Ryland's chief cuts managers in drive to compete

HOPING LEANER IS MEANER

September 17, 1992|By Ellen James Martin | Ellen James Martin,Staff Writer

Seated at the big maple-and-mahogany conference table at Ryland Group's Columbia headquarters, Roger Schipke spreads organizational charts before him. Excitedly, he talks about wholesale cuts he's made recently in the executive corps that serves Ryland's home-building operation.

"We were very top-heavy," says the 55-year-old chairman and chief executive of the nation's third-largest publicly traded home-building company. "Now we're well-positioned for the decade of the '90s."

Hoping that a smaller executive corps will hasten decision-making and make Ryland officials more responsive to their home-buying customers, Mr. Schipke has eliminated 10 of the 15 senior executive positions in Ryland Building Co., the core business unit of the Ryland Group.

In addition, Mr. Schipke has made territorial changes in Ryland turf. He has reshaped the Ryland Building Co.'s five regional offices -- folding the once-autonomous Brock Homes division into a new West Region, with headquarters in Los Angeles.

"We've erased Brock; there is no Brock headquarters anymore," says Mr. Schipke, allowing that Brock, a red-hot performer for Ryland in the early years after its acquisition in 1986, has disappointed recently as the California economy has sagged.

In reshaping the Ryland Building Co.'s regional offices, each has been made a self-sufficient "operating entity" designed to foster teamwork. Ryland, which expects to build nearly 8,000 homes this year, manufactures most of its own components in factories. Now, four of the five regions will control their own factories.

(The exception is the West Division, which includes markets in California, Colorado and Arizona. Distances are too great in this region to make the transport of components economical, so homes are "stick built" on their sites, company officials explain.)

Ryland factories are in New Windsor as well as in Orlando, Fla.; Shelby, N.C.; Houston; and Cincinnati.

In the past, Ryland's factories were part of Ryland Building Systems, and managers were rewarded for meeting goals for plant output and efficiency rather than catering to customers' needs, Mr. Schipke says. To get an answer about a factory problem affecting a subdivision anywhere in the country, he says, a manager often had to travel a circuitous route through the company's organizational structure.

"They said, 'Gee, we just make stuff,' " Mr. Schipke says of the Building Systems people. Now, a revamped Ryland Building Co. bonus system makes executives dependent on the success of others in their team for salary enhancements.

The new structure lessens the frustrations of working in the field, says Stewart Cline, one of the executives who took a new job in the reorganization. "The regions have more authority now," according to Mr. Cline, who once oversaw four regional offices and now is president of the Dallas-based Southeast region.

Like most home builders, Ryland has had rough sledding in the past year. As consumer confidence suffered through the roughest recession the industry faced since World War II, production for the Columbia-based company tumbled. Last year, Ryland's building company reported a disappointing operating loss of $16.3 million, compared with operating earnings of $22.2 million in 1990. It was the first loss in the home builder's 25-year-history.

Still, Mr. Schipke insists that his program to streamline the executive corps at Ryland's home-building subsidiary was not motivated by direct cost savings.

"My major thrust was to get people closer to the customer and improve the speed of decision-making," he says. "The savings aren't going to come from salaries. They're going to come from savings in the marketplace."

Although generally supportive of a leaner management structure, some analysts say Mr. Schipke may have pruned too many experienced managers .

"Peeling back the layers is good," said Kenneth Campbell, who tracks Ryland for New Jersey-based Audit Investments. "But cut too deeply, and you run the risk of losing the seasoned minds you need to run the business in hard times."

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