Warmth, Integrity, Spirit

Aug. 1, 2008
The organizational chart of cfm Distributors looks a little different from the structure of most companies. At the top of the chart is the customer, and

The organizational chart of cfm Distributors looks a little different from the structure of most companies. At the top of the chart is “the customer,” and every other position within cfm Distributors is designed to support each and every person who places an order or comes to one of the five stores in Kansas, Iowa and Missouri for HVACR equipment and parts.

The customer is at the top of the chart, but cfm Distributors has a 39-year track record of forging close relationships with its employees as well as its suppliers. Tom Roberts, cfm Distributors' president, proudly points to the company's mission statement that describes what the company is all about: cfm Distributors is devoted to delivering success to our customers, our employees, our suppliers and our company with warmth, integrity and spirit.

“That's what we do every day,” Roberts says of the mission statement that was developed in 1993. “Work in ways to help our customers succeed. We also think heavily about employees and their situations and their success. We don't think win-win is a tired buzzword with suppliers. We think we can all help each other get what we need: customers, employees, suppliers and the company.”

Roberts is the third president of cfm Distributors, which was founded in 1969 by Roberts' father, Amos, and his business partner, Bruce Huffman. Roberts and Huffman were manufacturers' sales reps, and they were approached with the idea to open a wholesale distribution business in Kansas City, MO. “They thought it was a good idea,” Roberts recalls, and it certainly was. In their first year in business with one supplier, revenues were $486,000. The business grew from there.

Tom Roberts joined the business in 1981 after three years of working for York's engineered machinery division selling large commercial HVACR equipment. By then, cfm Distributors had become a York distributor. “It all kind of fit together,” says Roberts, so he moved from Atlanta back to Kansas City to join his father and Huffman.

With the country in a recession, 1981 was not a very good year for business — or for consumers, for that matter. But economic difficulties also proved to be something of a revelation for the company. “In those tough economic times, we, in turn, were struggling and had to do something,” Roberts recalls. Amos Roberts and Huffman called their employees together and said they would vote on whether to take a 10 percent cut in pay or reduce the work force by 10 percent. The employees voted to cut their pay. By the end of the year, business had improved, and the company repaid them.

Beyond there was a large lesson of employee loyalty to one another: the importance of getting buy-in from all employees. For the past 12 years, the management team has held twice-monthly meetings, the first on the company's sales, profitability and general financial performance, and the second on the fast-growing replacement parts, supplies and store operations performance.

With its employees so clued in to all aspects of the company, the next logical step was to turn the employees into owners. Roberts' father had retired in 1993 (although he still works about 12 hours a week in customer technical support as the author and provider for the company's internal job-quoting software), and Huffman was preparing to retire in 2001. “For us, it was a natural evolution,” Roberts says.

“We had taken the employee culture established to the point that it seemed like this is where we were heading,” he says. Planning for the change to employee ownership began in 1998 and took effect in 2001. Employees own 39 percent of the company, while Roberts owns the remaining 61 percent. While employees had always felt a responsibility to the company and to one another, becoming an employee-owned company has “crystallized” the culture of cfm Distributors, making what they do even more relevant, Roberts says. “It's given people a reason to fill in for the person who is sick or who has a family emergency.”

But the customer-focused ethic that is evident throughout the company is not just a result of employee ownership. Remember the mission statement? “Warmth, integrity and spirit” are important elements that help to define the company and make employees want to stay. In fact, the average employee has been with cfm Distributors for 12 years. This sense of family and fun translates into easy and enjoyable customer experiences, like freshly baked Otis Spunkmeyer cookies and ice cream in the summer at cfm Distributors' stores. “There's always something new going on at the stores, and there's always a good reason to want to come to us, hopefully, instead of our noble competitors,” Roberts says.

When Roberts refers to his competitors as “noble,” he means it. Distributors in cfm markets are regional players — there are no national distributors, he notes. “For the most part, we have good competitors who have the best interest of the customer at heart. It's a good industry to be competing in — it's a small world — and your reputation and integrity are everything,” Robert says. “We're fortunate in the Midwest to have the kind of people who take the long view on a lot of different issues.”

That long view has certainly benefited cfm Distributors. Look at the company's growth rate since 1969 and you'll see a nice, steady, upward curve. “Our average annual growth rate has been about double digits since 1969,” Roberts says. Being involved in diverse market segments has helped buoy the company during the times when certain markets were flat. In fact, cfm Distributors is involved in practically every market that an HVACR distribution could be in ? from all aspects of commercial and residential to applied equipment, replacement parts, and tools and test instruments and supplies.

In the Midwest, new residential construction sales are also somewhat weak, but there remains a relatively strong commercial market. “So we can shift resources and shift our emphasis over to those markets that are continuing to be successful, while the other markets are recovering,” Roberts says. The relatively flat and flexible management structure has helped the company to easily shift gears into different markets.

The flat organizational structure means that customers don't have to go through layers of managers to get issues resolved. All cfm Distributors customers have a VIP card that contains the cell phone numbers of all the key people within the company, including Roberts, the tech support people, salespeople and parts people. Roberts says he'd rather resolve an issue at 10:30 p.m. on a Saturday than have to hear from a customer Monday morning who has had an entire weekend to stew about not being able to talk to someone.

The company has maintained such a flat structure even through its expansion to new markets in the late 1990s and 2000. Upon Amos Roberts' retirement in 1993, Huffman and the younger Roberts convened a strategic planning session that led them to conclude that they needed to be more than a local player. From 1997 through 2000, cfm Distributors opened one new store a year. In addition to the original Kansas City store (cfm Distributors does not call them branches), there are stores in Wichita and Lenexa, KS, Des Moines, IA, and Springfield, MO.

All are within three hours of the Kansas City headquarters and along major highway routes. Being in distinct markets yet close enough to the company's 85,000-square-foot central headquarters allows it to leverage resources and gain the economies of scale that a multistore operation can bring to a company. Roberts notes the importance of the store locations. Springfield is the regional market center for southwestern Missouri and northwestern Arkansas, Wichita is the largest city in Kansas, and Des Moines is the market center for Iowa.

Roberts says the location of its Wichita store is especially fortunate as two of its major suppliers ? York and Coleman ? have significant bases of operation in Wichita, and York's Commercial Unitary Products Group is just three hours away in Norman, OK. “We're the hometown distributor of the hometown brand, and that provides us with the opportunity to have a great relationship with really great manufacturers,” Roberts says. Such proximity gives cfm Distributors' engineers and technicians access to top engineering people so they can collaborate on customer needs. “They are incredibly responsive. It's just been a mutually rewarding relationship. The York people in Wichita and Norman operate state-of-the-art facilities and deliver a top-quality product with class,” Roberts says.

But it's not just the local ties that bind. Roberts says there's a Midwestern work ethic that plays a major role in this. “So having that management team in place at York in both Norman and Wichita doesn't just mean that they're close to us; it means that they think like we do and they have the customers' best interests at heart, and are ready to do the things that are necessary to maintain the integrity of their brands,” Roberts says.

Training remains a mainstay of cfm Distributors for both customers and employees. Technical and business training courses are held at all the stores throughout the year, customizing materials for the needs of its customers ? whether they are installers, technicians or salespeople. Some programs, like its Masters of Sales course, have become multisession programs. cfm Distributors has also been heavily involved in contractor training and continuing education that has since become mandatory in Kansas. Technicians can use most of its training courses as continuing education credits.

The company also invests in training its employees. Susie Smith, manager of the Kansas City store, holds the distinction of being the first HARDI-certified counter specialist. Roberts says she would have taken the training even without the certification offer. “She's a good example of someone who constantly wants to better herself and offer better service to her customers.” There are now more than 25 employees enrolled in HARDI continuing education programs.

Such training is just one of the benefits of being a HARDI member, Roberts says. “It's excellent, and it's another great resource and reason to be involved with HARDI.” As the president of cfm Distributors, Roberts appreciates the benchmarking conducted by HARDI. “It's really the best benchmarking in our industry by far,” he says. “It allows distributors to see how their financial performance compares to their peers across the nation. I consider that to be part of my training.”

He knows that change will continue to be the constant in the HVACR industry and, by extension, among wholesalers. “I'm beginning to think that management's primary responsibility is the management of change,” he says. “And once you get past establishing and reaching financial goals and recruiting and retaining the best employees, you wind up with change being the biggest continuous challenge.”

Michael Maynard is a business writer in Providence, RI, who writes on issues related to HVACR, construction and architecture. Contact him at [email protected].

Best Practice

Training — Internal/External

Definition: Offer the best training opportunities for staff and customers. Be recognized for leadership in technical expertise and training classes. Encourage broad and deep participation in training at all levels.

Examples: Internal — Utilize HARDI training for counter personnel and front-line customer service team. Reward completion with cash bonus. Encourage attendance at University of Industrial Distribution — (three attendees last session). Utilize desktop training (PowerPoint e-mails) on new product offerings, complete with tests and rewards (gift cards), and drawings for completers. Encourage and support lifetime learning. External — Provide technical training throughout the service territory that also qualifies for NATE®, state and county licensing continuing education credit. Provide technical training at county-required contractor licensing continuing education training sessions. Provide online training opportunities for NATE testing and employee screening.

Significance: Internal — Education leads to knowledge which leads to expanded opportunities to assist others inside and outside of the company, creating leaders in organizations to show by their example the value of education. External — By making our training meet the qualifications of other agencies, we simplify the training choices of the contractor and reward them more broadly for their participation and attendance in our programs, wherever and whenever they are offered.

Benefits: Internal — The best technicians seek the qualified counter for answers to daily problems. Highly qualified customer service personnel can provide answers to system questions that help sell correctly matched systems and reduce costly errors in system selection and option choices. External — Greatly simplifies the overall task of technical support. Increases the communication effectiveness between contractor installer, service personnel and our technical support team.

Procedure: Internal — Identify areas of desired improvements and fundamental knowledge, then utilize HARDI resources to build competencies. Encourage the store managers to attend UID (University of Industrial Distribution) training. External — Determine the requirements of other continuing education entities in the service area, and include those requirements in the creation of the syllabus and training program materials. Maintain the relationship with submission of new training courses to the oversight bodies for approval. Promote the qualification in all training materials and fliers.

People involved: Internal — New products by product managers as appropriate, HARDI training monitored and supported by managers. External — VP of Sales and Marketing, Technical Support Manager, Parts and Refrigeration Manager, President, Marketing Staff at annual meeting to modify training opportunities, schedule training for new product offerings or strategic directions. Marketing staff develops annual schedule for training, inserting new offerings, etc.

Timing: Internal — Continuous with emphasis on UID schedule. External — Set annual calendar and publish on website. Avoid May?Sept. dates for classes.

Cost: Internal — Training is a moderate development cost. External — Training charged at a level to recover all costs. Excellent training is well worth the cost. We provide discounts for multiple students and prepayment to encourage broad attendance and commitment.

Other considerations: Internal — Provide incentives for those who participate in training. External — Provide incentives to those who provide training. Distribute a percentage of the net income of the class to those who prepare and deliver the training curriculum.

Contact: www.cfmdistributors.com

cfm Distributors at a GlancePresident & CEO: Tom Roberts Vice President: Cal Berry, VP Sales & Marketing Headquarters: Kansas City, MO Operations: Full-Service HVACR Distributor with Applied Equipment Kansas City, MO
Des Moines, IA
Lenexa, KS
Springfield, MO
Wichita, KS Employees: 55 Annual Sales: $30 million Major Product Lines: York, Coleman, Bohn, Reznor, CES, Johnson Controls, Honeywell Website: www.cfmdistributors.com Year Founded: 1969