Greg Miller, CEO, The Larry H. Miller Group of Companies

Posted on March 1st, 2012 by Dealer in Profiles of Success   Email This Post Email This Post

The $2.5 billion, 7,400-employee Larry H. Miller Group of Companies started in 1979 with one Utah dealership. Today it encompasses 44 dealerships in seven states, as well as professional sports, auto racing and other entertainment venues, movie theatres and restaurants, and real estate, insurance and finance companies. We recently spoke to Greg Miller, CEO and eldest son of founder Larry Miller, about operating car dealerships, managing people, creating culture and keeping all the various plates spinning.

Click here to read the full story from Greg and the rest of the March 2012 issue of Dealer magazine.


We’re here to talk about your dealerships Greg, but the car business is just part of the story isn’t it?

Very much so, but our 44 car dealerships are the economic engine of the business. The dealerships and the company began in 1979 with my dad’s first dealership, a Toyota store in Murray, Utah. I’m 46 and I’ve worked off and on for my dad since I was a kid, doing everything from sweeping floors to managing his stores. He passed in 2009, but for some time he had prepared me to take the helm, though my mother remains chairperson of the board. Last year we retailed 61,629 new and used vehicles through these 44 stores.

What is your management structure?

I’m CEO, and have a COO for the sports and entertainment side and a president and COO of Auto Operations, Tony Schnurr. He has two operations managers reporting to him, and they have Regional Performance Managers or RPMs reporting to them. One RPM each is over Arizona, New Mexico and Colorado markets, two in Utah, and one in Idaho and the Northwest. RPMs wear two hats; each is a general manager of a store but also have GM responsibilities over the stores in their respective state or territory.

Do RPMs or GMs have equity in their stores?

Our family owns 100% of the stock except for two stores. Our GMs all receive a base, plus a percentage of their store’s net, and can earn what we call a Tier 2 bonus, which is up to 10% of the earnings of their store.

What are your top challenges managing car dealerships today?

Number one challenge: small-minded people. Too often, people tend to close off their minds, refuse to delegate out of some misguided sense of control, they laud authority over others and in general fail to be teachable themselves and in their responsibilities to teach, inspire and motivate others to excellence.

I expect every one of my managers to run their business very, very well. What I challenge them to is bigger thinking, becoming and being better students of our businesses and how we, in turn, share what we learn with those who come behind us, so we can make them better. As an organization, we’re to the point where we need to focus on philosophical and cultural ideals and goals, because if we can get that right then the operational challenges will take care of themselves.

By philosophical I mean that we have to teach and delegate; no one has the corner on the best way of doing things and when a manager fails to delegate he not only wastes time but talent – his or hers and the individual he or she should be developing to master those tasks.

By culture, I mean embracing the ideal that as you move through your career, the quality of your life is likely to increase. As blessings continue, it’s important to give back. My mom, addressing our executives at a recent conference, shared that as we earn money as an organization and as family we do primarily three things with it – pay taxes, service debt and share with philanthropic initiatives. We’re fostering a sharing culture here. We don’t push it, but we want employees aware of the idea that you don’t have to keep all the money you make. It’s OK to give some back to the community or to others who have supported our businesses or who have less.

You’re teaching or instilling humility.

Yes, and they go hand-in-hand; you have to be humble enough to learn. Moreover, part of this is stewardship, the responsibility to care for and take care of what is given to us.

I’ve been CEO now for a little over three-and-a-half years. It’s taken me a couple of years to get my legs under me and find my own identity and it’s really coming into focus now.  Therefore, when you talk about teaching and how you hold people accountable for applying what they learn, we have created what we call a “Management Pedigree.” It’s a process for evaluating executives within the organization. It helps us identify the process through which they were hired and/or how they moved up through the ranks. It helps us clarify, “OK, this person is really good at attracting, teaching, and promoting talent” or “This guy has been with us for 10 years and done nothing.”

We use this pedigree process as leverage – peer pressure – to hold managers accountable. Last week we had one of our recently promoted RPMs who has been with us 20 years present along with three GMs he had promoted. A moderator asked this RPM questions like “How did you get this GM ready for the job?” or “What talents and skills did you look for?”

You’re modeling the behaviors you want to instill.

That’s right. Last year we started the Larry H. Miller Institute for General Manager Development. We are in a position in our organization’s history where we’re on the verge of unprecedented growth. Last year we retired all of our revolving debt and all of our capital debt, so the only debt that we have right now is real estate and, of course, that’s covered by the rent from our various operations, so we’re going to be building cash at an unprecedented rate. That’s going to lead to many acquisition opportunities, so that’s why we need to be getting people ready so quickly.

The idea is that we want to have six to eight GMs ready to go as opportunities materialize to acquire new stores, so we hand-picked 10 of our middle managers, GSMs who’ve shown promise and talent. We invited them to apply for this Institute. These candidates also had to get the support of their GM and their GM had to agree to attend five of the 10 classes throughout the year with them. They fly in for intensive day-and-a-half of meetings. We were surprised when some of the GMs stayed for most of the meetings themselves!

Can you share some program content?

We cover the history of the organization, our culture and then we discuss each dealership department. We talk about inventory management, F&I including sub-prime, parts and service issues, and finally accounting. We break it down into more detail than this, of course, but they learn what they need to know so when they get the call to come run a dealership, they’re ready and able to succeed.

What vendors contribute to your success?

ADP has provided our DMS for many years, and we are quite pleased with their performance. We use DealerSocket for CRM. Used vehicle inventory optimization is supported by DealerTrack AAX and its eCarlist tool, with dealership websites provided by Dealer.com and Cobalt. We also have excellent relationships with Carfax, Autotrader.com and DME. KeyTrack helps us secure keys for the lot, and we use MOC1 advisor tablets in the service lanes.

What dealership-specific operational issues trouble you?

None troubles me, because we’ve really worked to eliminate or reduce them. We’re finally dialed in as far as inventory goes, for instance. In October of ’08 we had $267 million worth of new vehicle inventory. Today, we have $130 to $140 million and that’s where it should be with our volume. On used, we manage to a 35-day supply. Parts inventories carry between a 35- to 40-day supply. I’ve been having a hard time convincing others in the organization that it’s good to run a little leaner than that.

As far as brands, we might make a run at BMW, but we already have Lexus and Mercedes, Toyota, Honda, and Chrysler-Jeep-Dodge-RAM, as well as Ford, Chevy, Volkswagen, Hyundai, Kia, and Nissan. We don’t get into the super high-line or exotic brands or the lower volume ones, which haven’t work well for us.

One of the things that was bothersome to me when I took the helm was how little of our automotive operational net profit we kept. In other words, if we have a certain number of stores that make a million dollars, collectively, but stores that lost money require $200,000 in support, we’re keeping 80 percent of our net. In 2009, we were only keeping 73 percent. In 2010, we moved to 84 percent, and in 2011, we were at 93 percent profit retention.

What path got you there?

Here’s an example of how we got there. We had a brand that we worked through multiple facilities and GMs over the last 28 years that never seemed to work right for us. I then asked the CFO to prepare a performance summary of that store over the years. I was stunned that it had made only about $50,000 in all the years we owned it!

We had had good managers in that store, but we just for some reason couldn’t make the store work for us. We sold it to another dealer, a good friend, who has since made the brand and location work for him.

I learned from the experience that we have to figure out what we do best and then do more of it. We learned what we’re good at as operators and what we are not. Therefore, this store and some other assets were for us like sandbags on a hot air balloon. You soon get wise and start cutting loose the bags so the balloon can lift off the ground.

I remember riding in the car with my dad about 15 years ago as we drove passed this particular store. Dad was on the phone, very agitated with the GM of that store, asking why it was so hard to make that investment profitable. I remember saying to him, “Why not just sell it.” He turned to me and said, “Greg, we bought these stores to run them, not to sell them.” In my mind, I thought, “He’s a really smart guy. He knows a lot more than I do. Maybe there’s just something about that I don’t understand.”

Here we are years later, we sold it; life got better. If we have to divest of a few sick or poor performing operations in order to get stronger and healthier, I’m all for doing it.

One final question – your five points for operating successful car dealerships.

We have to protect the legal, financial, and moral well-being of the company. Within that context, we must execute consistently the fundamentals. These fundamentals for us are proper inventory levels and mix; the right people in the right places doing the right things at the right times; and, a fierce commitment to having what we call DPR meetings, daily performance reviews, every morning.

 

Larry H. Miller Group – Cars and More

The Larry H. Miller Group of Companies, headquartered in Sandy, UT, is a $2.5 billion group of companies, in five business elements: Sports and entertainment, including the Utah Jazz, the Salt Lake Bees, Miller Motorsports Park, EnergySolutions Arena, the Tour of Utah, and 94 Fanzz retail apparel stores. This element also includes a television station, a radio station, and about 95 theater screens in six locations.

Auto-related elements are Total Care Auto, which markets service contracts, GAP and casualty insurance, mostly to Larry H. Miller auto dealership customers, as well as a third business element, Prestige Financial Services, a subprime finance company with $423 million in receivables. Interestingly, only about 25 percent of the loans it originates are with Larry Miller dealerships.

The fourth business element is Miller Family Real Estate. This element manages the group’s various dealership facility needs. This element works with a half-a-dozen contractors to build facilities. The final element is the group of 44 Miller Family dealerships, which is clearly the economic engine of this organization.

Most of the second-generation Miller family is engaged in the organization. Sister Karen Williams, though not actively engaged in business operations, is involved in the Larry H. Miller Family Foundation. Greg Miller’s brother Roger, the next oldest, is an IT professional and handles systems facilitation, mostly for Miller Motorsports Park. Steve Miller until recently oversaw global new and used car inventories, but has since turned that important job over to a successor and followed his passion into the Tour of Utah, which is a UCI-sanctioned, multi-stage bicycle race. The youngest brother, Bryan, is the assistant manager of Miller Motorsports Park.

To manage this diverse operation, Greg Miller along with his brothers, their mother – the organization’s chairperson of the board – and a nephew, Zane, who worked in Miller Family Real Estate, meet every Thursday for three hours. Discussion covers all facets of the operation, though conversation follows no set agenda. On the first Thursday of the month, the current generation – called “Miller 3.0” and consisting of nieces and nephews – also attend. The older generations believe the third generation’s participation in these meetings, on which regular business issues are focused, helps them understand what it looks like to run a business and helps them understand expectations of them in such key areas as character, motivation and stewardship.

Greg Miller said the younger generation’s participation in these meetings helps keep them from having a sense of entitlement, for which Miller says he has no tolerance for anyone working with the family companies. “ They need to be part of what produces the fruits of this business and we talk about that a lot in this meeting, how one can’t be just a consumer but must be a producer too. To their credit, they’re really catching on to that. I’m very proud of them,” he says of Miller 3.0.

 


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