Distributors Change Tune on Generational Shift - Modern Distribution Management

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Distributors Change Tune on Generational Shift

This article is part of MDM's 2015 Distribution Trends Special Issue. It looks at the new mindset distributors have about retaining employees and grooming the next generation of leaders.

The annual feature was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this issue.

The full special issue is available to download in PDF format to MDM Premium subscribers. Subscribe below for full access. Or log-in if you are already a subscriber.

Trends outlined in the 2015 report include:

  • Good & Bad News for U.S. Economy
  • Distributors Get Back to the Basics
  • ‘Doubling Down’ on Distributor Relationships
  • Distributors Embrace, Expand Online Customer Base
  • Distributors Seeking ‘Lean’ Supply Chain
  • Distributors Adapt to More Sophisticated Supply Chain
  • Distributors Combine Traditional, New Means for Recruiting
  • Distributors Change Tune on Generational Shift
  • Trend Snapshots for 13 Sectors

The report also includes the following case studies and interviews:

  • 2015 MDM Market Movers
    • AJ Adhesives Takes Service to New Level
    • Plumbers Supply’s “Win-Win-Win-Win”
  • MDM Market Leader Profiles
    • Culture Drives Success for ERIKS North America
    • TTI’s Strategic Approach to Global Growth

This is a part of the 2015 Distribution Trends Special Issue. The annual feature was researched and written by MDM editors based on interviews with dozens of distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this issue.

2015 Distribution Trends Special Issue

Competition for candidates is heating up as distributors target similar candidates, according to Prudence Thompson, Egret Consulting, who says "times are weird" because consolidation has transformed the job market, giving job seekers, not job hirers, the upper hand.

"We're seeing more and more candidates getting multiple offers," she says. "This year we are seeing a big bidding war for talent again, with multiple distributors in one market all looking for the same type of person."

That increases the importance of training and succession planning as part of an overall retention strategy, especially as distributors bring more millennials aboard.

But as the generation shift continues, distributors are displaying a new tenor about differences among boomers, Gen Xers and millennials. They are taking less of an "us versus them" approach while better understanding the need to recruit across all ages for unfilled positions and adapting to the new workforce's preferences.

For example, the baby boomer generation took pride in staying in one place for a long time, which isn't as important with millennials, notes James Webster, vice president Bearings & Power Transmission Division, DXP Enterprises Inc., Houston, TX. What is important, however, is knowing how millennials fit and how they can grow in a company.

"You can train them to do things if they have a winning attitude," Webster says. "We have to create that environment for them because they really want that – and I don't blame them. But you have to constantly reinforce what they're doing, give them constructive criticism and tell them when they really seem like they are picking it up fast. That's the tough part because it is a different mindset."

Part of that mindset means mixing millennials in with older workers, says Roger Woodward, president, Alliance Distribution Partners LLC, Gallatin, TN, which provides an opportunity for veterans to train newcomers on distribution and those newcomers, in turn, to share their technology and social media skills. And while millennials aren't ready to run the show yet, Woodward says, they're especially needed to appeal to millennial buyers.

Distributors would love to be able to hire someone with many years of experience, thinking "that's going to be the secret sauce that's going to create some upside organic growth for us," says Don Fritzinger, president of Singer Equities, Pearland, TX. But the reality is that that's not always possible, especially with the influx of millennials, so it's important to focus on development and retention within your organization, "to limit the amount of talent that might turn over," he says.

That's why Jessica Yurgaitis, vice president of sales and marketing, Industrial Supply Company Inc., Salt Lake City, UT, says her company tries to "take advantage of all the trainings that are out there that the supplier puts on, especially if there's a way to become certified in something or have the ability to come back and train the rest of our staff on it or implement it at a customer level."

Along with providing the right leadership skills, distributors are finding a need to pass institutional knowledge to the next generation of executives, says Guy Blissett, wholesale distribution specialist leader for Deloitte Consulting LLP, who believes the industry faces a massive issue around knowledge transfer.

"Very few professional service firms do knowledge transfer well," he says. This provides a big opportunity here for someone to figure out how to do this well, which could wind up being another differentiator for a company.

The last HR component – and perhaps the one distributors struggle with the most – is succession planning, the process of determining who will own and/or run a business following any one of multiple scenarios, such as a sudden death, early retirement or even a planned departure.

A succession plan can be passing the business down to a family member, creating an employee stock-ownership plan, forming an aggressive management-training program to prepare future leaders, selling to a competitor – or some combination of these.

"We actually manage our planning on three levels," says Tim O'Keefe, CEO, G.L. Huyett, Minneapolis, KS. "There's an owners plan – we try to be really careful to keep ownership and management segregated – a management strategic plan and then we have a succession plan. The succession plan would be our version of the depth chart on an athletic team. We are looking at what do we have on the bench, who do we have in the game and what's happening in the game that's going to require us to have more people coming off of the bench."

Keeping an eye on the bench at all times – being keenly aware of who is getting playing time, who needs to get on the court, who is playing out of position, who bolted for another team – is an essential responsibility for any leader.

"Every company ever invented in the world will tell you people are their most important resource," says John Salveson of Salveson Stetson Group. "Everybody says that – and then you find out who acts that way. And my experience in the past with distributors is they didn't always act that way. They didn't have strong programs to develop people, they didn't have strong human resource functions necessarily and there was a lot of doing things the way we've always done it.

"Now, today, I think they are saying, 'We have got to get more serious. The future is here. The things we thought were going to happen are now happening.'"

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