Jack Welch values process over people. Ray Dalton values people over process.
This was the lesson that Dalton learned earlier in his career
when he had the opportunity to work for Welch on two separate
occasions after GE bought businesses he had started. While
many would salivate over working for Welch, Dalton shudders.
“It was probably the most difficult time in my life from the
standpoint of just commitment,” Dalton says. “It was a difficult
time being committed to GE because we’re so different.”
Those differences were rooted in the people part of business
and the GE philosophy of routinely cutting the bottom-tier performers.
“It was so painful to me to get another e-mail that said, ‘Get rid
of 42 more people because all of your C’s had to be gone by
November,’” he says.
While GE, as a whole, was growing 5 percent a year, Dalton’s
segment was growing 40 to 50 percent.
“I was struggling to hire people, and he’s telling me to get rid of
people,” he says. “This doesn’t make sense. You can’t have this universal application that says all C’s are bad. All C’s are bad means you
hired wrong, and you didn’t invest properly. If you lay a person off,
it’s 80 percent management’s fault because we never should have
hired if we didn’t believe we had a job for them.”
GE’s leadership team didn’t agree. They basically said to get over
it because he worked for GE now. For all that GE excelled in,
Dalton knew they were missing out on more.
“They do an amazing job,” he says. “But they forget a huge, very
important part of that — how they got there. It’s the people that
contributed to the number. I come from the inner city, where drugs
and alcohol and a lot of things were going on. I saw the power of
the people, and I saw that people survived that, and people contributed to things that were better.”
In 2001, he founded his seventh business, PartsSource LLC, and
from the beginning, he’s focused on that power of people. His team
grew the company, which sells replacement medical equipment
parts, from $40 million in revenue in 2005 to $84 million in 2007 and
is projecting $125 million for 2008. They also landed a spot on the
Inc. 500 list in 2006. This president and CEO credits his success to
the people he’s hired, setting them up to succeed, spending time
with them and keeping them happy.
“Our growth is completely centered around that we’re customer-centric, but in order to be customer-centric, you have to be
employee-centric,” Dalton says. “People say, ‘We really care about
our customer,’ but the question you have to ask is, ‘Do you really
care about your employee?’ What is the evidence that you can
point to that shows that you value your employee as much as you
value your customer because you can’t have a (long-term) customer without a long-term employee. It doesn’t happen.”