pss world medical presentation

8/7/2019 PSS World Medical Presentation

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PSS World Medical


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PSS World Medical

How AN ORGANIZATION with ordinary people achieveextraordinaryextraordinary result in the medical supply (distribution)

business?

and

WHY?WHY?

Environment Consistency Action


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Agenda

Introduction: Why the Article on PSS?

Overview of PSS and its key Achievements

WHAT, HOW and WHY of PSS actions

Singling out CSFs

Conclusion: KM++ Lessons Learned


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Introduction When it comes to any business in the world, it is

very usual that we will mention about 3 topics:

Business: what business are people in?

Industry: what is the industry environment?

People: leadership, entrepreneurship


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Little background of PSS Business: Normal Medical supplier

Industry: The distribution of medical supplies

----- Highly competitive, low-margin industry

People: Ordinary / regular

----- Not with elite education background (e.g. MBA)------ The founder Pat Kelly is a reluctant entrepreneur not a pioneer


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Motivation of this article (1) Apparently, PSS has Nothing special or does not looks

like a highly competitive company at all.

1. Business: is normal, low entry barrier

2. Industry: highly competitive and low profit margin

3. People: ordinary / regular people

However

This group of ordinary people have achievedExtraordinary result in the medical supply business


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Motivation of this article (2) Started from 1983

As of late 1999, its five-

year growth rate in

revenue is 52% and

earning per share is 31%

As of late 1999, its five-

year growth rate in

revenue is 52% and

earning per share is 31%PSS World Medicals

growth has been

achieved largely by

acquisition

PSS World Medicals

growth has been

achieved largely by

acquisition

PSS World Medicals

growth in sales is almost

60% per year from $170

million to $1.5 billion

PSS World Medicals

growth in sales is almost

60% per year from $170

million to $1.5 billion


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Question

Q: How do ordinary people can achieve extraordinary result in the

medical supply business ? What are the mysteries????

A: PSS knows how to leverage their employees talent, instead ofseeking and depending on talents (Just like Southwest airline, and

mens warehouse do).

If we recall all these companies, the common factors why they cansucceed but other companies cant are:

Environment Consistency ActionEnvironment Consistency Action


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Environment

Culture

Climate

Esprit de corps

Rules, regulations, policies

Availability of time (for reflection, )

to do with the environment with

which the knowledge source operatesOR the circumstance within which the

source functionsLooks familiar ????

Yes, it is one of slides from Prof.

Lee re ardin Knowled e source

Looks familiar ????

Yes, it is one of slides from Prof.

Lee regarding Knowledge source


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Environment Yes, in K6211. Environment is one of the

knowledge source/asset for any companies.

And PSS has extraordinary achievement forcreating its own environment in order to

leverage their employees talent



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Our Presentation Focus


To understand how PSS creates an environment that can be used to

greatly leverage their employees talent and contributes effectively to the

success of initiating/executing/integrating acquisition.

These two are the reason why PSS does not need MBA talents and can

achieve miraculous growth!

To understand how PSS creates an environment that can be used to

greatly leverage their employees talent and contributes effectively to the

success of initiating/executing/integrating acquisition.

These two are the reason why PSS does not need MBA talents and can

achieve miraculous growth!


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Environment (1) A business and organization run (led) by leaders, not managers

(producing/nurturing/deploying leaders, but not managers)

Notion and practice ofServant Leadership

Runs an open company - Any questions that is legitimate must be

answered (e.g. employees salary or bonus)

Give people authority and accountability

Share wealth


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Environment (2)Organization structure

Flat

No written organizational chart

Each branch is equivalent to a small business, with its

own P&L,

responsibility for gross margin,

complete discretion to set prices

determine its operation


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Environment (3)Organizational Policy

No policy manuals (but emphasize on personal communication)

No memos (Kellys rule is that everybody is required to read the first memo they get each month,and none therefore)

Only have a guideline in a large, colorful foldout brochure called Rules of the Game

7 areas:Equal opportunity

Sexual harassment

Rules of conduct

Alcohol, Drugs, Firearms

Absence of unions

Leave and holiday

Complaint resolution procedures


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Environment (4)Recruiting and selection

Credentials are not very important in PSS (no need from elite institutions, no need graduatedegree)

Recruiting is based in large measure on personal referrals (PSS gets new employees from the

informal network among their existing employees)

The hiring process takes 6 8 weeks.

No to call people back for interviews after the first recruiting contact. (The candidate must

call for a follow-up interview)

Often interviews will be done on Saturday, to see if the people will come in, if they are hung

over from Friday night

A behavioral interview guide with 30 questions for the interviewer to screening applicants


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Environment (5)Training

PSS university

Role playing

During training, people stay at corporate apartments instead of hotels, or they will stay at thehomes of people who staff PSS university and even at the homes of officers

Need to have dinner with each other and with corporate officers

There is 12 weeks of field training ----- do all the manual work from

cleaning bathrooms

driving trucks

stocking warehouse shelves, etc.

To learn from the bottom up.


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Environment (6)Leadership

In PSS, no manager titles, but many leaders

No many want to be leader, and moving into leadership is very much avoluntary decision

Because the meaning of leader in PSS is clear in below

Giving up freedom

Less financial gains (depending on teams performance)

Become servant to the team members (responsibility for mentoring,guiding other team members)

Losing some job security because leaders are expected to do much more


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Environment (7)Rewards

Bonus is paid semiannually

The bonus pool is shared among employees, not the leaders

The branch can receive up to 20% of bonus pool, can get 5% forhitting the target, can get another 5% for exceeding its dollarobjectives, another 5% if it keeps its asset days below a target level,

final 5% if it can exceed the target by 2% of net income.

(In short, the reward is great and very encouraging teamwork, notindividual)


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ARENT YOU CURIOUS ABOUT ?


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How is PSS doing today?PSSI PSS World Medical - Penny Stock Exposed

http://www.realpennies.com/otc/PSSI

Rank #68

PSS World Medical Inc. revised earnings guidance for the fiscal year 2011. Expense management wasprudent in principal based. Cash flow was strong and executed on acquisition strategy. Although still achallenging environment, the combination of these factors led the company to raise its guidance

to earnings per share goal of $1.30 to $1.32 for fiscal year 2011.

PSS World Medical Reports Results for Fiscal Year 2011 Third Quarter; Raises FY2011 GAAP EPS Goal to$1.30 - $1.32 Per Diluted Share

http://www.istockanalyst.com/article/viewiStockNews/articleid/4840106

Rank #89

PSS World Medical, Inc. is a national distributor of medical products to physicians and extended careproviders through its two business units. Since its inception in 1983, PSS has become a leaderin

the two market segments that it serves with a focused market approach to customer services

PSS World Medical Inc. Reports Operating Results (10-Q) -- GuruFocus.com - Oct 2010

http://www.gurufocus.com/news.php?id=113417

Rank #243

Pss World Medical Inc. has a market cap of $1.32 billion; its shares were traded at around $23.4 with aP/E ratio of 20 and P/S ratio of 0.6. Pss World Medical Inc. had an annual average earning

growth of 16.3% over the past 5 years. PSSI is in the portfolios of Columbia Wanger of ColumbiaWanger Asset Management, Larry Robbins of Glenview Capital, Steven Cohen of SAC Capital

Advisors, Kenneth Fisher of Fisher Asset Management, LLC, Jim Simons of Renaissance Technologies

LLC, Mario Gabelli of GAMCO Investors.


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Conclusion The KEY is about how to leverage employees talent.

Three elements for this KEY

Environment (culture, system, structure, policy, regulation, etc)

Consistency (all the above must be consistent)

Put in action (Do it ! Consistent managing practice)


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Thanks

pss world medical presentation

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