Argent Tape & Label
41016 Concept Drive, Suite A
Plymouth, Michigan 48170
When Lynn Perenic took over Argent Tape & Label in 2010, the company had been all but left for dead. Five years later, with Lynn spearheading an unconventional business model based on transparency and open-book management, the Plymouth, MI-based converter is thriving, and poised for continued growth for years to come.
Argent Tape & Label got its start in 1995, when Fred Perenic – Lynn’s husband – purchased the company from Fisher Label. The label business was a logical complement to its parent company, Argent International, a producer and supplier of custom diecuts, where Fred is president and CEO. Serving primarily the pharmaceutical market with labels and folded inserts, Argent Tape & Label enjoyed success, growing to become a $6 million business with 35 employees, four flexo and two offset presses, and folding equipment that ran 24/7. Business was good.
In 2003, Argent’s largest customer was bought out by Pfizer and subsequently moved – along with its label business – to the East Coast, taking with it a substantial source of revenue for Argent Tape & Label. Looking to fill the void, the company invested heavily in RFID, like many at the time thinking the technology would be the next big thing to hit the label market. Well, RFID didn’t take off as expected, and Argent Tape & Label found itself in dire straits.
By 2009 – with the onset of an economic recession – Fred Perenic was resigned to let go of his struggling label company. Enter his wife Lynn, a special education teacher eager to try her hand at turning around the floundering business. She recalls, “My husband didn’t love labels, and he saw his label business as an investment, and it wasn’t going anywhere,” she says. “RFID turned out to be a huge mistake, and the company sort of languished. But I saw potential. I told him that I can save this company – just sign the stock over to me!”
When Lynn took over, Argent Tape & Label had been whittled down to one working flexo press, and one pressman among just three employees. Her new company was also in debt and had no line of credit. “After he signed the stock certificate over to me, accounting showed the income statement, and it said I owed him $400,000 in payable. Not only that, there was a $1.8 million dollar loan between Argent Tape & Label and Argent International. So I thought I better let everyone in my company know the tough situation we were in. And that’s when I opened the books.”
Opening the books
Lynn Perenic came to the world of label manufacturing with virtually no experience in the industry – she was an educator by trade. According to her, throughout Argent Tape & Label’s history, the business management style she observed from her husband was one of “command and control,” a style that didn’t particularly suit this former teacher.
In researching ways to run her company, Lynn came across the book The Great Game of Business (GGOB), by Jack Stack. Today, a copy of this book literally sits on a pedestal in her office.
The Great Game of Business is about open book management, and outlines an approach to running a company that revolves around total transparency of company financials. In a nutshell, the GGOB encourages every single employee to learn the financial impact individual jobs play toward the company’s bottom line. Stack’s strategies implore that when everyone in the workforce sees and understands where exactly money is made and lost, and everyone is rewarded accordingly as the company grows, employees are both empowered and vested.
“It’s the only sensible way to run a business,” Lynn says. “In a ‘command and control’ environment, there’s sort of a resentment between upper management and the guys on the front lines, working on the presses. They see how many products are being manufactured, and they might think that ownership is turning on the faucet and cash is pouring out. The thinking is very different when people realize what the margins are. I thought it was important that my people know how much equipment and materials cost, how much we’re getting from it, and how much we have to pay for it.”
In the beginning, getting everyone on board with the philosophy wasn’t easy. “I opened up the books and started sharing our income statement, including the inventory and demand numbers, and that’s when my one and only pressman at the time said, ‘I don’t need this information, it’s got nothing to do with me.’ Oh but it does! I told him, ‘If I go down, you’re all going to know why – It’s not because I’m taking luxurious vacations and syphoning money.”
The employees have bought in to the GGOB business model, and the company, once on the brink of extinction, is all the way back. To put it into perspective, in 2010, when Lynn took over, Argent Tape & Label’s annual sales were $790,000, a number that included money from selling equipment. After eschewing “command and control” and five years worth of integrating The Great Game of Business, the company ended 2014 with $4.5 million in sales.
Playing The Great Game of Business involves continuous activity, and crucial to Argent’s success are its Huddles and Mini Games.
To see the GGOB in action, look no further than one of Argent’s weekly Huddles. Here, every member of the company gathers to review every line on the income statement. Responsibilities for the financials are divided among employees from all facets of the operation, and each individual takes a turn explaining what happened that past week – why a certain number may be in the red, why a target may not have been reached, and so on.
Without exception, Huddles take place once a week, with Argent’s now 15-member team gathering in the meeting room. Around the table are multiple, rather large, dry-erase boards that detail every penny earned and each and every expenditure. From label material costs, tooling and direct labor to marketing, travel expenses and office supplies, not only is every dollar accounted for, but is explained how and why that number is what it is by the individual members of the workforce. Press operators, rewinders, sales people, shipping and receiving, customer service, etc. – each member of Argent’s team is responsible for a line. And lines are often switched up, so employees can learn about the various other parts of the operation apart from what their specific job may be.
In The Great Game of Business, Jack Stack writes: A major benefit to the Huddle is that it humanizes the business. It gets rid of the invisible enemy – the “they,” as in “they screwed up,” or “They’re out to get us,” or “They don’t know what they’re doing.” The invisible enemy destroys company after company.
While each line on the income statement is important, perhaps there’s one that stands out from the rest, and it’s only updated quarterly – the Gain Share line.
There’s a chapter in the GGOB titled, “Skip the Praise – Give Us the Raise,” and it provides a framework for Argent Tape & Label’s employees to earn monetary bonuses multiple times throughout the year. This is the Gain Share line. It represents more than a calculation of shared payout, however. With everyone working toward the collective goal of improving that line, there is value behind the numbers. Not only does it bring Argent together as a team, but it also serves as a way to teach the business and help identify problems fast.
According to Stack, the Gain Share program “puts the ball in play. It sets the tempo. It keeps the action going week in, week out, all year long. It provides a language, a way of communicating. It creates excitement, anticipation… It makes sure people stay involved, engaged and on their toes.”
Mini Games are another way that Argent Tape & Label stays on its collective toes. Mini Games are short-term contests, created by the staff, designed to generate cost savings, or correct a weakness within the operation. The Mini Games have a goal, a timeframe for play, a scorecard and a reward – which could be a company party, a gift card, or dinner at a local restaurant, for example.
The prevailing theme inherent in playing The Great Game of Business is the notion of continuously educating and incentivizing employees, thus sparking their engagement and interest in the success and growth of the company.
Playing to Win
If the label business is a game, Argent Tape & Label is winning. By embracing transparency and making a game out of work, the company has found itself on a steep growth trajectory.
Back in 2010, one of the biggest challenges the company faced was finding more business. Argent took on smaller jobs wherever it could get them. “We looked everywhere,” Lynn recalls. “Anything for a buck.” She issued business cards to every employee as a way to recognize their role in the business as well as a means to turn them into Argent Tape & Label ambassadors.
As the company stabilized and began to make money again, investments in new flexo equipment came. Today, there are four flexo presses running – three Webtrons and a Propheteer – in four, five, six and eight color configurations. With demand from customers calling for shorter and shorter runs, Argent Tape & Label has set aside part of its 2015 budget to research and invest in digital printing equipment. The company is also looking at adding a new vision system.
The majority of customers come from the automotive market. Being in the Detroit area, Lynn refers to the automotive sector as the “low-hanging fruit,” and estimates 70% of the business is in automotive labels. However, the company is continuously looking to diversify and currently has several customers in medical, food & beverage, wine, industrial and horticulture markets.
Argent Tape & Label also leverages its position as a Women’s Business Enterprise National Council (WBENC) certified company, which is something that Lynn Perenic is especially proud of. “You have to take all of your little advantages and try to make them a big advantage. Our WBENC certification has helped us get into some of our larger markets, automotive in particular,” she says.
To gain more customers, Argent utilizes various networking opportunities presented by the WBENC, and regularly exhibits at trade shows. A lot of time is spent on marketing, and Lynn reports social media – LinkedIn in particular – has been helpful in gaining new business. And in addition to Lynn herself, there’s also now a dedicated sales force.
Transparency also extends to customers and prospects, who are invited into Huddles should they wish to see for themselves open-book management at work.
In the fall of 2014, the Argent Tape & Label team traveled to St. Louis, MO, to accept its All-Star Award at the annual Gathering of Games Conference, the only conference where the open-book community comes together from around the world to learn, share and celebrate the principles and practices of The Great Game of Business and open-book management. With the All-Star Award, Argent was named the “Best of the Best” in Open Book Management. A testament to Argent’s success, the award shows that the GGOB business plan translates well to the label manufacturing industry.
In winning the award, judges recognized the significant turnaround Argent has made as it continues to grow by double digits. The All-Star Award also recognized how Argent’s employees generated 75 cost-saving ideas through a single Mini Game resulting in $44,000 in savings.
Argent Tape & Label’s team has completely bought into playing The Great Game of Business and comes to work with an ownership mindset that is paying off. Looking toward the future, Lynn Perenic is envisioning a move toward creating some form of ESOP, yet for now, as the company continues to grow, she says, “Everyone knows when there is a gain, there is a share.”