Open Your Mind to Open Book Management with Theo Etzel

The Manufacturers' Network

Connect with Theo Etzel

Email: [e-mail]

Website: TheoEtzel.com

Lisa Ryan: Hey, it's Lisa Ryan. Welcome to the Manufacturers' Network podcast. I'm excited to introduce our guests today, Theo Etzel. Theo was CEO of conditioned air for 23 years. The company grew from $2.7 million in revenue to $55 million in sales at that time.

He stepped down as CEO in June of 2018 and is currently Chairman of Conditioned Air, now a 60 plus million dollar regional organization in the residential and light commercial HVAC markets. Conditioned Air employs over 375 full-time co-workers and has branches in Fort Myers and Sarasota.

Theo is the author of the book, Invest your Heartbeats Wisely, released in April of 2016. The book focuses on practical full philosophical, and principled leadership concepts for business and life. Theo, welcome to the show.

Theo Etzel: Thank you, Lisa. I really appreciate being here. It's always a joy.

Lisa Ryan: Great! Please tell us a little bit about your background and what led you to do what you're doing.

Theo Etzel: Well, my background is that I'm a native Floridian. I grew up in Miami and attended Stetson University with a focus on finance and economics. That got me started on the business side of things by developing hotels for hotels' national chain and traveling around the country.

Even into some entrepreneurial things after that. Developing an area franchise model for Ben and Jerry's in the Atlanta area. We were living there and did that for several years. We ended up selling those stores and having the opportunity to come to Naples, Florida, back down on the west coast.

I took over a small air conditioning company, Conditioned Air, and applied sort of the entrepreneurial people skills needed at that time. It helped me grow the business. I would say that I didn't have any experience in the HVAC world specifically, but I certainly had business experience. I'm a people person, so I tried my best to bring good practices, good ethics, good people treatment into the company and learn the HVAC business as I went along. I wanted to build a team that could really help that process grow.

Lisa Ryan: So you walk into this small HVAC company without any industry experience, and you're about to take it over. What were some of the things you did right off the bat to connect with the people who work there, develop that passion for the business, and build the culture you did?

Theo Etzel: I think the first challenge that I realized that the company had organizationally was that the person in my chair previously had not been forthright and straight-up with the staff. My number one goal was to establish trust with the staff, which required a whole level of transparency of telling people what I was going to do and making sure that I did it so that they saw that there was consistency in word deed.

Building the trust probably took the better part of a year to be truthful because there was skepticism. He's young. He hasn't been in our business before. What does he know? What's he here for? I mean, you have you know people. People will make up their minds a narrative to support their suspicions. If allowed to, and so that's where I do think in any organization, no matter what size.

Terrific communications have to be the key, so you have to tell people what you're going to do constantly. Set expectations and carry through with those. Solicit input for what works and what doesn't work. Ask questions and respect their opinion doesn't mean you have to adopt it. But it means you have to communicate with them if you don't choose to adopt an idea that someone suggests. You do need to explain why we can't do it exactly that way.

Lisa Ryan: So what would be an example of something specific that you did to build trust, as they saw that you were young, and they were skeptical. Maybe it was the leftover from the previous administration of what they experienced for them but was there something that comes to mind as an example of something you specifically did to build that trust.

Theo Etzel: I think one of the first things we did was when I reviewed sort of some of the programs or things that have been in place, 401Ks, things like that that may have gotten trimmed, as it were. Some of the benefits had been reduced overtime over the last 18 months or so a couple of years from when I got there.

I did sit down with people and really look at what matters to them. What did you have? What don't you have now? Why is that important? What are things important to you? We also looked at that we are competitive in recruiting with the current benefits package we have? What did we have? What don't we have now? I think I worked diligently to reestablish things that had been lost that were important to them.

Lisa Ryan: Even sitting down and asking them the question that critical of what's important to you. Because you can make up stuff all day long as far as what you think that employees need but having those individual conversations and listening certainly sounds like it had a big role in building that trust.

Theo Etzel: Yes. Fast forward just to current just by way of teeing off on that. The conversations are terrific, but I'm involved in a private school on the board of trustees now, and our head of school has an excellent way. When he showed up at our school and was new, he to sat down with the staff and did the individual questions, and several of the questions I thought were really key, and that is what are we doing currently that you like. What could we do better that you would like to see improved? What are the sacred cows that I might trip over?

Lisa Ryan: interesting.

Theo Etzel: So I don't know what they are. Would you tell me something that is known but it's not talked about, and then, and I thought this was key. What are you scared I'm going to do? That is a scary question, but it's a great question because it's an opening question. What are you scared I'm going to do? It's a vulnerability question. I think you're going to reduce our salaries. Or I think you're going to cut a lot of staff. Or you know I don't think you're going to invest in our development individually, you know education-wise.

You know anything can come out, but it creates a tremendous amount of conversation and insight into the organization. While I didn't use those specific questions in my conversations, I always tried to find out what was important what was needed. That really reflects more on my style. One has a coach as a leader. Trying to build other people and servant leadership, which is if you're working with me. I don't want to come in and have to tell you what to do daily. If I'm micromanaging, I don't find any joy in that, nor do I find that productive at all.

But what I will ask is, what do you need from me that helps you do your job better easier, more efficiently, and creates a better atmosphere and in the organization? If we can do that, it will set out to do that, and so, if you continually ask what that is, that leads to a lot of innovation, I think so.

Lisa Ryan: Fast forward. You're going from the beginning of initially building that trust. You and I cannot have a conversation, of course, without talking about your open book leadership because that is so mind-blowing for people who would never consider showing their employees the actual books. I'd really love for you to walk through that process, maybe, starting with the philosophy that made you look at that process of implementation looked and what happened afterward with the employees.

Theo Etzel: But that goes back to my premise that, especially for leaders, people in the organization are actually on the front lines doing the company's work. In our case, the technicians in people's homes or on a construction site or their installations are going into equipment in people's homes or our offices and businesses. They're coming in contact with the customer. They have to do manual labor. They have to do the heavy lifting on the front line.

It can be a straightforward jump for someone if they wish it to be to go from here. I am putting in this complicated system to feel that he must be up in his office pushing dollar bills in his pockets and figuring out how to get them out of the Office every night. Because it's a natural thing to play with, it's an unknown. How much does the company make? They pay me, but how much does the company make? Is the company in good shape? Are we doing the best we can? Are we going to be around the right people who want to know some certainties so, interestingly, from the manufacturing world, The book The great game of business by jack stack focused on manufacturing? The plant was designed to be an open book plant. In other words, they put teams together. They asked for input. How do you do your job more efficiently? Here's the impact of manufacturing on what one more widget per hour means. They started sharing a lot of numbers. They got a lot of input on improving the system can do it better. People became invested mentally in the organization, so we took that model, and we modified it to fit our company.

We started sharing with people. We started it as an education process. If you haven't done it, and people aren't used to looking at a profit and loss statement, you do have to invest time, and energy, and an education. We started with the expenses, and we made it kind of a game. Guess how much we spent on gas last month. Getting our vans to everybody's home. People's eyes bugged out when they heard how much the gas bill was or the insurance bill or training or tools that we buy or all those things that go into making up a business.

We started with the income side. We would then do it every quarter, and we would project on the screen a profit and loss. Our CFO would go through the line items. Now the line items are grouped. Let's not kid ourselves; we're not showing everybody's individual salaries up there. We're doing things properly, but we're going to show how much is spent on health insurance. How much you spent on vacation time. You know each part of the benefits that we contribute to, and then all the things that make up our expense side. It's a very educational, very eye-opening thing, and then, if our feeling was if you share this information and you're asking for people to think about how to do things in a wiser, better, more efficient way to create more value for the company. You really need to share part of the profit growth that results from people pitching in and having a quote owners mentality, so we do that. They're part of a share program at the end of the year, and we divide up a portion of the profits. They get to see that their quote share values every month, and it's not. It's just a way to involve people, thank people, and always have people thinking about the greater picture.

Lisa Ryan: When the other interesting thing that came out of this was it really helped with your retention versus people jumping and starting their own HVAC companies. Talk a little bit about that.

Theo Etzel: If employees think in their mind, oh wow, he's up there stuffing dollar bills in his pocket. How hard can that be? I'll go down to the used car place, get a van, and through my sign on on the side of it? I can be their competitor once people started getting an education on what it takes to really make the phone ring what you spend on advertising. Some of these other components really add up in being a consistent business. It became clear to a lot of folks. I like what I do, and there they are providing career paths here, and that's something that goes hand in hand. If you don't if want retention, then you do need to. You need to have a way for people to accelerate move up or move around in the organization and tear down sort of silos that you plug somebody in. They say I quit. That's not healthy either, but it helped mentally prepare people to say I really like what I'm doing. I'm not taking my work home with me. I don't have to worry about payroll. I don't have to worry about some of the other things. It puts in perspective what the business climate is out there as well.

Yes, it does help with retention, in my opinion, does, and I, but I also think it makes for a more satisfied workforce because one of the key things that happened after we started doing this. Very first meetings, several people walked up and said, thank you for trusting us with.

So it was a huge step of trust to show them we have nothing to hide here. We're going to show you how we're doing.

Lisa Ryan: It also helps them when we look at our employees from a holistic standpoint, and we're taking care of the whole person, not the person. That shows up at the plant or shows up at the job site.

Lisa Ryan: But by giving people that financial education, there's probably a good chance that they could better with their own personal finances. They could take that same mentality into their home because they have a different level of understanding.

Theo Etzel: Correct, I think you're probably right on that. I do think it's important along with that concept to look at the employee holistically, so we are always concerned about the family, what's going on in their life and offer programs to assist people that have situations that come up, as we all do and need some guidance on some things. It's an essential thing to stand behind folks that. Are you really on the team? We want to be supportive of that.

Lisa Ryan: So what are some of the things right now, amidst the covid, and everything else that we're going through, but what's keeping you up at night.

Theo Etzel: Oh, my, you know early on, people have asked me this question, and I said, I have to answer it this way, so well early on, when I wasn't too many months after I got to wondering, are we really going to make payroll on Friday. People owed us some money, so I knew Thursday, I'd grab the checks and make sure they paid us. We had a few weeks like that. I know the feeling of being stressed. Unfortunately, we don't have that to contend with now. But I would say it concerns in covid, but beyond covid, we travel so many miles on the road, and we put our people at risk, and obviously other drivers that are on the road, are at risk. I would say just the sheer number of miles that we drive. We emphasize the safety aspect of everything that we do. I never complain about anybody that says. I don't think this job is safe. I need help. We want to support the driving and making sure they're accident-free. That is first and foremost because that's huge exposure for us right from that standpoint. We want everybody to return home safe and healthy and be able to come back to work.

On the covid side of things, we took extraordinary steps immediately to give personal protective equipment to people to be protected when they went in someone's home or to a construction site. We made sure that we could contract trace. We had to do the same thing. We had to have people work from home. We had to have people. Not only did we not have group meetings again for a long time, but those kinds of things also did it virtually and did it by video and video messages. Communication is the key, so you have to continually keep that going by whatever means available at the time.

Lisa Ryan: When it comes to creating this network of industry colleagues, what would be something that you would like to learn from other manufacturing, HVAC industry professionals, and what would be your areas of expertise that you'd be willing to share with people who wants to connect?

Theo Etzel: Oh well, thank you. I'm always happy to talk about leadership styles and company culture because I really think company culture is key to success. I think that having a solid team and that team atmosphere is just so key. Recognizing people. I always say catch them doing the right thing. Catch someone doing the right thing, tell them they're doing the right thing, pat them on the back and make sure you do that publicly so that other people see you congratulating someone or thanking somebody. I'm happy to talk to people about my experiences in those things in the efforts that we took to do that.

As far as learning things, I am open to so many things to learn and love to do that. I enjoy listening to people talk and picking up on subtle things that they've had experienced, especially when it comes to employees, and gaining more efficiencies out of a process. Or how they got people to buy into a process when they had a large process to implement.

Implementation of a change in an organization of something that you're used to a computer system, whatever it might be, and all of a sudden, they got a whole new system. Now I've gotta go this direction as many tears and gnashing of teeth come with things like that.

I'm always a student of how to help get that done efficiently and timely, so I love stuff like that too.

Lisa Ryan: If you could boil it down to your favorite leadership principle since you wrote a whole book on it, what would be your words of wisdom to leave our listeners with today?

Theo Etzel: The most important thing that a leader can do is invest in their people. It's all about the team and the people. If I don't think if you are willing to serve people, if you're not willing to be transparent, if you're not willing to be honest with them, and expect honesty from them, then I don't think you're going to have a great culture in the company. If you show them respect and show admiration for the people doing the work with you, and your real team makes them and not afraid to lead the charge, and be right by their side when times are tough and admit when times are tough. For when you've made a mistake, and apologize, and say let's you know recover, and let's keep going. I think your culture will suffer from that. It has served me well in all my experiences, and anytime I didn't trust my gut on doing it that way, I'm just always regretted it, so it's just the best policy definitely.

Lisa Ryan: Theo, it has been a pleasure to have you on the show. If people want to get in touch and connect with you, what's the best way for them to do that?

Theo Etzel: The easiest way is to email me at [e-mail]. You can always go to the website TheoEtzel.com and fill out the contact sheet there.

Lisa Ryan: All right, well, once again, thank you so much for being my guest on the show today, Theo.

Theo Etzel: Absolutely, Lisa, I always enjoy talking to you, and thank you for what you do.

Lisa Ryan: You're very welcome. I'm Lisa Ryan, and this is the Manufacturers Network podcast. See you next time.