Management Needs in Today’s Rental Industry

By Bill Sitter

Bill, what general observations can you share regarding current management needs in today’s rental industry?

“Brian, the rental segment of the equipment industry is exploding and the need for management talent is great. To answer this question, we really need to segment the rental distribution industry into: large rental companies, medium to large distributors with significant investments in and appetites for short term rental, and smaller independent rental companies. Of these three, our executive search firm has much more exposure to the first two segments and we feel less qualified to comment on the smaller independents.

We see the larger firms seeking managers with more sophisticated marketing skills, people who are able to find profitable market segments or niches and then develop and implement strategies and tactics to capitalize on these opportunities. Windows of opportunity are often small, so fast acting/hands-on leader-doers are at a premium.

For the larger multi-state firms it is a given that the new breed of managers must also be: excellent communicators, self contained business travelers with excellent time and territory management skills, and competent PC users who can function with minimal support.

Distributors who are aggressively pursing the rental market are adding talented asset/fleet managers who understand the need to view inventory turns and fleet utilization from a perspective that differs greatly from the dealer of the 1970’s and 1980’s. Those who have established separate rental operations desire operations managers who know the true meaning of lean staffing and how to combine that concept with excellent customer service.

All of our clients seek managers with: integrity, good interpersonal skills…including team type leadership skills, and an understanding of how their operational decisions will impact the bottom line.”

How do middle level managers view upward mobility in the rental industry. Is promotion what motivates them or is it just “show me the money”?

“One of the exciting aspects of the rental industry today, especially for a junior manager, is the lean management organization structures which are so prevalent. There are a few very key staff roles but middle managers are almost non existent. Many national firms admit that the Branch Manager role is pivotal to their success in a market. We see this role as a great place for a young man or woman to take their first real shot at management. These can be “hot seat” roles, but for “performers” this opportunity provides an opportunity for a fast upward ride to senior management.

Money has been and will always be an important motivator…seldom #1 but still significant and a way to “keep score”. The rental segment seems willing to give operational managers the opportunity to earn very significant performance-based bonuses. We see this as a positive trend, as long as bonuses are tied to established objectives.

Beyond money, people still place high value on: their work environment, soft rewards including sincere “thank you’s”, vacation & benefits, and the opportunity to have a balanced life. We view it as a positive trend that today’s young managers place high importance on being able to provide a good quality of life for their families. The trade off is that its much tougher to interest the new breed of leaders in working 55-65 hours a week and traveling 75%. Employers will be challenged to develop programs and to tailor jobs that meet the needs of the next generation of managers while ensuring that the company can achieve the results needed to survive and to grow.”

What type of question would your firm ask of a rental management candidate or one of their references?

“Brian, we start each of our executive search assignments with a day’s visit at our client’s location. The primary purpose is to develop a complete position specification and detail document. This is a whole lot more than a job description. We outline: the job, desired qualifications, corporate culture, performance objectives and a lot more. This may seem like a digression from your question but you’d be amazed at how many senior level hiring efforts are launched without a decent outline of what is really being sought. We feel that both interview and reference questions should be driven by the position spec. Our premise is that the best indicator of future success is past performance. Therefore, many of our questions relate to situations in the candidate’s past which are relevant to the new position.”

Is the rental industry now attracting future managers from outside the equipment industry? What type of education levels or other credentials are you seeing as being most desired?

“It is really refreshing to see some very talented managers being attracted to the rental industry. Certainly, they are in the minority but the trend is exciting. Our industry is challenging for sure, but not especially complex. There is a growing feeling that “street smart” managers with good financial skills can excel in this business. It helps if they like mechanical things and it is essential that they have a customer service orientation. But, today, we are more apt to see a large rental company get excited about an MBA or a Marketing, Business or Finance Degree than a Mechanical or Civil Engineer, and that’s a real change from the past.”

What do you see in terms of mobility in the rental industry and what drives people to change companies?

“We observe a great deal of mobility. Several of the top ten rental giants are very new companies and these organizations have been staffed with many managers from other industry companies. The growth has been dynamic and the trend will likely continue for many years. Therefore, we see no let-up in career mobility. The good news for top performers is that there should be lots of opportunities, either with their employer or a competitor.

One challenge will be for employers to retain their top performers while developing a cadre of new managers for the future. When I started in this industry, with Cat in 1965, employers made huge investments in training and developing young managers. As a result of a few recessions and the resulting emphasis on flat/lean organizations, we are seriously concerned about the dearth of management development programs for the new millennium.

Brian, in the 1960’s and 1970’s, employees and employers typically expected the relationship to span a 30 or 40 year career with one company. A number of factors have combined to drastically change the “employment for life” paradigm: recessions, public corporation pressure on short term performance, rightsizing/downsizing, early retirement plans and layoffs. While employees have learned that lifetime employment security is a myth, they have also seen that sometimes the grass is greener on the other side.

We have observed a trend for upwardly mobile managers to be “career minded” and these top performers will look for and find opportunities where they can be challenged, have freedom to perform, and will be well rewarded for performance. Our sincere hope is that these doers will stay in the equipment industry…and that is not a given. As an industry, we must focus on presenting long-term career opportunities. If we don’t, we allow other industries to drain off the brains and management talent which is so vital to a healthy equipment industry.”