A large heavy construction equipment rental company in Canada had been operating successfully for fifteen years. The company had 500 employees with multiple equipment rental offices across western Canada. They were performing well on all fronts with a strategy to grow significantly in the coming years. Continuing to be successful was becoming tougher with the larger number of companies competing for the same projects each year. There was always competition and often several companies would be awarded contracts for the same project. Often times, some of the heavy equipment would not get returned immediately to the rental company location which would then necessitate an additional invoice to be paid to purchase new equipment to replace what was not returned.
The CEO had been in the position for fifteen years. He became concerned about the culture of his company and did not want his people to lose sight of who they were. He hired us, Integrity Consulting, to help them define their culture. Over the next six months, we helped them define their vision, mission and core values as the foundation for their culture. Included in the values clarification was a comprehensive set of behaviors associated with each. We then instituted a values-based decision making methodology that helped everyone from the senior leadership team down to the first line supervisors on how to use the vision, mission, and values to make good decisions on a daily basis.
On this one occasion, the company had been awarded a large rental contract on a construction project. They were not the only provider of rental equipment, but they were a significant provider on site. Everything on the project had gone well. At the end of the project most of the equipment was returned to their shop but not all. It was not out of the ordinary that a number of pieces were missing totalling 10’s of thousands of dollars. As per their rental agreement they tallied up the new cost of the missing equipment and added it to the invoice, which their client paid.
Then a few months later, the missing equipment started showing up back at their shop. This was normal as other contractors or other rental companies often mistakenly or inadvertently claimed it as their own during the decommissioning of the large project. However, the rental industry standard is to not inform the client who had paid for the “missing” equipment once it had been returned. That was a conflict now in the mind of the local store manager which served this rental contract. It totally contradicted his understanding of the company’s new values and the training course on values he had taken. What should he do? If he kept the returned equipment AND the money already received to replace it, that would be a clear violation of his and the company values. If he chose to return the money received back to the client, he would upset the “norm” for his industry and possibly risk retribution from his competition. He would also reduce the project profit margin and force any commissioned employees to have commissions recalculated.
Four months after completion of the Values-Based Decision Making training the local store manager and his CEO contacted us to explain the crisis and the “normal standard” for keeping the money paid by clients even after the equipment was returned. We reviewed the 6 step process and encouraged them both to apply this methodology to this situation. They did. Here are their results.
The local store manager clearly stopped and thought about this crisis and the need to make a decision. He initially weighed the 2 options against his values which was the first flag that something was wrong with the “norm”.
Based on the Local store manager and the CEO’s engagement with the Six-Step Decision Making Process, they realized that not refunding the client was a violation of the company’s newly defined values. Together both had made the decision to refund the money received for the returned equipment. The CEO decided not to have the sales team return commissions earned on the inflated profit, but was clear about how returns would be handled in the future. In fact he changed policy to state that commission would not be earned on lost equipment billed for. Now the challenge was determining exactly how he was going to execute on the rebate. It was really the local store manager who came up with the idea. Instead of simply sending the client a rebate check, the rental office manager got in his truck and drove 7 hours, 1 way to meet his client, the project construction manager. He delivered the check with an explanation of what he was doing and why. He shared with the client his recent adoption of core values and this was clearly the right thing to do based on those values. He even left his customer a copy of their values card with the 6-Step decision making process on it.
As more equipment slowly trickled in over the next few months, each time the rental store manager would hand deliver a rebate cheque to his client. After two months the last cheque was hand delivered, representing a 90% refund on the “missing” equipment invoice.
Shortly after this set of cheques were returned to the client, the CEO of the rental company was contacted by the President of the construction company who had rented his equipment. He was asked if he and the local store manager could meet in the main construction company office in Calgary, Alberta. The Rental company President along with his local Store Manager went to the meeting. The construction supervisor who received the rebate cheques was also there. They were told by the Construction Company CEO how impressed he was with their honesty. For that reason, he stated that he wanted to award a 5 year exclusive rental agreement contract to my customer. His words: “Finally a contractor we can trust.”
