Organizational Structure and Accountability
Posted on: 1/20/2022
This is dialog from a Peer Talk episode between Dan Crowley, President of Peer Executive Groups and John Jeanguenat, President of RentalMax.
Dan Crowley: Welcome to Peer Talk. Today’s podcast will be about leadership, accountability, and organizational structure, and we will be led by John Jeanguenat from RentalMax. He has been the president for the past, almost three years. He is an analytical and data-driven executive, with the largest general equipment rental company in the Chicago area. RentalMax was founded back in 1997; it has eight locations and serves contractors, industrial businesses, and “do-it-yourselfers.” John’s core experience is in building and leading teams, developing strategic plans, looking at his organization and analyzing the revenue generators, and identifying different growth opportunities. He is especially astute at evaluating systems operations and building efficiency. John is also a member of our Premier Group and a regular participant in all things related to Peer Executive Groups. Today, we thought we would get some insight into his organizational structure and accountabilities. So welcome to the program, John. Let’s start with your company. Why don’t you give us a little bit of background about RentalMax – where it’s located, what and who you serve, and the size and shape of it.
John Jeanguenat: So RentalMax is the largest general equipment rental company in the Chicago land market. We’ve been in business since 1997, and RentalMax actually started through acquisition of local, mostly family-owned, anywhere from one- to three-store rental operations. So RentalMax has grown from there over the course of 23 years. It was started by Terry Hagy, who is also a longtime member of Peer Executive Groups, and the Premier Group, specifically. I had the opportunity to come in and succeed Terry back in 2018. RentalMax was really built to truly be a general equipment rental company, focused on established small to mid-sized contractors and industrial businesses, but we also have a healthy homeowner, do-it-yourself customer base that makes up about a third of our business. Right now we have eight locations serving the entire Chicago land area. They’re all based in suburban cities and towns, but we serve the city of Chicago, and we serve the surrounding area as well as any company in the market.
DC: Great. That sounds awesome. I’ve had the benefit of being there and visiting some of the locations. One of the things that always appealed to me about your organization was your ability to push accountability down through your organization. So why don’t you tell us a little bit about the structure of your employees and staff, and how that might be different compared to a single location type of business?
JJ: Absolutely. So with eight store locations, each store has a store manager that is responsible for managing that location, to some degree autonomously, where on a day-to-day basis they’re the one making the decisions related to that store’s operations. With that said, we have a structure and have spent more than two years building out what we call an accountability chart, through the Traction Entrepreneurial Operating System (EOS) process where we have a leadership team in place. That includes myself as the President, as well as our GM of Field Operations, GM of Central Operations, and our CFO. In addition, we have a member of our investor group and board of directors on that leadership team. Within that group, a couple of years ago, we established a vision for the company and that vision includes an accountability chart – that’s really an organization chart on steroids. Each of us has direct reports. We divide the company into four primary departments, those being sales and marketing, central operations (fleet, safety and maintenance), field operations (store operations), and finance administration (everything from accounting to HR). That’s how we organize the company. Each of those groups has a weekly L10 meeting as part of our company meeting pulse. I can get into more of that later, but it’s really critical that each of those departments is communicating internally as well as externally to make sure we’re building a culture of accountability.
DC: That’s fascinating. Let’s stay on that for a second, because I do know a number of our members and prospective members are implementing EOS in their organization. And the term “L10” comes from the idea of having a quality meeting, being at a Level 10 on a scale of one to 10, and communicating as a unit. One of the things that I’ve seen with people who’ve been implementing EOS is it allows you to pass around the big rocks, the big issues, that you’re facing as a company and allows employees to not just fix an issue, but maybe even handle something that might be a bigger project. When did you move from just a leadership meeting to having meetings on that scale with some of your employees? When did that happen?
JJ: We started implementing EOS at RentalMax back in September 2018, a little more than two years ago. For the first three months, we really kept that among the leadership team. We didn’t even let the rest of the company know what we were doing because we really wanted to establish a vision for the company, and take care of that part of it so that we were truly ready to share that with the rest of the company. Especially at that time with me being new in the role and EOS being a brand new concept to the rest of the team, we wanted to make sure we communicated it clearly and got it right from the beginning. And so we introduced EOS to the rest of the company back in December 2018. We started with the weekly meeting, or meeting pulse as we call it, back in April 2019. It was about six or seven months after the leadership team started the vision building process. What we found is that that weekly meeting, especially for our store managers, replaced a monthly meeting that we had previously. At that monthly meeting, we would usually get about 20 people in a room, and it would last anywhere from three to four hours. It was good to have everybody in the same room and to keep everybody updated on what was going on, but we felt like we weren’t always following through, we weren’t always taking action steps after those meetings. What’s great about EOS and the meeting pulse and the L10, as you said, the Level 10 meeting, is that it really builds consistency into what we’re doing. It outlines clear direction as to what each of us is responsible for doing, whether that be on a quarterly basis or on a weekly basis.
We are establishing quarterly rocks, which are 90-day priority goals, if you will. On a weekly basis, we’re tracking our progress and determining, “Are we on track? Are we off track? Is that rock done?” In addition to that on a weekly basis, 60 minutes of the 90-minute meetings are spent on issues. We go through a process where we identify, discuss, and solve whatever the most pressing issues are for the company. The whole goal is to try to identify what the core issue is, not just to solve symptoms of an issue. From that process, we’re creating weekly to-do’s. To-do’s are seven-day action items that we’re expecting each person to complete on that weekly basis. Every week, you’re looking at, “How did we do on our to-do’s? What percentage did we complete?” with the goal being a hundred percent. Then, it’s the same thing from a rock standpoint on a quarterly basis. “What percentage of those rocks did we complete this quarter?” Again, the goal is a hundred percent. As defined by EOS, if you’re solving and completing 80% or more of your rocks, that is (or should be) considered a success, because those are meant to be stretch goals, not layups.
DC: Yeah, I mean, absolutely. Any time that you take people out of their day-to-day work environment, get in at nine and go home at five, and you get them to think almost like an owner would think, they’re looking at their business, their department, their division, or their store differently. And they’re saying, “This is something that’s going to have a lasting impact. Let’s work on it.” Working on the business versus in the business. I guess that’s the key. When you changed to this, or you started to roll these L10’s out, did you find that the employees felt like their voice was now being heard? That they were participating and getting feedback? That they had the connection back to leadership and management that maybe might’ve been lacking at some point?
JJ: That was absolutely a key part of launching EOS and implementing that operating system at RentalMax. It’s not that it was necessarily lacking in the past. It was just more around building consistency into the process, building that culture of accountability, because we believe that accountability really is a key part of the culture at RentalMax and at any business for that matter. From my perspective, I wanted to make sure that we were as transparent as we possibly could be in sharing our vision and sharing the direction that we wanted to take the company. So much of that follow-through and what we’re asking of each person on the team is based on helping us get where we want to go and really aligning with our actions and our goals to help get us there. That was really a big part of it – trying to get to the point where everybody is working in the same direction. You know, we’re using an accountability chart where everyone has clear roles and what we expect out of them in that role; we’re all working together toward a common goal. As EOS explains it, no matter what industry you’re in, if you can build a team that has clear expectations of each person, that’s really a powerful way to operate. It hasn’t always been easy or clean, but when you look back over the last two years – I think it’s always interesting to look back at what you’ve accomplished when you’re so focused on what to do today or what to do tomorrow – this gives us a broader perspective and a good way to look back and appreciate how far we’ve come.
DC: Oh, that’s a great point. I think that anybody would benefit from that, but certainly going through that process of EOS and the documentation that surrounds it, the different identification and then working through and solving some of the big rock issues. Looking back quarter to quarter, you probably have a really good sense of accomplishment, and it definitely will go down to whatever level of the organization is working on it. Related to that, let’s talk about some issues or rocks that pop up in your business that are related to the business development of the employee, meaning their ability to grow in their job and to be better at what they do. Tell us a little bit about issues you may have faced inside your organization related to training and development – getting people to the next level, coaching, mentoring, or even recruiting higher-quality people. How do you improve the stock of RentalMax in terms of the individual?
JJ: That’s a great question. I think it’s really a key question for any company like ours that is interested in growth because especially in this industry, what we’ve found is while you may be able to find people here and there that have a rental experience, equipment rental experience, more often what’s happening is you’re bringing in people that have a great attitude, great character, they’re enthusiastic. They really share some of the core values that we look for. We see them as a ball of clay that you can form if you pay the right amount of attention and give them the tools and the resources they need to succeed. And so, it has certainly been a focus for us as we prepare to grow our business. If we’re going to grow and we want to maintain this consistency across our operations, if we’re going to add a location, we’re going to need to start training and developing, not necessarily our existing store managers, but the future generation of store managers that can step in and lead a new store location and truly help us transform that location into a RentalMax. This year, for example, one of our goals as part of our one-year plan for 2020 was to develop for future store managers. We built out a training and development program that had five phases, and we identified candidates. We actually had an interview process for candidates who were interested in the program. We had store managers that referred members of their team to be part of this program. As we swing into the fourth quarter of the year, we actually do have four individuals on our team that are not currently store managers that will be completing this program. It doesn’t necessarily mean that there’ll be an opportunity for them right away to become a store manager, but as soon as that opportunity presents itself, we’ll have a good crew of people ready to step up and step into that role. That’s one way we’re certainly looking at how we develop the future leaders of the company and, especially at the store level, how we develop that crop of talent. In addition to that, we also look at how we create opportunities for everyone in the company to continue to develop and advance into new and elevated positions. How do we strengthen the entire team? That’s obviously a key part of not only recruiting, but also retention. Certainly, seeing what organizations like the American Rental Association are doing with Rental U and the direction that they’re going with developing almost a degree or certification program for the equipment rental industry, that’s really exciting. Internally we’re just starting on this, but this is actually a rock that we have at a company level for the next 90 days. It is to develop a virtual training program that will launch in December, and it will really kind of organically grow. There’s so much from a training standpoint that we would have to cover to take someone who’s brand new and develop them into a truly seasoned, experienced equipment rental team member, no matter what position they’re serving. This year, we already knew that we were going to have to take a lot of our winter training, which in the past has been in person, and move that virtually because of the COVID pandemic. We also noticed in years past some challenges with in-person training, because it really didn’t fit with our operations with eight store locations to try to get 10 to 15 people in a room together at the same time. It puts a lot of stress on our store operations doing that on a weekly basis. We really weren’t reaching everybody in the company with these training programs. So we’re really excited about that. It’s just getting started. There’s a lot of work to be done, and we certainly want to develop this to be not just the 2020-2021 training system, but really the development program for RentalMax for the future. That’s how we’re building that.
DC: It seems that between the L10, the participation of employees on every level, and providing virtual training opportunities, they all work toward the betterment of the company. If I’m a candidate and I’m looking at a place to work, I would think those are both great recruiting pieces that will pull in some really good candidates because they’ll say, “Wow, look at this, there’s virtual training, and there’s this L10 development.” Based on this conversation so far, it seems to me that you would have a really decent feedback mechanism with the employee from a one-to-one perspective. How do you know what’s happening at the lowest level in your company in different locations? Is there any kind of employee review process or two-way business development conversation with an employee?
JJ: At the store level, what we started doing in December of last year was we had a sit down meeting, a review type of meeting, not necessarily where compensation was discussed, but where we were sitting down with each person on the team and asking for their feedback. How are things going? What’s working? What’s not working? What would you like to see us do better? Am I, as the manager, doing what you need me to do to help you continue to grow in this role and with the company? I think that was a really good start, but we need to be doing that on an ongoing basis. The idea coming into this year was that we would be sitting down and doing that on a quarterly basis with each employee. I think we still need to do more, and I think there’s still room for improvement there. We’re really trying to align that with what we’re doing as a company at the leadership team level, at the department manager and leader level. We’re incorporating what’s called a quarterly conversation, which is an EOS term. That’s actually part of the meeting pulse. On a quarterly basis, I’m sitting down with each person on the leadership team and starting with, “What are you most proud of over the last 90 days?” What’s working? What’s not working? As we look at our core values, as we look at our people, we have a tool called “the people analyzer” that we’re starting to use more and more, and really just trying to keep that open line of communication. For me, it’s trying to understand what each person on the leadership team needs from a resources standpoint to continue to develop and continue to grow. We obviously have high aspirations and expectations for what we can accomplish, but at the same time, we have to provide the resources necessary to help us get there. My number one priority when it comes to having those quarterly conversations is making sure that our leadership team members feel they have the resources they need to accomplish what they’re setting out to do. A lot of times, it’s not even what I’m asking them to do. It’s what they’ve identified as the priorities for their own department and their team.
DC: It’s fascinating to hear you speak about this. It seems to me, and we see this with larger organizations, that you have almost an upside down organization chart where as president, you’re serving the needs of those who directly report to you, which I’m assuming would be the leadership team. If you invert the organization chart, is the leadership team serving the location managers or is it specific? Give me a couple of descriptors about some of your key positions. A lot of the people listening in might have one store, and they understand what it’s like to have an owner operator and to have people on the field or on the location level. Tell us more about who reports to you.
JJ: Sure. My direct reports are our CFO, our Director of Business Development, our GM of Field Operations, our GM of Central Operations, and then a Marketing Manager. From the store standpoint, our GM of Field Operations manages all of our store managers. So there are eight store managers, and we actually have a senior manager that’s also in that group. There are nine people total that are reporting directly to him. He is doing the same thing with each of those store managers on a quarterly basis – sitting down and having these quarterly conversations. Each of those store managers is managing their own team, which usually includes anywhere from seven to 14 people depending on the size of the store. That’s how we’re structured on the store level. Within business development, I’m still sitting in the Sales and Marketing seat on the leadership team. Eventually that will change, but that’s the way that we have built out our accountability chart. This year, we hired a Director of Business Development that now manages our Sales Reps. We have two Outside Sales Reps, and the Marketing Manager is also on our Sales and Marketing team. I’m working with the two of them directly, and our Director of Business Development is managing the two Outside Sales Reps.
DC: Got it. Briefly, how do you go from this structure to understanding what to measure? Are there metrics on every position? From there, are you creating a reward structure based on those metrics? What does that look like right now in its current state?
JJ: We have a scorecard for each of the teams. The leadership team and each of the department teams have a scorecard that we’re looking at on a weekly basis. That’s part of those weekly L10 meetings. We’re identifying anywhere from 10 to 15 metrics on that scorecard. We’re really trying to use those as a predictive tool to understand what’s going to happen with the business. What trends are we seeing? What are the issues associated with those trends? What’s going well? What’s not going well? Those scorecards have really been influential in helping us breed a culture of accountability. We broke those metrics down by store, and we’re looking at nine metrics for each store on a weekly basis. It’s incredible to see what kind of an impact that has. We’ve only been doing that for about four months now, but we’ve really seen an improvement since we implemented those metrics. I think that that’s really helping us build that culture of accountability throughout the company. We are not necessarily incentivizing directly on those scorecard items. We have a separate incentive program that’s aligned with our company goals, or aligned with our financial goals for the year. We are at a point now where we’re drilling down to every person at the store level. We have a concept called “everyone has a number,” and we’re setting a number goal. Whether that’s the number of reservations for the counter service person, or whether that’s the amount of equipment and maintenance by store for our mechanic team, or the number of deliveries and pickups that a driver is doing on a given day or in a given week. We’re really working to incorporate those metrics into our daily operations and our structure in a way to enhance that culture of accountability.
DC: Amazing, amazing. And that’s a couple of years of implementing EOS and really taking your leadership team to another level. We really appreciate it. John, we appreciate your time today. I know it’s very valuable, and I appreciate you being on the podcast. Everyone, John Jeanguenat from RentalMax!
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