CHANGE is inevitable. And if a business fails to transform with the times, the company may very well find itself on the opposite side of growth.
“When a company reaches a stagnant stage and cannot grow for more than two years in a row, and this is not due to any major external situation such as economy, political, oil, or currency crisis, that means you need to transform your company,” says PKT Logistics chief executive officer and group managing director Datuk Michael Tio.
Tio would know. He found himself in such a situation back in 2008.
PKT was raking in steady sales of about RM200mil from 2005 to 2007 when he started to realise that it had hit a ceiling.
“We found that there was no way we can grow. And if we don’t grow, the next phase will see us going down. So we need to transform. The reason why people fail in their business is because they did not transform when they reached their peak,” he says.
Well, solutions don’t grow on trees so Tio decided to bring his top management of about 20 people for a retreat. The purpose? To brainstorm ideas that would help create a new vision for the logistics company.
Tio emphasises the importance for CEOs to be present to take the lead on such discussions.
“Never assign your transformation plan to a consultant. Make sure you have the time to spend with your team to transform the company together. You need to provide the team with a direction,” he says.
When Tio was asked what it was he hoped to achieve with this transformation plan, his reply was to hit the RM1bil revenue mark.
When the rest of the team was asked if they thought the target was possible, only one hand shot up
“This person looked around and saw that nobody put up their hands, so she quickly put her hand back down,” Tio laughs. “So we asked her why she put up her hand and she said, ‘I’ve been working for Tio for 10 years and every time he said something will happen, it happens. So I believe if we want to achieve RM1bil, he can do it’.”
“So first things first, entrepreneurs must walk their talk. Otherwise, people will stop believing in you.”
This gave Tio a nudge of confidence.
But it took a little more to get the buy-in from the rest of the team.
They worked on breaking the grand vision down to workable plans and came up with two smaller visions: Wawasan 60:40 and Wawasan Asean 30.
Diversification is key, explains Tio.
The group had been overly reliant on the automotive sector with over 90% of sales coming from the segment. This meant that PKT’s business was highly exposed to recessions. The team decided that it needed to diversify its revenue base to 60% from the automotive segment and 40% from the fast-moving-consumer-goods (FMCG) segment, hence the name Wawasan 60:40.
They also looked at geographical diversification, aiming for 30% of sales from the Asean region.
“So in 2008, every single division and departmental head worked towards the same goal of achieving RM1bil sales. We looked at how each department can contribute towards this vision.
“I had everyone bought into the vision that RM1bil was possible. If everyone do their part and combine our efforts, we can achieve it. On my own, it will be impossible. And CEOs should never take all the credit for a company achieving its goal because there’s no way he or she can do it by himself or herself,” he says.
The management team also took the effort to help visualise the company’s potential to grow. They put out charts that tracked its historical growth to remind everyone that PKT had grown from a RM2mil company when Tio took over the company in 1996, to a RM200mil firm then.
Subsequently, PKT took steps towards the RM1bil mark. It invested in its state-of-the-art warehousing facility – The Waves – to boost its capability to grow.
As a result of its efforts, PKT enjoyed “a good year for 2010 and 2011”.
But as the company grew rapidly, Tio was reminded to also look into developing and rallying the rest of his employees around PKT’s common goal.
“We had our first transformation and we were clear on the company’s direction. But we discovered that employee motivation is also very important. Employees must have a clear motivation to work in the company. They are the ones doing the work.
“So we went for another retreat in December 2011 to see how we can further transform. Transformation isn’t a one-off thing. You need to have follow-ups to keep doing better.
“So this time, we talked about what employees want from us in order to be motivated to work,” says Tio.
No doubt, there was the usual request for better bonuses and incentives. But the team ultimately decided that being happy at work was more important.
“Being happy means having more freedom and flexibility at work. So we had to instruct our top management to be more flexible with the employees. There will be no more shouting at them. Instead, have fruitful discussions.
“But having more flexibility means that every employee must have their own KPIs and they must be honest about meeting these KPIs. Once you’ve finished your job, you can do anything you like.
“We’ve created a very nice office so we shouldn’t restrict them to just their desks. But you need to finish your work. So with this, we get them to work fast to enjoy that flexibility. And we are also cultivating an honest culture which is good for the company. I’m not here to punish people for failing their KPIs, I want to educate them on honesty,” he says.
PKT also started celebrating more events such as birthdays and Mooncake Festival to get its employees to bond to create a happier work environment.
Tio is proud to share that PKT’s corporate culture is built on five values: hardworking, healthy, honesty, humble and happy.
With everyone clear on the company’s goal and with a group of happy employees, PKT is well on its way to achieving its RM1bil target by 2020.
Additionally, there is a growing number of enquiries from people interested to work for the company.
According to Tio, there are about 18,000 people queueing to work for PKT via Facebook.
“They want this working environment, they like our culture. Previously, nobody wants to work for a logistics company. People used to think it’s a dirty place with no future. But now, I have PhD and Master’s students who want to work for us. This will help sustain a very good growth for our company.
“We have a clear direction, good management and good employees,” says Tio.
While good plans can put companies on a good footing, Tio cautions entrepreneurs and business managers not to sit on their laurels.
“Transformation shouldn’t stop. There are various objectives for a transformation plan. We had a company and employee transformation programme. Maybe there will be other types of transformation needed for other reasons in the future. You cannot stop. You need to keep following-up on your plans.
“Once you have done this, go to the next level, and then follow up from there. Transformation pushes us to go further.
“For every plan, you will eventually reach a stagnant stage because KPIs can become stale after a few years. So keep pushing further,” says Tio.
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