocky have become extra friendly in their spare time.

There is the attitude that dishonesty is a mortal sin. "As long as you work hard and don't lie to Joe, you can get whatever you want from him," Yocky says. "If you lie to him, though, you've had it."

Marlow is not the least bit defensive about his practice of subjecting employees to annual polygraph tests, a policy that is carefully spelled out on job applications. The questioning deals with theft and the taking of drugs "other than marijuana." But the tests' principal purpose, Marlow concedes, is to ensure honesty.

"We're not Big Brother," he says. "Our employees don't want to work with somebody who lies or steals or uses narcotics. We treat people like responsible human beings. I don't want somebody standing by the door shaking people down at night. Anyway, theft is the least important reason for the tests. I can catch a person who steals easier than I can a person who lies."

So far, R&J has had little occasion to confront either problem. One employee was let go a couple of years ago after a series of weak performance evaluations and two less than satisfactory attempts to get through his polygraphs without, as Marlow puts it, "lighting up the machine" on the question of lying to co-workers. Under California law, it is illegal to fire someone on the basis of polygraph tests.Under Marlow's interpretation, it is all right to ask someone to resign.

Finally, there is the attitude that the company will always find ways to succeed -- and to carry its employees with it as it does. Last year, as R&J geared up to introduce its first full-color catalog, Marlow was aghast to discover that the color photography alone would run upwards of $28,000; total cost of the previous year's black-and-white version had been only $33,000. "So we did what we always do in those situations," he says. "We got everybody together and asked if anyone knew who could do the photography." When it turned out that Jenny Yocky's mother was studying photography in night classes, she was hired to do the job. R&J saved $19,000, and the catalog produced results far beyond expectations -- orders are coming in from as far away as Switzerland and Pago Pago.

Volume at the Anaheim store, in fact, now accounts for only 25% of the company's business. Among the better-selling catalog items is a "baby doll" nightie emblazoned with a Corvette emblem, one of some 130 nonautomotive accessories developed recently by Rich White. A new line of wooden dashboards, designed first for Corvettes and now being rapidly modified to fit other cars, appears to be very hot. The company was recently courted by several area banks -- including, says Marlow, "one of the big boys from down on Wilshire Boulevard" -- to provide a $350,000 financing package for new inventory. Car enthusiast Reggie Jackson, better known for his baseball exploits at nearby Anaheim Stadium, has expressed interest in investing in the company and signing on as a spokesman.

So if you want to know the recipe for success at R&J Corvette, here it is: Take one idea for a business, blend in the right attitudes and a few good eggs to work with, stir that rascal like crazy, and watch it rise."If our projections are even 80% on target," Marlow says, "the people you're looking at here are middle management in 48 months."

To which Rod Olsen adds emphatically: "It has to happen."

Last updated: May 1, 1985




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