You may not have heard of Thermo King or Cummins, but you are almost certainly a customer.
“If you eat, you’re a customer of ours. If you live in a building, you’re a customer of ours,” said Don Pugh, Chairman of Thermo King Intermountain and the speaker at this semester’s Family Business Roundtable. “These businesses touch you in ways you don’t realize.”
Pugh and his extended family oversee a large business portfolio of big-brand franchises including Thermo King, Cummins, Bobcat, and JVC, as well as a construction company. Pugh, along with his sons Brandon and Jim, shared the lessons they have learned navigating a successful business while also maintaining success as a family.
The Pugh patriarch and Don’s father, Warren, started the business as a Cummins dealer in the early 40s and started Don and his brother working in the shop. Don began by cleaning the trench drain, “the job I was most qualified for as a teenager,” while his brother worked in the parts division tearing down and rebuilding diesel engines.
The brothers eventually took over the business, but it wasn’t all smooth sailing. An organizational behavior professor told the pair they had a big decision to make: did they want to remain business partners, or brothers? Both agreed that remaining brothers was more important and began making plans to split the business. They were at Cummins headquarters a week later, when the president of the company happened to run into Don in the bathroom. He offered an easy solution, asking Don to move to Seattle and start his own franchise.
“I’m probably the only one who was ever asked at a urinal,” Don joked, adding that the brothers were then able to work alongside one another as franchisees.
Today the family continues to operate across the West, and they have several shared values to which they credit their success. All three Pughs were quick to acknowledge the part that the employees play in the various businesses.
“We try to get the right people and raise them up,” Brandon said. His father agreed, adding that he’s never been afraid to hire someone smarter or better than himself.
The Pughs also try to encourage employees to take ownership of their projects and divisions, and work with a bottom-up budgeting process that allows employees to set their own goals. Financial statements are shared with every employee in the company, so everyone can see how things are going. The Pughs also encourage risk at all levels, knowing they will have some failures, but will hopefully also have winning successes. They were also a pilot company for Stephen Covey’s blockbuster “7 Habits of Highly Effective People,” and the book has given them a common language and frame of reference across companies.
There are several challenges confronting the companies today, such as environmental regulation, customer consolidation, and a technician and driver shortage, Jim Pugh said. In the future, the plan is to focus on growth within the existing geographic markets, acquisition of other companies with similar business models, and identifying talent.
All this is to lay the groundwork so that if a fourth generation of Pughs wants to be involved, they will have the opportunity. It’s unclear whether his grandchildren are interested just yet, Don said, but if they are, they need to fulfill a set of expectations:
- An applicable education in some aspect of the business
- Job experience outside of the family business
- A demonstrated ability to lead and perform
- The right opportunity and compatibility with the business
Don Pugh rarely heads into the office these days, leaving the running of most entities to his sons, but he is always happy to offer advice – though only if it’s asked for.
“Remember, your ship has sailed,” Don’s wife Jane is fond of reminding him. “You are literally an observer from the dock.”