Canadian Electrical Wholesaler

 

Oct 31, 2017

By Frank Hurtte

We will be posting a lot about people over the next few weeks. Why? Without people distributors basically become an empty warehouse, a collection of well-used computers, and an assortment of worn out office furniture. Speaking with an assortment of folks from inside and outside the industry looking to purchase distribution businesses, the conversation typically revolves around three major points: profitability, solid customer relationships, and stability of people. Take away the latter two and the distributor is valued somewhere near zero. Further, it might be argued, without the people there are no solid customer relationships. So talking about people is doubly important.

Our brand of wholesale distribution is one of the most people-intensive business models in existence. Sure, we have warehouses, inventory, customer credit, computers and company fleets of cars, trucks and lord knows what else, but people are the driving force of our model. For every dollar of gross margin generated, about 58 cents goes toward paying our people. To put it into perspective, this is four-and-one-half times our occupancy expenses and three times our other operating costs. It’s a growing concern.

News pundits point to lower unemployment numbers, nearing those of pre-recession days. These numbers don’t tell the full story. I believe the pool of high quality talent required to impact our business has been fully absorbed. It’s the law of supply and demand. Since midway through the year, salary demands by new recruits have been on the rise. This is especially true for high skill and technically qualified folks. For example, the starting wage for new engineers straight out of college (University of Iowa) has reached US$60,000.

The business model doesn’t allow a lot of leeway for raising the cost of employees. We can’t afford to raise our percentage spent on people above the 60% point and remain in business. There is little we can do about the escalation of salaries, benefits or health insurance. Productivity gains are no longer just nice to have, they are a necessity to survival.

Let’s explore some of the best practices used by others to build productivity within your organization.

Experienced people tend to be more productive

Research into hundreds of distributor organizations points to evidence that experienced people are more productive. They know the systems, short cuts and processes required to adequately carry out their jobs. In addition, experienced folks often have a deep industry background including customer contacts and those behind the scenes whom you can call upon in a pinch to resolve issues.

Retaining experienced hands is critical to productivity with the following caveat: they must possess the right work ethic and professional skills and be in the right position. Hiring errors left to simmer within the organization don’t improve productivity. For the sake of discussion, we’ll assume the last big recession gave you the opportunity to purge them from your organization. Hopefully, other poorly performing employees are on solid improvement plans or on their way out the door.

Whether they mention it or not, assume your team is under scrutiny from headhunters. Other companies, armed with a handful of dollars, are probing your defences. Fortunately, money isn’t the massive driver many of us believe it to be. Assuming your pay scales are reasonably sound and have kept up with the industry norms, the real drivers fall into issues of job satisfaction, proper tools for the job, room for growth, and a feeling of being appreciated.

Reviews are more important than you think

After conducting exit interviews with more than 100 employees, I am shocked to find the majority indicate they have not had an adequate review of their performance for years. Their managers point to ongoing informal conversations with the employee, but those leaving don’t see it that way. What’s missing? A plan for the employee to grow within the company. A formal recognition of success with customers. A show of appreciation for years of service. Their managers use the excuse that putting together a proper review is time consuming and difficult, yet they overlook the issues of finding and training a new replacement.

A few old-school distributor owners have even commented that reviews just open the door to higher employee salaries because after a good review employees expect a raise. In today’s environment, I suspect a new hire with similar skills might demand greater compensation than the existing employee, not to mention associated costs of lost productivity.

Hiring errors are expensive

The only thing worse than losing a solidly qualified employee is hiring the wrong person. While most agree with the statement, the hiring process at many distributors is still abysmal. Let me give you some examples:

• informal interviewing techniques used without a plan. Exactly what are you looking for in the interview? Distributors walk into the conference room with no plan and no idea of what they want to explore with the candidate. Aside from a verbal walkthrough of resume details, a good interview looks for signs of work habits, communication style and willingness to be part of a team.

• personality profiling is not performed. Personality profiles are not perfect, but they do alert the interview team to potential areas to explore. In reviewing hundreds of these profiles we have discovered a number of red flags which, once explored, saved our clients from disastrous new hires.

• reference checks are done in a haphazard manner. Some see this as tedious work. When potential employees come from large companies, you get the standard “they worked here from 2011 to 2015 and that’s all I can tell you” answer. Taking time to find mutual friends and/or customer contacts takes a little effort, so the process often goes by the wayside.

• background checks are often amateurish. I know of a distributor who hired a truck driver with two prior DWI convictions. How did this happen? Further, one company asked me to assist them in their background check. Their search came up with a clean record, while my paid search revealed two felony thefts in another part of the country. Strangely, the potential employee forgot to mention he lived in North Carolina for two years.

Extending this hiring error discussion, best practices indicate new hires be reviewed at the 30, 60, 90 and 180-day mark. An employee showing the wrong signs in these early days needs to be corrected. If no improvement is shown, he or she should be terminated before becoming a detriment to your organization.

Onboarding process

Getting a new employee off on the right foot can speed the time from profit drag to profit generation. An onboarding process is critical during this “need for speed.”

That’s not all

There are a number of other “people points” we need to discuss. In an upcoming issue, we will post Part 2, where we discuss applying management and coaching points to the process.

Frank Hurtte is the Founding Partner of River Heights Consulting. The Distributor Channel is a service of River Heights Consulting. Find out more: www.RiverHeightsConsulting.com.

Jean-Pascal TricoireBy Jean-Pascal Tricoire

The challenges facing industry at the moment are tough: supply chain disruptions, recurring lockdowns and lingering travel restrictions, to name just a few. We’re all trying to find the balance between overcoming these challenges while working to a future where we are more resilient, sustainable and efficient.

But today’s efforts are not enough. We’re being too conservative. More of our collective energy needs to be spent on the practical “how” — the “how can we get there with immediate actions.” 

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RittalIt is April 1, 1961, when an international success story begins in a small weaving mill in central Hesse — the standardization of enclosures. Rudolf Loh founds the Rittal company and changes the industry with one idea. The standard enclosure is used in millions of product solutions in over 90% of all industries worldwide. Rittal is the innovation and world market leader for enclosure technology and IT infrastructure.

10,000 employees worldwide work on new innovations, industry solutions and business models. A small steel manufacturing company has become a global digital enterprise. 

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David GordonBy David Gordon

Electrical distributors are at a unique moment in time where they have an opportunity to leverage technology to utilize the data it can unleash to accelerate profitability and sales cost-effectively.

Being in an information age is only beneficial if the information is utilized. Enhanced sales models, sales opportunities and servicing systems are combining to help differentiate distributors. Aside from a distribution divide being created by digital and supplier selection, analytics can either widen or tighten the divide.

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GDP - January 2021Real gross domestic product (GDP) rose 0.7% in January, following 0.1% growth in December. This ninth consecutive monthly increase continued to offset the steepest drops on record in Canadian economic activity observed in March and April 2020. However, total economic activity was about 3% below the February level before the COVID-19 pandemic.

Both goods-producing (+1.5%) and services-producing (+0.4%) industries were up in January as the 20 industrial sectors were nearly evenly split between expansions and contractions.

 

 

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Swati Vora-PatelBy Swati Vora-Patel

April has been a flagship month for new milestones: it has been one full year since many of us began working from home; Zoom and other such virtual platforms have been in play for a year to keep us connected – and the reliance on digital systems has heightened over the past year to populate the influx of online catalogues and eCommerce sites.

April also marks one year since I took over the reins of EFC’s Supply Chain Network to support the electrical industry’s digital transformation journey. 

 

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Changing Scene

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Leviton

The Atlantic & Ontario YPN regions have joined forces to present YPNs with this professional development webinar. 

Date : May 5, 2021
Time : 2:00 pm to 3:30 pm EST
Location Zoom meeting
Cost : $20 (plus taxes)

More than ever, interpersonal relationships are a crucial factor in the success or the failure of an organization but also in the fulfillment of its individuals. Far away from being an easy competence to develop, soft skills might be the determining factor that will make the difference in your professional career. This webinar will give you tools to help boost your motivation and your performance in order to reach your goals, both professionally and personally.

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Bogdan BotoiE.B. Horsman & Son has transferred Bogdan Botoi from his PAC BC Manager position to lead EBH’s newly formed Industrial Services Group (ISG) as Manager.

With his vast knowledge and experience from the PAC world and his engineering background, Bogdan will lead the ISG team in continuing to provide value-added services such as proof of concept design support, MCP design, training, and other technical services and support for our customers.

 

 

 

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Canada's International Investment Position, Fourth Quarter 2020Despite ongoing current account deficits and the corresponding need for foreign borrowing, Canada's net foreign asset position continued its upward trend in the fourth quarter to reach an unprecedented level of $1,360.6 billion. For a third consecutive quarter, the increase (+$248.1 billion) was attributable to higher foreign equity prices and was moderated by the revaluation effect resulting from fluctuations in exchange rates.

Over the quarter, changes in market prices led to a $345.3 billion increase in Canada's net foreign asset position. Major foreign stock markets outperformed the Canadian stock market in the fourth quarter. 

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VerozzaUnderstanding the challenges of time-sensitive job situations, VEROZZA has introduced a Quick Ship Program for their most popular high-performance downlight collections. The program includes the ARIOBASIC and TAKEO 4.0, products, which will ship within 5-business days of receipt of order.

The process of selecting the correct fixture is easy. Select a housing and trim that include a few customized features to create the fixture Product Code. Orders can be placed at orders@verozza.com or by phone at 833.VEROZZA.

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BridgeportBridgeport Fittings’ patented Mighty-Align® Steel Slip EMT Couplings eliminate the need for additional components when installing Prefab EMT racks. The couplings can also be used to join two lengths of conduit in tight, limited space applications.

Bridgeport Fittings’ center set screw feature provides the UL-required conduit stop while a convenient sight window allows for visual inspection of proper assembly. The steel slip couplings’ ability to back out the center screw allows the coupling to be temporarily placed on one conduit end while the other conduit is moved into position. The slip coupling can then be slid into place, joining both conduits.

 

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Peers & Profiles

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My first question to David was, what has happened in those six years? “Everything,” he said, and he started to laugh. “Obviously, we faced a lot of disruption from LED technology. 

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Rob DewarBy Line Goyette

Rob Dewar is President of AD Canada as of this past January, when AD announced it had made the strategic decision to establish AD Canada as a distinct business unit, serving the more than 150 members of its three Canada-based divisions. I recently had the chance to virtually meet Rob. I met a passionate leader about his new challenges.

“There are many projects in progress and specific to the Canadian industry and industry players. Interesting initiatives for the fall of 2021 will be announced shortly”. As Rob Dewar confirmed...

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