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Robert
Low grew up on a farm, and by high school, had some cattle
and hogs of his own. To help pay his way through college,
he sold some of his livestock to make a down payment on a
dump truck.
Later, he traded the dump for an over-the-road truck, and
in 1970, his trucking company, Prime, Inc., was born. An immediate
success, Prime doubled in size nearly every year for its first
ten years.
Today, Prime is one of America’s most successful fleets,
operating over 2,500 trucks and more than 4,000 reefer and
flatbed trailers. But in 1980, Prime’s prospects didn’t
look good at all.
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How did your business
change in 1980?
Robert Low: "Like
many companies, we were highly leveraged. Suddenly, interest rates
were over 20 percent, and by 1979-1980, we owed over a million dollars
a year in interest alone, more money than we’d ever made in
a year.
"We’d also just moved the company from my home town of
Urbana, Missouri to Springfield, and we simply couldn’t make
ends meet. It wasn’t long before we were forced into Chapter
11 bankruptcy."
That must have been a terrible experience.
"Well, they say that once you’ve been through bankruptcy,
you wouldn’t do it again for a million dollars. But they also
say that once you’ve been through it, you wouldn’t take
a million dollars for the experience.
"It was during the 41/2 years of bankruptcy that we learned some
of our most valuable lessons, and created the model that drives Prime’s
business today."
What did you learn?
"While you’re in Chapter 11, you do get considerable
leeway in dealing with your existing debt, but the court is very strict
about the fact that as you go forward, your business has to make it.
You have to pay your way as you go.
"We had very little money, but to survive, we needed very talented
people, and we couldn’t pay top salaries. We realized that in
order to get top people, we’d have to share responsibility for
management and provide financial incentives for performance in every
job."
How did your management structure
change?
"Just as in many companies, our management and employees weren’t
on the same team. Things could become adversarial, with each side
trying to win and make the other side lose.
"What we needed was ‘an alignment of interests.’
We re-committed ourselves to treating everyone the way we’d
like to be treated, and to making sure their hard work would be rewarded.
"We needed a new management style, where both sides could share
responsibility and authority, and where both sides could ‘win’
financially.
"So, we developed a flat organization and put in place an operator
lease program, coupled with incentive plans for every associate in
every job.
"We were motivated by pure survival. If we didn’t make
radical changes in our organization, we weren’t going to survive.
"The great thing is that it worked, and early in 1986, we emerged
from bankruptcy and got onto the path we’re following today."
In what sense is your organization
flat?
"We have very few levels of management. That promotes communication
throughout the organization and pushes responsibility right down to
the front line associates.
"They know they can make a difference, and they can take action
without having to go through layer after layer of management.
"That kind of empowerment, plus what we feel is proper compensation,
has made Prime very ‘nimble.’ We are big, but we can be
responsive to customers like smaller organizations."
How do the incentive programs work?
"Every associate can participate in incentive programs. Many
are involved in several at once. Some of these incentives are for
individual performance, while others are team-oriented, resulting
in rewards for groups of associates."
What are some of these plans?
"All of our contractors can earn $100 for successfully completing
a safety training program. Those who help us recruit new contractors
can earn the use of a brand-new truck for a year. And there are incentives
for superior customer service, on-time delivery, continuing education
and so on."
| Customers: |
Finding, serving
and keeping customers guarantees our existence. |
| Service: |
We will provide quality service
that meets or exceeds our customers’ requirements. |
| Value: |
We will price our service at
rates that are a true value to our customers. We
will purchase products and services that possess
the best value by producing the most benefit for
the least total cost over time, and not necessarily
at the lowest price. |
| profit: |
To remain free and provide security
for our company and associates, we must earn a profit. |
| Associates: |
We believe our independent contractors
and employees are truly team members, and call them
associates. We will respect all associates as members
of our PRIME family. To ensure quality people, capable
of near perfect performance, we will select associates
very carefully. |
| Excellence:
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Our goal is to be the best. We
will strive for total quality and continuous improvement.
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| Share: |
We will share with our associates
fairly based on their contribution to our prosperity.
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| Growth: |
We will seek growth and challenge
for our company and associates, while maintaining
security and stability. |
| Safety: |
We will operate safely. We will
not exchange the safety of an associate or the public
for economic gain. |
| Environment: |
We will use our abilities and
resources to protect the environment. We are responsible
citizens of the beautiful planet Earth. |
| Technology: |
We will use cost effective technology
to improve our productivity to the mutual benefit
of our company, associates and customers. |
| Productivity: |
Productivity improvement is the
only true way to increase earnings for our company
and associates. |
| Fun: |
We will provide a work environment
that is enjoyable. We will select associates, vendors
and customers that we can get along with and enjoy.
We believe that life is too short not to have fun. |
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Don’t all of these things
cost money?
"Each one of our incentive programs is structured to be good
for both the associate and the company. Safety pays. We know that.
We can look at accident ratios and costs and see it.
"Good maintenance also pays. So most of our incentive programs
are really self-funding.
"Instead of a ‘cents per mile’ structure, we share
revenues with our contractors. They get 72 percent of revenues less
their expenses, and the company gets 28 percent. If revenues go
up, their ‘pay’ goes up."
One measure many companies use is
employee retention. How are you doing with that?
"We’ve done exceptionally well with keeping good employees.
Right now, it’s a bit tough. But we’re optimistic about
the future. As the economy continues to recover, we expect revenues
to rise again, and along with them, contractor compensation."
How can you put a value on things
like your Millennium Building?
"We know what it cost. Now, is it a good investment? It’s
one of those things, like the value of customer service, that we think
you have to take on faith.
"We believe that providing these amenities for our contractors
and associates is the right thing to do, and we believe it will pay
off over time.
"Our Chapter 11 experience taught us that we have to go beyond
talking the talk. So far, our experience tells us this has been a
good investment."
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| How
did you decide what amenities to include in the Millennium
Building?
"That was easy, actually. We canvassed our contractors
and associates, and pretty much put in what they asked for."
You also have a Memorial Day
picnic every year and a holiday party near the end of the
year. How long have you been doing that?
"We started those right about the time we emerged from
bankruptcy. The Memorial Day weekend is pretty informal, with
more of a picnic and carnival atmosphere, but at our year-end
holiday party, we often see tuxedos.
"Our associates and contractors are truly valued team
members. We tend to use terms like ‘team’ and
‘family’ a lot around here, and frankly, we mean
it. We select team members very carefully, and we expect a
lot from them."
It’s a very enlightened
management style.
"It may be. Like any company, we’re focused on
profit. We have to earn a profit in order to survive. Again,
Chapter 11 brought that home to us. In order to earn a profit,
we must offer quality service at prices that are a good value
to our customers.
"To do that, we have to have good people, and we have
to treat them right, both in terms of compensation and respect.
"What we’ve learned is that those values work and
succeed. We’ve resumed a pattern of growth, not as large
as we had during the 70s, but a solid and steady growth."
"With our new business and management model, we believe
we’ll continue to grow, continue to provide great service
to our customers and continue to offer a solid future for
our contractors and associates.
Editor’s Note: You can find
out more about Prime at its web site, www.primeinc.com.
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A partial list of facilities
in the Prime Millennium Building:
ATM
Barber Shop
Beauty Salon
Chapel
Computer Room
Convenience Store
Copiers
CPA
Daycare Center
Doctor’s Office
Dry Cleaners
Exercise Room
Food Court
Gymnasium
Hydrotherapy
Laundromat
Library
Mall
Shuttle Bus
Massage Therapy
MovieTheater
Personal Trainer
Pool Tables
Post Office
Shoe Repair
Telephones
Travel Agency
TV Room Non-Smoking
TV Room Smoking
Video Arcade
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