15 Minutes with…. Art Friedson, CDW Corp.
Motivating a big company in small ways
By Brendan Coffey
In the early 1980s, when Michael Krasny was headed to work at his nascent computer reseller CDW, he'd grab a bag bagels for him and his handful of employees. Today, CDW is 3,700 employees larger, with $4.7 billion in annual sales, but the company still buys bagels for its employees every Tuesday and Thursday. If there is one thing Krasny knew early on, it's that happy employees lead to happy customers. The bagels are just one of the many touches CDW uses to this day motivate.
"There's a palpable buzz about the place… no one thing is the secret," says Arthur S. Friedson, head of CDW's Coworker Services and the man in charge of executing Chairman Emeritus Krasny's vision.
The Vernon Hills, Ill., retailer has seen tremendous growth, in no small part due to the high level of satisfaction and drive among its employees, says Friedson. In the past eight years CDW has averaged 50 percent sales growth each year, and its revenue per employee dwarfs competitors. "We don't manufacture anything. All of our competitive advantage comes from getting coworkers to believe 'What I do at work today has an effect on the enterprise,'" he explains.
Motivation for all
Friedson has tailored CDW's program to affect as many departments as possible, not just the sales staff. Programs are designed to reward team performance against measurable goals-- monthly bonuses are the normal reward. The financial benefits are such that warehouse workers, whose regular wages are about average for the job, typically garner an extra 25 percent of income a month through incentives. The number of employees participating in a motivation program at the company varies, but it isn't unusual for some 80 percent of employees to be in the midst of one.
The central idea of CDW's philosophy is to make a "Circle of Service," with the customer at the center of the circle. At its most basic, it's designed to encourage hardworking behavior even with simple decisions like returning a customer's call before lunch rather than waiting until after. "Our goal is to be the biggest little company around," he adds, since personal, professional service is a key factor to winning in retail.
Rewarding the "Old Timers"
In particular, CDW pays special attention to what Friedson calls Old Timers, employees who have three or more years of service at CDW. They are the ones who maintain the hardworking and upbeat culture at CDW, and pass that example to newer employees. Each Old Timer is informed of the annual revenue and operating income target for the company. When either one is reached, each Old Timer gets free airfare and hotel for him or her and their family to anyplace in the U.S. It's quite a perk, but it works, with CDW footing the bill for such vacations more than 50 percent of the time.
Even when times are tough, CDW hasn't given up on motivation. Since the recession began, the amount of money dedicated to employee training has been boosted each year. The result: CDW didn't experience a sales or net income drop during that time.
Indeed, CDW has been so adept at employee motivation and recognition that it recently won the Performance Through People award from Northwestern University's Forum for People Performance Management and Measurement, as well as recognition in Fortune magazine's Best Companies issue.
Big and Hairy
Almost continually, CDW also puts forth what Friedson calls a BHAG -- a Big, Hairy, Aggressive Goal for the whole company. The tradition began in 1996, when Krasny announced at the company holiday party that if sales broke $1 billion the next year (from its then-$960 million), he would split $1 million among everyone, equally. CDW didn't quite meet the goal, but employees had boosted sales substantially enough by the fourth quarter he awarded the money anyway.
That holiday party itself is also responsible for fostering a sense of teamwork and family. Ever more extravagant, the party is so well thought of that people often are heard discussing what to wear for it as far out as September. "It's like the prom," chuckles Friedson. This past year, when CDW acquired competitor MicroWarehouse, a Connecticut-based reseller with operations along the mid-Atlantic coast, Friedson flew all the new employees into Chicago for the party as an early lesson in CDW culture.
With so many incentive programs, the challenge is keeping them from becoming too easy or 'gimmies,' so Friedson regularly sweeps the programs, eliminating ones that have outlived their usefulness. "We're not doing this to go to Heaven; The bottom line is results. It's a culture of success," he explains.
Carrots and sticks
CDW has a myriad of programs designed to reward employees for their hard work. Here are some additional programs that have made CDW widely recognized as a desirable employer:
- Free dinners for second-shift employees
- Dry cleaning drop-off at the office
- On-site fitness center
- On-site day care
- Discounts on merchandise
- Employee assistance plan, confidential and cost-free
- Subsidized on-site cafeteria
- Free, full-service coffee bar
- Annual company-wide summer picnic
- Stock options
- Holiday cash bonus
