The average lifespan of a company in the S&P 500 was 67 years in the 1920s. Today, it’s under 15.
COVID -19 will undoubtedly shorten that lifespan considerably. The Coronavirus has become the fiery crucible where businesses are now testing themselves to see what they’re made of.
When it comes to the Sportscar Vintage Racing Association (SVRA) and it’s owner, Tony Parella, they already know what they’re made of, and where they stand.
In difficult times, research shows the focus for a business leader should be to instill trust, compassion, stability, and hope. In this 3rd installment of our interview with Tony Parella, owner and CEO of SVRA, we learn how he is doing just that for his team.
What follows is an adaptation of our extensive interview with Tony. The questions ran the gamut from racing to business philosophies, and the exciting digital future of SVRA.
We’re breaking the interview questions into a series of articles for you to enjoy. In this third installment, we ask about his first book, “Fractured to Fortune”, why SVRA has dramatically grown since 2012 and dealing with uncertainty in the COVID-19 age.
Let’s pick up with the interview.
Transforming Corporate Culture
ROD WORLEY, EDITOR – Let’s shift gears for a moment and talk about your first book, “Fractured to Fortune.” The book is, in many ways, a how-to guide providing a roadmap to help you positively transform corporate culture.
TONY PARELLA, Owner of SVRA – Sure Rod, my first book, “Fractured to Fortune”, is about the last telecommunications company that I owned and ran, which was Shared Technologies.
I bought Shared Technologies out of bankruptcy with a group of investors. At the time, the company had been through a couple of rounds of bankruptcy court.
Part of the employee base was unionized; part of it was not. The workforce was demoralized and dejected. WorldCom had owned them, which says it all.
The CEO and the CFO of WorldCom, as you remember, had gone to jail for improper accounting. Most of the employees had lost their pensions. The whole thing was just a mess.
When I bought the company, the first step was to assess the situation and write a different business plan. I held company-wide meetings after about six months and unveiled the plan to the team.
I wrote that we would revolutionize the way we treat our customers and transform the way we treat our vendors. But most importantly, the fundamental change would be that we would revolutionize the way we treat our employees.
And in that process Rod, I planted a flag on that first big meeting. I said, “Someday, we will be known as one of Fortune Magazine’s Top 100 companies to work for in our category.”
The inspiration for that came on a flight back from New York. I picked up a magazine at the airport and was reading Fortune’s Top 100 at that time.
What was so apparent to me, was every one of those companies ranked in the Top 100 for their employees, also had a world-class image for customer service.
Going For The Top 100
TONY PARELLA, Owner of SVRA – The Top 100 is a very lofty goal. There are over 5000 companies a year who typically apply, and they only take the 100 best. Here are the two essential criteria to be considered.
You have to have over a thousand employees. Your business’s annual revenue must exceed 100 hundred million dollars.
The process is a 60 plus question survey for all of your employees. Roughly 30 percent of your grade comes from a cultural audit. Approximately 70 percent comes from the actual scores that you get from this survey.
So the first year we tried, we had the dubious distinction of scoring the lowest of any company who had ever applied for the award. The good news in that is I didn’t jump out the window and kill myself.
I must admit I was taken aback by how poorly we scored. I think our aggregate score out of 100 was about 30 something. The questions are very in-depth. They cover everything from the integrity of the management team, the philosophy of the management team, to the benefits, health care; you name it, they measure it.
So, I took the 60 plus questions and assembled a team within Shared Technologies.
We built a specific plan to change how our employees viewed us based on these scores.
It took two more years of effort. By the third year of applying, we made the Top 100 for the first time.
We went on to be selected in the top 100 for four years in a row right up until I sold the company. It was just a remarkable journey.
So the first year that we made it, I wrote the book, “Fractured to Fortune,” because clearly, we were a fractured business. But we made Fortune’s magazine, that’s where the title comes in.
We paid fifteen million dollars or something like that for the business initially. We ended up selling it for almost 300 million dollars.
But what was most important in all of that was that the employees truly loved working there. That was a very, very special experience for me.
The business philosophy that I used for the turnaround wasn’t new to me. My Father ingrained it into me as a young boy. His mantra was, “If you take care of the company, the company will take care of you.”
When I got out to the real world to go to work, that wasn’t the environment I found. And I said to myself, “If I ever get to the point where I’m the President or CEO of a company, I’m going to use these principles to run my business.”
Surviving The COVID-19 Crucible
TONY PARELLA, Owner of SVRA – And now, here we are with SVRA and Trans-Am, and we’re following the same philosophy. In this crazy environment, with the Coronavirus that everyone in America is managing through, the principles haven’t changed.
Now, I’ll share with you what we’re doing for our employees. We have no money coming in the door right now because we’re not racing.
I’ve called our sponsors and said, “Because we’re not racing, I think you should hold off paying us till we get back to racing because I’m sure your world is different now as well.” That was a pleasant surprise for our sponsors, but that’s what I believe is the right thing to do.
To our employees, I said, “Here’s what we’re going to do. All of us, except for me, is going to take a 20 percent cut in pay for the next five months.”
“I’m not going to get paid at all. If we get back to normal before the end of the year, which I think we will, then we’ll have some money coming in.”
“Then, at the end of the year, I’ll write you a one-month bonus check. So technically, you wouldn’t be out any money. By my math, nobody will get laid off.”
“I’m going to give you special projects to work on that will make our company better when we go back to racing.” So the company hasn’t laid off a single employee, even though we haven’t seen any money come in for a couple of months and nor do I plan on it.
I think we’ll get back to normal here hopefully somewhat soon when it’s safe to do that. I’m proud of the employees.
This Coronavirus is like a crucible that is testing all of us Rod. Through this time of testing, the team knows we’ve got their backs.
That allows me to push them extra hard when we’re in race season to take care of the customers. It’s a very healthy ecosystem of providing a safe, fun place to work.
It expects a lot but gives back a lot as well. This business foundation, the way we approach vendors, our fans, and our employees was instilled in me at a young age by my Father.
Weathering The Storm
ROD WORLEY, Editor – Tony, I agree with your analogy. The COVID-19 pandemic is a crucible in many ways.
It’s a time of testing for many businesses, both large and small. My Grandfather used to say, “You find out a lot about a man when times get tough.”
I’m sure your team appreciates your philosophy, but sadly most companies are taking a different tact right now.
TONY PARELLA, Owner of SVRA – Well, you know Rod, people say, “Tony, that’s great that you’re not laying off your people.” The truth is, in recent years in business, a trend in America has emerged. That as soon as a company hits hard times, they take their employees to the woodshed to fix it.
Today most businesses are cutting costs, and where they start is by taking away benefits and cutting staff. It’s not lost on me that you’ve got to take in more money than goes out.
However, when you are making hay, and things are good, investing in your employees will always pay off. So when things are lean, you can weather that storm.
Unprecedented Growth For SVRA
ROD WORLEY, Editor – Are these the philosophies that you’ve used to achieve unprecedented growth over the last years?
Could you also share where SVRA was in 2012 in terms of attendance, drivers, and tracks, as opposed to where it was through 2019?
TONY PARELLA, Owner of SVRA – When you look at the success of SVRA today, this is a tribute to my employees. In 2012, when I bought the company, we ran at three racetracks, today we’re running at 14.
In 2012, we were running at three race tracks with no spectators and no sponsors.
Back then, 100% of our revenue came on the backs of our racers. Today half of our revenue comes from spectators, and half of our revenue comes from sponsors.
In 2019, we were over 30 times bigger than we were in 2012. Not only are we 30 times larger in size, but we’ve also significantly changed our model.
That has enabled us to fund other areas of the business and fund future growth. Frankly, that is what has helped us to weather this Covid-19 storm and why I’m not laying people off.
Financially, things are going to be tight for the next several months. For me, it all falls back to the business philosophy of “If you take care of the company.
The company takes care of you.”
That’s my job right now. So I think I think we’ve got the right balance.
We’re facing uncertainty like everyone else. But I feel like we’re handling it as well as we can.
The good news is we’re not drowning in debt as a business. We’ve been very prudent.
When things were good financially, we didn’t take on more debt. It’s enabled us to manage this as best as you can in this environment.
Solid Grip On The Wheel
Tony Parella has a solid grip on the wheel as he steers the Sportscar Vintage Racing Association (SVRA) through the tight turns of this pandemic. He knows the core values and business fundamentals that have hallmarked his lifetime of success.
This COVID-19 disruption will test the resolve of many businesses in ways that could not have been imagined. They will be tested in the fiery crucible, their mettle examined.
As for SVRA, they’ve made the needed engine adjustments, and are racing towards the checkered flag.
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