When 'culture' clashes with the bottom line - TruServ Corp - Brief Article

Home Channel News, June 18, 2001

As officials at TruServ Corp. tighten the tourniquet they have applied to their co-op's operations, they are being forced to make hard decisions about its as sets, physical and personal. Those decisions are, by necessity, mandated by the buying group's still-sizable debt that must be reduced if the company has any chance of moving forward with its business strategy.

The dealer-owned buying group expects to reduce its work force by 5 percent, to 4,284 people, in the three months ended June 30. Nearly 50 salaried employees were let go in May alone. Further personnel reductions are likely, as the company scales back its operations to more realistic levels that reflect a business which could generate $1.5 billion less whole sale revenue this year than it did in 2000.

However, as it decides who can stay and who must go, TruServ officials need to be cautious about getting too caught up in the frenzy of cost cutting. It should consider the value of each employee not only to the bottom line but also to the reputation of the organization it is trying to become.

When TruServ reorganized its management structure several months ago, it fired a number of high-profile executives who for reasons that only the company's current management can fully explain, no longer fit into the co-op's plans. One of those executives was Tom Filipski, who oversaw the co-op's advertising and marketing programs. Filipski was a 21-year company veteran who had become one of the buying group's more popular and well liked officials among members, according to comments from a host of dealer-members this newspaper interviewed over the past several weeks.

Running a $4 billion organization isn't a popularity contest. And Filipski had been one of the champions of a national television campaign that promoted the True Value banner which ultimately was deemed by management to be an extravagance it could no longer afford. Still, it would appear that TruServ might have done itself more harm than good in the unceremonious way it disposed of a person with whom many members had established a personal affinity over the years.

Another associate who was let go suddenly in recent weeks was Sue Jarmoc, TruServ's media relations manager. Jarmoc had been with the co-op for 28 years and was a lot more responsive to media requests for information than some of the coop's previous corporate flaks. During TruServ's spring market in May, Jarmoc worked diligently behind the scenes, coordinating events she literally was the company baby sitter, making sure executives showed up for scheduled appearances on two live radio broadcasts from the convention floor -- and helping to prepare show dailies and speeches presented by board members and co-op officials.

Tenure and seniority should not be a shield that protects employees from the harsh realities of corporate survival. And no one is irreplaceable. But the value of these factors has been diminished to the point of irrelevance at many companies, and not just TruServ. When cutting costs overrides all else, companies too often view employees as digits to be shifted on a balance sheet.

Don Hoye, TruServ's president, told me recently that one of his goals is to create a real "culture" within TruServ, where employees, dealer-members and the buying group at large act with one purpose. But can TruServ have such a culture with out historical perspective? When companies are so focused on looking ahead, they sometimes forget to look behind at the parts left in the wake of progress that got them there in the first place.