Hi! Today we're on a field trip and we're visiting with a company called Fastenal, and I'm going to be interviewing the district sales manager of Fastenal as well as the general manager of this particular facility. Mike Cunningham, welcome to Coursera. Thank you. And you are the district sales manager for Fastenal? Correct. Tell us a bit about your career and how you got to the position you're in. Well, Fastenal promotes almost exclusively from inside our company. So, we have a lot of opportunity for growth. I started with Fastenal when I was still in school, actually fell in love with the company, the industry, and I saw a clear pathway ahead of me that I could achieve. So, I ended up in a support position right after I graduated school where I assisted our daily sales people in helping them grow their business and manage their customers. From there I was promoted into an outside sales role, I had a territory that I was responsible for managing and growing, and numerous customers within that. From there, also promoted to general manager role in our branch, it's located in Downtown Pittsburgh, Pennsylvania. I ran that for a number of years, showed success and be able to grow manage that market and grow our people that were located within that branch, and then I became a district sales manager, moved over to numerous places in Ohio where I minister for business units and then back here to the Western Pennsylvania, Pittsburgh area, a few years back. So, how long have you been working for Fastenal? It will be 16 years coming up very soon. Wow, and it sounds like every couple of years you've had a promotion or some new job responsibilities? Yeah. Like I said in the beginning, since we do promote exclusively from inside the company, it's very easy to see a pathway ahead of you. We have many different career paths in many different directions that you can go. But kind of once you determine what your direction is and where your passion lies, it's very clear on how to attain where you want to be. Great. Now, part of your job title, district sales manager, what is your district? My district is comprised of 18 locations that are a mix of both standard branches, like the one you're standing in here today, and what we consider to be onsite branches where they're either located inside a specific customer's facility or located near that facility so we can provide the ultimate level of service to that client. I have 18 of those, like I said, scattered from Pittsburgh, Pennsylvania, south down into Northern West Virginia. Wow. So, what's your typical day like, I've realised you don't have a typical day, but-. No typical day. -tell us, what do you do. Okay. I think you could define my role into three major buckets that I do each day. First is sales management. So, I work with all of our sales staff on helping to develop and manage our key accounts, not only ones that we currently have but future potential key accounts. So, I'm working in that programming, helping that be developed and grow. Secondly, I'm working with our people, helping them develop professionally with their current position and working with them to understand where they want to be in the future and how to achieve those goals as well. Also within the personal bucket is I do a lot of recruiting for Fastenal, so I work with selected local universities to help promote the opportunities that we have. And then the third bucket, final is, I run the PML for business unit. So, when I'm making decisions within the business, I have all the financial data in front of me. So, I'm working with the assets and the profits of the business to make sure that all the decisions that we're making as a group fit our model. So, just to get a sense, you've mentioned kind of geographically where your district lies. About how many people do you have reporting up to you? There are 74, I believe, direct reports, and they're not all direct reports that's within our business unit, we have a management structure within. I've obviously 18 general managers that report to me and then under them or their sales people, their support folks, and their part-time trainees. So, ultimately though I do like to know every one of my people and I'm interacting with them when I see them, so I can understand where everybody wants to be in the future. Right. And just to help our viewers, who do you report to? I report to our regional vice president. So, as big as Fastenal is, we have a very flat structure. So, from the general manager level, to the district manager level, to the regional vice president level, and then we have our executives. So, our company is divided into regions and districts. So, with my region is Ohio, most of Pennsylvania, Maryland, Virginia, West Virginia. So, that's a region of our company and we have a vice president that runs that region. So, you oversee 18 different operations, are they all very different, are they similar? We. Have a lot of differences within our business units, and the reason being is we're very decentralized company. So, if we're going to really be able to assist our customers and helping them to be the best they can be, we've got to be adaptable to their needs, and the only way that's going to happen is if we have local decision-making power. So, we've maintained that local decision-making power to the district and the general manager. So, they can develop different things that best serve their market. When you look at my geographical area, the market in Downtown Pittsburgh is drastically different than the market Morgantown, West Virginia. So, if I try to maintain both those markets the same, it's probably not going to work out. So, those two markets and the folks that work within them operate very much differently. So, one of the things that we know when we study sales and sales management and what are the skills that are necessary, and they talk about flexibility being one and you've just mentioned that. What are some of the other things that you feel are important to you, for you to be successful? Well, when we recruit our salespeople we try to, very early on in their career, and the reason being is, it's a very large industry that we work within and there is a large learning curve to work for a company like Fastenal that has so many different solutions and value proposition to the customers. So, to learn that, I call it a toolbox of things that we can offer our customers, there's a learning curve there. So, we get them very young. So, I'm looking for basic qualities, and the first one is that dedication or that willingness to pursue a career in sales. So, you understand what sales is, you want to move forward as as a career in sales. Second thing is, this a good work ethic. I'm looking for somebody that has great common sense, a hard work ethic about them, and the willingness to learn and retain information. After that there's sort of more intangible things, adaptability. You never know what we're walking into on a daily basis. Things could be going great at a customer facility and they have a major breakdown that require, that halts production, and you can probably understand their facility goes down and are not producing product, they're losing money by the truckload. So, to jump into that situation when you thought you had your day ahead of you and you kind of knew what you're getting into, to jump into a situation like that, to be able to serve our customer and help them out of that situation, adaptability is very, very important for us. So, you've been talking about the skills that you think are necessarily important to sales and all, do have job descriptions? Certainly. Certainly. Every position, whether it be new part-time employee for us to our to our vice president level, each position is well defined in the scope and the responsibility. Well, is that very helpful to you in terms of managing people, is having that type of printed document? Yes, absolutely. When you have a printed document that explains your work function or your job duty, I think it puts you into the right place at the right frame of mind. So, you understand what the expectations for you are going into that position and then you can grow up that. Do those job descriptions change, do they evolve over time? Job descriptions, I wouldn't say change frequently, but they do evolve as our company evolves. We are a high-growth organizations so we're constantly tweaking and changing in order to best serve our employees and customers. So, yeah, we will update those and change them when when those times kind of happened. So, we've been talking about employees and recruitment of employees is an important part of your success and all. How do you go about the task of recruitment, how do you identify perspective employees and how do you select them? I mentioned earlier that recruiting and personnel management is one of the three major components of my position. So, when we view recruiting. I also mentioned that, it's a large learning curve to work for a play or a company like fastened on a big industry like this. So, we look to recruit our salespeople very early on. So, even while they're in college, we offer flexible hours, a great training program and really to get their feedback on what sales really is, to make sure that we're a good fit for each other. If that happens and everything works good, then, by the time they're ready to graduate, we're in a position where, we'll offer them a full-time sales position. Being in a global company and especially, strong here in the United States, depending on where the students from, we can facilitate opportunities, maybe closer to home or in an area where they'd want to be long-term. So, early on is when we like to help that recruiting process and an instance, we recruit or promote almost exclusively from inside the company, having share the vision with them or what they could achieve into the future by starting out at that point, is an important step to. So, when we talk about recruitment and to hire that, let say, one employee, about how many people do you need to talk to, to get down to that one? Recruiting is a numbers game, at all honestly. So, what we try to do is being in front of as many students as possible. So, when we work with local universities, we partner with only a handful of ones, that we can really form a true partnership with. So, when you really try to think of that number, I don't even know what to say that number is, but talking in front of classes, career fairs, large gatherings and sales competitions, we touch hundreds and hundreds of students in any given semester when we're talking about trying to promote the brand of Fastenal and the opportunities that we have. So then, what is the hiring process? So, if you post a job and you have some applicants that if applied to you, what happens after that? So, once an applicant, there's a numerous channels that you can apply through Fastenal, we have facile.com. We have a link on there for all our careers. So, you can apply that way, you can talk to your local district manager and your local branch manager. We posted some of the online job boards, as well. But once you use one of those avenues to get in contact with Fastenal, you pass to the district manager. From there, I review applications, review applicant information, and I choose the ones that I feel that would be best to interview. From there, we're going to have to interview process. You can going to interview with myself, and the branch manager. We can get a feel, who you are, what you're all about and if an opportunity of Fastenal is right for both parties. If so, we have some other prerequisite hiring stuff on drug tests et cetera. Then, from there, we choose in our final applicant. So, it sounds like one of the things that you have practices, trying to get multiple viewpoints. Right? You have two different people who interview a person, and helps to make for a more robust decision. Within any level, a hiring or being promoted within Fastenal, we're going to have a multiple interview process or a panel interview. So, you're always going to be interviewing with multiple people to get the best perspective possible on the type of applicants we want or the people we want to promote. When you're interviewing your perspective employees and all, do you have a series of questions that you ask? Do you use like a script or something? I hate to call it a script, but it guess the card is. We have questions that we developed as a company that we're going to ask in first and second interviews and those questions are important to us, and getting to know the individual and the qualities that we want to see with them. So, yeah, we've developed a pretty standard interview process. Well, I think too that that's also important, because that way, you're ensuring that you're asking the same question of every applicant. Absolutely, yes. You can compare apples to apples. Yeah, correct. Great. So, the hiring processes of course a long, involved process and on once you have an employee here on staff training, I would think is an important part of their development. So, can you tell us a bit about your training program. Absolutely, training is paramount to Fastenal. If we're bringing in our applicants or our employees early and one then develop a career. Training them along the way of utmost importance, not only for us to develop great people but for our customers to have the experience they want with our company. So, when a new employees are hired, they have phase one training program, and most of those trainings are online virtual modules, Skypes and things of that nature. That just gives them the basics about Fastenal, what they're coming into and how our company functions. These are materials that are produced by Fastenal? Yeah, we have a training arm of our company called the Fastenal School Business, we call it the FSB, and they develop all our training materials. So, once they get employee and employee completes that, that's going to prepare them for the next step, to get them little more well-rounded maybe the next step in their career. But once you start to progress through the company, there's pathways of trainings at every level, even at my level I attend multiple trainings per year anywhere from just sales trainings, to product trainings and to trainings that revolve around leadership, better communication, mentorship, et cetera. So, for a brand new employee, about how many hours a week would you be expecting them to be involved in training type? It depends on the branch itself and how the branch functions, but I like to see an employee work on training when in their first couple of weeks or a month, at least an hour or two a day. They get through those modules, don't want to rush them, because it's very important. So, I hate to put time stamps on it, but I think every day there needs to be time dedicated to working on trainings, digesting the material and learning it. Another part of your responsibilities would be evaluation of salespeople. Can you tell us a bit about how Fastenal approaches, Sales force evaluation. We evaluate ourselves fourth monthly. So, when you look at our business and how it breaks down, we have monthly sales goals, and that's how we judge ourselves on the progress that we're making as a branch and as a salesperson. Everybody has, the branch has its overall goal, and then the employees within health goals as well. So, each month, we're having discussions on the progress we've made towards achieving those goals, exceeding those goals, and then really, translating that into growth are both what did we look like versus last month, this month. What do we look like this month versus last year, what is our market share going. So, there's numerous metrics that we look at monthly, to see how the progression of that salesperson or that market is comparable to. So, where do the goals come from? Is that something you do? Yes it is. Okay. So, the end of each year, that late November, December time period, I believe I do goal setting for the following year. When we look at sales goals were a high-growth company our industry is fragmented. So, there's a ton of opportunity, ton market share for us here to take. So, we put a lot emphasis on growth. So, when we set goals, we looked at the year, that's part of the conduit goals, what did we produce a year, what were our trends, and we build upon those for the following year. So, year after year we're continuing to build on our business. So, I see that a good bit of this is history and past experience influences where you see things go. Does your markets change a lot, such that you have to sometimes revisit your goals or? Yeah. There could be an extenuating circumstances that happens in any given year that makes us pause and re-evaluate. I think a great example is that crash of 2008 into 2009. As a company, we were, everything was coming along great, and then, that happened and we had the pause and re-evaluate what did we need to accomplish, everything was very tough at that time. What did we need to accomplish, we set more realistic goals and change priorities to manage through that time. So, when you do that, when you reset your goals, why do you do that? Why do you go about resetting the goals? Goals are of vital importance to our organization. So, if the goals aren't realistic, and if they don't make sense- Who's going to take them seriously? So, we put a strong emphasis on making sure that they're attainable. They make sense, and they're realistic. So, people and our folks do understand the importance of, and we're all bought in to achieve. All rught. So much of, I mean part of your motivation of sales force, your sales force comes from goals that are set. Yeah. Absolutely, absolutely. Interesting, and then another component I would think of your job would be compensation. How does Fastenal approach compensation? Compensation really is the same across all levels of organization. It's a base plus commission program. What I mentioned earlier, that we're high-growth organization, we place most of our priority on growth. So, our commission programs are highly incentivized for growth. But they do compensate for existing sales as well, and growing your zone, your book of business, your branch, et cetera is the most important part of our company. So, when Lee and you say here commission, that something like based upon the dollar, the sales? They're based on the sales volume of your business. Yes. I see. Now, as part of that, we cover in our course expenses, the sales expenses, and sales management. How does Fastenal approach that? Do you have a sales expense budget that you're expected to manage? Yes. One of the back to my previous point about managing the P and L is one of my priorities or functions within my duties. Yes. The labor budget for my group is a big part of that. With any company, labor is going to be probably the biggest expense that you have. So, we're no different. So, managing that labor is part of managing my business. So, when I put into the lot I saw a couple of Fastenal pick-up trucks that were out there, so do salespeople, are they given a vehicle? Now, once you report to any of our branches, everything we do for our customers is done in a Fastenal vehicle. So, we provide all of our employees a company vehicle when they're conducting business within the market. Interesting, and so that's part of their compensation. Yes. How does Fastenal overall manage their sales operation and their growth? I believe Fastenals are more unique company these days. When you look around our industry, and maybe just industries in general, it seems like companies are almost running away from their customers. Meaning going into more in e-commerce type platform, or an online model where we're running more towards the customer. When you look at our business model, we have about 2,400 local branches within our company, 605, what we consider to be onsite locations where we're inside, or very near some of our best clients and biggest customers. So, it's a unique company in a unique way to approach the market. We feel as close as we can be to our customer, that's only going to help us engage them better, understand what their pain points and their priorities are, help align our sales folks with them, and come up with solutions to help them be the best they can be. So, that's really the Fastenal models is engaged at the local level, have inventory to local level, folks at the local level. When our customers think of Fastenal, they don't think of Fastenal, they think of Mike, they think of Scott, they only think of people not just the blue name. Interesting. I would think you serve a very important role in the sense that you are the connection between the Fastenal corporate, the headquarters, and then what goes on here in the field. I mean, you are the link. Yes. That's correct. We're a very decentralized company that has their decision-making at the local level, but there's a lot of things that happen from a corporate standpoint, and I help take that information corporately. New programs we have out, new products that are being launched, different ways of doing things. So, I'll take those ideas and streamline them down from my group, and help them understand what they are, what those priorities may be, and get everybody aligned on achieving them. How does Fastenal view the market, and how do they help to identify opportunities and then move to those opportunities? Okay. We're going to look at each market very much different than any other. So, we want to look at that market, I don't want to say in a bubble but almost in a unique standpoint where, what do we have to do within those markets to best serve our customers? That can be differentiated in very many ways, Metro versus a more rural market et cetera. So, we're going to look at the market and understand what kind of investments need to be made. Meaning, when we look at a market, maybe the territory is very, very large, and we're having trouble serving some of our clients the best way we can just because of the scope of the territory. We might decide to break that branch into two so we can best serve our customers. We can also look at, maybe a more Metro type market, where we might have a few facility scattered around, but we could best serve that market by combining into one larger location with more resources than we had before. So, we're going to look at it a variety of different ways, but it all comes back to the customer, and how do we best serve them and put ourselves in a position to bring solutions to their business. When you talk about things like when you are analyzing a territory, and maybe making a decision to change, split that territory into two and all, is that something you do? Is that what the district manager does? Yes, I'm going to drive that with my regional vice president. We' re going to analyze and make decisions together on that, but it does start at the district level. So, tell us about you've been involved in Fastenal now for quite some time and all. Tell us how things have changed. What lessons have you learned that you've been able to apply to the job today? Well, there's way too many dimensions. But a couple of things, two major things that we've done in maybe the last five years or so that really changed the landscape of the company is, we've listened to our customers and understanding that they needed more from a supplier as far as accountability, as far as understanding where the products within their facility are going, how to control them, you know who's using them. Those were questions that had trouble being answered. We developed an industrial vending solution to offer our customers, where we can put the most heavily consumed items, extremely close to their employees, maybe right next to him if necessary, that reduces the employees travel time, keeps them at work longer more productive. All the while, giving them all the stuff they need to do their job, and giving the organization a really clear snapshot of, hey, who's using that item? How many did we use? What frequency we're we using it? Maybe there's some abuse within those products. So, it created a very/ very strong visibility platform for our customers/ and they're oftentimes saving 30 percent or more on their consumable spend by utilizing this type of platform. When I was up and coming, who would have known, right? So, that's been a huge change. The other change is how we really approach our employees in recruiting. When you put a person into our industry, and let's say I hired you just to start tomorrow as a salesperson for Fastenal, there's a very large learning curve there. So, it's going to be hard for you to meet both your personal and company objectives for a long period of time when you first start. You're just trying to figure it all out. So, you're trying to figure it out, that's stressful for new employee. All the while your employer, we're also like, hey, we need you to produce at this level, and these are some of your goals, so it's very stressful time. So, we'd like to recruit early on, promote from within. When you're promoted into a role, you're well prepared to take that role. Day one you're extremely prepared. You're often running and you're producing right then and there. So, we'd like to train our employees for not only their current position, but for future roles, so when they do get promoted, that they are effective in those roles without missing a bit. So, they talk about in sales, delighting a customer. I'm sure you've probably had a few customer delights that you've been involved with. Can you share any of them? Absolutely, and obviously goes both ways. We all had our first share of successes and failures, but you learn from the failures. Where did we go wrong there and you adapt to it. But I'll tell it tie back to our lending program. We had a customer that we went into promoted the solution, and there was a lot of push back. At the high level of the present organization, he was all for it. But the local folks were like this, this, we have this tied down. We don't need this. It doesn't do anything for us, we know where everything's going, everything's happening, while we got forced down from the top that this is a solution. So, once we got it up and running and performing at a high level, their consumption is down 70 percent. So, from the standpoint of being extremely confident that everything was great, and then once we implemented, a really strong solution, they cut most of their expense on other business. My goodness. There are stories like that across whether it be through vending, whether it be through on-site model, because when you think of it on-site model, we're taking the Fastenal business model, whether that be inventory personnel or system solutions. We're actually putting it inside the customer facility and helping them manage their supply chain from inside out. So again, when you think of Fastenal, you have a person sitting right in your facility that you can interact with on a daily basis that's helping you drive costs onto your business. So, that's really neat about that story as they talk about how sales is solving problems and all. In here, you solved a problem that a client didn't even realize they had. Yeah. Sometimes that happens. A lot of times that happens. It's through our process of working with our customers, that's what we're trying to drill down to. Please share with us your pain points so we can bring the right solution to the table because we do have a lot of them. Even the solution itself is completely adaptable to different customers. So, once we get to know the customer, understand their business, we started to work together and understand pain points, is when we're most effective and our customers are most rewarded.
