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One-on-One with Rick Ching

Executive Vice President, Automotive Division, Servco Pacific Inc.

Photo: David Croxford

It’s certainly not a good time to be in the new car sales business, but Rick Ching says he loves his job so much that he can’t imagine doing anything else. In November, Ching’s automotive division cut its staff by 118 people — about 10 percent — what he called a devastating but necessary decision. Here, he talks about how management delicately handled the largest layoff in the company’s 90-year history, which, ironically, he says, helps demonstrate why Servco is one of the Best Places to Work in Hawaii.

Servco has been on our Best Places to Work list for the past five years. What makes this company so wonderful?
We’ve got great people, and I know that sounds like a cliché, but people really are our greatest resource. It’s absolutely one of the reasons I’ve been here for 24 years. To me, Servco is also a fun place to work, and when you spend as many hours as we do working hard, you really want to get up in the morning feeling like you want to do this. It’s hard to pick one specific instance that demonstrates why this is a Best Place to Work, but I can tell you something that makes me excited: I love to learn new things and have the opportunity to grow, and that happens every day here. To be at the kind of company where you have that just makes it really rewarding. This might sound kind of corny, but it’s like the inverted pyramid in that the further up you are, the more people you serve. It really is like that in this company. You just have more bosses and more people you need to work with, but that’s a benefit for me. In addition, we have great business partners here and they’re all very supportive.

What is the company doing to keep up morale during these tough economic times, despite having to reduce staff and streamline operations?
Well, we did do one layoff — 118 employees. Through it all, we were very clear with our employees and communication was key. We feel we did the layoffs at a level where if the market stays within our expectations, we’re not going to have to do another layoff. There are no guarantees in life, but we didn’t think that serial layoffs — layoff after layoff after layoff — was the way to do it. We just felt that people were going to be sitting there, waiting for the next shoe to fall off. It’s not healthy; they can’t get on with their jobs and focus on what they have to do. So, hopefully, this way, everybody can get back to focusing on the task at hand and doing the best job they can. It was extremely painful. Servco’s never had a layoff of that nature, but I give tremendous credit to our managers and our people for how they responded. We worked very hard to have one-on-one conversations with every employee who was affected by the layoff prior to them getting wind of it in a way that we didn’t think was appropriate. You talk about respect; we owed them the courtesy of telling them first. You have to remember, these were good people. These weren’t people who weren’t performing; they were just in a situation where the volume just didn’t dictate having as many positions. In most cases, determining which positions [would be eliminated] was very, very difficult because these were all really good people. It’s tough when we’re a 90-year-old company with a lot of family ties. I think if you ask the people if we handled it well, at least the people I talked to, they would say yes. [CEO] Mark [Fukunaga] and [president] Eric [Fukunaga] did an exceptional job. They tried hard to get in touch with virtually every single person who was affected by the layoff. They either sat and talked to them, had coffee with them or something along those lines. So when your CEO and your president make that kind of effort to touch the affected people, I think that really says something about this company.

Describe Servco’s corporate culture and what makes it unique.
We have a very strong corporate culture. Back in 1999, we had a values initiative and we actually worked with George Kanahele [a historian on Native Hawaiian values], who spent a lot of time with us to work to build that culture. I remember George telling us that the senior leadership really had to be ready for this process because we did it from the ground up. All of our employees who were with us at that time went through a session, which was about four hours, and they had a chance to say what they thought Servco’s culture was all about. Whether or not you have a very overstated culture, you have one, so we wanted it to be more explicit. All of this input was taken and we sifted through it and the senior management totally bought into it. So, we came up with Servco’s shared value statement. We also came up with Servco’s 10 core values and it’s an acronym that spells out “TEAM SERVCO”: Teamwork, Enjoyment, Achievement, Motivation, Service, Excellence, Respect, Vision, Communication and Ownership (which Ching recited from memory). As you might expect, if you ask people from any company what their organization’s values are, you might get a lot of those same answers, so it comes down to how you live them every day. The behaviors and the norms that go with them are really how those values get manifested every day in your work, your interaction with your co-workers and with your customers. That’s really where they count. They’re not just words on a piece of paper; they really are our culture.

How has the auto industry changed over the years and how has Servco positioned itself to come out at the forefront once this economic downturn passes?
I think it’s safe to say that we’re in uncharted waters in terms of the auto industry. It’s a cyclical business and we’ve always known this. Most of the 1990s for Hawaii’s automobile market wasn’t that good. Then it got really strong in the beginning part of 2000, when everybody started buying trucks and SUVs — up until 2005 and 2006. Since then, of course, it’s been coming down. What’s really affected us is the acceleration and steepness of that drop. I think most of the experts are forecasting that we’ll stay in this lower sales level for most, if not all, of this year. Then, hopefully we’ll see some recovery after that. We know we can’t control certain things — interest rates, what’s going on in the housing market or whether or not they’re going to pass certain legislation. We’re just focusing on the things that we can do well. Especially during this time, customer service has been a huge push for us over the past three or four years, but we feel we have to keep doing more.

From a management perspective, how do you think your employees’ satisfaction is reflected through the type of service the organization provides, as well as its reputation in the community?
It’s huge. In fact, I think you hit one of the nails on the head. Employee satisfaction is so important for us that, for many years, we’ve measured it. We do an annual survey and [global consulting firm] Watson-Wyatt sits down with our executive committee every year and we go over the results. Watson-Wyatt also has a high-performing norm for national companies, so they can tell us how we’re doing against those national norms. In many cases, they tell us we’re doing very well. You need employees who are happy and satisfied to be able to provide great customer service, and great customer service is the long-term key for financial profitability. Of course, we’re not perfect, but we’re always looking to improve.

Most human resource professionals say the most common reason employees both stay and leave a job is because of their relationship with their supervisors. Do you think the Fukunagas’ leadership styles play a big role in setting the tone for this organization?
Absolutely, but I think Mark and Eric would be extremely embarrassed if this article comes out and it’s about them, because that’s just not the way they are. With that said, Mark and Eric have made a huge positive change to the organization. It’s their management style; it’s their personalities. They’re also very good about saying, “This is your area, you know more about it, so make the decision and get on with it.” So, not micromanaging, empowering people to make decisions, delegating and pushing decision-making down, being tolerant of mistakes. They have a very supportive management style. They’re two of the reasons that Servco is such a good company. They’re such low-key people; they’re just so humble. You know, Mark goes fishing with our technicians sometimes and Erik has been in this business a long time and he goes out and talks to a lot of the employees and customers. Also, when we get involved in the community, which we’re encouraged to do, whether it’s your child’s soccer league or a nonprofit that you really care about, Servco has a foundation that provides contributions to a lot of the organizations that our employees are involved with. That’s neat when you think that the company cares enough that if you put your time and money behind some cause that you really care about, your company will also be right there as well.


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