Lumec lights up the town
Streetlight manufacturer brightened profit picture by opening books to managers

One of the most intriguing aspects of businesses is how closely they guard cost and profit figures. Public companies release some data, but rarely break it down by division. Private companies reveal almost nothing. But many don't just shield performance statistics from the public, they also keep their own executives in the dark.

Jean-François Simard thinks that it's the wrong way to go. "To get the best out of managers, you have to empower them, by making them understand how a company is run," said Simard, president and general manager of Boisbriand street lighting manufacturer Lumec Inc. "Otherwise everybody just thinks about their own little part of the puzzle."

When Simard became top dog in at Lumec in 1993, the first thing he did was open the division's books to his management team. "Senior managers can't make good decisions if they know only half the picture," Simard said. "So we decided to put everything on the table."

Simard's strategy was a bold one, but fraught with risks. There are good reasons that managers like to keep key information from employees. Many fear that releasing salary data could lead to a bidding war as underpaid employees seek to match the gains of their more fortunate co-workers.

Managers also worry about releasing profit statistics, especially in good years, fearing that workers will want a greater piece of the pie. By giving key data to executives, companies also run the risk that if they change jobs, the information could fall into the hands of competitors, unions or customers.

But Simard is convinced that the benefits outweigh the risks. So far he's been right. During the past year Lumec sold close to $74 million worth of street lamps and other lighting products, an increase of 37 percent from 2001. Billings have more than quadrupled since he took over as president in 1993.

Part of the reason for Simard's unorthodox management style is his unorthodox background. Simard joined Lumec twenty years ago while studying industrial design at Cégep du Vieux Montréal. Although he was working only part-time, his boss told him that he was producing more than many of his full-time employees.

During the ensuing years, Simard got to learn all aspects of managing a lighting production plant and eventually he migrated into sales.

"My art background really helped me to listen to what clients wanted and to come up with solutions," Simard said. "Humans are very visual. Even subtle changes in lighting can completely change our mood and the way we perceive colors."

Simard soon developed such a strong rapport with key customers that he was able to go back to school full-time to complete a bachelor's degree at the University of Montreal and to service his accounts at the same time.

Simard's strong design talent and enviable customer base soon attracted the attention of executives at Lumec's parent company, U.S. based Genlyte Thomas Group LLC. When the top job in Canada became vacant, Simard was given a crack at it, despite his lack of formal management training.

Simard realized from his years of battling for orders that no matter how efficient the company became, there was no way it could produce low-cost lighting as cheaply as its Asian rivals.

Lumec's 85,000 square foot Boisbriand plant is state of the art and its 258 employees are among the best in the business. But the cost differential between Canadian and third world labor rates was too big to overcome. So Simard decided to focus on quality rather than quantity.

About $1.4 billion worth of outdoor lighting products are sold in North America each year. But Simard decided to focus Lumec's efforts on building high-end decorative products for a small niche of municipalities, museums and companies that are concerned about the visual quality of their nighttime environments.

According to one long-time client, the strategy proved to be the right way to go.

"They spend a lot of money on research and development and are constantly trying to improve the decorative element of lighting," said Robert Généreux, director of urban development at the borough of Ville D'Anjou. "They have a good reputation. Even if their product is a little bit more expensive, it's better."

Lumec's service is another key selling point. "They have architects on staff who can help clients design lighting for new developments before they are built," said Généreux. "That means the lighting integrates better into the project design."

But while Simard has had good success at Lumec, according to one management expert who knows him well, not every executive can get away with opening a company's books to managers.

"It's very rare," said Ray Lévesque, Montreal Chair for TEC Canada an organization of chief executive officers, who has been coaching and mentoring Simard for two years.

"One of (Simard's) biggest attributes is his openness to new ideas, and willingness to take chances," Lévesque said. "Unfortunately, not everyone is like that."

Getting There: Opening the books to managers

o Many companies jealously restrict the flow of crucial information to senior executives such as profit, cost and salary data, fearing this could spur jealousy or be leaked to competitors.
o The downside is that managers cannot effectively evaluate performance if they only know part of the picture. (How can a manager decide whether hiring an additional employee is a good idea, if he doesn't know how much that employee will cost in salary and benefits?)
o Jean-François Simard attributes his success in building Lumec to the fact that he opened the company's books to key managers, empowering them to make better decisions.
o Lumec operates in the highly competitive street lighting products industry, which is increasingly dominated by low-cost Asian producers. The company build a profitable niche by producing premium, high-value added decorative lighting products.

 

Photo caption: According to Jean-François Simard, president, of Lumec, managers that are empowered with more information can make better decisions.

peter@peterdiekmeyer.com

-30-

Home | Gazette articles | Eye on Ottawa | Book reviews

peter@peterdiekmeyer.com
  © 2003 Peter Diekmeyer Communications Inc.