PSS WORLD MEDICAL:

THE CHALLENGES OF GROWTH

AND
THE FINANCIAL MARKETS
 INTRODUCTION

• Pat Kelly, founder and CEO of PSS World Medical had grown PSS into a $1 billion
business distributing medical supplies.
• He was collecting his thoughts as he prepared to visit an MBA class in HR.
• He believes that there are still some hurdles left that PSS had to overcome.
 BACKGROUND

• Pat Kelly served as VP of sales and marketing at Intermedco, a $41 million company.
• He had worked in medical supply sales and distribution almost his entire career.
• At the age of 35, he was fired from his job.
• He became reluctant entrepreneur.
• On May 2, 1983, he and some of his partners founded Physicians Sales and Service
(PSS).
 STRATEGY

• He set a goal of becoming the first national physician supply company.

• In 1988, PSS did $20 million business with 150 employees from 7 branches.
• In 1993, when PSS sales were $170 million, he set a goal of doing $1 billion in business
by 2000 and in 1998, they reached this goal.
• Kelly believed that in an industry experiencing consolidation, ”you either grow or get
acquired”.
• Between 1989 and 1998, PSS made 65 acquisitions because Kelly believes that
purchasing an existing distributor is less expensive than starting an office from scratch.
 ORGANIZATION

• PSS World Medical was organised into 3 divisions.

• Each division was headed by its own president and organised into small no. of regions.
• Each office was called as ‘store’.
• Instead of a manager, each store has a sales leader and operation leader.
• Sales leader responsible for the sales staff in the office and bringing the revenue.
• Operation leader was responsible for warehouse, delivery drivers, accounting and
other administrative staff.
• Each branch was accountable for its own profit and loss, gross margin with discretion to
set prices.
 MANAGEMENT
PHILOSOPHY & PRACTICES
• No business goal is worth sacrificing your values.
• Rule: Everyone has to read the 1st memorandum they
received each month.
• Brochure called “Rules of games”
• Build on a culture of trust and mutual respect.
 BASIC FUNDA:

 Recruiting and Selection:

• No Call back people for interview.
• Interview timing : Every Saturday
• 30 ice breaking Questions
CONT…

 Training and Career Development:

• Orientation Program
• Moving into Leadership: voluntary decision ; need sacrifice
• Do it for challenge ; do it for internal drive ;interest in helping other people be
successful
• Train people not only about product but also lots of role playing to emphasize skills
• Emphasized the mentoring, coaching and developing aspects of leadership.
• Book: & habits of highly effective people
 WHO IS RESPONSIBLE FOR COMPANY’S
CULTURE?
• Best way is not to scream at them but by really trying to Co operate
• Teach them how to learn , how to operate
• Learning: you need to learn more from the people around you
CONT…

• Reward
 Wealth should be shared, but shared in a way that people earn what they make,and
then get to keep what they earn.
 Tempting Incentive Policy
CONT…

• Open Book Management

 Transparency in Financial management
 PSS world medical uses bottoms-up forecasting methods : encourage everyone to
be knowledgeable and involved in financial management process
• Integrating Acquisition
Acquired companies are treated as a part of PSS culture
• Culture:
 Values driven company, with a strong culture
• Firing the Boss!
 If leaders can’t deliver, the people will fire them
• Driving out fear:
 The concept of Soft Landing
• Accountability:
 Blue Ribbon Inspections
• Fun:
 Positive environment, challenge meetings
 CONCLUSION

• High commitment culture.

• People love their work and colleagues.
• Wall Street did not appreciate what the company had achieved.
THANK YOU