The Light Governance Touch
The Light Governance Touch
The board of Quarles Petroleum Inc. allowed management the time to create and execute a response to the pandemic.
Only a handful of companies had forecast and planned for the disruptive possibilities of a pandemic, and Quarles Petroleum Inc. was not one of them. Still, this family-owned fleet fueling and propane distribution business was able not only to survive COVID-19, but also to proceed full steam ahead on its five-year strategic plan and successfully complete an acquisition. Plus, it was able to fill an open board seat.
The Quarles board took a hands-off approach during this time. The four independent directors and two family/owner directors purposefully did not inundate management with questions and concerns at the start of the pandemic, instead choosing to let the CEO and his team have time to strategize before meeting with the board, says Quarles chairman Milledge Hart.
“We had a previously scheduled board meeting early in the pandemic,” Hart says. “We didn’t feel the need to move that up. We let the management team get their feet under them.”
The company was fortuitously in the midst of a rollout of Microsoft 365, so employees working remotely were able to use Teams for meetings and other collaboration. Also, because of the conversion to new software, the company was already reexamining its cybersecurity protection. Quarles put into place a secure VPN and two-factor verification throughout its system to protect data.
Delivery staff were considered frontline workers, so management established social distancing and sanitizing policies. Activities not considered necessary for the core business were canceled.
Petroleum demand dropped about 50% as commutes were cut in March, says CEO Paul Giambra, but people still needed to heat their homes. And, with high-demand items flying off store shelves and increasing supply-chain problems, delivery trucks needed to stay on the road.
After formulating a plan, management approached the board. They wanted to see if directors were seeing anything handled differently or better at other companies they advised.
“When management came and presented to the board, it was a fully formed plan, and they wanted opinions, advice,” Hart says.
Keeping employees in the loop
For transparency’s sake, management made it a priority to reach out not only to the board, but also to employees.
“We had weekly communication to all of our associates,” Giambra says. “We wanted to tell them, ‘Here’s what we know about COVID. Here are some of the shutdown rules we’re getting.’ As information changed, government requirements were changing. Management would meet, discuss as a team and put our results out to associates.”
Those weekly communications continued through the summer.
Hart says the board also wanted to make sure senior management didn’t burn out in the face of the intense pressure caused by the crisis. Management, in turn, checked in with the rest of the employees to be sure they were safe and healthy.
Most businesses took similar steps at the outset of lockdown. What is remarkable is that just a few months later, in the midst of the pandemic, Quarles was able to complete an acquisition.
Purchasing in a pandemic
The Quarles five-year plan calls for aggressive growth, with six acquisitions during that time frame. The latest, the purchase of family propane and petroleum company Dixie Gas & Oil Corporation, was completed in the fall.
“Whenever a good-sized propane distributor in the geographic area we call home and thrive in is available for sale, we have to pay serious attention to it,” Hart says. “We can’t let competitors come in and take any of our area.”
Of course, this purchase was going to have to be done differently than any before it. Giambra says the challenge was that acquisitions are traditionally a “high collaboration” event.
“It is so much more challenging when you put social distancing barriers up,” he says. “Usually, we would spend more time at their facility. That was a big adjustment. Usually, we would have teams working through what we need to do internally. That would be in a big conference room with a white board.” Instead, the parties met on Teams.
But the company had completed so many acquisitions up to that point, there was a pattern to follow. “We didn’t have to plow as much new ground,” Giambra says. It wasn’t easy, he adds, but “We benefited from some of our past enterprise knowledge.”
Launching and completing an acquisition in a recession and health crisis was no small feat. While that part of the strategic plan came together successfully, other elements, like revenue projections, had to be adjusted. Giambra says that will continue in 2021.
“Our talks are more about having a flexible outlook,” he says. “We are building in flexibility so we can adjust as the market and the workplace adjust.” That includes how Quarles will handle staff vaccinations and possible incentives for getting vaccinated.
The board also has had to be flexible. Though the board was meeting virtually, Quarles conducted a director search, made the appointment and will begin the process of onboarding the new director online this spring.
“We focused on a different kind of integration plan for the new board member,” Hart says. “Not only individually, but for the board as whole. How do we socialize and get to know each other?”
He says there is a long list of ideas the board is working through, running the gamut from a basic cocktail party with a game element, to a mini-book club, to a mozzarella-making class.
“We’re also talking about a remote board dinner,” he says. “Dinner gets delivered to each board member and then we sit on Zoom and eat together.”
Hart says he’s learned a lot this year about the possibilities of disruption as well as how to get through it.
“For this board — and maybe for me — we’ve learned that when you gather and talk about contingency plans and worst-case scenarios, the worst case can be even worse than you imagined,” Hart says. “Moving forward, we need to expand our minds to what unusual disaster scenarios can actually be.”
Hart says communication is key and, while the company was dedicated to and successful at communication, he looks forward to being even more transparent in the future.
Giambra says he’s grateful to a board and owners who let his team lead in a time of uncertainty — they trusted him, he notes.
“I work for a family that is very understanding and supportive,” Giambra says. “The family has also chosen to have independent directors to provide their experience and expertise to help the management team be successful. Leadership from the family to put governance best practices into place allows for that success.”