Auto remarketing is not a glamorous pursuit compared with, say, creating the next big social-media app. But it has become a hugely digital-intensive business. And to get the right people to staff KAR Global’s dominant position in the used-car-auctioning space, CEO Jim Hallett has created a tech-friendly culture—housed in an uncommonly welcoming new headquarters building—in the heart of Indiana.
In doing so, the head of the $2.4-billion enterprise is providing a case study in how a dominant legacy company located in America’s heartland can hold and even enhance its position by making a digital transition, and then leverage its success to keep enough technology talent away from the coasts to extend its accomplishment.
“We’re really a tech company,” Hallett told Chief Executive. “Most companies are really tech companies now. We’re all going through some kind of digital transformation; that’s certainly prevalent in our business. Greater Indianapolis has become a real hotbed for digital talent here in the Midwest. And once we get people here internally, they see that we do a lot of very good things.”
KAR operates under 37 private labels in more than 200 locations across North America and Europe and sold about 3.5 million vehicles in 2018, about half through physical auctions and about half online or via a digital platform, to customers including about 17,000 franchise dealers and 35,000 independent auto dealers in the United States. Most of its products are vehicles coming off leases, which represents a booming business given how lease-happy consumers have become over the last decade or more.
Just as relevant to his business as the prevalence of off-lease vehicles has become the digitization of car auctioning, Hallett said. KAR acquired a major digital startup in this vertical, Openlane, in 2011 and has been pedaling hard ever since to transfer KAR’s legacy dominance to the digital realm. Luring the young talent required to do so was a key reason Hallett wanted to build a new headquarters to replace the 180,000-square-foot building KAR Global had just constructed in 2002.
So while the previous headquarters “was very compartmentalized, with not a lot of opportunity to meet with people from different floors and different departments,” he said, the new, 250,000-square-foot showplace that KAR opened in Carmel, Indiana, last summer is “very much open concept.” There are about one-third fewer individual offices, Hallett said, and “ten times the meeting or collaborative space that we had in the previous building.”
“There’s a lot of glass and daylight,” too, for the enjoyment of the approximately 1,000 KAR staffers who get to work at headquarters. “It’s all glass on the outside, and at night we leave the lights on in the building so people can see into it. They love to see our grand staircase” into the lobby, for instance, which connects the two wings of the building and\was inspired by rear-fender designs of sports cars.
Inside, the new KAR building includes a health clinic, state-of-the-art gym, a café that serves Starbucks, and a full-service restaurant with catering capabilities. The building inside also sports company-relevant design elements and curated art that also reflects its automotive heritage.
Hallett said the community has embraced the uniqueness of the new KAR Global headquarters and that the company has hosted many outsiders already. More important, the impact of the headquarters in retention and recruiting has been immediate, he said.
“The new building is the best recruiting tool we have,” Hallett said. “It represents our very relaxed and entrepreneurial culture. We create a lot of opportunity for people to work and put their heads down and really interact with the people they work with. That’s in the immediate sense, and also to interact with employees throughout the entire building.”
The workspace and culture that KAR Global is displaying, combined with the growing appeal of Indianapolis as a tech haven, is having an effect even on digital talent who have nearly unlimited options about where they could work and live these days.
“We had six graduates from the greater Indianapolis area recently accept IT jobs here, and in surveying them, they said they were drawn to us by the building,” Hallett said.
And that, he said, is only the beginning.