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Leadership Style at Menards

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Leadership Style at Menards
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Leadership Style at Menards - May 10th, 2011

Menards is a chain of home improvement stores in the Midwestern United States.
The privately held company headquartered in Eau Claire, Wisconsin has 262 stores in 13 states: Ohio, Michigan, Indiana, Illinois, Wisconsin, Minnesota, Iowa, Missouri, Nebraska, Kansas, South Dakota, North Dakota, and Wyoming.

Eldest in a family of eight, John Robert Menard Jr. was born in 1940 to parents Rosemary and John Menard Sr. in Eau Claire, Wisconsin. In a family where the values of hard work, frugality and independence were embedded in their very upbringing, he grew up with big dreams to start his own business. While attending a local Catholic high school, John Menard’s father planned for a pole barn to be constructed, and he inadvertently spent his summer of paid working with the crew. In a matter of two years, John Menard had learned enough to create his own crew to provide pole buildings himself around the 1960s when he was barely in his 20s.

Thus, it came to pass that Menards became a household name in the Midwestern region, particularly Iowa, North and South Dakota, Nebraska, Missouri, Michigan, Illinois, Missouri, Ohio, Indiana, Minnesota, and home base Wisconsin in 1972. As the third largest home improvement authority after Home Depot and Lowe’s, John Robert Menard Jr.’s company held its ground in the face of competition. One special store feature is their offer of full-service lumberyards, marking their difference from rival companies. Raking in over $6 billion in sales annually, it operates through its more than 37,000 dedicated employees. Indeed, the store chain’s slogan “Save Big Money at Menards” has boosted their performance under the leadership of its owner, President and Director.

Since 2001, John Menard has been involved with Polaris Industries Inc. as independent director and member of the Corporate Governance & Nominating Committee as well as the company’s Technology Committee.

In 2002, John Robert Menard Jr. became the American with the highest tax bill, with a $228 million personal federal income tax on a $593 million adjusted gross income. The year 2007 ranked him as the 155th on Forbes World’s Richest People, while 2009 saw him as the 132nd on the same list.

From 2007-2008 alone, John Menard has given $15 million to various non-profit organizations, and some $9,200 in political contribution to the Republican and Democratic parties. With his wealth, John Robert Menard Jr. financially aids a number of institutions like Regis High School.

One of his most high profile donations is the $15 million transformational gift for the establishment of Mayo Clinic’s Menard Transformational Fund for Education, as well as Luther Midelfort’s the Menard Center for Emergency Care. As a native of Eau Claire himself, he wanted to give back to the local community by funding the continued advancement of the first and largest integrate, not-for-profit group practice in the world.

John Menard Jr. is also the father of Paul Menard, a popular NASCAR driver.
His style is suggested by an innocuously titled pamphlet, Grow with Menards, which details the company’s standard operating procedure. It was inspired by Larry Menard’s Army experience during the Vietnam crisis, he told an arbitrator last August. To this day, Larry said, that booklet “is basically our rule book.”

John Menard Jrs managers must sign a work agreement in which they consent to pages of rules and penalties: They are fined $10 if there are more than 15 carts in the parking lot, $100 a minute if a store opens late, $10 if a customer doesn’t pick up a special order within 10 days. With military-like discipline, a manager’s absences are tightly
controlled, and suggestions to a superior are not welcome.

The rules also reflected the personality of a man who started with nothing and succeeded by pinching pennies. “That company’s his life and when he feels someone is taking money out of his pocket, he just goes nuts,” says Kight, the ex-director of Menard’s racing engine business. The National Home Center News,a New York-based trade publication, quoted vendors describing Menard as “‘tenacious,’ ‘frightening,’ ‘entrepreneurial’ and ‘paranoid’ all in the same breath.”

Managers are prohibited from building a home, even if they purchase the construction materials elsewhere. It’s a measure to prevent employee theft, John Menard once told the media. The penalty is termination.

Even minor building projects concerned him. On numerous occasions, former managers say, Menard hired private investigators to take photos when an employee added a deck or addition, then had internal examiners cross-reference the materials in the photos with items the employee had purchased, looking for products that had been stolen.

The most infamous casualty of this policy was Eldon Helget, a lumber yard manager for Menards’ Burnsville, Minn., store. Helget’s daughter was confined to a wheelchair and the narrow hallways in the Helget home made it difficult to get around. She was getting too big for her mother Linda to carry her up the stairs, and because the bathroom couldn’t accommodate her wheelchair, the girl had no privacy. When the Helgets could find no home that met their needs, they decided to build from scratch.

But Helget’s boss, Larry Menard, said there were no exceptions to the company rule. Helget, who had a stellar 13-year record with the company, could resign his post and take a lower-level job, Larry said. That meant a $15,000 cut in his $40,000 salary, but Helget still agreed.

The Helgets hired a contractor to build a ramp-equipped home, using building materials from another company. When John Menard heard about the deal, he fired Helget. The company notified Helget that if he ever showed up on its property again, he’d be arrested for trespassing. John Menard Jr

“John would say, ‘Why make a rule if you’re not going to enforce it?’” Archibald recalls, adding “sometimes, you have to cut throats. That’s how business works.”

Helget’s story found its way into the Minneapolis Star Tribune.A columnist called Menards’ policy, “something exhumed from the Bronze Age with all its primitive logic intact.” The story continued a second day when a local lumberyard offered Helget a job. The Helgets were elated – until they discovered Eldon’s contract with Menards barred him from working for a competitor for a year.

This rule came from Menard’s concern that his trade secrets might be revealed. Indeed, he refused to hire former Home Depot or Lowe’s employees for fear the person might be a spy.

Linda Helget phoned Menard to plead with him to relent. “He said we could find a house in another town, but all our friends and family are here. He thought he was a real stud muffin the way he talked and I said ‘who are you to tell us where to live?’ I told him ‘someday I hope a train runs you over and cuts your legs off.’’

TheNational Enquirertrumpeted the story to the rest of the country. The Helgets filed a wrongful firing claim against Menards; their attorney Edwin Sissam took the Menard brothers’ depositions. Sissam had expected John Menard to be a sophisticated businessman in a wool suit. Instead, he got “a cowboy in jeans with his shirt partially unbuttoned and a chain around his neck,” he says. John Menard Jr

“It was clear Mr. Menard is very, very secure in himself. His body language, his mannerisms, answering questions when he wasn’t asked; not answering them when he was,” Sissam says. “Most companies with an employee with a disabled daughter would want to be behind the family … But John Menard had this attitude, ‘Who the hell is telling me how to run my company?”

The Helgets took Menards’ second settlement offer, “somewhere between $1 and $50,000,” says a source close to the case, which was settled in 1992.

In his quest to run things his way, Menard was the ultimate micromanager, employees say. “There’s an emotional youthfulness and wonder about him – like a kid having fun – and then he says, ‘wait a minute, I can’t control that,’ and he tries to control absolutely everything,” says Kight.

Menard often goes through the mail of his top executives and tirelessly reads through customer complaints, former insiders say, looking for problems or hints that an employee gave something away at his expense.

The Menard brothers are notorious for dressing down employees. In the arbitration case last August, former Menards assistant store manager Cory Lickiss testified under oath that the day before he resigned, Larry Menard had called him a “f-cking retard” in front of 15 customers and many employees. John Menard Jr

“We used to joke when a letter came from headquarters that it would start with either “What the F…” or “Why the F…,” says former manager Bropst.

Corporate keeps a close eye on sales per customer per area, Larry Menard testified last August. Menards hired secret shoppers to evaluate service, a typical retail tactic, but it also had an extensive crew of merchandising and operations people who flew out of Eau Claire on six company airplanes seven days a week. Others hit the road in Menards’ fleet of cars to do inspections.

If John Menard was in a given city, he’d do his own, often in a crude, but unintentional, disguise. His hair color could be red, golden brown or shoe-polish black, says a former insider, explaining that one of Menard’s ex-girlfriends owns a salon. “She’s not a gifted colorist, but the price was right.” John Menard Jr

The home office monitored every store’s security cameras for at least an hour a day. “We can see team members doing their job well or not doing their job,” Larry Menard told the arbitrator. “We can see too many carts, not enough carts. We can see lines at registers and do corrective action.” The result was often a blizzard of memos to store managers, insiders say.

Menards was adamant about keeping a union out of its stores. “When I was promoted to assistant general store manager, the first thing I had to do was go to a one-and-one-half-day seminar in Eau Claire about fighting unions,” says Baumann. “If a person had ever worked in a union shop, you couldn’t hire them.” Bropst was forced to fire two promising management trainees because they’d been baggers at a unionized grocery store while in high school.

Under Menards policy, managers would see their pay cut by 60 percent if their store became unionized, notes Iowa ex-manager Faber. And the pay for managers was generous: $80,000 to $200,000 a year with bonus and profit-sharing included. It was particularly good, given that more than half of Menards managers hadn’t graduated from college, Larry Menard testified. John Menard Jr

But the corporate culture “just beat you down and made you feel you’re replaceable, and that you had no other options,” says Bropst. Most store managers haven’t lasted long enough to retire, insiders say.

Managers have to make do with very lean staffing. In 1996, the industry’s Home Channel News magazine called Menards’ staffing “remarkably frugal,” with 52 employees per store, including headquarters personnel, compared to Home Depot’s 195. Menards store managers make an annual pilgrimage to Eau Claire to “negotiate” their store’s budget, but couldn’t budge the number much, managers say.

Some budget-squeezed managers could be so short staffed, they had trouble meeting demands headquarters placed upon them. Managers who questioned the rules might do worse. All Menards managers must sign an agreement requiring them to go to arbitration – not the courts – if they have a dispute with the company. Moreover, they’d have to pay their own attorney’s fees and half the cost of the arbitrator, even if Menards was found at fault. John Menard Jr

When an even more draconian clause was added later, Faber, the former Iowa store manager, questioned it and drew Larry Menard’s ire. The new dictate required that managers pay a $200 deductible if a delivery driver they hired was in a traffic accident. Faber testified later that Larry told him he’d “hire someone younger” who would probably do a better job for less money if Faber didn’t want the job.

“Questioning their policy was the beginning of the end,” Faber says now. Company audits soon began finding problems with how he operated his store.

Ultimately, Faber, a 20-year veteran of Menards who was then 48, was replaced by a 29-year-old. Faber was offered a demotion in a different city. He refused the transfer and filed an age discrimination complaint, but lost.

Talking to the arbitrator, Larry Menard described the company’s practice of demoting managers as a benevolent act, reserved for high-potential individuals who “have kind of gone astray” and needed time to reflect and “get their act back together.”

Menards offers the targeted employee another job, but always for less pay, at a lower rank, in a different city, so the employee must uproot his or her family.

Bropst, too, had dared to question an order, this time from John Menard Jr.

“That was the beginning of the end of my career with them,” he says.

Larry Menard told Bropst he’d have to move. “They offered me another new store in Wilmer, Minn., and said ‘take it or leave it,’” he recalls. “I was nearly 40 years old and I figured it was time to stand up for myself … or I’d dance their tune forever.” Bropst quit.

When Bropst became the manager of a competitor’s crosstown store a few months later, Menards sued. “They wanted $25,000 from me for my non-complete clause.” Bropst spent $4,000 in legal fees, eventually getting the
case dismissed. John Menard Jr

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