Pictured Above: Angela Hungate (l), president of Reynolds Farm Equipment, and Gary Reynolds, owner, make up part of the executive team. Others (not pictured) are Mitch Frazier, CEO; Chris O’Neal, COO; and Jon Schwander, CFO.
Much like any well-managed sports team, Reynolds Farm Equipment is making all the right moves in order to separate itself from the competition.
Talent acquisition, training, analytics, innovation and team building, just to name a few, are all there. In fact, says owner Gary Reynolds, if he had assembled his current roster of leaders a few decades prior, his team would be world-beaters.
“I will tell you, if I had these four people [on the executive team] during the ’80s, I would have been King Kong by now,” says Reynolds. “Seriously. I would have.”
Equally important to its success is the dealership’s ability to engage employees through a system that offers incentives if certain performance benchmarks are reached.
The phrase “it’s just a game” might as well be a foreign language to the folks at Reynolds, because for them, the “game” is what makes the company so great.
Building the Team
Reynolds was founded in 1955 after Mac and Arline Reynolds purchased a small ag equipment dealership from the previous owner, who was looking to retire. By 1959, Reynolds had grown into the largest single-store dealer in Indiana. Their son, Gary, first got involved in 1969, where he started in sales. His siblings also worked for the business in various roles.
Fast forward to the present, and Reynolds has grown to 7 stores, most of which are located within the Indianapolis metro area.
Reynolds Farm Equipment
Owners: Reynolds Family
2017 Revenues: $169.9 Million
2017 Market Share: 66.81%
Return On Assets: 10.98%
2017 Parts & Service Absorption Rate: 75.5%
Major Line: John Deere
Shortlines: Ariens, Boss, Buffalo Turbine, Honda, J&M, Kuhn, Landoll, Lastec, Salford, Salsco, Stihl, Turfco, Valley Irrigation, Ventrac
As Reynolds looks to hand off some responsibilities to others, he has recruited some of the best talent he could find. Now, the company leadership consists of five members.
And like any good team, Reynolds has built its roster both through the draft — with family and long-time employees making up one part of the team — and through free agency, in adding some key figures in recent years.
Along with Reynolds, who has officially transferred to the role of chairman, the executive team consists of: Angela Hungate, Reynolds’ daughter, company president and a 30-year veteran of the business; Mitch Frazier, chief executive officer, who joined Reynolds in 2016; Chris O’Neal, chief operating officer and 20-year company veteran; and Jon Schwander, chief financial officer and a Reynolds veteran of 5 years.
In fact, within the last 3 years, Reynolds has revamped its store leadership structure. Each store manager now “owns” the Reynolds experience in their store. They’re responsible for the entire team’s performance management and have direct responsibility for the financial performance of the store.
Hungate has excelled at the challenge as Atlanta store manager, her colleagues note. This came after trial and error; Reynolds openly admits that he gave it a try and didn’t do so well.
And having someone outside of the executive team trying to steer the ship didn’t work well either, since it became common for others to circumvent the store manager and head straight upstairs to executive leadership. Finally, with the company president also managing the store, those days are over.
Now, with Hungate at the helm, it’s been smooth sailing, Reynolds says. He adds that she’s a good fit for the role in part because of her experience.
“She knows what we have to do at times,” he says. “She’s been out there cleaning, putting away parts, cleaning bins. There are times you’ve just got to do that stuff, have to be seen doing that stuff, because they [the employees] have to know it’s important.”
Schwander notes he was the first “outsider” to join the team. It was a transition for him to go from 10 years in public accounting to his role with Reynolds, which is run less like a corporate entity and much more like a family business.
And Frazier, for his part, came in more as a marketing guru without farm equipment experience.
“But that was really Gary’s vision to transform the company,” says Schwander. “From there, we got Mitch involved and you see all these other people, now we’re hiring full stack developers, programmers, videographers. Just different positions that you wouldn’t normally see to evolve our business.”
In addition to her duties as president, Hungate is also the store manager for the flagship Atlanta, Ind., location, which serves as the company headquarters.
Even though things were running smoothly, Reynolds and others recognized the need for a management group. O’Neal, who’d worked his way up through his decades at Reynolds, could have easily been turned off by the thought. Yet, he knew that bringing in Schwander and Frazier was the right move. In fact, he even participated in the hiring of Frazier, who became his superior.
Playing the ‘Game’
A few years ago Reynolds leadership adopted some new business practices after reading the book, The Great Game of Business.
Authored by Jack Stack, the founder, president and CEO of SRC Holdings Corp., the book lays out his method of turning around a failing business. Stack used the same open-book concept when he and some business partners bought the failing remanufacturing division of International Harvester in Springfield, Mo., and formed SRC.
After 2 years of declining sales revenue, Reynolds saw a more than 15% increase in 2017.
Companies participating in the “game” will educate employees on the business and its financials; keep score of the metrics to show where improvements are being made; regularly meet with employees to communicate what’s being done well and what areas still need work; and encourage employees to participate, since they will have some form of stake in the outcome.
Reynolds has always been an open book to his employees, which is why the team eventually stumbled upon The Great Game of Business.
Schwander, having never worked for a company that was run that way before, hopped on Google and typed “open book management” in the search bar. That’s how he, and then the management team, learned of Stack’s approach to running the business through “the game.”
“It’s interesting because it mimics what the Reynolds family culture is,” says Schwander. “Everything’s open, everybody can see anything. There’s no secret unturned.”
Therefore, it seemed only natural that Reynolds take things a step further by creating the scorecard and turning those performance measures into a game of sorts among the stores.
Although leadership tracks many different metrics at the same time, only 16 are included on the scorecard. The measurements on the scorecard tally out to be 4 for each department — parts, sales and service — and another 4 that apply to the store overall. The metrics also change each quarter, depending on what Reynolds wants to focus on the most.
The scorecard can be accessed by employees at any time through the company’s intranet. Members of the executive team also meet monthly with each store to go over its individual performance. And that has some benefits of its own, says O’Neal.
“One of the biggest things it did is it has kept at least two of us from the executive team every month at every store with the management team,” he says. “So, there’s at least two of us every month consistently at all the locations. And, all of a sudden, you just get that buy-in from the store.”
Reynolds notes that these meetings now take place before the month is half over, something they didn’t always do. That way, the store managers have time to improve their scores if they’re falling behind in some categories.
Reynolds’ Atlanta location was built with 2 parts counters, with the idea of having about 4 people working at each station, Gary Reynolds says. Once Angela Hungate took over as the store manager, she moved the cashiers closer to where customers check out, so they can talk with people as they enter the store. In the future, the store plans to go back to individual parts counters.
“So now they’ve got time,” he says of moving up the meetings earlier in the month. “They’ve got two more weeks yet to affect their outcome for that month. Whereas before, it was all probably already over for that month and here you’re gauging last month.”
O’Neal says one fairly new metric they’ve put on the scorecard is accounts receivable (AR). By making that a focus of stores, leadership is promoting more communication between managers and the person who oversees the unpaid balances.
“We had issues with, if there was a customer that had an issue, the store manager wasn’t aware of it,” he explains. “All of a sudden, they get shut off so there’s no communication between AR and the store and the salesman. We’ve asked: ‘Store Manager, you’re in charge of this location, you need to start to review your AR … Instead of just bad-mouthing AR to the director who is in charge of it, work with her to get some of these collected.’ So that is a new focus.”
A metric that specifically applies to parts is average order value. In putting this metric on the scorecard, Reynolds challenged stores to increase their average order values for a one-month period vs. the previous month.
“Jon and Mitch really brought that one [to the scorecard] because that’s more from the e-commerce/tech world,” O’Neal says. “We never talked average order value over the counter before.”
And so, O’Neal continues, they asked themselves: “Why would it not be the same? If marketing’s job is to get the guy in the door, then it’s that parts salesperson’s job to maximize that ticket.”
The dealer also added a metric for its marketing of used equipment on MachineFinder Pro.
John Deere uses an algorithm to evaluate the quality of product listings on MachineFinder Pro based on things like the title, product description and pictures. Schwander says the biggest influencer of a good “score” from the algorithm is that it includes 5 photos.
The MachineFinder Pro metric measures the completeness of these listings. Store managers are charged with viewing entries and ensuring problems are corrected if a score is low.
Putting this metric on the scorecard came out of a meeting where the employee charged with marketing the used equipment pointed out that only 10 units out of about 200 pieces of equipment were listed on MachineFinder Pro correctly.
O’Neal put it another way: Getting employees to meet these goals is much easier when they’re treated as a tactic to winning, rather than some kind of abstract number on a sheet of paper.
“So, we compare it to the ‘Moneyball’ philosophy,” says O’Neal, referring to the movie and book that tell the story of a professional baseball team’s evidence-based approach to fielding a competitive unit. “Instead of just looking at the wins, let’s look at RBIs and on-base percentage. The more that we can bring it down to tactics, the more they understand and get behind it, too. So we’re constantly challenging ourselves to come up with [something] new.”
The scorecard wasn’t an immediate hit, the team concedes. It took about 6 months for things to really get rolling, primarily because employees weren’t used to the concept and executives tried to implement it without any assistance from an outside consultant experienced with this open-book method.
These metrics also prove useful beyond the purposes of the scorecard.
“From a data standpoint, predictive and prescriptive will become much more granular than we are today, from all the data points,” says Schwander. “We’ll be able to solve problems tomorrow that we couldn’t solve yesterday. The customer will see value in that.”
By issuing scorecards, Reynolds Farm Equipment challenges its stores to improve on 16 different metrics. Some example metrics are:
- Accounts receivable
- Average order value
- Small tractor unit goals, by salesperson
Frazier gives an example: “Imagine you wake up on a July morning, a Saturday morning, and you get an email from Reynolds Farm Equipment — maybe you get a call, maybe you get a text — that says: ‘It may be time to change your blades. Do you want us to come do it? Or do you want us to bring them to you? Or do you want to come to the store and pick them up?’ And it’s not because we have a crystal ball and we can look inside your garage and figure out what it is, but we know based on hours and engine use.”
This requires no extra work in gathering that data, either, since Reynolds already has the information at its fingertips.
Weekly Meetings, Annual Vision
Another thing Reynolds has adopted is weekly Tuesday morning meetings.
“So, there’s three,” explains O’Neal. “We call it, ‘Three Tuesday Meetings.’ There’s the Tuesday call, and that happens every Tuesday at 7:30 [a.m.]. And then there’s the Tuesday meeting in this room, which is the inventory meeting. Then as part of that inventory meeting, once a month, all the store managers come in for it.”
Reynolds says the meetings started out in 2014, when staff would gather to discuss the onslaught of used equipment. The Tuesday meetings evolved from there.
“We knew we had to change the used equipment business from anything that we had ever done with it before,” Reynolds says. “It was then that we decided we’ve got to control the inventory and we’ve got to do it every week, not once a month or whenever we get to it. So, meetings were scheduled for every Tuesday, to control the new and used inventory. And then what grew out of that was the marketing of used equipment and how we were going to market it.”
Reynolds says the Tuesday meetings, together with the scorecard, have drastically improved things at Reynolds.
“The most effective thing we’ve done is the scorecard,” says Reynolds. “That and the Tuesday morning equipment meetings are the two things that I would say separated us from a lot of other dealers in our whole division, and separated us in the way we market used equipment and get it sold.”
The company also establishes an overall vision along with three core values each year. Performance evaluations are given to gauge whether everyone is lining up to those core values.
“This year, it’s all about ‘Serve,’” says Frazier, who is the driving force behind the annual vision process. “What are you doing to serve your team, to serve your customer and to serve your community?”
Frazier adds the company’s core values lay out a standard for employees to succeed and give the organization as a whole an opportunity to show what is most important.
“What we try to do is create this vernacular around this annual theme, this annual vision, these annual core values, so people have their own scale to be able to say, ‘Am I doing the right thing?’ Because if you’re doing something that fits within ‘Serve’ this year, you’re right,” he says.
O’Neal notes the use of a single word for the company’s vision goes a long way with employees.
“The one word has been powerful,” he says, “because everyone can get behind it and you hear everyone talk about it.”
Winning Through Performance, Innovation
It should be no surprise that Reynolds, a team with big ideas and a disciplined way to execute them, would see big results.
For one, Reynolds achieved a combined market share of 66.8% as of December 2017. The company was also named one of the top performing John Deere dealers in North America in 2017, earning placement for the second consecutive year in John Deere’s Leaders Club, a group consisting of the top 36 dealers in North America.
In explaining Reynolds’ high market share, the executive team gives credit to both the scorecard initiative and to individual performances by store managers.
What The Judges Say:
“This dealership had by far the strongest ROA of all dealers in the large category. The second-highest market share of all entries, and a good absorption rate. … Succession plan is very solid as well as their community involvement. … Changes over the last 3 years were outstanding … including such things as monthly and annual individual store competition for prizes ranging from staff luncheons to staff shopping sprees.”
“We’ve always had good market share,” says O’Neal. “But the last 3 years, it’s as high as it’s been.”
Achieving this level of market share has been very intentional, and not just something the dealership focuses on at the encouragement of John Deere, says Reynolds. The leadership team strongly believes a healthy market share is good for their business.
And Reynolds doesn’t just sell a product for the sake of selling it; if they carry it, they’re in it to be the best. It is imperative that store managers share that attitude.
“We’re not a large ag dealer that sells combines and we also sell mowers and small tractors; we’re an equipment organization that serves farmers, homeowners and landscapers,” says Frazier. “We have people that wake up every day in marketing, in sales, in inventory and in parts and service, who think about the small tractor market or think about the large ag market or think about the landscape market.”
Even if a store predominantly sells large ag equipment, the store manager still understands the importance of a small tractor or compact tractor, says Reynolds.
“I would say that every one of those store managers knows how important each one of those pieces of the market share is.”
For instance, golf and turf makes up only a small part of their business — between 5% and 7%, says Reynolds — but it’s still a point of emphasis within the dealership.
“We don’t go into the golf and turf business not to win today, even though it’s a small portion of our business,” Reynolds says. “And the leadership there is just as strong as it is in our other divisions. And I am telling you, we go after it to win, and we are winning.”
Reynolds also plans, over the next 5 years, to come up with more innovations based on customer needs and feedback.
One such innovation the company introduced recently is the ZGlide Suspension. The front suspension fork for John Deere commercial mowers replaces the OEM front forks to offer a comfier ride without reducing the quality of the cut.
Frazier says the innovation came about because some customers said they didn’t like the rough ride they got from the commercial mowers. The solution, created by one of Reynolds’ stores, was to create forks that use torsion technology to provide a fully integrated in-fork suspension, which reduces vibrations and bouncing.
“And now that’s become a meaningful product line within the Reynolds Farm Equipment stable of brands,” says Frazier. “And we have a company-stated goal of a percentage of revenue … coming from the ZGlide family of products or Reynolds-developed products.”
The ZGlide went from conceptual and testing phases to market in 18 months. Around 20 dealers across the U.S. now sell the product, either in store or online. O’Neal notes that Reynolds is preparing to launch a handful more products.
Reynolds also looks to innovate in ways that may not necessarily make for a better bottom line, but still set Reynolds apart from the rest.
“We are interwoven in the fabric of this community, and that’s because we serve everyone in this community. That’s not capitalistic; it’s truly how Gary feels, it’s how the family’s felt and it’s how we all feel for doing what we do…”
– Mitch Frazier, CEO
A prime example: The Combine Café.
When the Reynolds team was planning out the construction of the Atlanta location, Reynolds insisted it include a restaurant. Hungate notes that Reynolds had long dreamed of opening a restaurant or cafeteria at one of the stores, but there always seemed to be something that prevented it from happening.
“Dad always said when he built a new store, ‘Some day I’m going to have a café;’ he always wanted a restaurant. And boy, as soon as he built Atlanta, he said, ‘I’m doing it, I’m going to have my café. I have been told ‘no’ long enough,’” she says.
Finally, the Atlanta store presented him with the perfect opportunity. It made sense to build the café here because it was a good distance from any restaurant or other place to buy food.
“When we built [the store], we decided, ‘We’re out here in the middle of Never, Never Land, let’s go ahead and try to put a cafe in.’ Our employees have to eat, and this is our corporate headquarters, so we knew it’d have a large staffing of around 80 people-plus on any given day, and a lot of customers that may use it,” says Reynolds.
Hungate says Reynolds was right to put in the cafeteria. Not only does it provide a needed dining option for employees, it serves as a draw for customers, even if they’re not stopping into the store to buy any parts or a piece of equipment.
Innovations like these are key, considering the competition in the area. The customer base Reynolds is after, who primarily grows corn and soybeans, has plenty of options.
O’Neal says a Case IH dealer spans across basically all of Indiana and a bit into Ohio. There’s also an AGCO dealer that covers the same turf as Reynolds. And beyond that, there are 4 Deere dealerships surrounding them.
One thing that helps Reynolds is its store locations are set up to dominate the Indianapolis metro area on all sides, says Frazier.
“So we see that as a real advantage, a real competitive advantage across every segment,” he says. “Whether it’s large ag, whether it’s that homeowner market, the landscaper market, or even the golf market, to be centrally located there and to be at the center of the population hub has been a real advantage for us.”