Entering Tremco Group’s headquarters on Green Road in Beachwood, you’d never suspect the success the company has experienced during the last two decades.
It’s an unassuming office building, with no grandiose marble foyer, world-class art collection or arching steel and glass structure meant to awe visitors.It’s a nice-but-nothing-fancy facility that’s a reflection of the folksy personality of the CEO and the company, which makes roofing sealants, concrete additives and weatherproofing solutions.
Jeffrey Korach — who joined the company in 1964 when it was The Euclid Chemical Co. and who has been its president and CEO for more than two decades — greets you in a windbreaker with the company’s logo, dress pants and no socks.
“I don’t wear socks, I don’t wear ties. We’re pretty casual around here. The roofing department wears ties. They like it — good for them,” he says with a laugh.
The dress may be somewhat casual, but the results aren’t.
In 1984, Korach was leading Euclid Chemical, a $10 million company, when it was acquired by RPM Inc. In 1997, RPM acquired Tremco Inc. from BFGoodrich and formed Tremco Group, with Korach at its head. Since that time, revenue has grown by 3.5 times, and profits have increased by five times, with fiscal 2006 revenue hitting $976 million and fiscal 2007 projections of $1.1 billion, making it the largest division of Medina-based RPM.
Having a parent company to help fund acquisitions helps, but the growth has been a pretty equal split between adding companies and organic growth.
But Korach will tell you that successful growth is a compilation of a lot of things.
“One, you have to want to do it,” he says. “You have to have a passion for growth, and it has to be important to you to do that.
“Secondly, what makes a great company, or what makes a better company, are better people. The only way you can attract and retain really top talent is to be a growing company because it provides opportunities for people to move on, be promoted and take on additional responsibilities. Whether that growth is organic or through acquisitions, it provides opportunities for our folks and keeps them interested, keeps them involved and keeps them here.”
While there’s no one universal solution to achieving growth — and Korach says you need a bit of luck, as well — there are a few things you can do to improve your chances of success.
Develop talent
When a business is small, it’s possible for the CEO to keep close tabs on everything and to personally intervene when necessary. But as the business grows, you have to rely more and more on the people below you to get the job done.
“Typically in a business that gets larger, retention becomes a real critical issue,” says Korach. “Our management team works to identify high potential people. These are people that have not only the capabilities to be successful and take on additional responsibilities, but also the desire and want to have that type of risk-profile.”
This is where growth is necessary to avoid a Catch-22. Without it, it becomes very difficult to keep top performers.
“The problem is, you have to have a growing company in order to provide that opportunity,” says Korach. “If it’s the same old company as it was yesterday, then it’s going to be the same old job it was yesterday, and people aren’t fulfilled. Sometimes you get an aggressive young woman or man who is caught behind somebody that is 35 years old who might be here another 25 years. If that person is aggressive and wants to grow and expand, she’s not going to stay behind that person. They’re going to find another opportunity elsewhere.
“If we are unable to provide the opportunity, someone else will provide it. We spend an awful lot of time on this area. Great companies are made by great people. It’s not the other way around. In order to become a great company, which is our goal, we need to make sure we have the proper people in the right place so we don’t lose quality people.”
Each of Tremco’s division leaders is responsible for finding these potential leaders, and they are evaluated partly on how well they do it. Anyone at any level who shows promise can be considered, and those who are start to get tested.
“We meet several times a year as an executive team and review high-potential people,” says Korach. “We talk about what we are going to do with them, where we are going to put them and how we’re going to stretch and extend them.
“You have to find ways to feed the hunger they have. You have to give them new opportunities and job responsibilities. Put them in the fire and see how they respond to failure and disappointment. See how they handle risk and if they have a tolerance for it. If you do it and do it properly, then we can continue to develop people.”
Tremco extends that commitment with training from Harvard Business School and outside consultants to make sure potential leaders get the skill sets they need to succeed.
“All this doesn’t mean you’re not going to lose somebody; you’re always going to lose someone,” says Korach.
Developing top talent requires a cognizant and constant effort.
“It’s a process you have to do every day,” says Korach. “It’s not something you can do every other Thursday when you get a chance. It’s something you have to do on a regular basis. It has to be part of your culture. I think it’s been a major reason we’ve been able to grow our business.”
Develop a plan, then execute it
Korach says the keys to executing a plan are simple.
“No. 1, you have to have good people,” he says. “No. 2, you have to have a plan that everybody understands and buys in to. It can’t be a plan that I put on a piece of paper and hand to everybody and say, ‘This is the plan.’
“A plan has to be a compilation of information, goals and objectives that are developed at the operating level and reviewed at the senior management level and agreed upon.”
Korach says that if the goal is to get to Minneapolis by the end of May, then at that time, everyone should wake up and be there. Some people may get there by different routes, but everyone should get there at the appointed time.
“What often happens is, the goal isn’t very well understood,” he says. “The first step in proper execution is a proper understanding of where you are going. Everybody has to sign off on it and be involved; then it becomes pretty clear. That’s the first part of it — the buy-in of all the people — and the understanding of where you are going. I think that’s where most people miss it.”
With a destination clearly defined, the team has to execute it.
“In our case, it means doing it every day, week and month,” he says. “We never change the plan, but we do adjust our activities. Sometimes what we expect going in to a year isn’t what we get. Hurricanes hit the Gulf region, or a customer goes out of business. All kinds of things occur, and we have to adjust.
“We don’t change the plan, just how we work within it.”
As CEO, Korach monitors the operating divisions to make sure they are on track via daily order entry reports that compare where the orders are this year versus last. What he doesn’t do is interfere with the operations, because the whole point of assembling a team of top performers is that you can let them handle the day-to-day management.
“My style is to let the operators operate,” says Korach. “If I’m going to give them the responsibility for the results, then I have to give them the authority. They don’t need me to tell them how to do it. All I’ll do is just get in the way.
“They need to know that their results are being monitored, but I don’t get involved in the day-to-day operations or even the month-to-month. Those people are far more capable of running those businesses than I am and know the customers better than I do. I expect them to have the ability to deal with problems, and in order to do that, they need to have the authority that comes with that responsibility.”
By letting his operators operate, Korach is freed up to worry about bigger goals.
“Anybody can meet a plan,” he says. “The question is, can you meet it five years in a row or t10 years in a row? That requires a good part of your involvement and effort. What do I do today, and what do I do for today that’s for tomorrow? Whatever it is, it may not affect the income statement today, and, in fact, it may negatively affect it.
“Just about anybody can make a good year once in awhile, but what we want to do is do it consistently year after year. In order to do that, you have to set a course and you have to spend a lot of your management time looking at tomorrow, or else you won’t have a tomorrow.”
Tolerate risks
Growth won’t come to those who abhor risks, but it has to be managed carefully throughout the organization.
“I think in our business atmosphere, there is a degree of risk necessary to grow and carry on and operate a business,” says Korach. “I’m not talking about going to Vegas and betting everything on the dice; that’s not the type of risk I’m talking about. We need to be able to make decisions about issues that occur with our customers every day, and we need to know how to respond and how to deal with that.
“If every time we run into an issue that we didn’t expect and we just crawl into a corner, we obviously don’t have the talent for what’s going on day-to-day in our operations. We need people that have the ability to deal with those issues.”
Not only do you have to have a team with the ability to handle risk-taking, you have to manage employees properly.
“You have to allow people to make mistakes,” says Korach. “If you don’t allow people to make mistakes and you just beat the hell out of the guy that makes one, then that guy’s not going to take risks, he’s not going to get out of bed in the morning, and you can’t blame him. If you want to develop people with the ability to manage problems and live through difficulties and downturns and adjust to good times, then you need to allow them the opportunity to make a mistake or many mistakes.
“We expect them to learn from those mistakes and expect them to not make the same one too many times, but you have to have an organization that gives people the ability to go out there and say, ‘Yes, I’m going to try this and see if it works.’ If senior management beats them to death for every mistake, then you are cooked.”
Besides measuring the financial results of risk-taking, you also need to monitor how your people are standing up to those mistakes. Those who do well can be given more responsibility and move up in the organization and further develop your talent base.
“We all have a sense for risks, to be able to take risks and adjust to disappointment,” says Korach. “We need to be able to overcome that. If your personality is to sit in the corner and be down about it, then you are probably not going to be satisfied in that type of job, and that’s what we have to find out about our people.
“The only way you are going to find that out is to give them opportunities for those things to happen.”
Adjust your management style
Running a $10 million company is not the same as running a $100 million company, and that is not the same as running a $1 billion company.
Managing growth also means managing your management style and changing to meet new challenges.
“When this was a little company, I knew all our customers and knew all my employees’ children’s names and birthdays and so forth,” says Korach. “Obviously, as you get a little bigger, you get a little more isolated and depend more on your people than yourself. You end up delegating to responsible people and then having them delegate to responsible people.”
Where once Korach was meeting with every customer, now he has to rely on the presidents of his operating divisions to take on that role. While he still meets with customers on occasion, it’s no longer his primary role.
Learning to delegate isn’t easy, but it is necessary.
“I still find myself sneaking back,” says Korach. “I enjoy going to sales meetings and hearing what’s going on — things I used to do in my old life. I spend a lot more time now in meetings and people development rather than customer development.
“Delegating is very hard. I think that I understood it was necessary and had to do it. I’ve been caught in situations where you have the responsibility but not the authority, and I’ve always been thinking of that. Delegating is hard, particularly in areas you used to do. I used to be a sales manager, so working with customers has been the most difficult to delegate because it’s what I grew up doing, but I’m very limited in that today.”
While it may be hard to let go, investing the time to get the right people in place pays off because it’s a lot easier to hand an important assignment to someone who has proven themselves on various levels.
“You have to hound yourself to let go,” says Korach. “You gotta give those good people a chance. It all revolves around that. If you didn’t have to deal with people, business would be easy to run. It’s people that make things complicated, but it’s an advantage to be better at managing it than the competition.
“You have to have the people. The better the ballplayers on your team, the more likely you are to win more games. It’s not so much the position they are in, but you have to have them and an organization where people can have a chance to advance without having to climb over someone else to do it.”
People make the difference
Tremco set a goal three years ago of hitting $1 billion in sales by 2010. At the time, it was a $475 million company. Tremco is projecting it will that goal this fiscal year and is now in the process of setting new long-term goals for 2010.
But regardless of what goals are put in place, Korach knows that everything will hinge on the people who have to execute the plan.
“We need a lot of talented people to run this business,” Korach says. “Where are they going to come from? There are pieces of business being run all over the place: sales departments at our plants, the operating units or whatever. Who’s running it?”
Taking the effort to make sure talent was properly developed along the way has laid a strong foundation for future growth.
“If you don’t have those folks who are qualified to do those things, then you have a billion-dollar business that’s falling apart,” says Korach. “The real exceptional aspect here is to be able to have the talent here or acquire it to run the additional millions in business. As talent becomes more and more limited in the next 10 years, there is going to be a need for more people for more requirements here. The better your people are, the better your operations will be.
“From my perspective, you got to like what you are doing, you got to have a grasp of where you are going and you have got to enjoy people. People make the difference.”
How to reach: Tremco, www.tremco.com