No-shows to show-offs

When David Alexander accepted the position of CEO at TruGreen, he had first-hand knowledge on why the company was struggling.

“I fired (TruGreen) a few months before I was offered the job,” Alexander says, adding that he rehired them the weekend after he was hired. “I cancelled my service because they weren’t doing what they said – because they weren’t showing up when they said.”

So, it wasn’t a surprise that Alexander intially balked when he was approached about the CEO job. But after discovering his values aligned with TruGreen’s parent company, ServiceMaster, he changed his mind and joined the struggling company.

Those no-shows were a good indicator of why TruGreen had an 8 percent revenue decline in 2013 revenue, lost 400,000 customers in two years and went through three presidents in three years. The company was also spun off from publicly traded ServiceMaster and is now owned by the private equity firm Clayton, Dubilier & Rice, who also owns a majority share of ServiceMaster.

But that split from ServiceMaster gave Alexander and his team at TruGreen the flexibility to get back on the right path. Alexander says 2014 was “probably the best year in a long time” for the company in many areas and revenue has increased by $40 million.

“We probably measure, I don’t know, 25 or 30 different metrics, all of which we exceeded in 2014, so it was our first year as a standalone company, and we literally cannot be more pleased with the kind of year we had,” he says. “We added 44,000 or 45,000 customers. So, it was a pretty phenomenal year for us.” One major hang-up was the routing software TruGreen shared with other ServiceMaster companies including Merry Maids and Terminix – companies that performed services indoors and didn’t have to change plans when it rained.

“We’re using the same software dramatically customized for us, and then we have some internal software we’ve developed that is also very valuable for our business,” he says.

But the software wasn’t the only reason for TruGreen’s struggles, and those problems were weighing a lot of employees down. Alexander had to do the basics and make sure employees were showing up on time and servicing customers’ lawns the right way, but he also had to boost morale and shape a culture that would make staff proud of their employer.

As the largest lawn care company in the United States, the masses judge lawn care companies by how TruGreen does business, leaving Alexander with a lot of influence on how the industry is viewed in the public’s eye. In this exclusive conversation with L&L, Alexander talks about his first months on the job, why he describes the TruGreen acquisition mode as historic, what he sees in TruGreen’s future and much more.
 

Lawn & Landscape: You came into what sounds like, from the outside, a mess. What was the atmosphere like and what were some things you did to repair it?

David Alexander: That was kind of a fairly accurate description. It kind of was a mess. I came in December of 2012, started a week or so before Christmas, and one of the first things that I tried to do was get out in the branches and listen to our folks. In the two years I’ve been with the company, I’ve been to 88 of our branches (as of Feb. 2015), and what I try to do in a branch visit is listen to our frontline people, our service managers, our specialists, our general managers, our sales managers.

I try to learn what they think is going on, and what I heard in my first few months here was that we didn’t give them the tools that they needed to do their jobs. That they were very, very frustrated with routing, with scheduling, with planning. Not that our folks in planning and scheduling and routing weren’t strong, but their tools were so misapplied and so inappropriate for what they were trying to accomplish that, in effect, we handcuffed them in terms of being able to do their jobs.
 

L&L: These branch visits, which you still do, are unannounced. Why do you choose to do them that way?

DA: I don’t want people spending a lot of time making a branch pretty and working all night and doing those kind of things. I never announce I’m coming, I just show up, and I talk to whoever’s there. So, sometimes that’s the techs, depending on the time of day it may be the specialists. Other times it may be the service managers, the sales manager, the general manager, it may be customer service people, it may be the office manager.

But, I try to talk to whoever’s there and try to learn as much as I can about how they think the company’s doing. So, even at Family Dollar (Alexander was president of Family Dollar from 1995-2005) when I visited 600 stores a year, they were all unannounced. I’ve never done announced visits, and the reason I haven’t is, very early in my career we’d hear the CEO was coming, and we’d work all night to make the store perfect and he wouldn’t show up half the time. So, instead of being a positive, it became a negative. I don’t want to see what’s not real, and I don’t want them working lots of hours to make it just right for me. I’m there to listen, so for that reason I don’t tell them I’m coming.
 

L&L: When you first started doing these visits, I have to imagine people were a little worried about losing their jobs. How do you get them to be honest with you?

DA: It was fairly easy, actually because they were so frustrated that they were ready to be honest with somebody. It was surprising though how honest they were. I had one guy I talked to early on who’d been with us for almost 40 years, and I said, “I appreciate all your service to the company. It’s so great, almost 40 years.” And he looked at me and said, “The key word is ‘almost.’ I don’t think I’ll make it 40 years.”

I said, “Why would you say that?” He said, “I’m so frustrated with the systems, the fact that nothing works, and the fact that I can’t serve my customers today like I always have that I don’t think I’ll make it another six months.”

We had a lot of folks with a lot of tenure and a lot of loyalty both to the company and their customers, who felt extremely frustrated that they couldn’t deliver the service that they wanted to deliver.
 

L&L: Did you have to do any layoffs when you first got there?

DA: No, we have not done any layoffs at all.
 

L&L: What was the most shocking thing you saw when you did these visits?

DA: I think it was the consistency of concern that I heard everywhere I went. If you’re the CEO, some people will tell you, “Oh, he’s the CEO I need to tell him something nice, something good, something positive.” Folks were pretty straightforward that this ain’t working, so probably the tone and the tenor of the comments and the consistency of the comments that we needed to fix things, and we needed to fix them soon, and people were frustrated, and people felt very defeated.

And now, if you talk to folks at TruGreen, I think most people feel very positive. We do what’s called an engagement score where we survey all our employees every year on how they feel about the company.

And there’s four or five different levels of response, but the top two levels of response are what we call an engaged associate. They’re proud of the company, they like their jobs, they’re not looking for another job. We saw a 20 percent improvement in that this year.

But, most significantly, in our branch managers, that went from a 50 score to a 76 score. So, 76 percent of our branch managers today are very excited and proud of their company.

Two years ago that number was in the 40s and now it’s in the 70s. Their belief in the company, which then radiates to the service managers and then down to the employees, has dramatically changed in the last two years.
 

L&L: What have you done to improve the culture?

DA: We began to do a lot of things to incent our employees around retaining customers. One of the things we did is what we call Lawn Stars. Every quarter, every branch competes around customer count, and the branch that wins in each region, we have 21 regions, we have a prize catalog for all the employees. In addition, each branch competes for a charity each quarter.

So, if the branch wins, not only do they win prizes, but they pick a charity we then make a $2,000 donation to. Last year we made about $125,000 in donations off of that competition. (It was) a lot of cultural change in the company, being a lot more focused on the places they live and work, and beginning to feel like they’re winning again, seeing customer count grow again, having tools that they can really believe in that work, both in terms of routing, planning and scheduling, but also mobility tools.

We did a survey around what values did they think we should have. We had about 900 people participate in that. They talked about how we want to be a company of integrity. We want to be a company that focuses on their community. We want to be a company that provides great service.

 

Turnaround team When Alexander accepted the job, he changed 10 of his 14 direct reports. Even though TruGreen was the fourth company where he has served as CEO or president, he never had to make that many changes with direct reports. Some were brought over from ServiceMaster, while others were promoted from within. “I wanted a management team that really believed in where we could take the company,” Alexander says. “We had some great folks, but we had some folks who were either not good fits for the roles they were in, or they were somewhat beat down in terms of feeling like they’d been through a bunch. They were tired. And I wanted people who were very high-energy and enthusiastic and believed where we could take the company. Today, we have a team that is very excited about where we can take the company.” Below is a list of Alexander’s direct reports. Alexander’s direct reports Bill Hausbeck, North Division vice president since 2002, joined company in 1984 David Martin, chief financial officer, transferred from ServiceMaster in January 2014 Kirk Hurto, VP of Technical Services since 1981 Eric Davidofsky, South Divison vice president, transferred from Terminix in 2013 Eric Minks, West Division vice president since 2005, joined company in 1975 Jeff Fedorchak, VP of Corporate Affairs (a new position created by Alexander), transferred from ServiceMaster in 2013 Kari Rajaniemi, executive vice president and chief marketing officer, hired from SenecaOne in 2013 Kate Oliver, vice president of Customer Service since 1990 Ken Dewitt, chief information officer, hired from United Rentals in 2013 Kevin Mann, general counsel and chief legal officer, transferred from ServiceMaster in 2013 Martin Click, vice president of Process Improvement, hired from UPS in 2013 Mark Allen, vice president of Residential Sales, transferred from ServiceMaster in 2013 Roy Cohen, chief human resources officer, transferred from ServiceMaster January 2014 Shawn Flynn, promoted to vice president of Commercial Sales in 2013, joined TruGreen in 2002 and was most recently Atlanta region manager

 

L&L: Have you opened or closed any branches?

DA: We haven’t closed any and we have four satellites we’ll convert to full branches this year. Because we had such a good year – and because we’ve turned the business around, and we’ve proved that we have a very good business model,– Clayton, Dublier and Rice now is very supportive of both acquisitions and conversions of satellites to branches.
 

L&L: What kind of acquisitions are you looking at?

DA: Most of the acquisitions we’re looking at are more fill-in acquisitions. So, if we have a market that we already have a good branch and we do well in, a chance to be much more dense in terms of customer count. Those are kind of the acquisitions we’re focusing on.
 

L&L: Strictly lawn care?

DA: Yes, strictly lawn care.
 

L&L: What’s TruGreen’s approach to acquisitions?

DA: I guess a term I’d use is historic. So, if you go back two or three years, and you look at how TruGreen was acquiring, that’s kind of what we want to do now. We want to invest – it’s not a small number, it’s in the millions. So we want to invest in acquisitions and this is the year we’ll start back. We have a half dozen or so in the pipeline that we’re seriously considering. We’ll put some more in soon that we’re beginning to consider, so it is something we’re getting back into.
 

L&L: You also did focus groups with customers. What did you learn from those?

DA: If you look at what we’re starting to do advertising-wise, we ask our customers, when they hire us, what they are really trying to accomplish. We wanted to identify, is our purpose to just make lawns green and kill weeds or is there something higher we should aspire for?

And what we found was that our customers look at us as a way to live life outside. If you listen to our consumers, they feel like they’ve almost lost touch with their physical senses. They’re so focused on the Internet and the iPhone. When I was a kid you couldn’t wait to be outside. Kids today can’t wait to get on the Internet or play a video game.

So, the point is that we want to connect with our customers. We want them to get to know their neighbors, want them to live outside with their families. One of the things that came out of the focus groups is, the more that we can help our consumers understand that a beautiful yard, insect control, weed control – all those things are ways that help them live outside and spend more time outside.

 

L&L: How do you, as the largest lawn care company in the country, have to approach issues like pesticide bans?

DA: You’re talking about a level of science that I don’t actually have great expertise in. But we have a VP of government affairs, we have 12 technical regional managers around the country.

There are chemicals that we don’t use and we shouldn’t use. We don’t use any chemicals that are carcinogens. We don’t use any chemicals that are not EPA-approved.

And the reality is, there have been lots of studies (We’ve worked with lots of universities)that the work we do is actually beneficial to the environment.

Healthy turf grass reduces erosion, reduces water runoff. So, a lot of what we do is trying to help educate decision-makers that there are a lot of benefits to what we do as opposed to just negatives. You have people screaming, “Ban pesticides, ban herbicides!”

We’re trying to help people understand that they’re hearing a very one-sided argument.
 

L&L: Do you do that through going to government meetings?

DA: Not me personally, but our team does. We have a VP of government affairs who does that. Our technical managers sit in on town councils and community meetings. We have lobbying groups we support and we work with universities. What we try to do is try to get enough truthful information out so the loudest voice in the room isn’t the one you listen to. You listen to facts and science.
 

L&L: Where do you see the company in five years?

DA: We’ve begun to grow customers again. I think that’s going to accelerate. We’re spending a significant amount of money in advertising for the first time in years. One of the rules that I learned a long time ago in retail – don’t invite people into your store until you fixed it.

The worst thing you can do is take a store that’s out of stock and broken and run an ad, and everybody comes and they go, “Oh, your store is out of stock and broken.” So, last year we didn’t advertise a lot. This year we’ll spend about $10 million on TV advertising because we think we have the ability today not just to attract customers but to keep customers. When I look five years from now, I think we’ll have grown a lot.

We have a number of, I’d call them tangential businesses, that I’m not really ready to talk about. But, again, they relate to living life outside, and they’re very close to what we do.

They’re not mowing and cutting and so on, but they’re close to what we do, and there’s some of those that are kind of in a pilot phase or incubation phase that we think we can grow. There are aspects of our business that we think we can grow. For example, as we’ve done focus groups out west where customers don’t typically have lawns, they have a lot of trees and shrubs and desert scape and so on.

We think there’s a big opportunity for us there. When you help a customer understand the investment they have in trees and shrubs, and they’ve never done anything to protect them or treat them, and now you have like emerald ash borer and things attacking their plants.

We think there’s a big upside in that area to educate consumers and then to increase the penetration around trees and shrubs. We think there’s a big opportunity around nuisance pest control. Those are all areas that over the next four or five years I think you’ll see us grow a lot in.