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    People Power

    Valero's Gary Arthur extols the value of a corporate culture that rewards teamwork and new ideas

    Even as a young man, Gary Arthur, senior vice president of retail and specialty products marketing for Valero Energy Corp., never felt any serious doubts about his abilities and potential as a leader. In fact, he states simply, without a trace of bragging, that "I've always been a confident person, and always felt like I would be capable of doing a very good job in a leadership role."

    Arthur said that at Valero, management is about teamwork and engaging people to perform their best in support of corporate objectives. As part of this management team, Arthur may brim with quiet confidence, but he credits his success as a retailer to others.

    "Valero's retail management team, corporate and field support staff and, most importantly, the people on the front lines, store associates and managers, are the reason Valero achieves its retail mission," he said. "Our single greatest asset is our employees. They make sure that the customer experience is a good one. That's why it was so important when we took over the retail business [when Valero purchased Diamond Shamrock and its stores] that we talked to the employees, to find out what their concerns were, and address them. It is important first to invest in our people."

    Those employees are so good, in turn, because Valero has superior leadership at the top, Arthur suggested. "The reason I am here at Valero is that I was so impressed with the leadership team. And since being here, I have seen countless examples of strong leadership from Bill Greehey, our CEO, as well as from other members of our management team. Bill leads by example and sets the tone for leadership at Valero."

    Arthur cited Greehey's strong convictions, and said, "He has been a kind of beacon of leadership, and someone whom everyone looks up to, because he exemplifies leadership at its best."

    The Human Factor

    A native of Ashland, Ky., for Arthur the value of hard work, determination and desire became clear when he was in high school. "The first time I thought I could be a leader, I ran for senior class president, and got elected. I did not really think I could be elected, but I was. I realized if you really wanted something, you can have it."

    After graduating from the University of Kentucky, majoring in marketing and economics, Arthur interviewed with a lot of different companies. He was drawn to Ashland Oil's culture, and accepted a job in wholesale marketing in Louisville, Ky., in 1978.

    He worked on his MBA at night, ultimately earning the degree from Morehead State University. With diploma in hand, he was also gaining positions of increasing responsibility: Arthur was selected to serve as the executive assistant to Ashland's CEO and chair, John Hall.

    The position is not a common one, he said. Ashland created it as a key manager development position, with a similar one for the president/COO. Corporate leaders would identify high-potential young managers and put them in the positions for two to four years, allowing them exposure and experience in every facet of the organization.

    "The position was very unstructured and very high-profile," Arthur said. "One day, I'd be in Washington, D.C., working on legislative issues, and the next day dealing with customer complaints.

    "Interacting with all different constituents, including the media, government regulators and the board of directors, was a great way to learn about the business, and to understand all the interrelationships," he said.

    "When you hear people talk about a defining moment in their careers, this was it for me," Arthur continued. "At 32, I was among the youngest executive assistants ever named to the position at Ashland. Being selected gave me confidence that I had some ability."

    Like many c-store industry leaders, Arthur emphasizes the importance of learning from others. Giving young industry go-getters the chance to observe up-close leadership in action provides them with an invaluable opportunity. Arthur said all young leaders-to-be enter the game with core principles, but seeing the human drama is the key.

    "I've worked for a lot of very capable leaders in a lot of different areas in the business. I've tried to learn from both the good and the bad," he said. "Some leaders are particularly good at strategic thinking, some are very good tactically, some are good at managing assets and some are good at managing people. One of the real values, as I look back at my career, having had so many different jobs, has been to not only get a broad understanding of the business, but to also gain so many different insights in how to lead."

    Arthur's role as executive assistant gave way in 1992 to a position as vice president of supply and trading, and in 1995 he was named vice president of business operations, with full P&L responsibility for crude oil supply, refining, distribution and wholesale marketing.

    After the announced Ashland-Marathon merger, Arthur chose to leave the company after more than 20 years. Thinking it was time to head in a new direction, he joined Colonial Industries, based in Savannah, Ga., as vice president of supply and distribution, and then joined San Antonio-based Valero in 2000.

    The Culture Factor

    "It's just been wonderful ever since," he said. "This is a fast-growing company, a tremendous opportunity for me, and a great fit from a cultural perspective. The values of the company and the leadership were the reasons I chose to come to Valero. They had stated objectives of growth. They had a real need at the time for some additional leadership in the area I came from. I was excited to come in and join the leadership team knowing I could make a contribution to the company's success."

    With Valero's purchase of Diamond Shamrock in 2001, the company's leaders faced the formidable challenge of helping to revitalize a business that had made money in only four of the previous 13 months. "The company was full of tired properties, undercapitalized stores," he said. "A big challenge was whether or not we wanted to stay in the business. It was a big challenge to develop a plan to make it successful."

    Arthur, along with the rest of the leadership team, worked hard to mobilize the retail organization to develop the plan, to work out the details of the strategies, and then to implement the plan. They needed to achieve a higher level of success.

    He said this new infusion of energy, confidence and a can-do spirit was a breath of fresh air. "Our retail leadership team welcomed the opportunity to step in and develop the strategies. There was a level of confidence in the group that they could develop and implement a successful plan."

    Building from the Bottom Up

    When the team ventured into the field, however, it found that morale among store employees was low and turnover was high. Arthur and the rest of the team put a people-centered leadership philosophy into action and held roundtable discussions for both corporate and field employees. "As a result, with the support of our HR group, we were able to tailor our strategies around their concerns," he said.

    Valero improved pay, developed new recognition programs at store level, improved bonus programs and training. "We've cut our store turnover to less than half of what it was before the merger," Arthur said.

    He added, "We have invested heavily in our stores, with 450 having been remodeled. Significant capital has been put into the stores." The chain has a total of 1,028 stores today, down from a pre-merger 1,425.

    Arthur said he kept his team's motivation level high throughout the process by creating a sense of urgency around the mission. "My message was, 'We have this opportunity; we need to seize the moment!'" he said.

    Today Valero offers its up-and-coming leaders opportunities to learn and to develop their potential. Arthur explained, "We have ongoing leadership training programs that people in the organization can participate in. They are a part of our HR initiatives. Individuals who want to develop their skills have access to these HR programs.

    "We have an executive leadership program that operates several times a year. It's a three-day program of situational analysis; participants do a variety of different things that challenge them on their leadership skills, and help them identify strengths and areas for improvement. That gives people in our company a chance to develop at the very highest level."

    He added, "We are a company that really promotes new ways of thinking, new approaches to business. Corporate managers can gain critical exposure, and can make significant contributions. Because we have an inclusive culture that cultivates new ideas, we create fertile soil for new leaders."

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