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Chairmanís Address at the NAW Executive Summit, January 30, 2013

Chairman's Address - February 2013

Mark W. Kramer, NAW 2012 Chairman of the Board, and President and CEO of Laird Plastics

“Our Future Will Be Written on Our Ability to Attract and Retain the Very Best”

Good afternoon NAW members, invited guests, and friends.

The business acumen and leadership skill that all of you represent is the heart and soul of NAW. Your commitment to the excellence of your companies and the success of NAW is our driving force. For the last 12 months, I have had the privilege of serving as your Chairman — through indeed a very vibrant and interesting year — and as I conclude that tour of duty, I’d like to update you on the more meaningful aspects of what Dirk encourages each of us who serve to call our “Chairman’s Initiative.”

During the past year, my “initiative” has been focused on an issue of ongoing importance to the future of our companies and our industry — namely the discovery, recruitment, and hiring of top young sales and possibly management trainee talent. Two facts appear universally applicable:

  • First, in any distribution company “people” comprise the largest, single-cost component — with the “sales force” and selling functions the most significant aspect of it.
  • Second, wholesale distribution is an industry universally dedicated to “selling” as its primary reason for being. In our world, nothing happens until somebody sells something. Regardless of our line of trade, we are here to sell our suppliers’ products to the customers that need them.

Throughout much of my 29 years in wholesale distribution, it has been tempting to view this issue of hiring and developing sales talent as one of competitive privacy — simply leaving each of us to battle in our own various ways with everyone else.

However, I have come to believe the issue can be seen as much larger and more important than that. Each company’s ability to succeed is significantly enhanced or undermined by the recruiting efforts and the image that its industry possesses. Our ability to retain and develop people thus hired further depends on each of us understanding and applying state-of-the-art practices and systems to the development of these high-prospect individuals. At the outset, we are competing against all other industries that vie for the attention of these young prospects. And, our individual chances for success can be enhanced by our industry’s reputation and image.

While they were growing up, my wife Julie was fond of telling our children that if they showed us their friends we would show them, our children, who they were. If I update that wisdom to our current corporate circumstances it might read, “Show me your recent hires and I’ll show you your future.” If we look within our own companies, what do we see in our new hires? Do we see grizzled veterans of the industry hired primarily from competitors? Do we see “Hail Mary” hires from outside the industry? Or, do we see bright, young talent eager to be trained and developed in the values and visions of our companies? And, what’s the inevitable percentage of each of these?

The world around us is cause to increase our sense of urgency in this pursuit. The issue I’ve noted has been highlighted repeatedly in various editions of Facing the Forces of Change, in numerous Industry Surveys, and around NAW Roundtables and at Executive Summits for years. But in a larger context, let’s consider what is happening:

  • To begin, population demographics are about to turn distinctly against us as the baby boomer generation retires in large number, creating an increasing number of management and sales vacancies within our organizations. Worse, these people will inevitably take with them a high percentage of corporate knowledge and “know how” — the “Tribal Knowledge” as Mike Marks likes to describe it. 
  • Also, markets are maturing across some lines of trade, leading to ever-increasing competition for stabilizing volumes. The future of success is written in the capabilities, energy, and problem-solving skills possessed by our sales forces.
  • And lastly, the Internet and today’s knowledge tools have given our customers increasing commercial power. As we all know, salespeople can no longer simply be purveyors of unique information. They will be confronted with that and much more on the way in the door, so they must be capable of managing the problems and solutions that all this information surfaces.

We are all aware that what is needed, now more than ever, is a sales force capable of thinking quickly under pressure, crafting solutions to seemingly unrelated problems, and making good decisions — all while dealing with constantly changing market circumstances, information, and workloads.

So, where do such people come from and how do we help ourselves succeed in this vital area?

Let me suggest three critical areas for our consideration:

  • First, where do some of the best and brightest young sales talent and management trainees come from? Where do we find them and how do we attract them to the wholesale distribution industry in general and to our own companies in particular? What do we understand about these people and their search for the best employment and career?
  • Second, what can we, as individual wholesale distribution companies, do to improve our prospects for success with these individuals? How do we craft the best recruiting value proposition and mesh that with their goals and aspirations? And how can we improve the long-term chances for success with these people, better avoiding the costly and disruptive “churn” effect?
  • And third, what can NAW and our industry do to improve our “recruiting brand”? How do we broaden our target audience’s understanding of the vital role all wholesaler-distributors play in the success of the economy and delivering the lifestyles all our citizens enjoy?

Let me take these points in order.

On the subject of where we find talent . . . There is an emerging source of well-trained young people who have chosen “selling” as a career, and they’ve devoted themselves to academic and practical preparation within a wide variety of university programs. Today, more than 70 colleges and universities have instituted some level of “sales and selling process” education within their curricula. They range from basic selling elective courses within a general business degree to entire degree and major field of study programs that involve multiple years of concentrated effort in the art and science of selling. These programs repeatedly engage in national and now international, mock sales competitions that trace real-world selling challenges through to competitive solutions and feedback.

I have gained personal exposure to these young people through my work with the Florida State University Sales Institute and the University of Washington. I’ll have more to say on this tomorrow morning during our session titled, “What Are You Doing to Protect Your Most Important Asset — Your Talent?”. . . but for now, know that graduates of these programs arrive to the business world fully schooled in the mechanics of the selling process, sales call interaction, and how to create value propositions and handle objections, to name just a few skill areas. These sales education programs enable us to then proceed quickly to provide education on our specific products and services, and on our industry. This means we are able to move our hires rapidly along toward becoming significant “result contributors.”

A Harvard Business Review study supports this notion — indicating that sales education program graduates reach a “break-even point” 30% faster than those without such training. It is an interesting further validation of these programs that, for instance, every graduate of the Florida State Sales Institute was employed at graduation throughout the last four years — every one, every year, notwithstanding the recession.

Of importance for us, as they pursue this field of study, these students come out seeking the kind of job environment that is the hallmark of wholesale distribution. Many of these programs have surveyed their graduating students with regard to their career decision priorities. Graduates look for companies where their energies and efforts can make an immediate impact, where they will have the opportunity to do important work from day one — work that contributes to the success of the company. They are looking for a company they can believe in and one that takes a training and development interest in their careers. They say they are looking for interesting and varied work and an industry that may offer a more rational long-term work–life balance.

In short, I see them describing the sales environment offered by wholesale distribution companies. Yet, a significant challenge we need to address is that very few of them have had any exposure to our industry, and so they lack an understanding of our industry’s potential as an employer.

There is an interesting corollary benefit to consider, as we have discovered. As you develop and improve the ongoing training and career programs for these young people, others of significant, but perhaps undiscovered talent within the organization tend to gravitate toward this group and enter the development picture. This is evidence that the best and the brightest are attracted to the best and brightest.

On the issue of how our companies improve our prospects for success with the top emerging talent . . . Once the decision is made to seek out and engage this potential source of top talent, it is well worth considering what individual wholesale distribution companies can do to increase their success rate in attracting, hiring, developing, and retaining these people. Here again, it starts with fully appreciating the attractiveness of our industry’s value proposition in general. In a sales position we offer action, variety, flexibility, training, and direct rewards for contributions made. Add in the varied and interesting products, applications, and markets we serve and we all have a reason to approach the hiring of these folks with confidence. How would you characterize your own company’s hiring proposition against these criteria that sales-trained college students have clearly indicated are most important to them?

As we gain experience with hiring these sales-trained graduates, we’ll come to realize that being able to describe what we do in a way that conveys its true meaning and significance IS important. We need to describe our products in ways that highlight the contributions they make to environmental health — such as “recyclable,” performance enhancements — such as “CAFÉ standards,” and supporting breakthrough technologies — such as “medical applications.” We need to describe our services as enhancing the performance and efficiency of the entire supply chain. We don’t just supply products. We solve customer problems. In short, we need to translate what we tell our customers into a recruiting value proposition that resonates with these graduates.

The most important follow-on feature that we at Laird have discovered is to have an organized career-path approach for these hires. Of course, they don’t expect to be CEO starting out. But our being able to detail the personal training, cross training, and position development that we offer is a critical attribute. These new hires want to be challenged and receive frequent and meaningful feedback.

And, finally, on the issue of NAW and its role in all of this . . . As part of our recruiting efforts at Laird, we have seen the real value in getting engaged with the faculty of these sales education programs, and not just with their career placement offices. This has given several Laird people the chance to speak to classes and sales clubs, participate in guest lecturer programs, and even judge sales competitions. At the highest level, many of the school programs are looking for businesses willing to contribute financially and serve on various types of advisory boards. This access has allowed us to expand the understanding of wholesale distribution as an industry and as a career choice among hundreds of people who, in the absence of such presentation opportunities, would most likely graduate without having a conscious thought about the distribution industry.

This is where all of you come into the frame and the last point I want to make . . . What can NAW and all of us do to enhance the prospects for our industry to competitively attract the best and brightest people going forward?

Any organization’s “brand” is the sum total of all the encounters the marketplace and related parties have with it. This applies no less directly when it comes to the “brand” that wholesale distribution enjoys in the universe of career choices that top people consider. But, we generally start at a bit of a disadvantage which all of you can appreciate. Today’s headlines and media will highlight the manufacturing aspect of aerospace, medical, technology, retailing, and a host of other highly visible industries, but they will seldom highlight the wholesale distribution or supply chain component.

We can change that. By making “outreach” and “engagement” a more prominent part of our executive commitments, we can create those “touch points” that build our industry’s reputation, expand its understanding among the growing university community that focuses on sales education in particular, and ensure that we are, as we should be, a top-tier consideration for the best and brightest young talent.

Many of us have opportunities to submit written pieces for various publications, and each of these opportunities is another chance to selflessly brand wholesale distribution in addition to our company’s direct objective in the engagement. Today’s university community is a highly effective communication network. You can be assured that the opportunities you provide for education support, internships, or class project access will be leveraged significantly as word spreads throughout that community.

NAW is taking part as well. The announcement in the fourth quarter of last year that NAW has formed a strategic partnership with Chally Group Worldwide of Dayton, Ohio, means that further crucial resources for wholesaler-distributors will be available in our efforts to profile and understand sales talent and sales performance within our companies. Chally offers best-in-class processes, tools, and resources to help evaluate the sales roles that exist within our companies, and then they apply performance-proven analytics to help us match sales talent with the desired sales functions.

In short, Chally will bring practical tools right to your doorstep and provide the means to better and more fully evaluate the sales talent you desire to bring into your company. Improving the certainty and applied accuracy of your sales hiring has to be seen not only as a key benefit for your company, but also for the productivity and contentment of the people thus hired.

A related, and exciting, opportunity for all of us lies in the work of SEF — the Sales Education Foundation. This organization, spearheaded by Chally founder Howard Stevens, has a goal of connecting the best and the brightest college sales majors with companies looking to hire individuals who have specifically been trained in the art and science of selling. Today, SEF enjoys relationships with more than 70 U.S. universities that have programs emphasizing the sales function. These universities are working with SEF and Chally to assess the sales aptitudes of interested undergraduates and then connecting them with companies in search of qualified sales personnel. Frankly, our distribution industry hasn’t made enough business-to-academia connections. SEF is working hard to change that.

In closing, I have been energized by the chance to initiate our consideration of how we can further build the industry’s brand and position ourselves to attract an unfair percentage of the brightest future sales and management stars.

Our companies are the people who comprise them. Our future will be written on our ability to attract and retain the very best. I hope my comments today have caused you to reflect at a higher and deeper level about how this growing source of top talent can supplement the ranks of quality leaders that I see in this room. I hope you, too, will take tangible actions this year to enhance our industry’s position.

I thank you for the opportunity to serve as your Chairman this past year.

And I thank my wife Julie for your unending support and understanding throughout. We have been rewarded with the chance to serve with and engage wonderful people, travel to interesting places, and come to an even higher appreciation of the importance and significance of our great industry and the potential that NAW has in its continued contribution to our collective success.

Thank you.