When it comes to a business like The Hillman Cos. Inc., it would
be ridiculously easy to make a lot of bad puns related to its business. Even Mick Hillman, the company’s president and CEO, can’t
resist a chuckle at a corny nuts and bolts gag.
The Hillman Cos. supplies retailers with the most fundamental
types of hardware products: nuts, bolts, screws and all manner of
fasteners, key blanks and about 45,000 other low-priced, but
nonetheless critical items for their customers.
When the company was sold in 1982 to an investor group and
some company executives, it was doing about $8 million a year in
sales. In 2006, The Hillman Cos. net sales were $424 million, and
Hillman expects to hit the $450 million mark this year
“This company has never had a year where sales and earnings
have not been better than the year before,” says Hillman of the
company his parents founded in 1964 with $2,000 of borrowed
money and no experience in the business.
As revenue continues to grow as it acquires other firms and its
customers add hundreds of stores to their retail networks each
year, it has required careful management of its work force to
keep up.
“I think the challenge is to both mold the people who have
been loyal and dedicated and committed to the company to be
able to grow with the organization, and at the same time recognizing that some people cannot grow at the rate the company is
growing, and so you have to infuse some talent when necessary,” Hillman says. “So it’s a combination of balancing loyalty
with the need to step up as the business grows.”
Hillman’s approach has been to emphasize the basics and be
consistent, all while making sure to reward loyalty to keep the
core of a strong culture.
Creating loyalty
Hillman says he’s used a variety of strategies to ensure that his
employees remain loyal and stick with the company for the long
haul.
“We’re very good at attracting talent, polishing talent and
retaining talent,” says Hillman. “I don’t lose people to competitors or to people leaving to go to other opportunities. We do not
lose good people around here.”
Hillman has some compelling facts to back that up.
“I’ve got 400 people who work in my retail stores that do routine service work and the industry standard there says you’ll
lose 40 percent of those people every year,” Hillman says. “My
turn rate is less than 10 percent.”
The company holds onto employees by rewarding their performance and loyalty, and by providing a rewarding work environment and flexibility to move within the company.
“First of all, at the senior level, they have equity in the company,” says Hillman. “The other thing is we allow people a fair
amount of autonomy and authority, so they are able to make
important decisions. Again, I think being able to give them a
change in terms of their responsibilities, so they can work on different areas of their skill set, I think that helps.
“One of the things that we’ve used is we’ve allowed people to
change spots in the organization, so we’ve had IT guys going to
operations, sales guys moving to other positions, so it’s really
been rounding out everybody’s exposure to the company.”
Because the business is complex and difficult for newcomers,
Hillman prefers to develop his existing employees to advance to higher levels.
“It’s very difficult for someone to come in here at a director
level or executive level and make a meaningful contribution
inside a couple of years,” says Hillman.
To help with employee development, the company added a
training department staffed with training professionals a few
years ago to develop and evaluate its talent using testing and
techniques like 360-degree reviews. When weaknesses are
detected, employees go through additional training and coaching to help them develop their skills.
“We’ve got a professional trainer and we get feedback based on
his interaction with the folks as to whether they’re capable of
going to the next level or not,” says Hillman.
For those who aren’t capable of moving up, Hillman has a philosophy of moving people to other slots in the company where
their talent and skill levels are better suited, even if it’s at a lower
level. He won’t reduce salaries, but he might cut back on raises
or freeze their pay levels.
“I think one of the things that we’ve done to maintain the culture here — and some people might look at this as a bad thing
— if somebody couldn’t jump up, we would always find a spot
for them within the organization, so we didn’t have to eliminate
people,” says Hillman. “If we didn’t feel like they could move to
the next level, we would find a position for them that was meaningful, that fit their skill set. So I think what came out of that was
a fair amount of loyalty and there’s a fair amount of seniority in
the company.”
Hillman rewards that kind of loyalty, even for those employees
who might not be performing up to par in their jobs.
“If you’re committed to the company, if you’re loyal, if you’re
hardworking, I will find a spot for you,” Hillman says. “And people know that, they recognize that.”
But that’s not to say that working at Hillman provides a guarantee of a lifetime job. Laggards simply don’t last, even those
with long service records.
“Now, just because you’re tenured, if you’re not loyal, if
you’re not a hard worker, you won’t last,” says Hillman. “I’ve
gotten rid of people who were here 20 years when they’ve
decided not to work anymore.”
When the company needs to go outside for talent to meet its
growth needs, Hillman hires people who he deems are
overqualified. His rationale is that hiring to meet the needs of
the current level of the business will nearly ensure that the
business won’t move past that level. Similarly, he adds people
in anticipation of additional business rather than waiting until
the existing work force can’t handle the increased volume.
Some of the incentives that the company uses to reward its
workers across the board are events that involve employees on
every level. Companywide picnics or free lunch days are
offered a half a dozen times of the year, and there are also gifts
for longevity and hitting certain goals.
It’s important to have rewards that everyone within the company can enjoy. Hillman points to their annual all-expenses-paid trip for top sales and service people and for long-term
employees as an example.
This year, the company is taking about 70 couples to Puerto
Rico for five days. The group is made up of top sales and service people, as well as every employee that’s been there for 25
years or more.
“So, the interaction between senior managers who have equity, salespeople who are making $50,000, $60,000 or $70,000 a
year, service people who are making $30,000 a year and the guy
who’s out there putting screws in a box for $13 an hour, all
going on a pretty high-end trip with all expenses paid, that’s
just an example of how we’ve done a very, very good job of
keeping good people in the organization.”
The combination of rewards and recognitions provides some
of the glue that keeps its employees connected to the company.
“All of that, I think, tends to tie you in with the company,”
says Hillman. “I think these are the kinds of things that make
people want to stay at the company for their entire career.”
Share the financials
Hillman also makes employees feel like a part of the company by sharing financial information about how the company is
doing.
“We openly communicate the results of the company,”
Hillman says. “People know whether the company’s doing
good, bad or indifferent. So I think if you know what the situation is, if you give people the facts, you don’t have to draw out
the conclusion for them. They can draw their own conclusions.
If you don’t give them the facts, if you don’t communicate, then
you have a whole set of other issues.”
Hillman shares that kind of information at quarterly meetings
with all the employees, on bulletin boards and through e-mails
and a company portal accessible by employees, where they
can view statistics like daily sales results and earnings versus
projections.
“People at almost every level know whether the company’s
doing well or not.” Hillman says.
He says that while it can be a double-edged sword to be that
open with the financials, on balance it’s better to share it than
to keep it hidden.
“I think it’s critical to share that information,” says Hillman.
“The danger in it is when things are very good, people will
expect more. The positive in that is when things aren’t good,
people know not to ask for more. You’ll pay more on the
upside, and you’ll pay less if things are not good. It’s a double-edged sword.”
Hillman offers that while companies need to change to
remain viable, there are some things that should remain the
same to ensure continuity over time.
“The advantage that we’ve had is we’ve had the same consistent leadership philosophy over the whole life of the company,”
says Hillman, a pattern he says started with his father at the
helm. “When you act the same way over a long period of time,
people know what to expect. I think what happens with some
companies is that they change leadership and people wonder
where it’s going with the new leadership. I think that’s been the
advantage here because people — employees and customers
— know what to expect.”
HOW TO REACH: The Hillman Cos. Inc., www.hillmangroup.com