Third-party logistics company C.H. Robinson tripled its business in 10 years, reporting $9.3 billion in gross revenue in 2010, and completing a transformation that has seen the 115-year-old company transitioned from a grocery sourcing operator to the largest freight broker in the U.S.
By the end of the first quarter 0f 2011, the company had 7,783 employees at 231 stations, most of them in the United States, but a growing number at operations around the world to serve the company’s expanding ocean and air freight business. C.H. Robinson has maintained a strong corporate culture across a far-flung network, a culture that emanates from its corporate headquarters in Minneapolis but is recognizable in Europe and Asia as well as across its U.S. offices.
Commentary: Driving Retail Supplier Compliance.
C.H. Robinson expects to do more hiring this year in a recovering economy to serve its growing business. We talked to Senior Vice President Jim Butts about what C.H. Robinson looks for in recruiting, how the company helps its hires become successful employees and how it maintains its company culture as it grows.
Q: Tripling in size and doubling your head count in 10 years has to challenge your ability to keep company principles in place. How do you do that?
Jim Butts: Part of the answer is in the question. Because we maintain a common view and a common culture, that’s partly what enables our people.
There are some unique characteristics of our organization that support that culture. For instance, we’re decentralized, and that is because we want to have people who are able to make decisions for our customers and be responsible for our customers. And that means shippers, receivers and our contract carriers as well, because we have to add value to all the parties that are in the transaction.
So we’ve got to have people that are decisive. People react well when they’re empowered.
Q: Is that a common trait of a C.H. Robinson employee, whether they are in New York, Minneapolis or Seattle?
A: That decisiveness, that desire to be empowered, to take action on their own — as a manager, one of the things that I realized happened a lot with, say, poor performers, is they would say things like, “I don’t understand, I’ve done everything people asked me to do.”
Well, the fact is, nobody has time to ask every employee to do everything that needs to be done. No more so than a customer these days has the time to ask any service provider to do everything that needs to be done. There is great value in people as individuals within their career taking action, in what we’ll call their discretionary volition, to make decisions on their own and take action to contribute to customers’ goals. And we as an organization have to do that for our customers as well.
So it is not just executing.
Q: As you grow, can you lose control of that culture? You may want people to take action for their customers, but you want them to take actions that reflect what C.H. Robinson is about.
A: What you are looking for is characteristics that do well within that culture. So certainly decisiveness and ability to function in an empowered manner with customer orientation is important, because we as an organization are not asset-based. And so everything looks to be a resource.
Q: What do you mean by that?
A: When a customer calls and wants to move something from point A to point B, for a transportation provider that becomes a decision on whether they have a piece of equipment within 50 miles or 100 miles. That’s never the case for us. We look for what resources are out there. What ways do we have of accomplishing this customer’s goal? So we don’t look at it is a yes or no decision. When you look at what ways there are of accomplishing a customer’s goal, you have to be much more creative and resourceful.
Q: And how do you promote that in a day-to-day way to more than 7,000 employees?
A: Another thing that we think is pretty unique about our culture is “pay for performance.” It’s based on how an individual or team performs, how a specific office performs and how the organization performs. We think that is really key.
When you have organization that has to meet the expectations of 37,000 customers, with 49,000 contract carriers, you’ve got to be flexible, you‘ve got to be agile, and you’ve got to have people that are excellent communicators just to meet those needs on a daily basis.
You may have one particular shipper who has delivery expectations of 98 percent on-time pickup and delivery, then you’ve got asset providers who have different expectations and you’ve got to find a way to bridge those expectations so the customer’s needs are met, the contract carriers needs are met and you do it in a seamless way and fluid way that gets it done on a daily basis. So you have to meet the high expectations of multiple stakeholders that require a certain level of service intensity.
And you have to be versatile. And this is something some people struggle with: You have to be extremely detail-oriented, because transportation and shipping and supply chain management are detail businesses, and have to have an eye on the big picture, too. What is the customer’s overall strategy? What are they trying to do in the marketplace? What is their competitive position?
And we have to have people who are high-touch and good with people, people that are high-tech, in that they’ve got to understand technology. And you have to be high-team — working with others. It’s very rare anymore that one individual can satisfy the needs of one customer, particularly in the global supply chain. We often have multiple people in remote locations that have to be brought together in such a way to meet the needs of a customer.
Q: What you are talking about is intangibles. In hiring, I’m sure you hear from people who tell you how much they increased revenue here or accomplished something there. How do you ensure in hiring that you get those intangibles? How do you assess them?
A: We’ve got a process where we evaluate people based on specific characteristics we’ve found to be important in successful individuals in Robinson.
Specifically, one would be the ability to take responsibility for results without having direct control over any of the elements. Because the first thing a customer is going to ask if a shipment is late is, why didn’t you use a truck with enough hours to get the job done? So our job is to have a plan, but also to have a contingency in place. Because the successful businessperson is the one who has multiple options that they are able to exercise in such a way that they meet the service expectations of the customer.
One of our traits is “think, plan and go.” It seems pretty simple, but it’s always something we have to have in the back of our mind. Because in shipping, transportation and supply chain management, something is going to go wrong at some stage in some part of the transaction. And what do you do in that eventuality?
When I was a manager, everybody would come in for a job interview and say, “I’m a great team player; I’m a great problem solver.” Well, OK, what does it mean that you’re a great team player? For Scottie Pippen, that meant something different than it meant for Michael Jordan. Does that mean you get along with people, or does that mean the people you work with improve and work at a higher level because you are able to see their strengths and help them be more effective?
You add value as an individual by contributing to a team. And the team’s goal is to make sure the customer and carriers are satisfied with the service. If the customers and carriers don’t see the value you are adding with your service, it’s a tough industry to make a living in.
There are individuals that may have a very high performance as individuals. And then what we find is we have to encourage them to grow in a way to become successful in a team environment. And oftentimes that means doing a variety of things depending on the customer’s needs. It’s he or she that is most flexible that finds a way to win.
So that is something we look for, certainly from our managers. We promote from within. We think that’s good internally, and we think that’s good for our customers as well. Because our customers want to see that people that are meeting their needs are also growing their careers.
Q: Do you find it difficult to bring people in at the management level? Do they have a tougher adjustment than someone who has grown up in the company?
A: Part of that, and this is my perspective as a manager, being a third party logistics company, one that does not rely on assets as its main way of operating, having that mentality that we’ve got to find the resources to get things done for the customer, that is something people get more effective at as they learn early in their careers. And — this is not an absolute, just my experience — it’s an acquired taste. Many people like the certainty of saying yes or no and moving on to the next question. With us, it’s, “we will find a way.”
Q: Is it difficult to foster that more resourceful approach later in a career, where you may have worked in another environment for 10 years?
A: I have talked to people that have tried to make that adjustment, and they have said that is one thing they have struggled with.
Q: Is there a particular formula you have for finding the right person, particular kinds of questions, a litmus test?
A: My experience is that in today’s world, applicants are so well coached on many of the questions that they are asked in interviews that you don’t always get the good insight into how the person thinks or how they approach a situation or, more importantly to me as a manager, what things they take into consideration as they review a situation.
What I would attempt to do is ask questions that they likely had not heard before and get a good understanding of how they think on their feet, without preparation.
Q: Even questions not related to logistics?
A: Sometimes, yes (laughing). A lot of it could be with customer service, or communicating or supporting a teammate.
Q: After you hire, how do you assess whether you’ve got a successful candidate, an employee you’re going to want to invest in?
A: One thing we do is to compare him or her to other successful candidates. Then we go through team interviews where that person is hired, at the branch. Most of the people that we hire are hired at the branches, the operating centers. They will frequently have a person to shadow, to get a good idea of what the job entails. The people who really thrive at this business, within our culture, like it because it’s fast-paced and dynamic and changes all the time.
If you look at the decisions we make in terms of who comes on board, most of the work is done in terms of preparation — having a good process, having a good shadow interaction or experience so that the employee has a good understanding of what is likely to happen, what the expectations are. You have the team interviews so you have a good understanding of whom you will be working with, but you also have an opportunity for the team to take more ownership of that process. Because just as nobody succeeds alone, nobody should fail alone either.
Q: How does the shadowing process work?
A: They will spend time on the floor so they get a good understanding of the ebb and flow, the daily conversations, what the daily flow is like.
Q: Have you had employees who surprised you by not succeeding, and have you gone back and looked at why that happened?
A: That probably happens in all business. I think it happens less in those situations where the managers are experienced, have a good process, they have team involvement, and they go through the rigor of not only knowing who they are hiring (but also) that person having a good understanding of what is going to be expected of them.
Q: So you are pretty comfortable when you make the decision that the hire has a good chance of succeeding.
A: Yes, and it’s only fair to your customers that you are not going to expose them to people who are not going to have a high probably of being successful. And it’s only fair to the hire as well. You want people who come on board to succeed. Frankly, it’s a commitment on our behalf if somebody decides to come onto the Robinson team that they are going to get the commitment of the Robinson team to be successful. It’s not sink or swim by themselves. It’s up to us to provide them with whatever support we can.
Q: The nation’s unemployment has been so high in the past couple of years, does that make it easier to find recruits?
A: There are more candidates, but it gives our recruiting force more candidates to sort through, and it increases their workload. But it does not necessarily translate into more of the candidates we are looking. Just because the numbers increase, that does not mean it increases the number that are ultimately going to be successful in the demanding industry that we have.
We feel as you look to where transportation has transitioned to logistics and now to supply chain management, it’s got some of the best people in business. Many of the best minds in business now are in logistics and supply chain management. It has become a C-level issue and a boardroom topic — logistics and supply chain as a way of establishing competitive advantage.
So the expectations of all the service providers have been raised dramatically. One of things I like to talk about is that it used to be transportation was moving freight from point A to point B. Now it’s moving a customer’s business to a better place. So the expectations are much higher, and, frankly, the qualifications of the people have to be higher as well. It’s a much more data-driven and analytic field as well.
Q: Is hiring in other parts of the world different from what it is in the United States?
A: One trend in the industry is increased demand for people that are multilingual. That is probably true to a higher degree in Europe, Asia and South America.
A few years ago, I was in an office in France, and they were talking about ways to expand. One way to expand was to take more freight into Germany. So what they were looking for was a German-speaking French person to build that trade lane.
Another example is that in Chicago there are a lot of Russian-speaking drivers and truck companies. So we have had people who speak Russian and Polish to do more business with those specific areas. That language area is of growing importance for us.
Q: What about the ways people deal with different business practices in different markets?
A: As the arena becomes about supply chain, outsourcing is a big trend and another is a greater reliance on our people in account management by their subject matter expertise. You can’t be an inch wide and a mile deep. You’ve got to have well-rounded business people in order to add value to a customer’s resources. We look for people that have a wide expertise in business subjects. And then we continually augment that.
Q: There are many more programs at universities involving supply chain management. Have you seen the impact of that in your recruiting?
A: The universities and colleges are much more focused on turning out graduates that have transportation logistics and supply chain management degrees. We see that as a very positive development. One thing we have done is become much more involved in those academic institutions, either in an advising standpoint — being on boards, and many other things. Many of our people go talk to classes on career days for instance. We see that as a positive trend.
The fact is, it still does not change much in terms of what we are looking for in employees. Those logistics and supply chain management degrees are important, yes, but it does not trump those other characteristics we are looking for. We need the ability to communicate, the ability to work with other people, that high-touch, high-tech, high-team person we talked about before. Those things will always be important. That does not take away from the importance of the academic discipline. It just points to the maturing of the industry. Those customers who work with us understand what our capabilities are, but they also have higher expectations of our people, which we see as a positive.
Q: Is there one relatively common thing you see candidates lacking coming out of school?
A: From talking to our customers who identify the need for good talent oftentimes, what they say is that they have a good understanding of logistics and supply chain, but they don’t have enough varied experience within the specific industries.
So it may take somebody two or three years to understand an industry before they can have a meaningful impact.