Every company that enters a scaling mode knows the importance of employees. Yet few leaders understand the reasons why we must put employees first. After years of studying fast-growth companies, it is evident to me that those leaders know how to put employees first. Today’s guests are Authur Barrett, President, and Tim Barrett, CEO, at Barrett Distribution. Inc Magazine ranked Barrett Distribution #4404 on the 2020 Inc 5000 list. The company is a customized third-party logistics, omni-channel distribution, and direct-to-consumer fulfillment services for clients in many industries. Arthur and Tim share why they see a correlation in growth when they put employees first. In this interview, we look at the essential aspects of this style of leadership.
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Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.
We focus primarily on wiling our employees. So we want our leadership team to be that is their number one goal, like that’s why our employees first our employees and in turn will be happy and advancing in their career and doing better and learning and so they, in turn, will know what they need to do. And they’ll do it with a positive attitude, and they’ll wow our customers. And so when our customers are wild, they’re happy, and they reward us financially. And, you know, we’re open book management so that reward flows back to those employees and creates a good cycle, they’re right, they get that tangible reward, and then continue to be happy and continue to WOW the customers.
What our customers are buying from us, is people process and technology. We have two different sorts of business models, if you will, we run multiclient distribution centers. And we also run dedicated distribution centers. So some of our bigger customers are the latter, the dedicated distribution center, they’re not buying a building, you’re not buying our capital, infrastructure, they’re buying our people process and technology of those three people that are on our team, is by far the most important.
Welcome to Growth Think Tank. This is the one and only place where you will get insight from the founders and the CEOs, the fastest-growing privately held companies. I am the host. My name is Gene Hammett. I hope leaders and their teams navigate the defining moments of their growth, are you ready to grow?
Gene Hammett [1:48]
Putting customers first probably sounds natural to you that your company should put customers first. I wouldn’t disagree with that statement. But here’s something to think about leaders and the company are different leaders have a different kind of focus that is necessary for them to organize the people and to get them to coordinate together. When you put customers first, as a leader, there’s something in the back of your mind that says that. Whatever the customers want, and all of the value that is necessary for us to keep going, we can take away a little bit from our employees, they’re expected to give that so that the company can run smoothly. What I want you to really think about today is what if that idea to put customers first as a leader is wrong? What if putting employees first was a way that you could actually create more connection, create more empowerment trust, and those employees were able to put customers first, we have a special guest today on the podcast. happy to announce that we have. We have Tim Barrett and Arthur Barrett, it’s a family-owned business Barrett Distribution, they’ve been on the Inc list 11 times. So consistent growth of eight consecutively. And it gets harder and harder when you get over 100 million to grow at this pace and keep up with these smaller companies. But this company does something different than all of their peers. They understand putting employees first is really the key to the overall success of the business. We’re going to talk about that today we’re going to unpack some of the elements around putting in place first, what it means. We’re gonna talk about transparency and open-book management, we’re going to talk about the autonomy that’s necessary. There’s a lot that goes into this. So tune in to be a better leader and understand the difference make the decision for yourself is the answer. Make the decision for yourself as a leader, what’s more important, your employees or customers. Now, if you haven’t already checked out the training that we have to create a better leadership environment for your organization. And to grow faster, make sure you go to genehammett.com/training. It’s a free tool that we’ve been using and sharing with our audience to get them really tuned into what does it take to go beyond where you are today. Just go to genehammett.com/training, get the three mistakes, and learn how to avoid them, and make sure that you evolve as a leader. Now here’s the interview with Tim and Arthur.
Gene Hammett [4:29]
Hey, guys, how are you?
Tim Barrett [4:30]
Very good, thanks. How are you doing?
Arthur Barrett [4:32]
Right. Great, Gene. Thank you.
Gene Hammett [4:33]
Tim and Arthur glad to have you here on the show, we’re going to talk about the leadership that has been instrumental to growing the company consistently and fast over the years. Tell us a little bit about Barrett Distribution.
Tim Barrett [4:46]
So I’ll go first, I guess. So we’re a third-party logistics company. So we run distribution centers for other companies that outsource that function to us. So we do e-commerce fulfillment and wholesale distribution to retail stores for basically any consumer product. So you know apparel, footwear, health and beauty care any any kind of item like that you could think of that is purchased in a retail store or via e-commerce. It’s a family business author and I a third generation has been we’ve been running together for about 25 years.
Gene Hammett [5:20]
So it wasn’t always e-commerce what was is it always just been logistics?
Tim Barrett [5:27]
Always been logistics. So started out as a textile warehouse, believe it. So in the 1940s. Like grandfather started the business and worked with some of the textile mills in New England and mostly handled imported bales of wool of all things that came in from South America and Australia and UK and transported them from the docks up to the warehouse, and then from there to the mills. So that was how it started. And then obviously morphed over time. Probably got it we got into e-commerce early, probably right around 1999 to 2000.
Gene Hammett [6:04]
That was early, I was working with a technology company, and in 1999 we were connecting to the back ends like JD Edwards and Oracle to make e-commerce possible. And I remember the I was having conversations like, Do you even have pictures of your products? And most people were like, No, not yet. Do you have descriptions? No, not yet. That’s how early I was into e-commerce. So I am excited to talk to you today about when we were doing some research into your company, you thought that the people were an integral part of the success and the growth of your company? Why are people so important?
Tim Barrett [6:43]
You want to go harder? So so the Yeah, geez. So for us, we’re growing fast. And, you know, we were geographically dispersed. So we, you know, we have to rely on people that we trust in, you know, put a lot of faith in and a lot of, you know, a lot of Trump’s face, like a better word. So that is, um, you know, really important to our growth that, frankly, lets me sleep at night that I know, I have a good team that I can rely on and believe in and know that they’re going to do the right thing. We, you know, really focus. So our, our strategy, if you want to call it that is that we we focus primarily on wowing our employees. So we want, you know, we want our leadership team to view that as their number one goal like that’s why our employees first our employees and in turn will be happy. And, and advancing in their career and doing better and learning. And so they in turn will know what they need to do. And they’ll do it with a positive attitude. And they’ll wow our customers. And so when our customers are wild, they you know, they’re happy, and they reward us financially. And, you know, we’re open book management so that that reward flows back to those employees and creates a good, you know, good cycle there, right, they get that tangible reward, and then continue to be happy and continue to while the customers
Hold on for a second. They just mentioned open-book management, you probably know what that is. But let me just make sure that we’re all on the same page. And my perspective of open-book management is this, that you willing to share the financial aspects of the company, with your team, openly across everyone, not just the top tier, not just the people who need to know it, everyone gets to understand what the numbers mean. Everyone is taught and trained on how their role inside the company plays into the numbers. And everyone gets to see those numbers on a regular basis so that you can actually grow as a team. And when people understand those numbers, open-book management really can be powerful because they can actually see things that maybe you don’t see they can see the patterns, because they’re not inside it and looking at it the same way you are they have a different perspective. No. Does it take work? Absolutely. Is it take commitment and courage to open up your books to everyone? Absolutely. But open-book management is not something new. But it can be a very powerful way to align people together. Back to the interview.
Gene Hammett [9:18]
I have an impossible question that I asked from time to time. That question is impossible because it’s really hard to pick. And some companies really struggle with this. But I want to ask you guys this. I don’t know what you would say but based on what you just said, I probably have a good idea. As a leader, what’re more, important to your customers, your employees?
Arthur Barrett [9:40]
Gene Hammett [9:42]
So that was to come back on that why employees so important?
Arthur Barrett [9:47]
Well, they’re the backbone of the organization. Obviously, you need the customers to produce the revenue but we’ve really built our business on the fabric, the moral fabric The core values of our employees. That’s the most important thing that I do as a leader of the organization is be very selective about the people we add to the team. I often say that, you know, what our customers are buying from us, is people process and technology. We have two different sort of business models, if you will, we run multiclient distribution centers. And we also run dedicated distribution centers. So some of our bigger customers are the ladder, the dedicated distribution center, you know, they’re not buying our building, they’re not buying our capital, infrastructure, they’re buying our people, our process and our technology, you know, those three people that are on our team is by far the most important.
Gene Hammett [11:01]
I once got told by a very established very large, publicly-traded company CEO. I shared that one question with them. And I told them the results, which I haven’t shared with you, but specifically, fast-growth companies like yourself that are on the Inc list, when I asked that question 94% of the time will say its employees first. So you’re in good company. But I’ve been told I’m wrong. bigger companies, I think, look very short term focused. And so they think customers are first in a no, this is, you know, companies have to put customers first to get value. But why do you think companies grow to a certain point where that begins to shift back to customers?
Tim Barrett [11:44]
That’s a good question. I would say it’s, it’s not the right approach. But I guess it’s because they’re so focused on the top line, you know, I think as you get bigger, that top-line becomes a beast, you have to continue to feed and maybe, you know, I’m just speculating that maybe they view, you know, that revenue stream as being so important to maintaining a top-line growth that, that they focus on that and maybe they feel like, you know, I’ve just touched on people process and technology, maybe they focus more on their process, as opposed to the people that are making it happen, you know, they feel like they’re part of their process is so solid and locked in that they can plug and play the people? I don’t know, I’m speculating. No, I don’t really know.
Gene Hammett [12:30]
I want to ask him a question. It’s kind of about the industry. You had probably seen some of the news it was going on with Amazon. And I don’t, I don’t have an idea about this. But what were your thoughts on? Amazon, you know, the way that we’re treating employees through this whole COVID thing?
Tim Barrett [12:51]
You know, I, first of all, I would say that, most likely, there are two sides to that story. Right. And I, you know, I don’t I’m not sure if it was as bad as it was portrayed. But I guess that’s part of the problem, right? So I made, you know, I would guess that they lost a bit of touch with, you know, making those employees feel valued. And, you know, listening to them, and it’s probably a lesson they’ve learned, you know, I think, I think, you know, you see videos of Jeff Bezos now visiting the DCS and, and, you know, making a personal making personal connections with the employees. And so, you know, that’s, that’s what we do, you know, author visits, every single facility every single quarter, and hands out, you know, hands-on our game chair checks into, you know, personally, all our employees, you know, like that, that touch? Um, you know, it’s, it’s, we want to do it, because we want to thank the employees, but I think it’s meaningful to the employees to that we take the time to do that. He takes the time to do it. I know.
Arthur Barrett [13:54]
I might answer it just a little bit differently. I don’t think we really know how Amazon is treating their employees. We know how a very small number of employees were sort of portrayed in the media as being treated, but I don’t know that I would paint Amazon with such a broad brush. It’s it. I think it’s one of the few times that Amazon does not control the message, and they could cut away from it.
Gene Hammett [14:27]
Well, I would add to that just a little bit. I Bezos is actually very famous. I’ve talked about this on stages, whenever I’ve talked to groups. He’s a very intelligent leader. He’s been very successful. No one’s gonna argue with that. But he believes in customer first over employees, it’s gone on record. But when you think about, you know, I think it’s a hard question. It’s a reason I call it that impossible question. But I figured that you guys would put the attention on employees because, you know, being a family-owned business, you understand this. You’ve Round over 1000 employees that right? Yeah, that you sometimes you lose touch with it. So I’m really kind of, you know thrilled about having you on here to talk about how do you truly do put employees first through this process. We’ve already talked about why it’s important. Let’s talk about how you’re doing it day in a day out. So I know that selecting the right people is important, onboarding them. What are the other core elements that you think about as a company to create the kind of employee experience that makes people really love and wow, them, as you say?
Arthur Barrett [15:33]
Well, the first that comes to my mind would be recognition. And that starts with giving people the opportunity to advance. But I think we do a pretty good job of recognizing, when people do go above and beyond what they thought they might have been able to do in their own mind. And really celebrating that achievement. We don’t do enough of it. We’re trying to do more and more. That’s part of the reason why I make the rounds and get to every building every quarter. And I was…
Gene Hammett [16:10]
That’s very important of you learned anything about how best to do that, that provides the connection that you want for your team.
Arthur Barrett [16:18]
Well, we started something new last year, where each quarter, we ask people to nominate an employee of the quarter, who best demonstrates it lives by one of our core values. And we formed a selection team to actually make the final selection of five employees, each quarter, one for each of our five core values. And, you know, that really has motivated teams across the country to strive for always better, which is, in fact, one of our core values.
Gene Hammett [17:03]
Well, I love that idea. Do you name that something specific or give me some details behind that program?
Arthur Barrett [17:14]
Well, it’s nothing fancy, which I think if you just label it, an employee of the quarter. And rather than have one, we have five. And the five are the, you know, the five people who each demonstrated best one of those five core values.
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Gene Hammett [17:44]
I’ve heard one leadership guy and I don’t know his name, I probably would even share it if I did, because I don’t agree with this. But they had said that this kind of competition amongst employees, sets the wrong tone, you don’t want competition, you want collaboration. And I get that. But I feel like the peer to peer adds something to this like they’re recognizing their own. And you’re reinforcing those core values. There are so many pluses behind this that overlay, I guess some negative competition element, you feel the same way? Or am I wrong?
Arthur Barrett [18:17]
I don’t really see it as a competition. People are nominated by their peers and their leaders. And then a selection team, you know, makes that final. That final call, but it’s not like people are vying against each other, to be recognized for that one. core value.
Gene Hammett [18:38]
I don’t see it as competition either. But I just wanted to bring that up. Because, you know, some people have that perspective of no competition inside of the workplace is not right. And I just I see it as a chance to recognize you can’t, we can’t all be, you know, the same person, you know, we have to have some something to strive for. When you think about autonomy inside this because I know that was one of the things that you said was very important to the employee experience. Did you guys you have a just, you know, very distributed workforce. autonomy is necessary. How do you make sure that that’s, that’s really a part of the culture?
Tim Barrett [19:18]
That the autonomy is part of the culture?
Gene Hammett [19:20]
Tim Barrett [19:21]
So we’re, we’re well, I don’t know, we’re an open book management company, right. So we, so each, each facility, each operation, you know, each team, not all necessarily in an operation really has responsibility for their own p&l, you know, their own and there you know, every so every employee in our company gets an update on where we are every single week. So we’re forecasting the current month. You know, saying is showing where we’re at in you know, in their facility and also the company will live in We are here to date, and then they get an update on what that means in terms of a bonus for the quarter where they’re at for a bonus for the year. So they’re, they’re very in tune to, you know, to the business. And we, we do a lot every week we do training with every single employee every single week gets some form of training on the business. So, you know, outside of their job function, you know, try to help them learn more about the business, how do we make money? You know, what, what are they, how do we manage cost, what costs go into a certain category, they’re, they’re hoping, you know, all learning a little bit more about, you know, how, how we are successful and what we need to do to be successful. And, you know, that that drop that we have, you know, people that have driven, like, they’re driven to, you know, to continue to do better, right, they’re measuring their productivity, they’re measuring the units per hour, they all know exactly where they are in the units per hour this week versus last quarter. And they’re, they’re focused on it, they’re focused on quality metrics, you know, how are we doing with the customers? What’s our last customer survey? for, you know, the customer that I happen to work on? You know, how are we doing with you know, any, you know, ship errors or any other imperfections, you know, we record all those in our quality system. And we do, you know, corrective actions, and we you know, so people are, you know, people are really in tune to it, they’re there. They’re just kind of really invested in the business.
I don’t know if you caught that, but they really invest in training people weekly. Now, this is different types of training, I actually talked to them off the record about it, I won’t go into the details. But my question for you is, how are you training your people on a weekly basis are? you may say, we don’t need to do that. But there’s probably something in the business that they need to learn to be reminded of. And having the ability to train people weekly, and making that important piece to the organization, as people begin to understand this. Now, it’s got to be good training, it’s got to actually move the needle, it can’t be boring. So all that I’m trying to say here and put a spotlight on for you is, as a leader, how are you training your employees on a regular basis, not once a year, not once a quarter, on a regular basis. Back to the interview.
Gene Hammett [22:28]
The heart of his open-book management is around transparency. Some companies don’t really, you know, embrace that level of transparency, they’re afraid to share the numbers, they’re afraid to explain how the business works are afraid to, to truly open up maybe how much profit is being generated? Have you guys seen a benefit by having this kind of approach and transparency level within the company?
Arthur Barrett [22:55]
Oh, sure. Yeah, I mean, it gets everybody pulling in direction. And they’re, they’re fired, about fired up about their numbers. Every, every building that I visit, we go to the whiteboard, and they take me through their numbers. And they’re quite proud of those metrics, quite proud of their accomplishments. And, you know, most importantly, really fired up about what it means from dollars in their pocket. You know, it’s real it’s an organization of 1000 people all pulling the boat in the same direction. sounds corny, but it really is what we have achieved through this open-book management concept.
Gene Hammett [23:42]
How long have you been doing it?
Arthur Barrett [23:45]
12 years while?
Tim Barrett [23:46]
Yes, we are. I think I’d say more. Yeah, it’s been a while.
Gene Hammett [23:51]
Did you get that from one of the business thought leaders around this? If so, who do you remember getting it from?
Arthur Barrett [23:58]
Well, we we pattern, our program after that book, The Great game of business? Yeah, it was written by jack stack. So we include just about every aspect of that program, other than the equity in the business.
Gene Hammett [24:15]
Well, I really appreciate Tim and Arthur, you being here to share your journey of leadership and consecutive growth. And you’re really focused on employees employee versus something that’s near and dear to me, and I really appreciate you sharing that wisdom.
Tim Barrett [24:31]
Arthur Barrett [24:32]
Hey, a joy to be with Gene. Thanks for the opportunity.
Gene Hammett [24:36]
Putting in place first, I love this conversation. And it’s a little bit polarizing because I think a lot of people would argue with me that it has to be customers. And I don’t want you to get this wrong and organizations, companies should put customers first. But leaders have to look at who are the people inside the organization remove their concerns for their own treatment and really Wow, the employees. It’s one of the concepts I pulled away from Tim and Arthur. Hopefully, you picked up on that. These guys have really evolved leaders,, they’re working really hard to develop the next class of leaders inside the organization. They’ve invested heavily in training. And they’ve been using another company that it’s not my company, but what are you doing to evolve and really train your employees to have the kind of leadership that you expected them to be strong leaders to be influential to be visionary? Well, it takes some special training to do that. We happen to have an assessment to help you out with that. The first step is to look at the training, go to genehammett.com/training, give you three mistakes that organizations make that keep them from scaling and keep them from creating a team of eight players. So check out that training genehammett.com/training. When you think about podcasting growing, hopefully, you think about Growth Think Tank, as always, lead with courage. We’ll see you next time.
Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.
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