Michael Egan became the president and chief executive officer of Alamo Rent A Car Inc. in 1979, he wanted to hire the very best -- and that meant not raiding the ranks at Number One or Number Two. As he saw it, "the best businesspeople . . . were not to be found in the car-rental business. They were so specialized they were almost business cripples." The only ones he would consider for Alamo's management team were running their own franchises, but "they were making a ton of dough on their own and were unavailable."
So he signed up his banker, his auditor, the former chairman of a retail chain, an airline executive a car dealer, a former Navy officer even an obstetrician -- and more than quintupled the company's sales in five years.
According to executive recruiters, the idea of transplanting outstanding performers to unfamiliar fields is more often talked about than put into practice. "At the outset of a search," says recruiter Leon Farley, "many of my clients say, 'Just get me a good manager and we can teach them the business.' But when it gets down to the interview cycle, [the clients] change their minds." Unless candidates are specialists -- lawyers or controllers, for instance -- their ignorance of a new field inner workings may hamper their performance. Large companies in mature business sectors prefer to recruit native talent, and cross-industry hiring occurs primarily in emerging industries, where experienced people are hard to find.
"It takes the courage and entrepreneurial vision of a very secure human being to reach out and pull in the best available talent," says William E. Gould, president of the Association of Executive Search Consultants Inc.
Michael Egan might resist the label "visionary," but he prides himself on his ability to spot human potential. "I have the great good fortune of being able to see the good in things that others may not, he says. He and his management team have courted top performers with a tenacity that has become Alamo folklore. People relish telling their hiring tales:
* Former Navy lieutenant Elizabeth Smith says, "I think I have the record for turning them down. I said no to Ed Rudner [then Alamo's executive vice-president] four times." She laughs. "When I told him I wouldn't take the job, he pulled a cute trick. He said, 'Come in tomorrow and tell me why.' " Smith, who taught herself computer programming and rose to data processing manager at two companies after she left the Navy, says, "My main reservation was that Alamo was so small. It had only a few hundred employees. Rudner was saying that they'd grow 500% in the next five years, and I figured this guy was smoking something."
The night before her last interview, Rudner sent Smith flowers and a note saying, "Sleep well . . . think about Alamo." Over lunch she agreed to oversee the company's reservations and data processing departments. She has since moved to the marketing department and become one of the firm's senior directors. Her salary, she says -- including bonuses -- has grown 500% since she signed on.
* Richard Kirby, like Smith, was in no hurry to join an unknown company. He was "very happy" as a senior vice-president of Southeast Bank, Florida's largest. When the banking field began expanding in 1980, regular nibbles from headhunters convinced Kirby that his future in it was assured. Yet he admired Alamo, one of Southeast's corporate accounts, and -- with a banker's characteristic curiosity about working in industry -- he interviewed with Rudner. Still, he was reluctant to accept a job. "It was easy to understand their hopes and their dreams," he recalls, "but I wondered if they could pull it off." Meeting Egan convinced him. "He was the consummate entrepreneur. He had . . ." Kirby hesitates, "a comfortable confidence . . . a hard-driving business sense that I liked." Kirby, 36, is now vice-president of operations.
* Michael Cole, Alamo's treasurer an vice-president of finance, resisted the company's advances until he had talked with its auditors and reviewed its financial statements. Cole had managed Eastern Air Lines Inc.'s computer sales and service department and then its air cargo accounting operation. Originally an electrical engineer, he also had his CPA and MBA degrees and had taught operations research and computer programming courses while at Eastern. He saw Alamo as a place where "I would have the chance to use all my skills at once."
* Macdonald Clark, former chairman of two divisions of the Associated Dry Goods chain, had left retailing to become a trial lawyer. Egan met him socially, and eventually convinced him to trade a growing practice for the marketing vice-president's slot at Alamo.
* George Pickel was known to many Alamo employees as their obstetrician. Michael Egan knew him as a doctor disenchanted with the state of medical practice and eager to launch a new career in business. Because the doctor "had been trained to care," Egan felt he would be a logical choice to head a new personnel department designed to emphasize employee "wellness" over more traditional administrative functions.
For the white-haired, 44-year-old Egan, the car-rental business is also a second career. A graduate of Cornell University's School of Hotel Administration, he started out managing college food and dormitory operations. In 1973, he moved to Florida to help a friend's ailing rental-car venture. A year later he joined Alamo, then owned by billionaire John MacArthur. By 1976, the struggling firm was in the black.
A year after MacArthur's death in 1978, Egan and several investors bought Alamo and set out to capture markets overlooked by the big car-rental firms. The idea was to attract the leisure traveler, then go after cost-conscious small businesses. It was an aggressive strategy -- and a tremendously successful one. Sales are up from $30 million in 1979 to an anticipated $175 million for this year Some say Alamo has been a bit too aggressive in seeking new business. Last June, the Florida attorney general's office charged the company with using "bait and switch" tactics and imposing unnecessary insurance charges. The complaints were dropped in August when Alamo agreed to comply with relevant statutes and reimburse customers whose complaints had merit.)
Call it aggression or call it self-motivation, Michael Egan was looking for a special quality in his managers -- and he didn't expect to find it in the competition. He saw most Hertz Corp. and Avis Inc. refugees as "job jumpers, and I didn't want them sharing our secrets. Also, I didn't want to have to untrain somebody, or fight someone telling us that our way wasn't the way they used to do it."
He talks about "iron-willed determination" -- the trait he most looks for in potential hires -- as the key to success at Alamo. "That's what the work ethic amounts to," he says. "We're not smarter than our competitors, so we have to outwork them. . . . We look for top athletes."
To double-check his instincts, Egan has each management finalist reinterviewed and tested by industrial psychologist George Dunlevy, who has defined a profile of the person most likely to thrive at the company. "The people at Alamo are like Marines," Dunlevy says, half in jest. "They are so gung ho, it's almost disgusting." People who rise in Alamo, he says, are young, aggresssve, achievement-oriented risk takers. When he errs, he adds, it is in overestimating tenacity. "It's hard to predict energy and drive." "Alamo has almost a work sickness, a drive to succeed," says Elizabeth Smith. "In recruiting, I paint a very black picture of what it's like here. Slow dullards need not apply. Those who don't make it find themselves bypassed for promotions and somehow just slink away into the night." Smith says she looks for people promotable by at least two or three levels, people with "a certain steel in the back."
Yet there is also a softer side to the Alamo personnel philosophy. Egan talks about the workplace is a moral and spiritual substitute for the "centering force" that disappeared from most people's lives with the decline of religion, community, and extended families. Naming Dr. Pickel to direct the "employee wellness center" reflects Egan's commitment to "fulfill our responsibility to our people."
His managers have picked up that attitude. Operations vice-president Kirby says he recruits "as I would go about making a friend" -- slowly, conversationally. He typically holds five to six interviews with desirable applicants. "After an hour a candidate begins trying to figure me out. I'm not interested in that. I want to know what they'll be like in 90 days."
From the beginning, however, there was an unwritten rule: People from the competition never got as far as interview number one. Then, in 1981, Bob Coffey finally made a breakthrough.
Coffey worked in Avis's marketing department. "I was having a hard time competing against this company that I had barely heard of," he says. "I was impressed with the personal approach they took toward their accounts, so I started investigating the company and Mike Egan." But when Coffey approached Alamo about a job, he was flatly refused.
He dogged Egan for two years, eventually proposing a "twofer" deal -- himself and his wife, Dorothy, who was with Avis's public relations department. Still dubious, but in need of qualified marketing people, Egan invited Coffey and his wife to spend two consecutive weekends at his home before he finally offered them positions. Successfully "de-Avised," as the company joke goes, Coffey is now Alamo's executive director of marketing. (His wife has since left to start her own public relations firm.)
Hiring the Coffeys was a watershed, Egan concedes -- and in fact, more than a dozen big-renter alumni have since been admitted to Alamo's management ranks. Yet he has no regrets whatsoever about his original strategy.
"It's still better for us to recruit from outside the industry," he says. "It made sense to me then and makes even more sense to me now."