Bracing for Impact: Put Employees, Customers First During Downturn

KAR Global CEO Jim Hallett came out of the Great Recession stronger by elevating concerns of those two key groups.

No industry was hit harder than the automotive business during the Great Recession, but the nation’s biggest vehicle remarketer got through the downturn in large part by focusing on — and trying to meet — the needs of its two most important constituencies: customers and employees.

KAR Global, a $2.4 billion company headquartered in Carmel, Indiana, has benefited from a robust used-car market over the last decade and from the major decision by CEO Jim Hallett to acquire an operation that took the company into e-commerce several years ago. But to achieve that success, Hallett had to lead the company he founded in 1990 through the 2008 and 2009 downturn in shape to take advantage of what the last 10 years would offer.

Primary to his strategy was to put customers and employees at the center of things. With customers — such as the rental fleets that buy used vehicles in bulk — “we would talk to them and ask them, ‘What are your pain points and how can we support you’” through the downturn, Hallett told Chief Executive. “Because if you can support your customers during difficult times, they’ll reward you during the good times.”

For example, some KAR customers needed places to park and store vehicles “because they couldn’t resell them all at the prices the market was offering and had to wait things out for some period of time,” Hallett said. “So we went out and acquired additional land so we could do that at no charge to customers. And then when the recession ended, that business came to us.”

In regard to KAR Global employees — whose ranks number about 15,000 today — Hallett focused on transparency, honesty and opportunity.

“You have to be willing to be really transparent with your workforce and tell them the truth and what you’re dealing with and what the plan is,” Hallett said. For example, the company decided that it needed to cut some employees and to “get fewer people to do more work — to become more efficient,” he said.

“But you’ve got to protect your good people,” Hallett added. “Not just people who’ve been with you for a long time, but who are the people you need when you come out of the recession to help manage you back to where you need to be?”