Con-way chief Stotlar: “We’re back”

Con-way Inc. President and CEO Douglas W. Stotlar says he has some bad news for his competitors in the LTL sector: “Tell them we’re back.”
  
Thanks to a transformational organizational change led by Stotlar, he says Con-way is on its way back to its familiar leadership perch atop the LTL industry. Its largest unit, the $3.2 billion Con-way Freight LTL unit, has rebounded from its low point during the 2008-2010 recession to again one of the most profitable carriers in the sector.
  
Con-way Freight earned $35 million in the first quarter, normally the slowest period for all trucking companies, and is poised to earn even more the rest of this year. That was nearly 70 percent better earnings than the 2011 first quarter.
  
In a riveting keynote presentation before the SMC3 annual meeting here, Stotlar gave a step-by-step picture of what happened to Con-way and other LTL carriers during the depth of the recession, and how it has emerged stronger than ever.
 
Some background: Stotlar first joined Con-way Central back in its infancy in 1985. Back then, he said, the bulk of Con-way drivers were laid-off Teamsters from other companies. He joked that one driver used to ride around Columbus, Ohio, with the cab windows up, trying to convince other Teamsters that Con-way had outfitted their trucks with air conditioning. In truth, they had not.
 
“Our whole concept was based on velocity,” Stotlar said, recalling the early days of next- and second-day deliveries. Some Con-way trucks rolled out with less than 1,000 pounds of freight, but they rolled out on schedule because it had promised customers next-day delivery. 
 
“Early on there was a spirit that we would do anything we could do to deliver the freight,” he said. “Our employees walked around like we were the cure for cancer.”
  
Then the competitive landscape changed. Customers had more choices. New technologies emerged. Shippers had options. Con-way’s service gap narrowed as the likes of UPS and FedEx entered the LTL market. Still, Con-way enjoyed its most profitable year in 2005, thanks to a great environment for all trucking companies.
 
Then what Stotlar called the “perfect storm” hit. In 2008, at the start of the recession, Con-way endured the first layoffs in company history. It idled 2,000 workers and shuttered 43 terminals.
 
There was a rapid decline in LTL volume, a capacity glut, increased price competition and wage and benefit cuts.
 
“We had way too many trucks, way too many trailers and the bottom fell out,” Stotlar recalled.

For the first time in its history, Con-way posted a quarterly loss in the first quarter of 2009. “That was the most miserable point of my life, but we had to make sure the company survived,” Stotlar recalled.
 
Yet out of this crisis, Stotlar saw opportunity. The recession had “reset” company expectations. It removed resistance to change. With a sense of urgency, employees had become prepared for a transformational change.
  
In August 2010, Stotlar put on a second hat. In addition to his job as CEO of the $5.3 billion holding company, he assumed the role of interim president of Con-way Freight. He knew he had to align his leadership team with a common vision and goals, clarify roles, remove roadblocks and set a clearly enunciated long-term strategy.
  
He and his leadership team personally engaged employees at “town hall” style meetings at 290 locations around the country, sometimes as many as five a day from 5 a.m. until dusk. Stotlar said he listened more than talked.
  
When he did talk, he says he emphasized respect for employees and four core values—safety, integrity, commitment and excellence. As he said, “If you want to get fired from Con-way, violate one of these.”
  
While talking to employees increased, the time spent in meetings decreased. Stotlar said senior management was spending nearly half its time in what he called “endless” meetings. Now, he says, “We meet for two hours on Monday—and that’s it for me. The rest of the time we’re going to spend talking with employees.”
 
Key facets of the organizational transformation were a shift from top-down hierarchy to what Stotlar called “servant” leaders who coach and mentor much more than they dictated.
 
“I use respect and accountability—not command and control,” he said. “I want to give employees the authority and tools to drive change.”
 
The result has been what he calls “a sea-change in our organization.” There has been a 40 percent reduction in overall workplace accidents, saving $17 million in one year.

Vehicular crashes have lowered 25 percent. Cargo claims have been reduced, saving $18 million. Overall operating income in 2011 improved 400 percent in one year to in excess of $100 million.
 
“We have rebuilt the company to what it has been—a really fun place to be in the past year,” Stotlar said. “We’re doing things for each other—not at each other.”
 
Calling the LTL environment “the ultimate team sport,” Stotlar said the nightly trick of running a complex, multi-stop operation with thousands of moving parts requires all hands on deck.
“You can’t do all those things with just technology or corporate edict,” he said.
 
The most important things he’s learned are:
-Leadership has to be in it for the greater good.
-Listen more than you talk
-Let your actions be your words
-Keep communications simple and clear
-Never underestimate workers’ desire to do the right thing.

That has led to operating efficiencies throughout the Con-way network, greater pricing and sales sophistication, better technology implementation and, oh yes, better profitability.