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Cadet Uniform Services: Cleaning Up in the Cleaning Business

PART A
The 1990s have been, both real and imagined, a period of service revolution. The ideas of total quality management, reengineering, and focusing on core competencies have all been applied to the issue of service delivery. Managers have been intent on guiding their companies and their employees to the rewards to be realized from total quality service. But more often than not, this goal has been illusory. It takes far more than a visionary leader or a spirit toward quality to consistently deliver exceptional service. In contrast, Cadet Uniform Services Ltd. of Toronto, Canada, inculcates total quality service throughout its organization and, in so doing, creates a shared mindset between employer, employee, and customer. In 1993, Cadet was among the five companies awarded a Certificate of Merit in the Awards for Business Excellence, the Canadian equivalent of the Baldridge Award.

The Quintessential Launderer

Cadet is considered the launderers launderer. The business was started in Toronto in 1974 by Quentin Wahl as a spin-off of his fathers dry cleaning business. The company provided multiple services to its customers; picking up, cleaning, and delivering customer uniforms as well as providing unique inventory control and management services. These services were provided by Customer Service Representatives (CSRs) who, while employees of the company, were given absolute authority to act as individual entrepreneurs. As reported in Cleaning Up, a noted industry magazine distributed internationally:
Domenic Casbarro is sure of one thing. He loves his job. Casbarro, 43, has worked for Torontobased Cadet Uniform Services Ltd., primarily as a customer service representative, since coming to Canada from Italy in the mid-1970s. By 7 a.m. most days, he is pulling out of a Cadet plant in a bright orange van loaded with hundreds of uniforms, destined for firms ranging from multinational automakers to small food processors. But Casbarro and his fellow customer service representatives do more than just deliver uniforms. They are expected to be part-time salesmen and full-time diplomats.

In 1995, Cadet was the third largest uniform services company in Canada with annual revenue of US$30 million and an average annual growth rate of 20% over the past decade. The antecedent of this growth was a belief in quality that was instilled in Wahl while he was working at his fathers company. Wahl grew to understand and appreciate the necessity of doing the job right the first time, every time.
Copyright 1999 Thunderbird, The American Graduate School of International Management. All rights reserved. This case was prepared by Professor Caren Siehl and Research Assistant Scott Hessell for the purpose of classroom discussion only, and not to indicate either effective or ineffective management.

This simple slogan led Cadets 275 employees to be the most productive and efficient in the industry. Cadet annually picks up, cleans, processes, and returns seven million uniforms for 3,500 customers at prices which are 5% lower than those the company charged in 1985. At the same time, profit margins exceed industry norms. Cadet enjoys 8-10% lower per-unit costs than competitors, and wages are at least 20% higher and, oftentimes, double industry averages. This unending commitment to quality and efficiency has led to an astounding customer retention rate of over 99%. Most recently, Cadet has considered exporting its special brand of service to the United States.

Wahls Corporate Reformation

Wahls demand for quality, service, and continuous improvement has served as a wellspring of corporate reformation. Cadets resounding growth and expansion has not come by accident but rather through a shared culture of service, quality, and an unapologetic dedication to employee entrepreneurship. Service: Wahl and his Executive Vice President, Arnold Gedmintas, have focused themselves and their company on service to the customer. This is reflected in the entrepreneurial nature of the CSRs as well as in the strategic priority placed on serving the customer. Traditional managerial control of employees is absent from Cadet; rather, control is given to employees on how best to serve their customers. Gedmintas reinforces this message when he says that what separates Cadet from other companies within the industry is our understanding of our customers needs. Quality: Every step in the pickup, cleaning, and delivery process is examined by CSRs and other members of Cadet to understand how, and if, the function adds value and quality to the customers operations. CSRs prided themselves on 100% error-free deliveries to customers. Gedmintas argued that the service quality process is the single most critical component for our continuous improvement, growth and success. Everything revolves around it. Its the nucleus of our corporate culture. Employee Entrepreneurship: Employee entrepreneurship was a hallmark of Cadets corporate philosophy. This focus was not a hollow message of employee empowerment but rather a true commitment to the reallocation of power and decision-making. A CSRs success or failure was predicated on the complete satisfaction of his customers as well as the amount of income he generated on his routes. For example, approximately 60% of a CSRs pay was based on customer retention levels, and another 30% on ratings given directly by customers. This reliance on customer feedback mirrored how an individual entrepreneur thrived or failed. This commitment to service, quality, and employee entrepreneurship represented far more than a set of slogans concocted by a public relations department. It was the springboard to a way of doing business and a way of leading a business. It was, in fact, a philosophical and cultural foundation that guided the activities of a guild of artisans.

A Guild of Artisans
The guilds of pre-industrial Europe ensured the commitment of their artisans to established, highquality standards through selective admission to a rigorous training process. Cadet employees were engendered with a similar level of expertise and dedication through focused hiring, extensive training and development programs, and clearly articulated quality standards. Hiring: Potential CSRs were scrutinized carefully by team members rather than relying solely on the evaluation of a traditional human resource manager or a line manager. Team members were respon2 A15-99-0017

sible for examining the qualifications and inherent commitment to service and quality of all potential employees. This method was utilized because Cadets current CSRs understood more fully the level of commitment necessary to maintain the companys quality and service standards than managers who were less directly connected to the process. In addition, it reinforced the culture of employee entrepreneurship and teamwork. Exhibit 1 provides additional information on the hiring process. Training and Development: Both new-hires and established CSRs were given unending opportunities to learn new skills that could significantly enhance their ability to serve their customers. An education center offered updated materials on quality and service issues. The company actively encouraged CSRs to seek outside education and reimbursed such educational pursuits. The only stipulation to continuing education was that CSRs must share their newly acquired knowledge with other employees through a summary of how the experience could be beneficial to ones work. Additionally, employees had the choice of being trained in other areas of the business, contingent upon being able to find someone willing to trade positions. This provided employees greater job flexibility, variety, and personal (as well as professional) growth opportunities. It also increased the general understanding of the company and the requirements for success in this industry. A Quality Awareness Board (comprised of employees from different parts of the business, as well as customers) both oriented new-hires to the companys quality focus and provided an ongoing process mapping exercise on how to best increase the effectiveness and efficiency of day-to-day operations. This process mapping was credited with significant increases in sales. The focus on understanding various levels of operational efficiency is illustrated through the use of Error Cause Removal (ECR) forms. ECR forms were routinely used by CSRs and other employees to identify an inefficiency in the total service delivery process. Such an ability to identify and rectify a problem was the direct offshoot of the employees training and development activities. In addition, weekly figures on sales, costs, and growth were posted on bulletin boards throughout the business. Wahl also invited a variety of CSR team members to meet with him for a monthly operation review meeting. Was this level of commitment to extensive training and development really necessary? As Wahl stated, If you are trying to figure out whether or not the investment is worth it, its a nobrainer. Cadets dedication to employee development saw tremendous returns. Each CSR at Cadet routinely accounted for over $17,000 per week in sales revenue for the company. This was considerably above the industry average of $7,000 to $8,000 per month in sales revenue. This type of productivity also translated into considerably higher compensation for Cadet employees. It was not unusual for a CSR to earn US$53,000. By contrast, drivers at competing companies averaged about $26,000 annually. Wahl said, You look at almost any business, and the lowest-paid, least-recognized employees and the ones with the highest turnover rates are the people who meet the customer. We try to do it differently. Quality Standards and Innovation: A high standard of quality was required of CSRs and communicated to customers beginning with the initial customer visit. A 47-step checklist ensured that a customized, quality-focused program was developed for each individual customer. This focus created a standard for the CSR and high expectations for the customer.

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Quality was demonstrated throughout the process and culminated in the Cadet unconditional service guarantee. This was partially enabled because of a unique process patented by Cadet. The speed and control of uniforms through the system was monitored by the use of heat-sealed bar codes on each uniform. As a uniform passed through various stages in the process, it was scanned so that customers and CSRs alike could be aware of the uniforms progress through delivery, cleaning, repairing, replacing, and returning. With this system, Cadet processed 400,000 pieces of clothing per week with only 46 uniforms misplaced. Although typical for Cadet, this process was soon being improved. Cadet was developing a radio chip that could be inserted in each uniform so that the uniform could more quickly speed through various stations without a bar code needing to be positioned properly for scanning. This new development would completely automate the cleaning process.

Linking Rewards with Total Quality Service

Wahl stated, The aim is to put in place systems that allow people to be motivated and to utilize fully their abilities. All I am doing is making it possible for them to do their jobs. And they respond by doing their jobs better than anyone else in the industry. This level of motivation was achieved through both monetary and non-monetary rewards and consequences. Monetary: As stated earlier, a CSRs pay was directly tied to the satisfaction level of individual customers. If a customer was satisfied, a CSR was rewarded with increased income and bonuses. If the customer was dissatisfied or left the company, a CSR could expect commensurate negative consequences. This direct relationship between customer satisfaction and pay was a tremendous motivator for all employees. Non-Monetary: The power of motivation via non-monetary means should not be underestimated. Simple activities such as Quality Kids Day, which provided employees the opportunity to share the idea of quality with their children, and Zero Defects Day, at which the plant closed early for a barbecue on the days the company met its goals ahead of schedule, proved to be powerful motivational tools. Quality awards received by the company from its customers were displayed in the cafeteria and acted as a symbol of pride for team members. The biggest benefit of the recognition was that these awards were a tribute to all team members of the organization and acted as tools for reinforcing the companys goals and culture. Another example of non-monetary incentives was the freedom to do ones job as one best sees fit. Control over ones work environment can be a tremendous influence on how motivated one is to work. The unique and sustaining quality of the companys incentives were not the individual tools utilized but rather the combination and interrelatedness of the tools. Many companies send mixed signals about their culture and how they support it (or fail to support it) with rewards and consequences. The ingredients of Cadets culture and motivational tools were mutually supportive. As an example, a company will often say that an employees compensation is dependent on how well ones customer is served. Yet, relatively little autonomy on how to serve the customer is given to the employee. Similarly, an employee may be given what appears to be great latitude in customer service yet be judged principally, if not exclusively, on how an employer views the effectiveness of an employees service abilities. The inability of this reward system to inspire quality work and customer service is selffulfilling. Cadet ensured that its combination of motivational tools, both monetary and non-monetary, supported one another; its consequences acted in unison rather than in conflict. Of equal importance, Cadet gave CSRs tremendous autonomy on how best to serve the customer.
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A Way of Doing Business: Challenge for the Future

Fernand de Lessep, builder of the Suez Canal, was unable to engineer the Panama Canal because he failed to recognize the challenge of extending his ideas across the Atlantic. As Cadet expanded throughout Canada, and possibly North America, the challenge for Wahl would be to transfer the culture and focus on total quality service through an ever-expanding organization. A critical question for Wahl: how could Cadet transfer to new employees, in an ever-expanding system, the same dedication to service that had been the hallmark of this organization? In addition, could this culture and set of rewards continue to motivate CSRs as competition intensified in this industry?

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EXHIBIT 1 Excerpt from Finding, Training, & Keeping The Best Service Workers, Fortune, October 3, 1994. Cadet Uniform Services, which outfits the employees of North Americas leading corporations, owes much of its success to the way it picks employeesand to the way it pays them. The Toronto company, whose 1993 revenues reached $23 million, was one of five certificate-of-merit winners last year in the Awards for Business Excellence, the Canadian equivalent of the Baldrige. One of Cadets secret weapons is personnel director Nada Cian, a recruiter who never stops recruiting. Shopping one morning in a neighborhood supermarket, Cian, 52, a garrulous native of Croatia, noticed a cheery employee carefully stacking apples in a pyramid. After a brief encounter, Cian determined that the man was obsessively neat, exceedingly proud of his work, physically fit, and exceptionally friendlyeven in the early hours of the day. He was, in short, a perfect candidate to deliver Cadet uniforms, a job that involves rising every day at 4 a.m., carefully managing inventories, lugging heavy bags of soiled clothes, and joyfully interacting with customers. Later, after a series of interviews with Cian and other Cadet managers, the company hired not only the apple stacker, but also his equally ebullient wife. Cian, who has been with Cadet for 27 years, manages to pre-inspect even those job candidates who walk in off the street. From her large-windowed office overlooking Cadets parking lot, she secretly assesses their bearing and demeanor. Do they stop to check that their hair is combed and their clothes are neat? Do they walk quickly and purposefully? Or do they amble back to the car several times to fetch something they forgot? Says Cian: Im looking for someone with a positive attitude, someone who wants to work, whos ready to work. After the interview she accompanies all candidates back to their cars, not just to be polite, but to covertly check out the cleanliness of their vehicles. None of this would matter much if Cadet were hiring people simply to drive trucks, deliver clean uniforms, and pick up dirty ones. But Cadets concept of customer service representatives, as the drivers are known, extends much further. They are mini-entrepreneurs who design their own routes and manage their own accounts and, to a large extent, determine the size of their own paychecks. Put your stereotypical view of truck drivers aside and meet Roosevelt Michelin, 34, a Cadet customer service representative (or CSR) for the past five years. The soft-spoken, mustachioed Michelin holds a diploma in computer programming from a three-year polytechnical school and is pursuing a degree in psychology. He spends most of his nine-hour day, which starts at 6 A.M., delivering and collecting uniforms and courting new customers. Every afternoon he works the phone, handling requests and complaints from his clients. Says he: What I like about this job is the rapport you get to build with customers. You become their focal point. Then there is the payabout $50,000 per year, nearly twice the industry average. Also the chance for promotion. Nearly every executive at the rapidly expanding Cadet started as a CSR, including Quentin Wahl, 48, the maverick mountain-climbing and bicycle-riding CEO, who has run the family-held company since 1974. Cadet ties compensation almost entirely to measures of customer satisfaction. Lose a customer on your watch and your salary sinks. Says CEO Wahl: So many companies tell you how important their customers are, but hardly anyone actually pays their employees for satisfying them. Ernie Garcia, 26, a high school dropout with an engaging smile and a self-deprecating wit, has been a customer service rep for just over two years. Since he began, he has managed to double his pay to about $37,000 a year. Says Garcia, an immigrant from Portugal (Cadets work force includes 46 ethnic groups) who was recruited by the eagle-eyed Cian: This pay system brings out the best in us. And Cadet wins because we perform at our peak. Cadet, whose annual growth has averaged 22% for the past 20 years, has double-digit gross profit margins exceeding the industry norm. Once Cadet gains a customer, he tends to stay. The annual defection rate is less than 1%. Employees dont leave, either. Turnover is a low 7%. Says Wahl, who is a U.S. citizen: The jobs we do arent so special. The pay is good, but its not great. The main thing we have to sell to employees is the culture of the organization.

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References
Cintas Corporation Received National Award for Excellence, PR Newswire, 22 Oct. 1998. Cintas Wows the Uniform World, Apparel Industry, Apr 97, Vol. 58, Issue 4, p. 62, 4p. (All quotes are taken from this source.) Cleaning Up, Maclean, December 1994, Vol. 50, p. 46. Letters, Apparel Industry Magazine; Atlanta; Jun 1997; Anonymous. Reaching the Summit of Quality Management, Industrial Leader, October 1993, p. 35. Treadlines, CIO The Magazine for Information Executives, April 1, 1993, p. 1. When Boring Stocks are Beautiful, Kiplingers Personal Finance Magazine, Feb 95, vol. 49, Issue 2. Industrial Launderer, pp. 38, 42, 46. M&A Strategies: Cintas Corporation Corporate Growth Report (Weekly); Santa Barbara; Jul/Aug 1986; Anonymous. Cintas, The Uniform People, 1995 Annual Report. Cintas, The Uniform People, 1996 Annual Report. Cintas, The Uniform People, 1998 Annual Report. Cintaswebpage @ http:\\www.cintas-corp.com. Fife, Sandy. The Total Quality Muddle, Business Magazine, Nov. 1992, pp. 67, 69. Ghezzi, Bert. A Uniform Approach to Quality Takes Cadet to the Summit of its Industry, Quality Update, 1992, p. 11. Henkoff, Ronald. The Best Service Workers, Fortune, October 3, 1994, p. 122. Raynor, Michael E. The Golden Rule In Action, Tapping the Network Journal, Fall 1992, pp. 18, 122, 348.

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