This MTD exclusive was provided by Michael McGregor, a partner at Focus Investment Banking LLC (focusbankers.com/ automotive/tire-and-service) and author of MTD’s monthly Mergers and Acquisitions column.
A Supreme Court Justice once
observed that “the true
symbol of the United States
is not the bald eagle. It is
the pendulum. And when
the pendulum swings too far in one
direction, it will go back.”
This pendulum swing may be happening right now with regards to corporate
profits and employee wages.
According
to the Federal Reserve Bank of St. Louis,
corporate profits as a percentage of
gross domestic product (GDP) more
than tripled from a low of 3.7% in 1985
to a high of 11.5% in 2021.
At the same time,
employee compensation as
a percent of GDP declined
by 20% over much of this
same period, from the high
point in 1970 to the low point of 2015.
This is partially what is behind the
“great resignation” we observed during COVID-19. We’ve seen decades
of unparalleled profits in corporate
America, while workers’ wages have
remained stagnant.
Some workers feel they have been left
out and their wants have been ignored.
The pendulum has now swung back in
their direction. Many are looking to
“work to live” rather than “live to work.”
They want to be valued for the work
they do and they demand higher pay.
Why else would 4.5 million people
quit their jobs last November – the
highest resignation rate per month
ever, according to the Bureau of Labor
Statistics? Workers voted with their feet.
While there are many ways to attract
and retain employees, I’m going to
focus on just one – having a mission
or purpose they can buy into, other
than just making a buck.
A quick check of some leading automotive chains’ websites tells me that a lot
of businesses are looking inward when
presenting themselves to the public.
Statements like “we are after complete
customer satisfaction,” “we will not be
undersold,” “safety is our priority” and
“we offer the highest quality” are what
I mostly find.
A few have vision statements, but
the purpose of those is to explain why
customers should shop at their stores.
An effective mission statement
explains your organization’s reason for
existing. It’s a simple, short explanation
of your company’s purpose and intent.
This mission statement
can support a company’s
vision of being the best or
being the lowest-priced
or whatever that vision is.
But a concise statement
must give your employees, customers and
stakeholders an idea of what you are all
about. And it should give your associates
a greater sense of identity.
In my previous career, my mission
was “to keep people driving by providing
peace of mind with predictable, affordable, high-quality car care.”
The “keeping people driving part”
was intended as the general purpose
“feel good” – implying we help move
people and society forward. The other
parts related to our subscription-based
model that was intended to re-engineer
the auto service business.
Customers and employees bought
into our mission. This was reflected
in everything we did in our stores and
even in our community involvement.
Every month, each of our stores took in
a donated or abandoned car and fixed it
up at no cost for needy people through
Goodwill’s Car Donation Program. Our
employees felt really good about this and
it reinforced our mission to improve
the auto repair business for everyone.
When I exited that business, I chose to
reinvent myself as an investment banker.
I was no longer on the grand mission of
re-engineering the car care business and
was instead “just doing deals.”
My son, Neil, who was maybe eight
years old at the time, told me that what I
was now doing was just as important as
what I did before because I was helping
people. So that’s my mission. I help people.
If a tire dealer wants to pick my brain
about what their options are, I’ll spend
some time educating them – even
though I can’t represent them if they
are too small.
If a tire wholesaler is facing liquidation because their main vendors
pulled their lines, I‘ll see what I can
do to engineer a quick exit – even if
it’s too late.
If a multi-location tire dealer is
breaking even, I’ll look at their books
and give them ways to improve their
performance.
I speak at industry conferences to
help educate tire dealers. I write this
column to hopefully make you more
aware of the private capital markets – and your options. All of that is without
getting paid.
Now don’t get me wrong. I make a
great living as an investment banker helping people in the automotive business.
But it’s my mission that drives profit
and not the other way around.
I urge you to find your mission. It
will benefit you and your business.
And it will benefit your employees
— giving them a higher purpose to rally
around.
