Dave Gheesling, CEO of FEI Group: Focus on Leadership - Dec 2015
Interview by Kemp Harr
Dave Gheesling, CEO of FEI Group, was born and raised in Atlanta and earned a degree from Georgia Tech. Upon graduation, his favorite professor advised him to get a job rather than seek an MBA, so he set out to work in sales.
He had been selling industrial trucks when the phone rang late one night, and an old neighborhood friend talked him into joining the national accounts team at Mohawk, launching his career in flooring. In 1998 Dave struck out on his own, founding FloorExpo, which later became FEI Group, the largest network of flooring, cabinetry and countertop contractors.
Q: What do you see as your role within FEI Group?
A: Jim Collins, author of Good to Great and Built to Last, coined the brilliant phrase “genius with a thousand helpers,” and it is safe to say that we are the polar opposite of that at FEI Group. I’m surrounded by amazing people who are smarter and better than I am. Believing that micromanagement stifles employee growth, we extend a tremendous amount of latitude to our team members to handle as much accountability and responsibility as is possible. All of this springs from our Vision Statement. We very rarely refer to titles or org charts at FEI Group, but my role as CEO is to attract and retain the best people, allow them to truly own their roles, and constantly reinforce the Vision Statement. At the end of the day, when the team wins, everybody wins.
Q: What is your next big challenge as the leader of FEI Group?
A: Business is good again, to the near horizon anyway, but good is the enemy of great. It has been a wonderful first 17 years, but we have countless opportunities to plow wider and dig deeper in terms of bringing efficiencies, economies of scale and the cross-pollination of expertise to the members of our various networks. Coming off our best national conference in history last month, our biggest challenge is to exploit the numerous opportunities identified that week for improvement in all four of our national networks. More key players from our member companies are directly engaged with FEI Group than ever before, which has further opened opportunities to focus on narrower areas of specialization. We are also exploring other related arenas to add to our portfolio.
Q: In the last couple of years, we’ve seen more strength in the multi-family sector than in single-family. How do you think this will balance out in the next few years?
A: Single-family home ownership was artificially high at around 69% going into the 2008 downturn, and we are still navigating that correction. We will probably see the reset land at a stable figure that will likely be lower than normal for some time. This will in large part be due to the emotional factors still in play on the heels of residential real estate having so recently exposed its greatest consequences of risk to date. All of this has, of course, favored the multi-family channel, both in new construction and replacement activity, and that is how the pendulum swings in the residential contract arena. But it will continue to swing. Several substantial macro-economic issues have the potential to impose dramatic changes over the next few years, however, so the truth is that I cannot make sound, specific predictions at this point. No one can, really.
Q: With single-family housing, where are the pockets of strength?
A: The pockets of strength vary from market to market, particularly in the major markets. But generally speaking, single-family homebuilders are leery of the growth of the rental community and multi-family new construction. They continue to experiment with more affordable homes with limited upgrade potential while still attempting to generate a better mix with other more conventional products. My strong sense is that it will take some time for macro issues at the national level to stabilize, and this jockeying around with shifts between the two residential contract channels will continue for at least that long.
Q: What key indicators are best for giving you a read on what the next season or year will bring to your membership?
A: On the single-family side, the availability of skilled labor continues to be the primary challenge. This issue brought growth in the channel to a screeching halt a couple of years ago, when the rates required to attract qualified labor increased to the point that prospective homebuyers and entities on the financing side stopped moving their feet. Selling today isn’t so much of a challenge, relatively speaking anyway, but getting sold floors installed is. That said, our members in both channels tend to have longer-tenured and more loyal labor than the average bear, and even a slight difference in this aspect is quite a competitive advantage.
Overall employment, starts and permits, overall housing inventory, and existing home sales are always on the radar as well, but the formal forecasting in this area has been suspect at best in recent years, so anecdotal evidence gleaned through networking within our membership has become a stronger indicator for us. On the multi-family side, labor is of course also a factor, but we also look at new construction starts and permits, vacancy rates, and the movement in recent years to more hard surface installations—the impact of the latter being the extension of turn cycles. It should also be said that we have close working relationships with our suppliers, who keep their ears to the ground as well. And we keep our finger on the pulse of the dynamics in the political arena.
Q: What is the government’s role in driving homeownership?
A: My default response to the notion of what role government should play in virtually any area is as little as possible, up to and including none. That said, the government played a very large role in the escalating percentage of Americans owning homes, which was around 69% going into the epic downturn of late 2008. There is a lot of credible research that indicates somewhere in the low 60s is about as high as that percentage should be in a capitalism-based nation, and the artificial accelerants to the demand side, of course, led to the inevitable bubble. The underlying assumption that home values would always increase as they had for at least some five decades was highly flawed, to say the least. Again, to the extent government stays out of things and lets the natural forces and factors of a free market work, chances for a stable and healthy homeowner population increase.
Q: In terms of carpet in the U.S. losing share to hard surface flooring, has this been a natural progression or was it accelerated by the major carpet producers diversifying their focus?
A: I think it would be more accurate to say that major carpet manufacturers diversified their focus in response to the shift in share, a shift that was a natural progression due to several other factors, including manufacturing and distribution efficiencies, technological advancements in construction and styling, etc. But I wouldn’t be surprised to see the pendulum of preference continue to swing back and forth over the long haul.
Q: What are your thoughts on the shift in carpet from nylon to PET? Who is responsible for explaining to the consumer the balance between disposable and durable?
A: In large part, the recession drove the shift from nylon to more affordable PET systems, and the resulting balance of manufacturing capacity will hold that mix to some extent going forward. Filament PET is an entirely different product from the spun PET that gave the fiber a bad rap decades ago, and its performance has proven adequate in the price-value equation that it brings to the table. Nylon still demands a performance premium, although the delta versus highly twisted PET has decreased somewhat. It will be interesting to see how the PET versus nylon capacity wars play out in the coming years. Regarding the education of consumers about the balance between disposable and durable, the seller who furnishes and installs the product owns that responsibility on the front lines, and only they have the ability to deliver a truly unbiased message. Educating the customer is paramount here, as proper expectations must be established at the outset. Different fibers have different performance attributes and costs, so it is very important that the customer understands up front what the best applications are for each of them.
Q: You are well known as a motivational speaker who speaks from the heart and employs famous and pertinent quotes to support your message. How did you develop this knack?
A: That is quite a compliment. I’m not sure it’s merited, but thank you. Everyone on our team is a very strong public speaker, so to the extent this is true, I’m in very good company. It has been said that 99% of the population fears public speaking more than death, and while I have witnessed that countless times, it’s not something with which I can personally relate. Public speaking—which, by the way, I believe to be inspirational at best but not motivational, as motivation only comes from within—is a relaxing and enjoyable experience. But it comes with a lot of responsibility and requires 100% engagement, because a 30-minute speech, for example, costs the speaker a half hour of his or her time, yet consumes over ten collective days of life from an audience of 500 people. I prefer to prepare as little as possible, talk to members of the audience beforehand to see what is on their minds, start focusing on a general message, then let it fly from the heart, as you say. Regarding the quotes, I’ve always enjoyed reading them and drawing from the experience of others, and I suppose if you stop and really think about them they tend to stick in the mind.
Q: What are the characteristics of a true leader?
A: Empathy and humility top my list of aspirations, and the five pillars to the Foundation of our Vision Statement resonate strongly with us at FEI Group as well: persistence, integrity, class, attitude and respect.
Q: How do you balance the time you spend at work, with family, spirituality and working out?
A: One of our eight Core Values at FEI Group, again taken from our Vision Statement, is “Physically fit before mentally fit!” I cannot function without exercise, so that is a fundamental requirement more than a balancing act. Work, family and spirituality never really stop either, as these things are almost always front-of-mind regardless of time, date or location. An early morning routine I’ve used for years now blocks virtually everything out for a little while every day, but apart from that time, I’m probably not very good at this thing you call balance.
Q: You are a leader in flooring but your passions are more extensive, including your study of meteorites. When you consider your career and life, what do you think your legacy will be?
A: I guess there are two points to consider here, Kemp: leadership and legacy. I remember like it was yesterday, my high school basketball coach wanted to name my best friend and me as co-captains of the team. My surprise and gratitude were immediately evident. But he quickly followed up with the blunt revelation that his preference would have been to name my friend sole captain, because he did everything exactly the way our coach asked him to do it. He was every coach’s dream. The problem with that, he told me, was that the team was going to follow me regardless of who he named captain. At that point in life, I had no idea what he was talking about.
The tangible elements of leadership are fairly easy to understand, and there are countless books on the subject that essentially say the same things. But I still do not fully understand the dynamic of the intangible side of leadership, which in my experience is the overwhelming majority of the equation. It is very difficult for me to not try and dive headfirst into most situations, and often that can mean the opposite of empowering others. To prevent the consequences of micromanagement, it’s something I’ve worked hard to avoid but will most likely continue to struggle with for the rest of my life. Regarding the notion of what my legacy will be, I don’t know and I really don’t ever think about it. Hopefully the net of my intentions, efforts, accomplishments and countless mistakes will be positive.
Q: What are the two or three things that people should focus on to be successful?
A: Develop A, B, C and D priorities, then delete the Cs and Ds and cut the Bs in half. Make sure one of the As is a focus on health and physical fitness. Develop mentor relationships, and welcome constructive criticism. Be aware of the downsides to everything, but focus on the upsides. And don’t take life or yourself too seriously.
Q: What is your advice to young people who are considering a career in the flooring business?
A: In spite of its challenges, which every business has, the flooring business has certain attributes that seem to attract some of the best people in the world. Gravity and friction are here to stay, so flooring will always need to be replaced. And in any channel—residential contract, retail, commercial, etc.—new flooring can change the look and feel of a space as much as anything else, so it’s an arena of high impact. It’s also a highly competitive industry, and competition and/or collaboration between great people bring out the best in all of us. All told, it is the people, not the floors, that have kept me in this industry for over two decades.
Q: It’s been said that this new Millennial generation has little if any view of a 20-year plan. How did we get here and what will the world be like under their leadership?
A: My sense is that the rapid evolution cycles in the tech arena have fueled much of this, and more than anything else my concern for this generation is that technology hasn’t so much been used to make the things we have to do more effective and efficient, per se. It is so engrained in their daily lives that it seems to have simply taken them over. The real downside to this is the decreased human-to-human connectivity, as so much of that interaction has been replaced with technology. My daughter and I have this discussion almost daily.
Q: What advice do you give your daughter as she gets to the age when she’s wondering what passions to pursue?
A: She’s a tennis player, and that sport has become a metaphor in many ways for her. I encourage her to maintain intensity and a positive attitude and to simply focus on putting good strokes on the ball, not on the results of the shots. A lot of good shots hit the net, fly long or wide, or are returned as winners from the opponent. But keep putting good strokes on the ball, on the court or in life in general, and positive outcomes will take care of themselves over time.
I remind her to choose friends wisely, because we all become the sum of the people with whom we surround ourselves. I try to inspire her to take chances, frequently reminding her that the things she will regret later in life are the things she did not try. Maddie is very familiar with Michelangelo’s quote, “The greater danger for most of us lies not in setting our aim too high and falling short, but in setting our aim too low and achieving our mark.” That said, I just expose her to as much as I can, tell her to work hard and follow her dreams, and remind her to live her life as simply as possible and the way she wants to live it. At the end of the day, what I want for her is to self-actualize and to be happy—doing whatever it is she wants to do along the way.
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