Olympic Steel CEO Stresses Continuing Education & Values

Siegal talked about the importance of articulating your business values and a mission statement. Olympic Steel has ten core values said Siegal. When you run a business, he said, you have values that your employees judge you on. “The problem is if you don’t articulate them, your employees will articulate them for you.”

“At Olympic Steel we aspire to make a difference to the communities we serve and the people who work for us,” said Siegal.

It is important to make employees feel welcome and valued, said Siegel. “There are all kinds of different people to satisfy and in the end the values matter. Ultimately you are trying to create an environment where things that matter, matter.”

“We don’t always want to achieve the best return; we just want to get the best return we can while recognizing that we serve different masters.” In the steel industry you have three different masters all the time: customers, employees, shareholders/owners.

“The customer has this desire for ‘’free,’ everything else is negotiable,” said Siegal. Shareholders want you to make money. Employees want better salaries, better benefits, they want meaning in their jobs,

“I never thought I would have to negotiate with a new employee on how much vacation time they will get,” said Siegal, noting that in his day you simply wanted to work.

You can’t satisfy any of the three constituencies if you are not growing, said Siegal, you have to have strategies for geography, added value, products and people.

From a people standpoint, Olympic starts cultivating performance from young to old. Internships are offered to the young–“we really like interns, they are cheap and they are really smart.” Then there is the high performance culture in which employees are given the chance to grow.

“These young kids are basically told to change jobs every five or seven years, that you are only going to get ahead by ‘enhancing your knowledge base’ by changing jobs,” said Seigal. A thought process that he disagrees with. “If you want to change careers,” he said, “do it within the company.” Olympic tries to identify the best and brightest and keep them engaged. Performance reviews, that are honest, are critical to the process.

The path to growth continues with continuing education—sending people back to school for MBAs and Lean Six Sigma training—at all ages. Olympic Steel also offers scholarships for children of employees.

Another thing to consider, said Siegel, is succession planning. What will happen to the company as owners and management retire?

Giving back to the communities the company serves is a high priority encouraged through community involvement, volunteering and civic investment.

The service center industry is a 20 percent gross margin business, said Siegal, “But we could all do better.” Achieving 23-24 percent gross margins is the goal. Value added, new products and enhanced product mix is how you make money, he added. “The problem is that whenever you do something unique, the bar will eventually catch up with you.”

In the past, a business could get ahead through information garnered in relationships. That information advantage no longer exists due to the technology. Everyone has access to the same information through software programs and the internet.

You cannot get ahead of your competition through information, said Siegal; you don’t always have the best price. “Ultimately you have to perform flawlessly for the customer…because the cost of doing things twice is not recoverable. If you don’t have a commitment to on-time and quality, you will be giving up your profits.”

In a bit of humor, Siegal noted that things have changed in the steel industry in the last 40 years: 1) there would be no women at the meeting, 2) people would be smoking, 3) everyone drinks a lot less. “On two out of three, we had a lot more fun 40 years ago,” he said.

One philosophy that will matter from 40 years ago to 40 years from now is “cash is king.”

“We all know the real estate and steel business is cyclical,” said Siegal. “We all know that one day in a good market is one day closer to the bad market, and one day in the bad market is one day closer to a better market.”

“If you don’t over-leverage yourself, and over-commit yourself, and you live within your means, you survive. So you can sit in a rocking chair when you are 80 years old and you can look back on your career and say it wasn’t so bad after all.”