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36
MOTIVATING

Growing Up as a CEO
 

After eight years of unbroken business success, Walter Riley found out he wasn't the leader he thought he was.
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Walter Riley built just what he thought he wanted -- one of the fastest-growing companies in America. Then he tore it down and began rebuilding it, trying to completely remake his own style of managing. Why? Because he expected more than what he was getting out of being a business owner. And because he started to see that his company needed more than his old self could give. -- J.H.

By any standard measure, G.O.D. (Guaranteed Overnight Delivery) Inc. has always been a star. During its first six years of life it grew more than 8,100 percent, while its segment of the trucking industry shrunk by two-thirds. By 1988 it had $17 million in sales, about 260 employees, and a national reputation. It has posted profits every year except one.

Walter Riley, G.O.D.'s chief executive, has always found surprising ways of responding to the impressive numbers. In 1986, when sales approached nearly $13 million, he took all his managers and supervisors on a wild trip to the Bahamas, where they organized a triathlon and bombed around in banana boats. To celebrate 1987's successes he took them on a picnic, then presented them with a vacation house he had bought for their use.

But Riley saved his biggest surprise for 1988, when sales rose by 18 percent and profits by more than 25 percent. That was the year he shocked everyone by tearing the company to shreds.

Nothing was spared. He remade the management structure. He abolished the intricate sales-incentive program. With his new executives, he spent 150-plus hours writing a one-page statement of corporate purpose and values. "I decided," Riley quietly remembers, "to crush what we had and start from scratch."

But why?

Ask, and he will give you reasons: his salespeople were disgruntled. His dock workers were dissatisfied. His managers were distrustful. Yet what ultimately propelled Riley was not one of these things nor even the combined effect of them all. What propelled him was his own disgust with the kind of manager he had become. "I hated the things I was doing," he says softly. After all the effort and pain and setbacks and successes, he discovered he wasn't the person he wanted to be.

He was an accomplished strategist, to be sure -- a brilliant business-problem solver. But he had hoped "to inspire people" as well, he says. He had hoped to be a role model, a compassionate mentor, a leader. He had hoped to be loved. "Instead," he says, "I was a dictator."

He created a company that, for all its success, mirrored some of his worst instincts: impatience, mistrust, anger. It had become a place he was miserable being in but could not imagine staying away from. Now, he wanted to try -- this time with the help of others -- to build a company that was more than the product of his bullying self-interest.

Starting over, he felt, was his only way out.

* * *

Exactly how things had reached this point in the spring of 1988, even Riley finds difficult to explain. What he had wanted most, for as long as he could remember, was to make his company grow -- and fast. For the preceding six years at least, that's just what he had done.

In 1982 he took the moribund local carting company he had bought only 18 months earlier and reinvented it, responding to trucking deregulation in a way that would turn Seigle's Express -- the company's name back then -- into an industry juggernaut.

Riley had known when he took the Kearny, N.J., company over in late 1980 that it was in trouble. In the face of postderegulation price-slashing, he says, "our core busi-ness was going to deteriorate." Seigle's was small and had made its money by offering low prices while operating on slim margins. When larger carriers responded to the new environment by cutting prices by as much as 45%, Seigle's didn't have the cushioning to survive the brutal ride.

So Riley had begun immediately to look for a market the discounters weren't serving. He thought he knew one. Would you be interested, his salespeople asked potential customers, if a carrier offered you consistent overnight delivery? Would you pay a premium for it?

As Riley suspected, the answer was yes on both counts. Now, all he had to do was figure out how to provide a level of service that had heretofore never existed in the trucking industry.

Seigle's would have to go regional -- catering to the Northeast Corridor -- and deviate from the way such truckers usually handled their cargo. Typical methods involved too much transferring among different vehicles for freight to get moved overnight. Riley admired Federal Express Corp.'s revolutionary hub-and-spoke system, in which all letters were sorted through one central terminal in Memphis. So fascinated was he that he took to sending empty envelopes just so he could corral Federal Express drivers and batter them with questions. Where does all the freight go? he'd ask. How many stops do you make in a day?

Riley immediately began testing variations on the hub-and-spoke system, ways to cut down on goods handling. Then he heard about the Surface Transportation Act, which would legalize the use of small, 28-foot trailers pulled in tandem. Perfect, he thought. The small trailers could efficiently make local pickups and deliveries, then be hitched together for the nightly run to the North Jersey hub -- the only place the cargo would be transferred. Two months before the act was even passed, Riley bought 30 of these pup trailers and seven tractors at auction.

Once he'd set up the hub and spoke, Riley had to make sure the industry knew about it. He saw the opportunity for some cheap marketing when a salesperson complained that the name Seigle's sounded too much like, well, the kind of small-time business that carried hats from one place to another -- certainly not the regional powerhouse they all believed they were building. So Riley kicked around a bunch of names for the new overnight service, to be set up alongside Seigle's, which would remain a local carter. Guaranteed Overnight Service. Overnight Express. And, finally, Guaranteed Overnight Delivery. Riley, not the subtle type, loved the G.O.D. initials. Don't even think about using it, warned a local ad agency. Riley thanked the agency for its advice, then instructed that all the trucks be painted with the G.O.D. logo in six-foot-high black-and-red letters.

Along with the new name, Riley also resurrected an idea that he had tried at Seigle's for a while: offering a money-back guarantee for overnight service. "It wasn't hard for a lot of companies to provide overnight service," Hank Epstein, vice-president of finance, admits, "but the guarantee was unique."

G.O.D. fast became the trucking company Riley had always envisioned while growing up and working in -- then finally directing -- his father's trucking ventures. Riley's trucks were painted white, with red wheels and bumpers. His drivers wore pressed white shirts with a G.O.D. insignia on the front and an American-flag arm patch. They looked very much like the Federal Express drivers Riley had so admired. Best of all, sales roared ahead. "At a time when most truckers were cutting their prices, he found people willing to pay for service," says Samuel Highsmith, president and chief executive of Batesville Truck Line Inc., in Batesville, Ark. "He saw the Cadillac where others saw the Hyundai."

* * *

The numbers bore out Riley's original vision. In 1983, its first full year, G.O.D. picked up sales of nearly $400,000. The next year sales shot up more than 400% to almost $2 million. Sales doubled to about $4 million the year after that. During its first five years the company grew at a rate of nearly 7,500% -- fast enough to earn the 16th spot on the Inc. 500 in 1987. In 1988 it ranked 61st. Even Riley was surprised how fast it all happened. In 1988 he was just 32 years old.

Still, he rarely thought about the numbers as anything more than steps toward another goal. G.O.D., he boasted, would grow at 25% a year until it hit $200 million -- or until it was 100 times bigger than any business his father, Richard Riley, had run.

The last of those businesses had been Seigle's Express itself. Walter Riley, who'd begun his trucking career at age eight, had joined his father right out of high school and from the start proved far more adept at company building than the elder Riley had ever been. By 1979 Walter, then 24, had taken a stagnant and marginal business and pushed sales to more than $3 million. Pretax profits, which had been a rarity, were running at almost 8%. Repeatedly the younger Riley had remade Seigle's, finding new customer groups and market niches, buying more trucks, relocating to larger terminals, and finding inventive ways to exploit the new capacity. In those days everybody at Seigle's was feeling confident, even his dad. Finally, Richard Riley owned the kind of business he thought he should have owned all along. A thriving company at last. And it was his. All his.

It was an unfortunate and dangerous equation.

As far back as 1973 the elder Riley had talked about selling his son a piece of the company. Whatever happened to that plan? Walter asked every now and then. Don't worry, came Dad's reply, we'll get around to it. By 1979 Walter feared that his father had backed out entirely. He brought it up again. Talk to me a year from now, his father instructed, and if we're still doing well, I'll consider it.

Maybe they both knew what was coming. During a vacation to St. Thomas in early 1979, Walter made a mental note of a tremendous opportunity in the moped-rental business. When he returned home, his father's lifelong fear of growth seemed even more overpowering. It was as if Richard Riley was afraid, deep down, that he would soon be running the company again. And he didn't want his son to leave him with a business that was already about four times bigger than he had ever handled. Don't buy any trucks, he told Walter. Don't take on any more debt. Don't bring on any salespeople.

The crash was coming, and neither of them was going to swerve. "They were at each other all the time," Hank Epstein recalls.

One evening, Walter was in the dispatch office talking with an employee. His father appeared outside the doorway. "I've got to talk to you," he said to Walter. "In a minute, Dad," Walter replied. "No," his father shot back. The argument escalated behind the closed doors of Walter's office. Employees outside heard a lot of yelling. The next thing they knew, Walter stomped out, leaving, it seemed, for good.

For a year Walter stayed away -- part of that time plotting to start his own trucking company. But he abandoned his plan and instead moved his family to St. Thomas, where he struck gold renting mopeds. And where he waited for what he believed was inevitable.

Seigle's quickly began to deteriorate. As employees and customers hit the exits -- and deregulation, due in 1981, neared -- Epstein persuaded Richard Riley to sell. When Walter heard, he rushed back to New Jersey. He bought the business for a price that was, he concedes, a bit on the high side. "But if I hadn't given my best shot to buy that company, I don't know if I could have looked at myself in the mirror."

Once they signed the papers, Walter felt free. The company was now his weapon, and he planned to wield it. Eager to prove himself to his father, whose highest aspiration, so far as Walter could tell, had been to eke out a living, the younger Riley pushed hell-bent for growth. Not healthy, manageable growth, but bigger and bigger numbers, more and more recognition from employees, from competitors -- and finally from his father. The company and its employees were Riley's race car, and he was stamping hard on the accelerator. It did not make him a very enlightened manager. "I never looked at the internal processes of the company because I never thought they were significant," he says.

But he knew he needed employees to achieve his goal. He wanted them to feel just as insatiable as he felt, to be fueled by the kind of anxiety that made it impossible for him to sit through a short meeting without punching someone up on the speakerphone or running downstairs to talk to the guys in the shop. Riley wanted to motivate them, and he decided he could use money to do it.

Back in 1977 he had convinced his father to start a profit-sharing plan. Now, with Epstein's help, he used the plan to lock employees more tightly to his goals for growth.

Under the new system, the company retained its first 3% of profits. After that 20% (recently raised to 22.5%) would be distributed among supervisors, salespeople, and clerical staff, each of whom was assigned a certain number of shares based on seniority and responsibility. They wouldn't receive their money automatically. They had to earn it four times a year, through a grading system. If they got an A, they'd receive 100% of what their shares called for; a B earned them 80%, a C, 60%, and for anything less, zero. It was a simple system, Epstein says, based on management's feeling that "the way to motivate an employee is to put a carrot there for him to grab."

* * *

What Johnny Appleseed was to apples, Riley would become to carrots. With the grading system in place, Riley looked for a way to involve drivers and dock workers more closely in his plans. He wanted to speed them up. From now on, Riley announced, dock workers would be paid for the freight they moved, the number of shipments, and the actual weight. Pay might range from $9 to $20 an hour, depending on whether you were loading a truck full of cigarette lighters, say, or heavy batteries on pallets. The incentive caught on -- too well. About two months into it Riley noticed that damages had tripled. The dockpeople were working fast, but not carefully. So he reduced salaries by 10% and added a 20% bonus based on avoiding costly errors, such as misloading or damaging freight. Since the upside potential was now greater for the dock workers, they didn't squawk too much about the pay cut. "It really did the trick," Riley says proudly. He revised drivers' pay along the same lines, with bonuses based on pickups and deliveries completed.

No group or problem at G.O.D. escaped Walter's passion for incentives. The sales staff got bonuses for achieving individual gross revenue goals and bringing in new business quickly. To curb absenteeism, Riley spent $250,000 on a house in the Poconos that employees could use for a week as long as they weren't out sick more than two days a year (five days for dock workers). "We fell in love with incentives," says Karen Crawford, vice-president of sales and marketing. "We lived and breathed them."

And the air was fine. Among drivers, Riley says, productivity rose 15%. Dock workers finished their jobs at least 90 minutes quicker than before. Between 1985 and 1986, sales skyrocketed from almost $4 million to nearly $13 million. On the surface at least, it looked as if the incentives could take Riley where he wanted to go. "We were growing, and we were profitable," Epstein says. "We didn't think we had any problems."

Or none that they could see, anyway. Riley occupied himself mostly with pricing decisions or other customer-related issues. Beyond throwing them incentives, he rarely thought about managing his employees. Once in a while he would take a halfhearted stab at developing a management technique. At one point, inspired by a few pages he had read in a management book, he set up an executive committee made up of his eight or so top managers. The group in turn was split into pairs and given specific areas to focus on, such as credit and collections. Every other week they would report on their progress. As one team delivered its report, the others felt their eyelids fluttering like mud flaps. The experiment collapsed in about nine months. "The commitment wasn't there," Riley admits.

"Hey, Walt," Epstein used to ask, "what's the management philosophy of the week?"

One time, borrowing a tactic from a neighboring trucking company, Riley decided to hire a consultant who offered a special technique for monitoring driver productivity. Riley would send him the drivers' manifests -- their lists of stops -- and he would apply his formula. His findings were not pleasing. Many of the drivers were hitting only 80% of their assigned stops. "You know what?" Riley said to Epstein, shaking his head, "we've got a bunch of damn lazy drivers around here." Epstein wasn't so sure. When he scrutinized the names Riley had flagged, he noticed a similarity among those drivers cited for their productivity. It turns out, he later reported to Riley, that the drivers' efficiency had more to do with how well the trucks were loaded than with the drivers' motivation. They weren't so lazy, after all.

Or were they? Like his father, Riley was not one to give workers the benefit of a doubt. If employees weren't getting the results he wanted, he blamed them. "You're lazy," he'd say to their faces. "What the hell takes you so long to do everything? You must be an idiot."

"Walter," a manager might say, "I've got a problem with one of my employees always being late." Without so much as looking up from his desk, Riley would offer up a solution: "Fire him."

"I've fired a lot of people in my life," Riley admits. Many managers couldn't even get his advice. Impatient, Riley would walk away in the middle of people's sentences. "He'd catch maybe two words of what you said," Marilyn Montorio, the company's internal auditor, recalls. Heaven forbid Riley should spot employees chatting or just taking a moment's rest. "Why are you standing around?" he'd bark. "Get going, get going, get going!" Many employees, Montorio says, "perceived Walter as the enemy. He could be considerate, but he didn't meet with that many people."

He was too busy rushing around, chasing a number, patching a leak. If the daily sales report revealed a 10% revenue dip, he'd get on the speakerphone to Epstein. "What the hell happened?" he'd shout. If Epstein didn't have an instant answer, Riley would punch up Crawford. "For heaven's sake," he'd yell, "did we lose a customer yesterday?" Crawford would investigate, only to find out that a customer was taking inventory and didn't ship as much as usual. With Riley placated, the managers could heave a collective sigh -- until the next morning, when he'd be on the phone shouting at Mike Irwin, vice-president of operations, "How come returns are way the hell up?"

Riley made few formal attempts to meet with workers. He got tired of all the griping. They were earning good money; they should be happy. To communicate with employees, he tacked up posters with such catchy slogans as Think Profit. One memorable poster featured a boy and a girl tugging a cart in opposite directions. It was a cautionary tale. Underneath, employees were encouraged, in big, thick letters, to think about TEAMWORK.

That poster was about the only place you could find teamwork. After Riley's executive board evaporated, he decided it would be more efficient to meet with his three top managers -- Epstein, Crawford, and Irwin -- individually. "We got things done, but we were not a team," Crawford says. "There were a lot of hard, strong boundaries."

If Epstein was having a problem collecting from a customer, he'd storm into Crawford's office. "We can't do business with these people," he'd yell. "Cut them off." Crawford -- who would never have been told that the account was trouble -- would calm him down, maybe squeeze some money out of the customer, then sit tight until Epstein came in yelling again. Similarly, Irwin might march into Crawford's office and tell her that she had to get rid of that new retail-clothing account; separating the clothes was taking too much of the dock workers' time. "We never told operations what accounts we were going after," Crawford says. Now, the unhappy salesperson would get stuck having to call up the new customer -- the one he worked so hard to land -- and tell him, sheepishly, that G.O.D. couldn't handle it.

Frustration ricocheted from office to office. If Crawford was mad at Epstein, she went to Riley. If Irwin got steamed at Crawford, he appealed to Riley. The two combatants might arrive at Riley's office at the same time, launching into a screaming match. Whoever could convince Riley won. "He enjoyed for a time the rivalry between us," Crawford says. "He thought it sparked us."

"In the absence of any real corporate values," Riley says, "the owner's personal values take over."

Leave me alone, came the cry from most G.O.D. workers when asked by managers to help a colleague; I'm trying to make my bonus. "You'd ask someone, 'Can you help so-and-so?' " Montorio recalls. "They'd say, 'Oh great, now I have to do his job, too?' " As sales manager, Crawford couldn't direct her staff as a team. She couldn't get them to work together on special campaigns or promotions. "I was managing a group of individuals," she says. "There was no common thread except that they were all motivated by their incentives." Riley reinforced that attitude. One salesman racked up $7,000 in bonuses over six weeks. Riley couldn't get over it. "This guy saved our business," he bragged to anyone who would listen.

With all the hullabaloo about incentives, Epstein says, "we assumed that our best employees were the ones who were making the most money." Riley considered Neil Gross, for instance, a winner. And Riley loved winners. Gross always hit his numbers and consistently brought in more new business than any of his co-workers. He generated so much paperwork that Crawford sometimes fell months behind just processing his bonuses. "I was very motivated," says Gross, a regional sales manager in Philadelphia. "If you're going to offer me an incentive, I'm going to collect it."

Last year Crawford gained some disturbing insight into exactly how Gross was prospering. Although his bonuses indicated that he was bringing in lots of new customers, she wasn't seeing a corresponding increase in sales. When she asked Gross, he readily acknowledged that he spent an hour or so a day combing through the shipper's list picking up credits for even the smallest of his accounts. "Nothing I did wasn't within the system," Gross says. Crawford couldn't argue with him there. If anything, Riley's thirst for growth had pushed employees to get their bonuses any way they could. But look, Crawford said, we don't want you doing this on company time. Fine then, replied Gross. He started coming in an hour earlier.

The salespeople -- Gross wasn't the only one getting around the system -- weren't alone. Sometime later Riley discovered "a little conspiracy among the supervisors to raise the bonuses of a certain group of dock workers." The same dock workers were getting the most lucrative assignments. Worse, some were claiming bonuses for work they hadn't even done, and their supervisors knew it. "Bonuses had a lot to do with how well the dock workers got along with their supervisor," Riley says.

G.O.D.'s winners, it was starting to seem, were those who best figured out how to beat the system. And for every so-called winner, there were many more who felt like genuine losers. "It seemed like I had created a company with too many losers," Riley says. "People were getting pissed off."

If he needed to confirm that, all he had to do was read a letter Epstein had received from the Internal Revenue Service. All companies with more than 500 W-4 forms must file their taxes on magnetic tape, it said. Wait a second, Epstein thought, we don't have anywhere near that many employees. Consulting his master personnel list, he discovered that G.O.D. had employed nearly 700 people in 1987 -- for roughly 200 jobs. When Epstein relayed his discovery, "Everybody was astounded that we had run through so many people," he says. "And we didn't know what was causing it."

Riley was upset. "I was hoping to have a positive influence on people's lives," he says. "And I could see we weren't moving in that direction." People were just scurrying for their bonuses. Nobody seemed to have the good of the company in mind. There was no teamwork -- even, as it soon became clear, at the top.

One day in the spring of last year Riley and his top three executives met to discuss a new deferred-compensation program for them. In the agreement he asked them to sign, there was a clause that said the deal would become void if they should get fired. Epstein objected to the language of the agreement.

Riley was hurt. He felt Epstein didn't trust him. The argument spilled over into the next day, a Saturday. In an early-morning phone conversation, each apologized for the misunderstanding.

"What is it, Hank?" Riley asked. "Don't you trust me?"

There was a moment of silence on the other end of the line.

In that moment Walter Riley realized how much he hated what he was doing. He had never wanted to ask an employee to trust him. He wanted it to be natural. He was always pushing people right to the line, struggling to get what he needed from them. "A master manipulator," he calls himself. Even if he bribed them with incentives, sooner or later they would rebel by cheating the system or leaving the company or refusing to make an extra effort. "I realized we were not a great company," he says.

* * *

Riley had always equated great with big. That was because he had vowed not to create the same kind of company his father had run. But now he was realizing that G.O.D. was more like Seigle's than he cared to believe. And Riley's role was not that different from his father's: often mistrusting, never satisfied. He had never wanted to be a businessman in the sense his father had been. "I like trucking," he says, "but what I really like is people. I had a vision of a place where people found a lot of compelling reasons to be the best they could be." Rather, they seemed to have compelling reasons to deceive him.

He didn't like the way he felt from day to day. "There's a feeling that I wanted to have," he says. "It's a feeling I'll get when I know that I'm inspiring people and being a role model for lots of people." He did not have that feeling when he begged for Epstein's trust after so many years nor when one of his finest dock supervisors quit after being graded a B.

But as he discussed these problems with his managers, Riley was oddly subdued. Somewhere inside, he blamed himself. He had showered his workers with incentives, assuming they'd shirk their responsibilities otherwise. "As all this happened, a small voice in my head said: 'What did you expect?' " he recalls. "I felt like I couldn't blame them. I felt I could have better results if I acted with more consideration."

That meant not imposing his own goals on the company, not craving growth for its own sake, not pushing so hard to reach $200 million. "I realized that if that was the most important thing, I could do it," he says. "But I'd give a lot of frustration to a lot of people, including myself."

"It wouldn't be worth it to get there this way," he adds. "It was painful because I didn't have any other way. I didn't have any other tools."

It is at this point, of course, that Riley had a choice. He could have decided that there was no escaping the pattern of entrepreneurial myth -- which posits that the company builder whose furious ambition is required to start a business cannot become the manager who nurtures that business once it has grown. He could have decided to do what so many founders in his position have done before. He could have sold out.

Instead, Riley decided to change. Or at least to try to. If he didn't have any tools other than his old autocratic carrots and sticks, then he would find some new ones. He would attempt to become the kind of manager who could lead his company up the next set of steps -- which meant that he had to change his company, too.

Riley had remade Seigle's Express, and then G.O.D., several times single-handedly, shutting out others around him. This time would be much different. To rearrange his company's internal organs, he was going to have to open it up. To keep himself committed -- no more philosophies of the week -- he knew he ultimately needed to involve ev-erybody, to feel as if going back to his old ways would let them all down. "Even if tomorrow Walter found something better than what we're doing," Epstein says, "he realizes we've made a commitment to our people that this is the direction we're going in. If we told them that we'd discovered something better, they would believe nothing from us again."

Riley began by trying to organize his top people into a team. Last August, after attending a seminar given by well-known quality consultant W. Edwards Deming, he invited Epstein, Crawford, and Irwin to do the same. Then they all went rafting together and soared in a hot-air balloon, where they vowed to set G.O.D. aloft. "We decided to turn over the whole company," Riley says.

His attraction to Deming's theories is hardly mysterious. Deming encourages managers to think about the systems they provide for employees, rather than pointing a finger at individuals. Riley had always thought about systems for customers; behind G.O.D.'s success was its original and superior overnight-delivery system. Inside the company, though, "I always focused on individuals and individual accomplishment," he says.

No more. Riley even asked an outsider, William Latzko, to work with G.O.D. as a consultant, attending what have become twice-monthly management meetings. Latzko, a college professor, studied with Deming. At their first meeting Latzko demonstrated how disjointed the company was by asking each of the executives one simple question: Why is G.O.D. in business? He got four very different answers.

Afterward Latzko insisted that the four of them write up a statement of corporate purpose and values. Up till now, he pointed out, the company had provided employees with only short-term goals. So they set aside one four-hour block to get it done. About 20 rough drafts and as many meetings later, they were still at work. Should their mission include specific growth goals? Should they restrict themselves to providing overnight delivery? And what would be the best order to put the goals in? They kept calling Latzko back in, showing him new drafts. "The process forced us to think through our own priorities," Riley says. "We each have compromises in it. We realized we had to be a team to provide any kind of environment for the others." The top-ranked value? G.O.D. would provide "an environment for its people that promotes joy at work, achievement of personal goals, and an opportunity to share in the prosperity of the company."

A couple of months after the statement of corporate purpose and values was finished, Riley and Irwin toured all of the company's outlying terminals, bouncing along in the company motor home. (They now meet at least once a quarter with all 150 or so drivers.) Riley's basic message was that his job would no longer be to push employees, but rather to make it easier for them to push themselves. "We want you to be happy," he told them. "We want you to get to the point where 95% of you wouldn't consider quitting."

He also vowed to wipe out incentive systems that are so unfair that employees feel driven to cheat -- no more focusing on the sheer volume of work at the expense of examining how it is done. "The better systems you give employees, the more they increase their effort," he says. "Cutting out frustration is what enables people to work harder. And it is my job to do just that."

Late last fall Riley used pallet jacks, the electric lifts used to move cargo around loading docks, to test his new theory. R. J. Conlon, the night operations manager, had been complaining for months that the dock workers needed more pallet jacks. But it wasn't worth trying to convince Riley. "If you couldn't show how the pallet jacks would contribute directly to the company's growth, you'd have a hard time getting by me," Riley says. But in November, still hearing grumbling, Riley simply spent $60,000 to lease 30 additional pallet jacks. "I felt it was going to create happiness among our dockpeople," he says. "How much is that worth? I think it's incalculable."

The pallet jacks brought benefits he hadn't anticipated. Under the bonus system, dock workers without pallet jacks couldn't earn as much money because they couldn't move the heavier skids. Fights often erupted. Or workers would have to stop in the middle of building a pallet to chase around a pallet jack. And as Latzko points out, "When you are frustrated, you treat the freight with less regard." Having their own jacks gave workers a sense of ownership.

Turnover had been worst among the dock workers. Now, it has nearly ceased, Epstein reports. And the dock supervisors are relieved that they don't have to spend their time refereeing between bickering employees. "When you improve a system by 10%, you get 1,000% improvement throughout the company," Riley says. "If you throw people money, they won't be happier for long. They'll be happy until they figure out how to spend it."

"It's a real simple change in philosophy," Mike Irwin says. "Instead of saying, 'Let's get them to do it, and if we can't, let's just get somebody else,' it's 'Why don't we see if there's a problem with the system."

Riley is moving quickly. He has eliminated the company's grading system. He has installed radios, air conditioners, and cassette decks in the new trucks. For a time, he made it his job to meet with his New Jersey drivers every Monday at 6:30 a.m. at the local diner. He would nod and take notes as they told him their problems. That deep hole in the yard is catching our landing gear. Can you look into the union's new dental plan? Riley tries not to take their complaints personally. "I don't assume they mean it that way anymore," he says. And firing people, as Marilyn Montorio puts it, is a "a no-no around here. People handle people now. They don't just get angry. They are dealing with each other."

Which is not to say that Walter Riley has given up on his big plans. He's still after growth. "This may cost us short term," he says, "but next year profits will double." Then he catches himself shooting from the hip. He now knows when he is acting impulsively. "Or maybe," he adds, "it will happen the year after that."

Riley still pushes the company, but there is a more tempered quality to it. "We are giving it our all, but we're doing what's realistic," Crawford says. "Walter has really calmed down."

Riley forces himself to slow down and listen to problems before trying to solve them. "That new employee who was supposed to start today didn't show up or call -- what should I do?" Crawford asks. "Maybe she couldn't call," Riley suggests. Even Crawford raises her eyebrows, surprised that he is willing to go that far. "I never expected him to say that," she admits.

But even if Riley is wrong, he's not going back to his old ways. As the management meeting ends, he slips his brown leather jacket over his white V-neck sweater -- the one he always wears, with the G.O.D. insignia -- walks down the steps and across the loading dock. It is only 6 p.m. In a few hours the place will be stuffed with pallets.

Riley speaks forgivingly of his father, who now runs a courier service nearby. "My father didn't know how to change his beliefs about himself or about people," he says. "I'm doing that. I feel loved by a lot of people. I feel more of everything."

He pauses for a moment, turning to look back at the terminal bays, still calm before the nightly storm. "This feels good," he says. Then he catches himself again. "More than that," Walter Riley adds, "it feels right."

Last updated: Jul 1, 1989




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