March Issue Extra: In his own Words

Lawn & Landscape magazine has printed portions of an exclusive interview with Don Karnes, president of the TruGreen Companies, in the February and March issues. Here is the remainder of that conversation, where Karnes touches base on a broad range of topics.

L&L – What were the lessons you learned the first time you tried residential mowing?
DK – You know, I think they’re the same lesson we learned in the construction business. You’ve got to have management and the knowledge of how to run the business. What we like here is that it’s a recurring service in a highly fragmented market. Back in the early days, we really didn’t have the expertise on payroll to understand the business, and when you don’t have that it’s a struggle.

L&L – Would this be set up as its own division or would it be tucked under the branches?

DK – We have an individual, Joe Griggs, who used to run our interior business, here at corporate working on the protocols and manuals and so forth, but it’s really going to be set up through our regions because it will be an add-on to current business and we’re looking to play off the overhead structure we have in place today.

L&L – What was behind the decision to exit the interiorscape business?

DK – Really, we never saw that becoming a large enough business for us to focus on it. We couldn’t see it reaching the scale or size to make us want to be in that business, and we think Rentokil paid us a fair price for that business. We really want to get into businesses that we can exceed $100 million in, and that’s the type of business we think residential lawn mowing can be for us, so that’s where we need to focus.

L&L – As you look at 2002, what goals are at the top of your list for the organization?

DK – First and foremost, the three company imperatives – we have to do those. We have to be the employer of choice. We have to take care of our customers – customer retention. And we have to deliver customer service. I also want to make sure that Six Sigma is installed and that we really start the continuous improvement process.

On the numbers side, we want double-digit revenue growth on the LandCare side. For lawn care, we’d like to do mid- to high single-digit growth organically. Then, on the bottom line, we’d like to grow double digits for sure. And I think we’re positioned to do that.

We’ve seen our employee recruiting opportunities go very well, the best that it has in the last three or four years, and that’s a key indicator for us that we’re going to have more quality people than we’ve had in the past. In addition, the prices of gas and oil seem to be coming down.

We didn’t have a good 2001, and everyone in our organization will agree. But having said that, we make an awful lot of money for ServiceMaster, and we have a lot of people out there performing every day and making a difference. Now we have to continue to improve. It’s not about anything but continuously improving. If we can improve ourselves every day, then next year we’re going to be pretty excited about where we’re going.

L&L – Enhancements tend to be high-profit work, so what should landscape companies do to maintain their profitability this year?

DK – I think it’s a combination of being more aggressive pursuing sales while also reevaluating your cost structure. We have to be as aggressive as we can with our sales effort and make sure we do what’s right for the customer so that the recommendations we provide them are the right recommendations for the budget they have. If we meet with the customer and understand their needs while we also right-size the business to the revenue and maintain our margins, then we’ll be fine.

That’s a balancing act for the branch managers, but it starts with renewing the customers and then making new sales and, ultimately, providing good service.

We all have a business to run. We have to get out there, get after it, and those that do will win, while those who look to make excuses will be in trouble. That happens every time.

L&L – Do you have concerns as the biggest lawn care company about your ability to do lawn care work in the future with all of the legislative issues challenging the industry?

DK – Obviously, New York has been problematic, but we’re adapting to that to get the job done. It is more expensive and we don’t make the profit there that we used to, but we’re still serving our customers.

We also deal with telemarketing legislation of course, and legislation will always be out there that we have to work our way through with new, innovative ideas to protect our business, our employees and our customers.

Of course, we’re the largest, so these regulators are in our business pretty often, to be honest, and we’re pretty confident about the standards that we set for the industry. I’m very proud of the record that we have environmentally, and that will continue.

L&L – What kind of a responsibility does a company like yours have because of its size and its dominant position at the top of the industry?

DK – I think that we need to stay involved with the legislators on all of the issues. We also need to make sure that we’re setting the standard. We need to make sure we post on every lawn, not just the ones where it’s required. We have a recycling system in every one of our lawn care locations because we think that’s important. Really, we’re working on any issue that comes up and being at the forefront without imposing ourselves on our competitors.

There are some people in the industry who take offense with us trying to take the lead on issues, so we’re getting it from both ends. I’ve been criticized personally for not taking a more active role in the lawn care industry, and I’ve really felt over the years that I don’t think that’s a place for me to be. We like to support the industry, and I think we do that, but some of the smaller companies really take offense if I’m involved in that, and we’re not out to offend anyone.

L&L – Is it healthy for the industry to have one company that is so much larger than the other companies in the industry?

DK – I think for some of the smaller operators to have a potential exit strategy, this is healthy for them. And I would think a lot of them would want to be able to have that vs. not having one. I think if we’re doing our job and we’re not only helping ourselves grow but also helping the industries we’re in at the same time, then yes, it’s valuable. For example, we advertise and get our name out there, but that’s good for everyone. I remember how our inquiries used to spike when ChemLawn would put its ads out there.

Years ago, I went to a meeting and heard Jack van Fossen, the former CEO of ChemLawn speak, so you know this was years ago. They were doing $150 million or something like that, and at that point in time in my career, that was very important to me because here was this guy running this huge lawn care company and I was in awe. I hope that we would be that inspiring to some people, although I know we’re not to everybody. But we hope there are a few people out there who appreciate what we’re doing and where we’re trying to take the industry.

L&L – What are your personal goals?

DK – I’ve always wanted to do more and more. Today, what I’m really interested in is providing an opportunity for our people and getting our company back to operating more profitably and growing.

L&L – How do you stay in touch with the field? Are you out there much?

DK – One of the biggest responsibilities of my job is making sure I don’t lose touch. Obviously, I can never have the kind of contact with customers and employees that I had when I was a branch manager, but I can get out in the field and talk with key people so they have a chance to say what is right and wrong and give them a chance to give us some feedback so we can support them better. We’ll also be doing employee and customer surveys at least twice this year to get a feel for what people are thinking about us.

L&L – How successful has ServiceMaster been at bundling its services with one customer so you provide them with lawn care, pest control, cleaning and so on?

DK – You know, I think you’ll see us really step that up in the next few years through Home Service Center, our home service avenue. It’s not as easy as it would seem to be, but we do have this huge base of customers to go after.

The author is Editor of Lawn & Landscape magazine. To read the rest of the March issue of Lawn & Landscape online, click here.