This MTD exclusive was provided by Michael McGregor, partner at Focus Investment Banking LLC (focusbankers.com/automotive/tire-and-service) and author of MTD’s monthly M&A column.
A Supreme Court justice once observed that “the true symbol of the United States is not the bald eagle. It is the pendulum. And when the pendulum swings too far in one direction, it swings back. This pendulum swing may be happening when it comes to corporate profits and employee wages.
According to the Federal Reserve Bank of St. Louis, corporate profits as a percentage of gross domestic product (GDP) have more than tripled, from a low of 3.7% in 1985 to a high of 11.5% in 2021. .
At the same time, compensation of employees as a percentage of GDP fell by 20% over most of this same period, from the high point of 1970 to the low point of 2015.
That’s part of what’s driving the “big quit” we’ve seen during COVID-19. We have seen decades of unprecedented profits in corporate America, while workers’ wages have remained stagnant. Some workers feel they have been left behind and their wishes ignored.
The pendulum has now swung in their direction. Many seek to “work to live” rather than “live to work”. They want to be valued for the work they do and they demand a higher salary.
Otherwise, why would 4.5 million people quit their jobs last November — the highest monthly quit rate on record, according to the Bureau of Labor Statistics? Workers voted with their feet.
While there are many ways to attract and retain employees, I’m going to focus on just one: having a mission or goal they can subscribe to, other than just making money.
A quick check of the websites of some major automotive chains tells me that many companies look inward when going public. Statements such as “we strive for complete customer satisfaction”, “we will not undersell”, “safety is our priority” and “we offer the best quality” are what I come across most often.
A few have vision statements, but the purpose of these is to explain why customers should shop at their stores.
An effective mission statement explains your organization’s purpose. This is a simple and short explanation of your business purpose and intent. This mission statement can support a company’s vision of being the best or being the cheapest or whatever that vision is.
But a concise statement should give your employees, customers, and stakeholders an idea of who you are. And it should give your associates a greater sense of identity.
In my previous career, my mission was “to keep people driving by providing peace of mind through predictable, affordable, high-quality car care.” The ‘keep people behind the wheel’ goal was designed as the overall ‘feel good’ goal – which implies that we contribute to moving people and society forward. The other parts were related to our subscription-based model which aimed to reorganize the automotive service industry.
Customers and employees have embraced our mission. This was reflected in everything we did in our stores and even in our community involvement.
Every month, each of our stores picked up a donated or abandoned car and repaired it at no cost to those in need through Goodwill’s car donation program. Our employees felt really good about it and it reinforced our mission to make the auto repair business better for everyone.
When I left this activity, I chose to reinvent myself as an investment banker. I was no longer on the grand mission of revamping the auto service industry and was “just doing business.”
My son, Neil, who was maybe eight at the time, told me that what I was doing now was just as important as what I was doing before because I was helping people. So that’s my mission. I help people.
If a tire dealer wants to ask me what their options are, I’ll spend some time educating them – although I can’t represent them if they’re too small.
If a tire wholesaler faces liquidation because their major suppliers pulled their lines, I’ll see what I can do to arrange a quick exit – even if it’s too late.
If a multi-location tire dealer breaks even, I’m going to look at their books and give them ways to improve their performance.
I speak at industry conferences to help educate tire dealers. I write this column in the hopes of making you more aware of private capital markets – and your options. All this without being paid.
Do not mistake yourself. I make a good living as an investment banker helping people in the automotive industry. But it is my mission that generates profit and not the other way around. I urge you to find your mission. It will benefit you and your business. And it will benefit your employees by giving them a higher purpose to rally around.