Robert Foord, the second-generation leader of Kal TireDarren Hull
Vernon, British Columbia, seems an unlikely home for a company that makes its living off tires. In the city's downtown, ponytailed customers at the Bean Scene wear khaki shorts and tie-dye while sipping Rwandan dark coffee. A busker strums a guitar on a street corner, while out on Kalamalka Lake, boaters exploit the early-autumn warmth for one last ride. The unmistakable smell of B.C.'s cash crop wafts through the air.
Yet, Kal Tire has resolutely maintained its head office in this easygoing town since the late Tom Foord started the business in 1953 to serve the commercial trades. Convinced that small-town values seed its corporate culture—and ultimately its success—the family-owned company has no more intention of moving from the North Okanagan Valley than of issuing an IPO. Tom's son Robert Foord, Kal's president and a vigorous mountain biker, describes the high-on-recreation location as a "cultural filter" that attracts employees with similar values. "Going back to my dad, he believed that developing relationships is core to the business," says Robert, who holds that executives' main purpose is to support customer-facing employees. To hear him tell it, Kal preaches service; tires just happen to be the commodity.
Kal Tire's "trust-us" formula is evidently clicking, externally and internally. Primarily a tire reseller, Kal has hired 1,700 new employees over the past five years, bringing the total head count to 5,400, with annual revenue of $1.4 billion—and a senior management team numbering just six. About one-quarter of its revenue comes from retail sales, 40% from commercial sales and retreading plants, and 35% from mining—supplying gargantuan tires to clients like Iamgold in nearly 20 countries, from Suriname to Chile to the Democratic Republic of the Congo.
Kal relies on buy-in at every level. All of its employees, from installers to sales reps, are part of the profit-sharing plan, and local store managers are required to review their profit-and-loss statements at monthly meetings. Inside its headquarters—a bright three-storey building tucked behind one of Kal Tire's 250 orange-signed outlets—the senior management team works in small rooms at the centre of the second floor. A junior staffer handling customer service gets a window, while the president sits in a glass-walled office. Everyone eats together in the catered cafeteria.
The company invests heavily in training, bringing employees to Vernon for two-week stints. The idea is to vest managers with the authority, and confidence, to operate quasi-independently. "We want an ownership culture—this is your business," Foord says. "We give them the tools to succeed." Senior managers use a pair of executive jets to visit the field. They are "influencers," rather than authoritarian figures, says CFO Ken Chaun, who is married to Robert's niece. "A senior zone manager would have no problem telling me I'm out to lunch when they disagree with something."
A family tree in the office library shows Tom Foord's five siblings, his wife, Norah, and Robert—Kal Tire's owners—along with their spouses, kids and grandkids. As a young man, Robert felt claustrophobic in Vernon, where Kal is the biggest thing going. He rebelled, travelling through Asia and Australia for 18 months before chucking admission to law school in favour of working his way up the company ranks. Today, he's the ambassador between the family and the company's board. In the early days, Tom Foord attracted executives by depositing annual incentive payments, based on corporate performance, into individual accounts. That system remains intact. When executives leave the company, the account goes with them, while equity stays inside the family. "Dad, and the family, believe strongly in alignment between the senior management team and the family," Foord says. "We could use bonuses, but it's critical to take the longer-term view. We want people to think, How do we continue to keep this business sustainable for the future?"
With competitors like Canadian Tire, Green + Ross and OK Tire for the business of personal-use vehicle owners, the near-term answer to Foord's question includes aggressive expansion outside Western Canada, especially in Ontario (though not to the U.S.). Aside from offering a wide range of tires, plus services such as brake repairs and wheel alignments, it sells a road-hazard protection plan that allows customers to replace damaged tires on a pro-rated basis, with rotations provided free.
At a Kal Tire store in Mississauga, a poster on a wood-panelled wall behind senior zone manager Ron Pierce's desk displays the company's cherished "Seven Aims." Vehicle owners who have fallen prey to wallet-sapping repair shops might scoff at words like value, fair profit, honesty, mutual respect, "responsibility to our customers, each other, our communities and the environment." But Kal believes customers will return if they feel satisfied, not fleeced—almost like part of the family. /Tom Maloney