Saturday, May 19, 2007

Les Schwab, RIP

It's the rare corporate titan who earns a eulogizing obituary from me; you've got to have some mighty good karma about the way you rake in the dough. Les Schwab did it the right way:
``There will never be another Les,'' Phil Wick, chairman of Les Schwab Tire Centers, said in a statement. ``He was a visionary, and all of us who worked with him will stay true to his vision of integrity, service and treating people right.''

Until about a decade ago, Schwab appeared in nearly every commercial for his company, making him one of the best-known faces in the West and fixing himself in the region's collective consciousness.

Employees wear their hair above the collar and sprint to customers' cars when they pull in.

``They are known for their service and dealers from around the United States will travel to Les' stores to see how he does business,'' said Bob Ulrich, editor of the Modern Tire Dealer.

``Superb customer service is the key and Les just happens to be better at it than anyone.''

Schwab's profit-sharing program put 55 percent of profits - or more than $60 million - in employees' pockets in 2002, which encouraged worker loyalty. And Schwab liked to promote employees from within.

``Why wouldn't you work for him? You've got to work hard, but what if you were guaranteed to retire wealthy?'' Ulrich said. ``His profit-sharing is a great program, and it's rare.''
You can't underestimate the power of employee loyalty to a company's success, but the covenant between owner and employee that used to exist--work hard for me and you've got a job until you drop--dissolved a number of years ago. It's just too tempting to muck with your labor force, given the percentage of most owner's costs represented by labor. And so in return, employees take no investment in the fortunes of the company on a daily basis, and leave on a whim taking their training and experience with them. Maybe Les just understood what hard work was worth:
His mother died of pneumonia when he was 15 and his father, an alcoholic, was found dead in front of a bar just before Schwab's 16th birthday.

An aunt and uncle offered to take him in but he rented a room at a Bend boarding house for $15 a month and delivered newspapers for The Oregon Journal while struggling to finish high school.

He got the coveted downtown delivery route and added another, and at 17 was making $200 a month, about $65 more than his high school principal, and owned the only new car at school, a Chevrolet sedan.

After graduation he married his high school sweetheart, Dorothy Harlan, and continued selling newspapers full time. At 25, he took a job as circulation manager of The Bend Bulletin, but wanted to try something more lucrative.

He borrowed $11,000 from his brother-in-law in 1952, sold his house and borrowed on his life insurance policy. He walked away with O.K. Rubber Welders, a dilapidated tire franchise with no running water and an outdoor toilet. He knew nothing of tires and had no formal business training.

But by the end of the first year, Schwab had done $150,000 in business, five times more than its previous owner - and by 1955 he had opened four more stores, two under the name Les Schwab Tire Centers.
We'll miss your corny commercials, but we've got the people running out to meet our car, and the free beef, to remember you by. And that's probably how Les wanted it.