| No fancy office for LandAmerica's CEO
Cost-cutting helped
company breaking into Fortune 500
Related
articles:
-
Saving a historic bank
- At Bay Mechanic, founder
steps back following brush with death
- Military background helps
founders call the shots at ITA
by
Lisa Antonelli Bacon
for Virginia Business
July
2004
When Lawyer’s Title Insurance
Corp. spun off from Universal Leaf in 1991, things didn’t
look good for the company. It had just come through
two years of poor results, the victim of a stagnant
real estate market plagued by high interest rates. All
CEO Charles H. Foster Jr. could see was red ink. “It
was like the faucet had turned off,” he says.
The 61-year-old Princeton graduate recalls
his early days in the corporate hot seat from a cramped,
cluttered office at LandAmerica Financial Group’s
Richmond headquarters, the holding company for Lawyer’s
Title, and the company Foster now heads. “Our
values were low. The surprising thing was that no one
came in and bought us.” As it turned out, LandAmerica
did well by just hanging on, so well that in March of
this year the company placed 483rd on the Fortune 500
list, with record revenues of $3.4 billion for 2003,
sparked by record-low interest rates and booming real
estate sales.
The relatively rapid ascent was an uphill
battle all the way. After Lawyer’s Title spun
off, it had to reconfigure. “We needed a board
of directors, corporate governances; things we didn’t
need before,” notes Foster. One thing was clear:
Foster had to find ways to cut costs — across
the board. When the company moved its Richmond headquarters
from the West End to the city’s Southside, the
employee cafeteria was the first casualty. “Then
we decided what size offices we needed,” he says.
All offices, including Foster’s, were trimmed
to a standard size: 10 by 15 feet. “And then we
looked at staffing requirements.”
A staffing overhaul shaved jobs and
replaced them with a cadre of temporary workers and
part-timers. Then came the carrot on the stick: Foster
tied employee compensation to the company’s performance.
The plan worked. “Before you knew it, we’d
gotten our costs in line at a time when the real estate
industry was in such a poor situation that banks were
writing off loans.”
But the plan wasn’t short-term.
It became the blueprint that would put LandAmerica,
a holding company whose subsidiaries provide real estate
transaction services for residential and commercial
customers, not only on the Fortune 500, but also on
the magazine’s prestigious list of most admired
companies.
Even now, the number of employees is
a fluid roster that bloats and shrinks in sync with
the real estate industry. “Now we’re much
more adept [at] having flexible costs associated with
the people side of the business,” says Foster.
Last year, for instance, the company staffed up with
temporary and part-time workers to push through a tsunami
of refinancings. The staff is leaner these days since
the furious flurry of refis slowed as rates crept up.
Now, with 800 offices and 10,000 agents
in the U S., Mexico, Canada and other overseas markets,
keeping full-timers happy throughout frequent change
is a challenge. Foster found that employee incentive
plans were essential to LandAmerica’s future.
And, like its work force, the company’s incentive
plans move up and down with business volume. Pressed
to sum up the corporate philosophy that earned LandAmerica
its place among the country’s leading companies,
Foster keeps it simple: “Mind your costs, and
be disciplined.”
A decade ago, LandAmerica was product-driven.
“We did title insurance,” Foster says. “Customers
thought of us in those terms.” But industry changes
in recent years have found its customers making new
and different demands. “Large lenders who drive
a lot of loans want a company to provide a variety of
services. Because of that, we clearly have a culture
driven by customer service.”
“Bundled services” has become
a key term in industries from software to banking. Likewise,
LandAmerica has sought to be all things to all people
in the business of real estate transactions —
lenders, developers, real estate agents, attorneys,
and property buyers and sellers —handling everything
from title searches to closings.
These days the company’s mantra
is growth, says Foster. Last year, it expanded the products
and services it offers primarily to the mortgage lending
community, and it continues to make acquisitions that
will help with this goal. It also added a home inspection
division and is poised to move into other related areas,
such as homeowner warranties. “With the huge rush
in revenues, we popped into the Fortune 500,”
says Foster. “We want to grow enough to stay there.”
But staying on the list will be incidental to Foster’s
mission. He says he won’t turn down the heat until
LandAmerica is America’s number one service provider
for real estate transactions.
Return to Virginia Business - July 2004
|
