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Making Five Become One

When merging companies together, communication is key.

It has been said that there is no such thing as too much communication. In today’s ever-challenging business and economic environment, this statement has never been more valid. Case in point, in October 2008, a strategic decision was made to merge five material handling operating companies in the United States into one under the Equipment Depot brand.

The five companies, operating individually and formerly known in their respective markets as Forklifts Inc. in Mechanicsburg, Pennsylvania; Portman Equipment Company in Cincinnati, Ohio; Material Handling Services in Chicago, Illinois; Equipment Depot in Houston, Texas; and Levee Lift in Evansville, Indiana, were to be one—not only in name, but in every aspect of their operations. Each of the five companies had a unique culture and strong history, and it was determined that telling the story internally was going to be key. Our challenge would be not only to merge the companies, but also to have the employees, some of whom had been in their positions for a long time, believe in the change.

Having come from Levee Lift myself, I had a clear understanding of the concerns shared by many of the employees. After being named COO of the new entity, I put myself in our people’s shoes and considered carefully what their concerns would be as they faced the change. As I have led the consolidation effort, I have made sure that we not only talk to our employees at every level, but we listen. Making communication a bedrock of our process has been and will be the foundation for our success.

Today’s Equipment Depot is owned by Pon Material Handling, part of Pon Holdings, which is based in the Netherlands. As each of the five had operated as independent distributorships until being acquired by Pon during the period from 2000 to 2007, communicating not only the Equipment Depot story but also the Pon story would be paramount. Though it’s been challenging at times, we are two years into the process, and we are proud of the progress that has been made and the transition that our people have made. In short, it is inspiring.

The Merger Process
In July 2010, we unveiled the new organizational chart with key leaders throughout the operating companies. To form our leadership team, I approached the other four individuals who had served as CEOs of their respective companies to discuss their new roles and outlined for them their new opportunities as part of the newly merged organization. Once the leadership was in place, we worked as a team to identify and recruit employees from all five companies to serve in a variety of organizational and structural roles. As we approached each person, we shared the vision that brought the companies together and communicated with them the goals and objectives that were being developed, while seeking their input and reaction. This communication process included in-person workshops to develop strategy around their particular business units, including sales, parts and service, finance, information technology, marketing and communications. Each of these units then met to create short-term and long-term strategies to match the vision and mission of the overall company.

The next step was to identify all the talent within the company. With 1,600 employees, we knew we had a lot of good people who would be critical to our future success. As we worked with an outside consultant whose expertise is in reorganization processes and shared services, we made sure we prioritized communication to our employees.

By November 2010, we had solidified many of our internal processes. For instance, we developed a process for getting an order through the quotation, preparation, order and delivery phases. One thing we had to consider was what kind of culture we wanted to implement. Were we going to empower people all the way down to the bottom? Or will all decisions be made at headquarters? The result of this kind of analysis would dictate how we structured the company, the systems, and how we would serve our customers. Those kinds of decisions are things that people don’t often think about, but we spent a good deal of time making those choices while always asking ourselves how we would communicate the decisions and the rationale behind them.

Any large change like this also requires good relationships and communications with our major OEMs. Keeping them informed about the new organization and strategies was all part of our process. For much of the second half of 2010, the OEMs were involved in building the strategy. We sought their buy-in as we worked to create a mutually beneficial system of operations.

As you can imagine, the level of detail in this endeavor is enormous and cannot be done overnight. However, while you are in the middle of turning the ship, the employees are, of course, champing at the bit to find out what role they’re going to play and what their future holds. They want more certainty and they want information. I have been in their shoes, so I completely understand their needs.

Communicating the Message
No matter what stage of the process we find ourselves in, progress would not be possible without securing buy-in and cooperation from our employees. One of the most important goals was to break down the cultural and philosophical differences and the “this-is-the-way-we’ve-done-it-for-years” mentality. Working through those issues wasn’t easy, so from the start, we made it clear to our employees what we were doing and why we were doing it. To build trust and excitement, you can’t leave people in the dark. Building a communication platform requires as much focus as creating a product delivery system.

Bob Schermer gives tips for distributors looking to acquire a company. Exclusively in The MHEDA Journal Online.

For instance, our parts and service team has someone from Pennsylvania, someone from Illinois, someone from Ohio, someone from Kentucky and someone from Texas. Other teams are built the same way. Every week we hold a meeting—by phone, Web conference or face-to-face—and each team member is challenged to push information down further within his or her respective organization.

Technology, changing at lightning speed, is creating new forms of communication and innovative ideas about the ways we communicate, and we are taking advantage of these at every level. However, when you also have a very significant portion of your employment base that is not part of the electronic communication movement, it is also important to develop an effective way to talk with them and to hear their concerns. By using a good old-fashioned face-to-face communication ambassador program, not a single day goes by at Equipment Depot when communication is not part of the workday.

To build trust and excitement among employees, you can’t leave people in the dark.

This is not to say that we have not been without our challenges. From the beginning, a lot of employees questioned the future of the company and their future within it. A common refrain was, for example, “We were successful as Levee Lift. Why are we changing everything?” Frankly, it is a good question to ask. From the corporate perspective, our goal is to grow revenues through size—not to cut more costs. We went through enough of that in 2008 and 2009. The primary goals are to grow our revenues, increase opportunities for employees, share best practices and become one voice to the OEM and the customer. However, if every employee at every level is not in the information loop, his or her performance is hindered by doubt and uncertainty.

Going Forward
We’ve been spreading a positive message among the employees, and it is not just lip service. Our management, myself included, truly believes that we’re going to be stronger because of this merger. For example, we will be able to create an internal training university that will provide opportunities for employees to be trained and grow. We will have more opportunities for marketing and technology advancements that we could not do as smaller, individual companies. There are many advantages that come with growth; however, there are also disadvantages if you do it incorectly. You can create structures from which employees can become disconnected quickly. That’s why we need to stay grounded and stay in touch with our employees. We now have 44 locations, so we need to keep recognizing that branches are where the rubber meets the road and where the transaction with the customer happens. Without that recognition, we will not be successful. We need to stay constantly focused on what happens at the branch level and make improvements to provide the best service possible. That is ultimately what differentiates us from our competition.

At some point in early 2011, we feel confident that our transition will be complete. We will flip the switch, so to speak, and operate as one. We’ve set some financial benchmarks and expectations. The rest of it is going to be emotional. Right now, there is a great deal of energy around this reorganization. A lot of people are really embracing it and now the employees are asking, “What are we waiting on?” They feel the excitement, and if we keep the energy high as we think, talk and listen to our people, we will succeed.

Material Handling Equipment Distributors Association
Meet the Author
Bob Schermer is chief operating officer of Equipment Depot, a division of Pon Material Handling, headquartered in Houston, Texas, and on the Web at www.eqdepot.com.

One comment

  1. The article reflects the leadership employees are looking for. With communication, employees are more confident and more willing to make the changes that are critical to the success of the business. Understanding the need for change is essential to the future growth of any company.

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