Ethical rewards

Durable Slate Co. President and CEO Michael Chan didn’t start his career with a job in the roofing/construction industry. Instead, after graduating college he earned a very respectable $10,000 a month as a stock broker.

But the 23-year old Chan felt something was missing.

So he left the stock broker business and got a job as a laborer with a very small firm, Durable Slate Co..

“It was understood from the beginning that I was there to learn the business and take it to another level,” says Chan.

That’s exactly what he, his brother, John, and Ed De Long did. They acquired Durable Slate from its founder in 1986, and what started as a four-employee company is now a firm with more than 100 people and sales of $10 million.

Chan and his brother John, executive vice president, credit their success to doing business ethically and exceeding customer expectations, which led The Better Business Bureau to recognized= the company with its 2003 International Torch Award for Marketplace Ethics.

“If you conduct business the right way — the way it’s supposed to be done — good things will come your way,” says John Chan.

What hurdles have you overcome since taking over the company?

Michael Chan: I started as a laborer about 16 years ago when the company consisted of just a couple of guys and their helpers. I knew nothing about construction or managing a business. I went from making more than $10,000 a month to about $800 a month.

I saw that so many businesses were one or two dimensional. They either focused entirely on making money or they were totally customer-focused at the exclusion of everything else. After researching many businesses, I settled on the slate roofing business, a business that I felt I could learn and that had a lot of potential. So my challenges were learning the business and learning how to manage people.

Being Chinese, I also experienced some discrimination. But I worked my butt off, working 80 hours a week, listening and learning. I hired others that were like me — they were interested in growing the company, and most of them had no construction or management experience.

What policies, initiatives or values led to the Better Business Bureau recognition?

Michael Chan: One of the things we strive to achieve is the Hubbard Management System.

In that system, there are four types of customer exchanges. The first is the kind that is criminal, where the customer pays the company, which does little to nothing in return. The second is a partial exchange. The company tries to get ahead by doing less than you say you are going to.

The third is doing exactly what you tell the customer you will do, and the fourth is giving the customer an abundance of what you promised. We try to live in the fourth exchange, not just with customers but throughout the company.

An example of this is, if we tell the customer that the job will take a week, then we try and finish it in five days. Or if we thought a repair job would take 25 slates and it takes 31, we use 31 without charging more. That’s the culture we try to play up.

We have a few employees that do not want to function that way and leave the company, but we rarely get rid of anybody. Our quality control department checks everything, and if it isn’t right, we fix it, at the job and with the employee, so it doesn’t happen again.

How difficult is it in today’s business environment to maintain business integrity?

Michael Chan: It’s very difficult. Our sales come probably about 70 to 80 percent directly from customers and the other 20 to 30 percent from contractors. It’s hard keeping up with where we’ve been in this business environment when others are having a difficult time selling.

We try to do our best — sending the same number of people out when we’re not making enough money –that’s when integrity comes in. It’s easy to do what’s right when the money is there. You have to just maintain that level come hell or high water. It takes a lot of self-discipline.

It’s expensive sometimes, but you can’t look at it as an expense. If you want to survive long term, you have to be persistent, and that includes integrity.

A business won’t survive long without integrity. It depends on how long the company wants to succeed. Enron was the seventh largest company in the world when it went bankrupt.

I didn’t start out wanting to be the leader of the company, but out of necessity, became an owner. And conducting business ethically leads to a happy life — it gives you day-to-day happiness.

What are the company’s goals for the next five years?

John Chan: We set the company’s goals in 1998, and we’ve little more than doubled our business in the last five years. We set our target sales and then set up numbers in each of our seven divisions to back them up.

We did a lot of long-term planning. We broke each goal down to calculate how each division could contribute to the goal — how many jobs it would take, how many people — all across the company. Each division knows what it has to do to achieve our goals.

How do you emphasize your business ethics with employees?

John Chan: We emphasize ethics in a number of ways. In all of our meetings with everyone, we go over everything pertinent to the company and the job.

We’ve shared a lot of stories about how ethics in business leads to success. We’ve seen case after case of high-profile companies that have done something underhanded to get ahead. They lose sight of their original intention.

Sometimes they just take a short cut. But a short cut often takes you down the wrong path and leads to problems. We have courses offered in a classroom setting. We train employees in roofing, safety, orientation to the business, and we have a course in ethics.

It is a challenge when I hire someone that isn’t used to operating that way. It is a challenge instilling in newer guys that are sometimes used to looking for ways to give less to the customer rather than more. That’s what we run up against.

What are the biggest changes you’ve seen in your industry, and how have they affected the company?

John Chan: The biggest changes I’ve seen are mainly on the legal front. OSHA regulations are much stiffer than they were 10 years ago. That’s something that seems like it hurts us sometimes.

Recently, we went out and broke down a job for an insurance company. They turned us down because we needed to use scaffolding. The person I dealt with asked us if we couldn’t just use big ladders, but it was against OSHA regulations. He said the other company he asked about the job would go without them, and he went with them.

But we didn’t want to risk our company or our guys. I’ve found that we might lose one job, but cutting corners comes back to bite you later. If you conduct business the right way — the way it’s supposed to be done — good things will come your way. How to reach: Durable Slate Co., (800) 666-7445 or