A Managing and Leading a Dynamic Enterprise

Ferrellgas was founded in 1939 in Atchison, Kansas by A. C Ferrell. They are a supplier of propane gas and currently run their corporate operations out of Overland Park, KS a suburb of Kansas City, MO. In 1968 A. C’s son James E. Ferrell took control of the company and started his vision of expansion. In 1994, Ferrellgas became a publicly traded master limited partnership. Ferrellgas is the second largest propane supplier in the United States, they server over 1 million customers and the company has a market value of approximately $1. 5 billion dollars.

The company has become a leader in the propane industry and has recently become the largest supplier of propane tank exchanges thanks to their acquisition of the Blue Rhino Corporation. They currently operate and supply customers in all 50 states including Puerto Rico. Ferrellgas continues to grow by way of disciplined acquisitions. Since 1939 the company has acquired more than 230 companies and continues to aggressively pursue additional acquisitions. A unique aspect of the company is that it runs three separate operations all within the Ferrellgas family.

Ferrellgas North America, is the companies logistic and wholesale operation, they provide fuel and transportation services to many independent and corporate accounts. During the summer months when fuel consumption is low this operation will lease out their corporate trucks and use them for all types of transportation for hire services. Blue Rhino, is the company’s tank exchange operation; this was an acquisition that took place in 2004 for the sum of $340 million dollars. This acquisition instantly catapulted Ferrellgas into the lead for providing tank exchange services throughout the country.

Blue Rhino currently has over 45,000 exchange sites and continues to grow. Ferrellgas, is the company’s retail operation. They currently have over 924 retail operations and provide propane fuel to mostly residential and commercial customers. Organization Chart Management Approach I have known Mr. Steve Johnson for nearly nine years and have always admired the way he is able to motivate others to work hard for him. As we visited he shared that he’s not always sure how he gets others to do the things he wants them to do, he chuckled and said sometimes it just happens.

Early on in his career he had a manager at a retail store where he was employed tell him that if you ever want to be successful, you need to learn how to build relationships with other and understand how to communicate. Little did he know that the advice his manager just gave him would become one of the most crucial pieces of advice for his success in life. In Mr. Johnson’s Northern region he has over 2,000 employee’s, he believes that he has met almost all of them. He makes it a priority to visit as many locations he can in a year, he is a believer that you need to shake hands and make a connection if you want your employees to work hard.

He empowers his managers to take interest in their employees, during his weekly calls to Area Managers he makes a point to ask about field employees and how they are doing. Mr. Johnson even goes an additional step by always being involved in the hiring process for any employee. His phone interview is always the final step in any hiring decision made; he believes that it’s important to make this connection. This type of leadership goes a long way with employees, not only do his employees know his name they also know the car he drives.

He laughs when he is driving in his territory from one location to another and a Ferrellgas gas truck will be behind him and he gets honked at and a big smile and wave to go along with it. Typical day in the life According to Mr. Johnson, there is no such thing as a typical day in his position. This is one of the reasons he loves his job as much as he does. The variety that goes along with his position definitely keeps it interesting. At first, when he was promoted he was a little apprehensive at the sheer size of his territory.

He wasn’t sure how he would be able to have a good handle on the daily operations. A key factor in his success has been his ability to learn how to delegate more and trust the individuals around him. When he first started he truly wanted to be everywhere at all times and involved with everything. He quickly realized that this was impossible. Typically, days begin at 5:00 am with either a 5 mile run or a swim if he is near his gym or a hotel. He states that being physically fit is important in keeping his mind sharp; he talked about how many hours a day he either sits in a car or at his desk.

After his morning exercise routine it’s time for conference calls, he states that he spends nearly 65% of his time talking on the phone. These calls range from corporate conference calls, area manager calls, last step interview calls and coaching calls. Next up is working on projects; he usually has 5-10 projects going on at any given time that will eventually require his expertise. Depending on the time of year it is, he could also be spending his time assisting his area managers in fuel forecasting for the upcoming heating season. In the middle of all of this he is constantly checking emails and answering texts.

He can remember when it was actually possible to walk away from work at the end of the day. It is nearly impossible today to do this. Technology is a great thing…most of the time. He joked that he really does work 365 days a year 24 hours a day, his days never end. Management Functions According to Mr. Johnson he does not like the term “manager”, he prefers the word “leader”. When I asked him about the management duties he has, he asked if he could talk about the leadership duties he performs. He believes that his position with Ferrellgas is to lead others into success which will in turn help the company be successful.

Depending on the time of year will dictate his priorities, if we used today as a basis for our discussion it would look much different than a talk in January. Today, we are in prime contracting season for the upcoming heating season. In years past, contracting season did not start until early to mid-August, this has changed as the economic climate has changed and the volatility of the fuel markets. Fuel used to be price pointed on supply and demand, not so much anymore. The littlest of disruptions can cause major volatility in the marketplace.

With this said, he is working with his area managers in developing forecasting models for their territories. This is consuming nearly 80% of his time for the next few weeks; this time is spent on phone calls, visits and email traffic. Once this process is completed he will spend the next month digging out from the pile of items that have been put on hold while he finished the contracting season. During this time he has to prioritize, there are items that he cannot put on the back burner and he has to know how to juggle these. For instance, he is also working an acquisition in the state of Ohio for a small independent propane company.

During this courtship he has to be available to the potential company to ensure a smooth transition if all goes well and the stars align. Mr. Johnson has spoken numerous times about delegating, during these times he relies heavily upon his support staff to assist in meeting all deadlines. Corporate Senior Management Theories Ferrellgas is a company with true morals based upon the leadership of Mr. James E. Ferrell. When Mr. Ferrell took the reins of the company in 1968, he vowed to make this the best propane company in the world.

Mr. Johnson believes that if you were to have a conversation with Mr. Ferrell today he would let you know that he has achieved his goal. Mr. Ferrell is one proud individual of the company and is not shy to let anyone know who made this happen. The success of Ferrellgas did not come from Mr. Ferrell himself, it came from the employees. It came from the dedication and work ethic of his employees. Ferrellgas empowers its leaders to do the right thing. The Behavioral theory of Management seems to fit Ferrellgas well. As we know from our readings this theory is that job satisfaction does not only hinge on salary but also on working conditions and attitudes.

Mr. Ferrell realized early on that if he was going to be successful he needed to surround himself with successful people. He also knew that he had to watch how he spent his dollars and if he overpaid his employees to keep them, he was throwing away money. An idea he implemented to entice good quality employees was his Employee Stock Ownership Plan (ESOP). This allowed his employees to be directly affected financially by their own performance. Today Ferrellgas employees own approximately 18 million units of stock which makes up nearly 49% of the company.

Not only does Ferrellgas offer an attractive ESOP they offer many other benefits outside of the typical health benefits. They are strong participants in the communities they do business in; corporate encourages local offices to get involved in community activities. Ferrellgas hosts a national coat drive every year that generates thousands of coats for those in need. They are regular volunteers with local food banks and have even painted a fleet of bobtails (propane delivery trucks) pink to support the fight against breast cancer. Conclusion To say Mr. Johnson is proud to work for Ferrellgas would be an understatement.

His praise for the company easily shines when he talks about the company he spends most of his hours with. It’s apparent that when he was hired into his current position it was because he was the right fit for the job. His attitude and drive is exactly what the company looks for, not only senior leadership roles but also delivery drivers and customer service representatives. Mr. Johnson has the ability to walk the walk and talk the talk when conducting business, employees look up to him and want to perform. His implementation of the Behavioral approach in management is something others could learn from.

His uncanny ability to remember names and make employees feel at ease when dealing with difficult situations is phenomenal. He knows that many of his employees could make more somewhere else, he also know that many don’t because they love their job. He makes it a point to let me know that he is proud of the fact that Ferrellgas is willing to try other things to make the company better. When asked about other Management theories, he believes that the company has implemented both the Theory Y and the Contingency Theories. He reiterated that the company wants employees to succeed and given the right opportunity most will.

As technology has changed over the years Ferrellgas has always been a leader. The company was actually the first major company to use handheld computer devices when delivering propane, the largest change in propane delivery in over 50 years. Ferrellgas is in a customer service driven industry, if customers are not taken care of they will not be customers for long. As Mr. Johnson states, “If employee’s are not taken care of they will not be employees for long”. It is his duty to follow the lead of the company and make sure that employees are taken care of first.


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