Breaking the Ice After acquiring Buena Park Lumber & Hardware in 2002, Ganahl transformed it from a diamond in the rough to a polished performer.
When Anaheim, Calif.–based Ganahl Lumber took over Buena Park Lumber & Hardware on July 1, 2002, its executives knew, almost immediately, that incorporating that store into Ganahl’s operations wouldn’t be a cakewalk.
Buena Park Lumber, based in Buena Park, Calif., wasn’t profitable when Ganahl bought it, and some employees were hostile to the idea of a longtime rival acquiring a family-owned business that dated back to the beginning of the previous century. And its 86-person workforce had settled into what Ganahl Lumber president Peter Ganahl calls a “‘task culture,’ where people were told what to do and they did it.” What he wanted instead was a “results culture,” where employees are remunerated based on their performance and how it contributes to the prosperity of the store.
“That,” admits Ganahl, “can be scary to a lot of people. But we had to take Buena Park down [by altering its compensation structure] to bring it back up.”
Ganahl Lumber offered jobs to virtually all of Buena Park’s employees. But some left, others were let go later, and the workforce now stands at 68 people. Paul Kelly, a 12-year veteran of Ganahl Lumber who is now general manager of the Buena Park location, recalls an absence of hierarchy at the beginning. “I had a counter sales manager who had been with the store for more than 20 years, but who had never interviewed anyone for a job,” says Kelly. “Now that person is responsible for recruitment, hiring, and training. Our hardware [department] manager, who didn’t even hire his own people, now has a targeted goal of labor costs to gross profit.”
On the up side, Ganahl says his company inherited a “wonderful customer service culture” at Buena Park that simply needed to be made more proactive and productive. To that end, Ganahl added a second shift at Buena Park—now comprised of between five and eight people—to handle late-day orders. And the larger company learned a few things from its acquisition in the areas of target marketing and purchasing Chinese-made merchandise for promotions.
In 2002, Buena Park Lumber’s stated annual revenue was about $21 million. But Ganahl says those numbers were dubious, because the store had been taking on “some really stupid business, with bad pricing.” About $3 million in business from pro customers with accounts at both companies were shifted exclusively to Ganahl’s other yards.
Ganahl asserts that Buena Park’s former general manager had kept the previous owners, the Nelson family, in the dark about the store’s deteriorating financial condition. Consequently, he now has seven people within Buena Park’s operations tracking its monthly financial results. Ganahl Lumber is employee-owned, and shares its yards’ numbers with employees. That information, Kelly says, serves as a performance benchmark for Buena Park Lumber.
Ganahl and Kelly admit that, despite these icebreakers, it’s taken longer than they expected to win over some employees to their system. But it’s hard to argue with results: This year, Buena Park Lumber’s revenue will land somewhere between $22 million and $23 million, compared to $17.5 million in 2003. And the store is back in the black.
