There’s nothing that’s done more for our company than Topgrading. MarineMax is a huge fan of Brad Smart’s Topgrading system. We began the process in 2002 and we’re totally convinced Topgrading has significantly improved our bottom line. We are in the people business, and now with Brad’s gift, Topgrading is the heart of our culture and a primary focus of MarineMax.Bill McGill, CEO
MARINEMAX (1,300 EMPLOYEES, TOTAL COMPANY, DEALERSHIP GENERAL MANAGERS)
Industry: Largest Boat Dealer Company in the World
- 95% of store managers hired since 2009 have turned out to be A Players or A Potentials; pre-Topgrading hiring/promoting to store manager success was 25%.
- How to remain profitable selling a luxury item (yacht) in severe recession.
- Severe cutbacks in number of employees can work, if A Players are retained.
MARINEMAX REGION (175 EMPLOYEES)
Unlike many others in the business, we’ve not only survived but we’ve managed to be profitable; Topgrading has been crucial because we’ve done well with fewer people, but almost all A Players.
— Brett McGill, Region Executive
Industry: Largest Boat Dealer Company in the World Highlights:
- Improved from 30% to 100% A Players in management; 30% to 80% A Players in all jobs in recent years.
- How to survive in a down market with A Players.
MarineMax, the largest boat dealer company in the world, was a case study in the 2005 edition of Topgrading. Since then of course the world economy tanked and has been a challenge for MarineMax, since $250,000 boats are not necessities to some people! But Topgrading has helped so many companies survive the downturn, and CEO Bill McGill makes it clear that the company is doing fine because it downsized to almost all but A Players, the high performers who are resourceful and figure out how to perform even in down markets.
This case study begins with the 2005 version, next a 2012 update for the company as a whole, followed by a mini case study of a region led by Bill McGill’s son, Brett. Finally you can read a Chat with a Topgrader (Bill McGill) interview.
2005 CASE STUDY
How would you like to launch a new company, selling yachts, just before the 2001 recession hit? MarineMax did exactly that, and despite some early success in the waning months of the go-go nineties, the arrival of a significant economic down-turn, coupled with a relatively unseasoned management team from a corporate perspective, made their chances of weathering the turbulent financial climate difficult, to say the least. “We had a great vision for our Company and we had the opportunity to provide our customers with something not seen before in our industry—hassle-free boating. We all talked enthusiastically about “Delivering the Boating Dream” to our customers. Unfortunately, our initial stock performance was mixed, partially because we lacked all of the talent we needed. With Topgrading, we have been much more successful,” says Bill McGill, CEO.
MarineMax began in 1998 with six independent boat dealers merging their businesses, and an IPO took place that same year. The company in 2005 and 2006 approached $1.2 billion in sales, over 90 dealerships throughout the US. The stock chart suggests something remarkable was done to grow profitably, selling a discretionary luxury item, despite several recessionary years. That “something” was Topgrading.
McGill: “In retrospect we had only 25% A Players. We visited Brad at the end of 2001 after reading Topgrading, and he got us started right by assessing and coaching the top team, so we got A Players in all the senior jobs, and then training us to take over.”
The top managers include 90 store managers, six regional presidents, and 15 managers in the corporate office called Team Support. Figure 5.4 shows Topgrading results:
MarineMax Talent Distribution
Topgrading took hold quickly at MarineMax. The initial senior team consisted mostly of B/C Players, but many of them had A Potential. Having run individually successful boat dealerships but not being familiar with the more sophisticated and complex corporate structure, some very sharp, high potential managers simply had a huge amount to learn about information sciences, human resources, marketing, M&A, and the best practices and processes necessary to run a nationwide company. In addition to bringing his senior management team up to speed on these efforts, McGill made the staunch commitment that Topgrading would become an integral and lasting part of the company’s culture. All managers now receive training in Topgrading, by 1) reading Topgrading, 2) participating in Topgrading Workshops, 3) learning online through the company’s E-learning system, in innovative training sessions featuring lessons from successful Topgrading managers and Topgrading professionals, and 4) as soon as the opportunity arises, managers who have not yet performed a Topgrading Interview are paired with those that have.
Hiring A Players has become a MarineMax towering competency. Several acquisitions were walked away from, after internal Topgrading Interviews by Jay Avelino (VP Team Support) and senior operating executives were conducted, because they found that the company to be acquired lacked management talent. In the pre-Topgrading era about one-fourth of new hires and promotions turned out to be As or A Potentials. McGill says, “in talent meetings we’re tough graders, but we’re proud that now 94% of our external hires have been A/A Potentials.”
Few B/Cs have actually had to be fired. “We’re a people-oriented company, equally passionate about helping our customers live their boating dream and sincere in helping our own people progress from B/C to A”, McGill said. “In a coaching atmosphere, every senior manager updates a comprehensive Individual Development Plan annually (and more frequently) and helps his direct managerial reports to do the same. The results can be quite dramatic. On the other hand, if they don’t comply or aren’t able to achieve their goals, they generally quit, because the company has done all it can to help them grow. “Everyone knows the expectations and there aren’t any surprises,” said McGill, “and we are fully committed to having over 90% As and A Potentials by 2005, because only A Players can Deliver the Boating Dream to our customers.”
MarineMax executives’ advice:
- “Topgrade from the top down.”
- “Use Topgrading professionals to initially assess management and screen replacements to be sure of an all A Player senior team.”
- “Make Topgrading integral to the company culture, not a ‘program’.”
- “Emphasize why Topgrading is necessary – to Deliver the Boating Dream and to provide great careers for our people.”
- “Use Topgrading methods to assess the management team of possible acquisitions, before the acquisition.”
Despite the downturn in the economy, the company continues to fully embrace Topgrading methods. Although there has not been much hiring or promoting, what has been done has been very successful. For example, the store manager position is crucial for obvious reasons … and 10 positions opened up. Nine of 10 store managers hired have turned out to be A Players and the 9th is A Potential, for a 100% success rate.
Unfortunately, Jay Avelino passed away, and for a year Topgrading languished. However, Dr. Ray Bowman has become Vice President Team Development, and is re-energizing Topgrading across the company, and at all levels.
2011 Chat with a Topgrader, Bill McGill:
Brad: Welcome Bill.
Bill: Thank you Brad.
Brad: With the economic downturn, is Topgrading more or less important?
Bill: Topgrading has and will always continue to be the foundation of our corporate culture. We’ve learned to do more with fewer people, but all As. I’ve had to shrink the company from 2,600 employees to 1,300, and from 93 stores to 56; the stock was way up over 100% from 1999 until the downturn, but now we’re down 23% so far this year. Had we not Topgraded, the stock performance would have been much worse. We were very fair with people and have A Players in HRT, so there have been no legal problems because of As in HR. 93to 56 stores, lean and mean.
Brad: There are several questions for you, Bill, starting with, “How do you roll out Topgrading when you have multiple locations?” And as a retailer, you certainly do.
Bill: After you Topgrading Professionals trained our managers, I’ve reinforced it in our staff meetings, with all of our Store Managers and then Service Manager together. Topgrading is discussed, reinforced, and success stories are shared in almost every single meeting we do.
We actually mention Topgrading on our road shows. So when we present to Wall Street, which we’re getting ready to do next Monday up in Boston and New York on Tuesday, we mention the importance of Topgrading. We are all about the people and we’re only as good as our people. Investors can benefit because we Topgrade; if you have A Players you get A results. The example I give to our team is; we’ve had stores that are just absolutely killer, beautiful, gorgeous stores, perfect for the marine industry and yet, they don’t fully deliver. We have a store in Miami on 79th Street that’s in a rough neighborhood – you’d better take a gun after hours if you’re going to visit there – but it’s always one of our top stores because we have an A team there.
Brad: Do you use the Tandem Topgrading Interview, using two interviewers?
Bill: The Tandem Topgrading Interview is absolutely critical. There are a couple of things you’re doing and obviously two ears and eyes are better than one. So, when one is asking the questions the other can be looking for the non-verbal signs and also can be thinking about – “I wonder where this is going” – or “maybe there should be a follow up question.” You’re also educating each other about how you are doing the tandem, to make yourself more proficient.
Normally they run anywhere from four to five hours. But it’s fun and whenever we make a hire one of the first things that we get, even before we hire the individual is, “Oh my gosh, what a wonderful process!” And part of that is people like to talk about themselves.
Brad: Well, A Players do.
Bill: So, it’s absolutely been a game changer for our company. We do not hire a manager unless a Tandem Topgrading Interview is performed. And we do not hire a salesperson unless we do a Tandem Topgrading Interview. Because what you say Brad about it costing roughly 15 times what you’re going to pay them in a sales role is absolutely the case. If we lose a deal or two that adds up real quick especially in some larger boats. Our average unit that we sell is about $110 thousand; you can’t afford to hiccup on it.
Brad: How can you afford to have two interviewers for seven hours and is it worth it?
Bill: Boy, how can it not be worth it versus making a mis-hire? You’re going to spend days, weeks, months, or years and hopefully not years realizing that this person is misplaced so why not spend the time, and do your due diligence up front and make sure you’ve hired right. The person being interviewed appreciates it, too.
Brad: Someone asks you, “What are the required resources and specifically for a roll out, what were the things you did in the first 90 days or so to get the program off on the right foot?”
Bill: Ideally you Topgrade from the top down. And you run all managers through the workshops and you pair people together. The less experienced people will learn from the more experienced people. It’s an educational process to do a Tandem Interview. We have tried individual Topgrading Interviews. It does not work as effectively. When you get two people together you hear, see, and learn different things.
Brad: Someone asks, “What was your biggest obstacle and how did you handle it?”
Bill: Well, the biggest obstacle that we’ve experienced is that people want to cut it short and jump ahead. We still today have managers that have said, I’ve known this guy who has worked as one of our suppliers – or something like that – for 15, 20 years and I may not know everything about this person but they’re perfect for the job.
So, you have to say and be firm that we are following the process so there will be a Career History Form and Topgrading Interview Guide and we’re going to follow them to a T.
Brad: “How do you gauge the return on investment in Topgrading?”
Bill: The best return on investment is how an A Players perform. You see it on the bottom line; you see it in the team that they’ve assembled. Some exception to that would be the depression that we’ve been in, they want to call it a recession but it’s been a depression; and during that time we’ve got A Players that have struggled because of it.
Brad: Yes, it makes a lot of sense. Bill, I really appreciate your time this afternoon. Everyone is muted so they can’t clap their hands but I’m sure they would. It’s been very enlightening, thanks so much!
Bill: Well, thank you for what you’ve done for industries and more particularly, for our company Brad.
Brad: Well, you’re very welcome. I’ll talk to you again soon Bill.
2011 Mini-Case Study: Region of MarineMax
Brett McGill, MarineMax Regional President, has 7 MarineMax stores, with 5 General Managers. Our success hiring GMs is 100%, and 75% of the 28 lower level managers in the stores have turned out to be A Players. And we’re going to do even better! Prior to Topgrading our success was about 28% (a guess), so we’ve more than doubled our success.
Also, we’ve begun using Topgrading methods for all hires; we need everyone from the receptionist to our service people to be highly professional.
“Absolutely, our region is more successful because of Topgrading. We’re profitable in the worst economy since the Great Depression and we’re selling luxury boats, and a lot of our competition already went out of business. When the economy rebounds, we’ll have fewer competitors and we’ll have just about all A Players, so … watch out!”
— Brett McGill, Regional Manager
Brett’s Advice to Would-Be Topgraders:
1. Follow the Tandem Topgrading process
2. Use what is learned from the Topgrading process to coach and develop the team member
3. Take the time to hire and promote correctly and save in the long run by having A Players who demand less of your time and perform