When Frederic Holzberger decided to put himself in his workers’ shoes by picking a customer order himself, it didn’t take him long to realize that there was something wrong with his warehouse system.
After zigzagging the floor and running himself ragged, he knew there had to be a better way.
“I sat down with my operations people and said, ‘Can’t we design our picking slips where you start at one end of the warehouse and work your way to the other so you don’t wear people out?’” says Holzberger, founder and CEO of Aveda/Fredric’s Corp., a distributor of organic hair care products to the salon trade.
Holzberger’s hands-on style is anything but an excuse to micromanage; his employees enjoy plenty of autonomy. He simply believes that he can’t know his business and where it needs improvement without getting into the thick of it.
And his employees’ energy isn’t all that he’s committed to conserving. An avid environmentalist, Holzberger has made it a priority to run his business so that it, like the products it sells, has as little negative impact on the environment as possible.
A businessman with a keen social conscience, Holzberger, his company and his employees support a wide variety of charitable efforts in the Cincinnati area, from battered women’s shelters to Habitat for Humanity. But it isn’t the result of blind altruism; every decision must show some payback, and Holzberger isn’t shy about letting his customers and the public know about the company’s contributions.
“You have to stay in the peripheral vision of the consumer,” says Holzberger. “People don’t mind spending a little more if they know you’re doing something good for the environment.”
Holzberger talked with Smart Business about the value of people, the environment and the rewards of hard work.
Where did your commitment to environmentally sound business practices originate?
I hired a leading environmental consultant to come in here and tear my company apart. I paid them to tear it apart to find out what I could do better. I didn’t mind paying them, but I wanted them to tell me how I could save money in the long run. They measured our air quality, went through all of our utilities and talked to anyone they wanted. They gave us some great ideas. As an example, we had too many people in one area without enough air exchange, so people were getting sleepy so they were not as productive. When we put a new unit in, I noticed how much more productive people were.
The one thing that we weren’t doing as a company was enough carpooling. So I designated the whole first row of our parking lot to environmentally friendly cars or carpoolers. We currently have four vehicles in our fleet that are hybrids.
Years and years ago, I challenged our operations people to come up with the most environmentally sensitive packaging that we could. We kept challenging ourselves to be more environmentally sensitive. They’re proud of it, so we printed it on our boxes.
We let people know our story in our company information. So often, businesses don’t tell their story. There’s nothing wrong with that if it’s legitimate.
Another example is our packaging peanuts. I said, ‘Look, we’re using a lot of these Styrofoam peanuts. They last 99 years and they’re going into the landfills.’ Thinking of all the millions we use over the years, it was really bugging me.
So I challenged our people to find something that could replace them. They came back with a foam peanut made from cornstarch. They cost me 10 times the price of Styrofoam, but we did it because it was important to us to make the change. We recycle 70 percent of what comes through the front door. We’ve got a Dumpster that is strictly for cardboard, which we recycle 100 percent and get cash for.
How do you make sure that those choices are also sound business decisions?
Any time you’re going to make an investment in your company, whether it’s environmental or whatever, you’ve got to see that there’s going to be a payback. I would suggest they start with their people. You can have the greatest plan in the world, but it takes a lot of work to make it work.
It’s always about crawl, walk and run, but it’s got to be fun. It’s important that whatever you do, you explain the investment you’re making because people today, I honestly believe, want to join a brand, they don’t want to buy a brand. And they want to join people who are of the same mindset, good stewards of the Earth, good to their people, good to the environment.
Why are altruism and community involvement so important to you?
I grew up very, very poor. My father died when I was 4. Having gone through that kind of lifestyle, you learn a work ethic very early on.
I had a great mother with great values that raised us all to be good human beings. In growing up, that was a basic part of my life. As an example, we used to receive food from the Franciscan Sisters. In addition to that, our cousins used to pass down clothes to us. When you grow up in an environment like that, you have a little different philosophy.
Education has always been a cornerstone in the foundation of my success and passion. I worked my way through college; it took me 10 years because I did it in night school. I graduated from Miami University with a degree in business administration, with a major in marketing.
I worked my way through college as an electrician, so I had gone through an electrical apprenticeship program. I went to school, plus worked full time and overtime during the day. It was a tough journey but one I never regretted. I was very determined to get my degree.
I was the only one in my family to get a degree, so it was a milestone for me to achieve. So many people did so many things for us; now it’s time for us to do things for other people.
How do you track the results of your company’s charitable efforts?
We get close to 1,000 requests a year for baskets of our products for raffles. A couple of years ago, I thought we really needed to see what all this money is doing. So I created a form to make people accountable. On this form, we’re asking people to supply us with information about the charity, how much money it raised, who won the basket, just to make sure that we have accountability.
A piece of advice I give to my staff is you always have to inspect what you expect. If you don’t do it, you’re going to pay the consequences of not knowing.
It’s really amazing when you can measure and see the good that you can do. That makes you want to do more, but there’s nothing worse than feeling like you’re being used and taken advantage of.
How did you become an entrepreneur?
With my electrical background and my degree, I went to work for a large electrical manufacturer, Thomas & Betts Corp. I learned tremendous business skills from them. I worked my way up to new product development, did a lot of work with NASA.
I was giving seminars to architects and engineers about these new technologies, trying to get them to design them into their products. My former wife was a hairdresser. She wanted to open a salon. We bought a little salon and turned it into one of the premier salon spas in Cincinnati. That began my journey as an entrepreneur.
We started the company in 1983 as the distribution piece of the business. We had passive exercise equipment, active exercise equipment, tanning equipment, facial equipment and body wraps. Then the equipment became a commodity, and the math people squeezed the profit out of it.
I met a gentleman named Horst Rechelbacher, who was the founder of Aveda, while I was looking at new product lines. I liked the marketing approach that he took in that his products didn’t use detergents, which most such products do. By 1992, I had the rights to sell in Ohio, Indiana, Kentucky and Michigan. So we phased out the tanning and spa equipment and focused on the Aveda products.
I learned through the process that you’ve got to have some exclusivity because if two people are selling the same product, it becomes a commodity.
What are the critical elements for success in business?
The No. 1 asset that should be on the balance sheet is people. That’s where I’ve made the most significant investments in my business. One of my strengths is developing people, and I think most successful entrepreneurs are strong in that area.
I came across an article that told how many resumes are fictitious, how many people don’t have degrees that they claim to have. And it’s really tough getting a lot of this information because of the privacy laws. You hire someone and then you find out things about them in the field, whether they’re in sales or whatever.
So I don’t hire people; I let the staff hire people. I make a team do it independently, and they evaluate each candidate. What’s a resume? It’s just creative writing, in my opinion. An interview is nothing but creative talking. Who’s going to say anything bad about themselves? If the candidate comes in for an interview, you can find out in five minutes that it just isn’t going to work, but you go through the whole process anyway.
So I try to do career fairs instead. A career fair is really a storytelling. I think the greatest leaders of all time were great storytellers, and you’ve got to have a great story to tell what you’re all about, the good, the bad and the ugly.
So many companies paint such a blue sky, but so many times it turns gray or even black.
When you start empowering your people to take that responsibility, they love it and they want it because they don’t want someone coming in sitting next to them that isn’t going to do their job or get along with them. The kind of mindset of people that you attract is not just those looking for money. They’re here because we’re doing the right thing.
We have corporate memberships at a health club here. To me, it’s an investment in our people. If they feel better and they’re healthier, it’s going to help productivity and help with our medical insurance.
HOW TO REACH: www.fredrics.com
