Three million dollars. That's what Doug Fabick figures Fabick CAT made last year on a $500,000 investment, which, says Fabick, "Is a pretty damn good return." In fact, that's a 600% return on investment -- enough to make even Berkshire Hathaway stockholders jealous and to inspire CFOs to ask pertinent questions about Fabick CAT's investment strategy. But that half million dollars didn't go into new equipment, buildings, or technology. In fact, there's almost nothing tangible to show for it. Instead, Fabick CAT invested $500,000 on its people. And people are how Fabick CAT made $3 million back.

Fabick CAT sells, rents, and repairs Caterpillar construction equipment. The company serves construction businesses and contractors in 61 counties in southern Missouri and 36 counties in southern Illinois, as well as pipeline construction contractors around the world. Founded by John Fabick in 1917, Fabick CAT now has more than 600 employees in 12 locations -- each considered a company in its own right -- with headquarters in Fenton, Missouri. Fabick CAT is still a family-owned business, and Doug Fabick, its president, is the fourth-generation Fabick to lead the company.

In 1999, Doug Fabick took over from his father, who told him to "make his splash" and build his team. Fabick realized he had a challenge -- Fabick CAT wasn't even in the top 25% of America's 50-plus CAT dealerships. It wasn't a comfortable place for the competitive Fabick, and clearly, something had to change. But change is not a beloved concept in the heavy equipment industry.

"Change is the constant of the world. Change is good; change is inevitable. But change scares people to death," says Fabick. "CAT dealerships are twenty years behind the times. Technology doesn't do much for us -- you can't send a big old yellow CAT over the Internet -- so we don't change unless we have to."

Fabick decided that it was time to change, though he wasn't sure what change, exactly, to make. So he analyzed the company, thoroughly researching every standard business indicator. Nothing turned up. Then he started analyzing businesses run by his friends at other CAT dealerships. He asked for their organizational charts, figuring that because CAT dealerships all do and sell the same things, the charts would clearly show one system that worked best. But there wasn't one. Some CAT dealers did well, while others didn't, but there was no indication as to why. So he called the dealers and asked them point-blank. He got nowhere.

"They couldn't tell me how they got to be so successful because they didn't know," Fabick says. "So when I hung up the phone, I could only think [that the reason] they do well is because that guy does it well. That's why he's got these two departments doing great and some other guy doesn't, because the other guy doesn't have that experience. Or something."

Fabick began to wonder if other dealers even understood why they were so successful. He kept studying, moving his people around, trying to figure out how to make his company CAT's best dealership. "I kept looking and learning, looking and learning. Then I read First, Break All the Rules and Good to Great." What Fabick learned from those two bestselling management books is that some people have innate talent for their jobs -- and that those people can be identified and deliberately placed in the job roles for which they were born.

"Boom! That made it click in my head -- that's why it's different in every dealership," says Fabick. "They're putting the right people in the right jobs. But they didn't know it. They're just unconsciously letting the cream rise to the top."

Armed with his insight, Fabick attended a Gallup-sponsored management summit in 2001. He absorbed the research on employee engagement, especially as it pertained to the right fit for the right job, and the linkages between engaged employees, engaged customers, and increased profit. In 2002, he hired Gallup to administer its 12-item employee engagement survey, the Q¹², at Fabick CAT and to train his managers to facilitate engagement.

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Article from The Gallup Management Journal