Time passes, regardless of our desires. Later this month, Bill Vogt, one of the best human resource leaders in our industry, is planning to retire from Zeeland Lumber and Supply.
Let’s jump back to a time when his walk was a little faster, and his stories might have been little shorter. On that day back in 1992 when Bill Vogt and Jim Cavanaugh met in Edmund Okla., I doubt either of them imagined what was in store for them. Jim was a 39-year-old president of a small four-location dealer based in Tulsa called Hope Lumber and Supply. Its revenues at the time were under $50 million. Bill was also about 39 years old, with a master’s in public administration from the University of Virginia, looking to leverage his experience. He showed interest in Jim’s vision and was hired.
Working together over the next 15 years, Cavanaugh and Vogt built Hope Lumber into a 75-location, top-performing company, with 1,200 employees, covering 10 states and generating $1.2 billion in annual sales revenue. Its metrics were outstanding:
- Earnings before interest, taxes, depreciation, and amortization: 12%
- Compound annual growth rate: 20%
- Inventory turns per year: 10
- Average days of sales outstanding: 34
- Percentage of revenue spent on corporate costs: 1.5%
How did they do it? Here are some lessons learned, based on excerpts from my conversations with them.
Used with permission
Bill Vogt
Human Resources Leadership Matters
“I saw Bill transform from an in-the-trenches, hands-on, do everything manager to an executive human resources professional, leading a staff of talented individuals as a team,” Cavanaugh says. “Not many individuals have the capability, adaptability or expertise to lead, grow and adjust that quickly. Because of Bill’s unique talent, humility and undying commitment to do “right” by both the employees and the company, he was not only able to grow and adapt but THRIVE in this rapidly changing environment. Remember, Hope Lumber completed 20 acquisitions, added 70 locations and over 1,000 employees. Bill did an exceptional job, allowing the rest of the team to concentrate on transitioning customers and revenue.”
To that, Vogt says: “I will always appreciate how deliberate Jim was with my development. We both understood that if I didn’t understand the details of the business, how could I be effective in impacting the company objectives? In turn, I worked hard at earning my place at the strategy table.”
Hire Entrepreneurial Talent as Location Managers
“Jim’s and my thinking were very, very similar,” Vogt says. “He truly saw and valued strategic human resources input. He was a driver who knew that he didn’t want to be the kind of corporate executive who pulled strings on puppets. … He didn’t have time for it. My role was to make sure we were people smart. Standards were set, but he also granted the autonomy necessary to hire highly talented people. Hire talent solutions, support them, but also get out of their way. We both agreed that building a culture of excellent talent with loose reins on people was our vision. If you must light fires under people, you likely have some combination of poor leadership and the wrong people on the team.
Set up the Right Compensation Program:
Vogt says: “A good understanding of psychology added to incentive plans is the secret to great compensation programs. Our compensation program at Hope Lumber was almost perfect. It was designed to attract the kind of decisive entrepreneur who would manage our operations as if it were their own company, the only difference being that they didn’t have to come up with the working capital. We collected the first 2% of sales to cover the salaries we paid, paying out 10% of the remaining part of operating profit, adjusted down if they mismanaged their inventory, accounts receivable, or safety benchmarks. We wanted to pay large bonus checks.”
And Cavanaugh adds: “Bill developed industry-leading incentive compensation plans for managers, salesmen, truck drivers, load builders, and production workers. Many of those plans are still being used today! He provided the leading edge of the transformation and consistent superior achievement of personal performance.
Culture of Performance and Integrity
“Hiring and vetting for integrity is key,” Cavanaugh says. “The loose reins granted to our location managers meant we had to have confidence that their values aligned. Hope Lumber had some of the best location, market, and executive leadership in the industry. Many of those professionals are in top leadership roles at Builders FirstSource, BMC, and other companies today. Bill had a tremendous impact on the development of this structure as well as the recruitment of those leaders.”
And from Vogt: “The incentive program and culture of performance drove out incompetent talent rather efficiently. We believed clear and objective personnel evaluations respected the integrity of the underperformer while giving the opportunity to grow – and protected our culture at the same time.”
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We all have mentors, those people who have generously shared their wealth of knowledge and experience with us. Bill, thank you for giving this once 29-year-old rookie recruiter a shot at serving you 20 years ago. When I tell stories of the shoulders of giants I am standing on, yours are the first ones told. Your friendship will always be valued. Now we can focus on more important goals, like catching big fish in the Gulf.
Don’t underestimate the depth of his knowledge, experience or the breadth of his career achievements. Don’t hesitate to reach out to Bill with your human resource questions. Jjust make sure you have a full cup of coffee, a clean note pad and plenty of time. …
Thanks, Bill!
