Pete Correll: ‘Bad news does not get better with age’

Correll’s remarks were edited for length and style.


WE GO BEYOND THE HEADLINES

Each week, Sunday Business Editor Henry Unger has a candid conversation with a local leader as part of our commitment to bring you insightful coverage of metro Atlanta’s business scene.

Pete Correll, one of the dean's of Atlanta business for more than two decades, built his career by paying attention — first to his mother and then to influential leaders like Bill Clinton.

Correll, the 72-year-old former CEO of Georgia-Pacific, helped build that company into a building and paper products powerhouse (brands include Angel Soft, Brawny and Dixie) before negotiating a $21 billion sale to Koch Industries in 2006.

Then, as chairman of Grady Memorial Hospital Corp., he helped engineer a politically-charged reorganization and financial turnaround for the long-struggling system that provides vital trauma and emergency care. Still chairman of Grady, Correll also is chairman of Atlanta Equity Investors, which buys controlling stakes in growing, mid-sized companies in the southeast.

Correll, a Brunswick native, talks about what he learned while forging a highly regarded business career that began 60 years ago.

Q: What happened early in your life that helped shape it?

A: I learned more from my mother than I learned from all of my educational experiences. My father died when I was 12 and I was the only child. We had a little men's store in Brunswick that my father started. We had to figure out how a woman and her 12-year-old son could run a men's store, because that was our only source of livelihood.

I worked every day after school and learned an awful lot about business in that tiny store. The most important thing I learned, which got reinforced for me throughout my life, was that most managers understand an income statement — but very few understand cash.

In a little men’s store, nothing mattered but cash. We had a little cash drawer. If you had more money at the end of the day than you had in the beginning, that was a good day. If it was near empty, that was a bad day.

I learned how to ignore accounting and pay attention to cash. That has served me well.

Also, I’m one of the few CEOs you’ll meet who can alter a pair of pants, put the cuffs in them and let the waist out.

Q: Did you learn anything else from your mother?

A: My mother was the most determined human I ever met. When my father died, by all terms we were bankrupt. We didn't know what that meant back in the 1950s, but we had far more liabilities than we had assets. We didn't have the cash flow any rational person would assume was necessary to survive.

Nevertheless she did, by working ungodly hours, knitting sweaters at night, doing whatever it took. She made me a very determined person by watching her.

She was determined that I learn to play golf, because she was concerned that there were no men in my life. Golf opened a whole world to me. I became a much more confident individual, that I could compete and get along in social situations from a silly game like golf.

I got a golf scholarship to Georgia Tech. I only went there one year. I was absolutely miserable. It was a very austere environment.

Q: You ended up at UGA and got a business degree. Later, you turned down a master’s program at Harvard. What happened?

A: After UGA, I got a job as a commercial analyst at a pulp and paper mill. I fell in love with it, but I decided I didn't have the right education to win.

I applied to master’s programs at two schools — Harvard and the University of Maine. I didn’t have any money, so I picked Maine because they gave me a scholarship. It turned out to be the best decision I ever made in my life. I got two master’s degrees, one in pulp and paper technology, and one in chemical engineering. I became comfortable in the field and got a good job with Weyerhaeuser when I graduated.

I was called on to move many times. I understood early on that I would not fully know how to do parts of the jobs I had to do. So developing a cadre of people I could call for advice — in and out of the company — was critical. I’d call and ask people I had worked with along the way what they would do in a certain situation. It was reciprocal, although I didn’t get as many calls as I made.

Q: What did you learn from Bill Clinton?

A: I worked a lot with him when he was governor of Arkansas because Georgia-Pacific had more plants there than in any other state. I always marveled at how he communicated.

He convinced me that if you talk to people, you could change their behavior. I started a process that every time I went to a mill I’d spend an hour in an all-employees town hall meeting. The rules were simple. I’d spend about a half-hour talking about the company and then there was 30 minutes of no-holds-barred questions.

I think that did more to help me understand the people of Georgia-Pacific, and them to develop a trust in me as leader, that this guy really doesn’t have any secrets. Clinton had that disarming way to talk with people and let them talk to him.

Also, he was a big believer in surveys. He polled everything, so we started polling the people at Georgia-Pacific like crazy. That really helped me in talking with people.

I found out that employees value communication with their supervisor more than anything else. And beyond that, as you go up the ladder, they really just want to trust that the company’s leader is telling them the truth and not trying to hide anything.

Q: What other leadership advice do you have?

A: Bad news does not get better with age. The sooner you know it and can deal with it the better.

When I finish a meeting with someone, I always ask: “Now, what didn’t you tell me that you’re just embarrassed to tell me about?” It’s amazing how many people will say: “I just didn’t want to worry you about this so soon.” Many times, knowing about things early helps keep Genie in the bottle.

You’ve got to develop open lines of communication because generally the people who work for you know more about a situation than you do. Never close your office door unless you’re having a private meeting. And walk the floors.

Also, I always believed and told our management team at Georgia-Pacific every day that we don’t own this place. Our job is to maximize the shareholders’ investments. They don’t have emotional ties to this place. They want the highest return on their money.

Once you get a breakout offer like we did from Koch, how do you explain to shareholders that you have a better idea when you don't have a better idea? We were being offered $48 a share on a stock that was trading around $31 or $32. It was a very fair price for the company — about the value we thought we could get if we executed our business plan perfectly. But there's always risk in a business plan and there's no risk in cash.