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ENTREPRENEUR PROFILES

3.4.99  
Clean, Sober, and Good for Business
Ex-substance abusers power Omni's telemarketing

When he's searching for salespeople, Omni Computer Products President Gerald W. Chamales turns to some unusual recruiters: parole and probation officers, social workers, and recovery-program mentors. He knows their referrals will have histories of addiction and sometimes nonviolent crime, which can punch big holes in a resume. But to Chamales that represents potential, not problems. "They're coming out of a desperate situation, and that's what we look for: people who are desperate to change their lives. They tend to work harder to prove themselves," he says.

Chamales, 46, speaks from experience. He's a recovering drug and alcohol abuser himself who bottomed out as a homeless youth on the streets of Venice, Calif., 25 years ago. From the company's beginning he has made hiring the hard-to-employ -- and managing them with the tenets of recovery programs -- a key part of Omni's corporate strategy.

Today, a third of his 120 telemarketers fall into this category. They have helped build Omni from a startup -- launched 19 years ago in Chamales' Venice Beach apartment with $1,300 borrowed on a credit card -- to a 280-employee national supplier and manufacturer of Rhinotek-brand printer cartridges, paper, and related products.

Chamales estimates the privately held company, which occupies 40,000 square feet in Carson, Calif., grossed $28 million last year, with sales to such blue-chip clients as Walt Disney Co. and Federal Express Corp. Omni doesn't alert clients to its hiring policies, but it doesn't hide them, either, and no one seems to mind. Some sales agents even discuss their personal struggles with customers.

It turns out that a life hustling on the streets can be good training for telemarketing. Chamales says these workers are unusually persuasive -- a useful skill when you're making 25 to 30 cold calls day. The results surprise even Stephen Marcus, a California judge who heads a court-run rehab program from which Chamales has hired. "Hard as it is to believe, these people are good workers," Marcus says.

It is, indeed, surprising. Addicts and alcoholics cost the economy $314 billion a year just from absenteeism, not to mention any hidden damage their performance does to their employers. The difference at Omni is that people don't have to cover up. "An employer who hires recovering people is hiring people who acknowledge they have a problem, and some of those costs could be avoided," says Scott Robertson, administrator at Glendale Adventist Alcohol & Drug Services, in Glendale, Calif.

Managing those workers is no simple matter. It takes special supervisors to do the job. Take Joe Hiller, senior vice-president of sales. He came to Omni in the summer of 1984 -- 40 days sober after more than a decade of substance abuse -- decked out in his father's ill-fitting suit. "I didn't even know how to tie a tie," says Hiller. His first check, commission only, was $27. Within a year, he had moved into management.

HONOR SYSTEM. Before Chamales will hire anyone with a troubled past, he demands 30 days of sobriety in a treatment program. He forgoes drug tests, relying instead on his own instincts and the honor system. Applicants are given a 50-question multiple-choice test to detect qualities associated with Omni's top sellers and to help weed out "50-yard-dashers," smooth talkers who won't last. The company actually has an incentive to hire the ex-felons -- a credit of up to $2,400 on their first-year salary under the federal Work Opportunity Tax Credit Program.

Once hired, telemarketers learn the company's well-defined rules. Although they don't visit clients, sales agents -- all of whom get 5% commission and earn $250 to $400 per week for the first year -- have to dress professionally. "We come here broken or limping, and the company shows us the path," says Alan Jacob, 49, once a heroin addict, now vice-president of sales management. "There are a lot of guidelines and structure here because we need that."

Managers balance that strictness with sensitivity to personal problems that can mar performance. To help employees restore credit or finance a car, for instance, Omni has disbursed $250,000 in loans. Another technique is to assign a mentor to each new employee. Ex-addicts often need help with such basic etiquette as shaking hands. "Twenty years ago, I had trouble looking into people's eyes," admits Chamales, who was raised in foster homes and started drinking at 14. And mentors help ease the emotional roller coaster of commission sales itself, which can take a toll on anyone.

How do employees from the regular workforce feel about their ex-addict colleagues? They can be "more sensitive," says Judy Vallembois, a sales-administration manager, misinterpreting even routine brusqueness as harsh criticism. But "they're a lot more creative and more fun to be around."

All this support results in lower turnover, especially during the first year, when the telemarketers are earning the least for the company. Among Omni's rehabbed workers, the first-year retention rate is 15%, while only 8.5% of those from Omni's regular workforce are left after 12 months. Such attrition would be dismal in most businesses, but experts say it's quite solid for telemarketing.

Workforce longevity makes other savings possible. Many telemarketers rely on sophisticated customer-contact software, which costs from $3 million up to $25 million, for a 300-seat call center. These systems provide more background data than Omni's long-term account executives need; they have much of it in their heads. Omni didn't bother upgrading its antiquated DOS system to Windows until last year.

Omni's rehabilitating mission works for high-level recruitment, too. Earlier this year, Chamales began introducing a retail Rhinotek line. To lead the push, he hired David Bledeen and Jerry Dix. Bledeen is a recovering addict and co-founder of Naked Juice, a startup acquired in 1987 by Chiquita Brands International Inc. Dix lost his share of a $19 million lug-nut business because of substance abuse. Chamales says that under other circumstances, he wouldn't be able to hire executives with that pedigree.

To be sure, not every day is sunshine and success. Chamales weathered two death threats 10 years ago. A bomb scare five years ago shut operations for half a day, causing about $50,000 in lost sales. And $25,000 in supplies evaporated some years ago. He has identified only one of the culprits -- a rehab worker whom he had fired.

EARLY SIGNS. The more common problem is relapse. Omni mentors know the early signs: absences, tardiness, bizarre behavior, a lack of focus, two-hour lunches. Six months ago, Hiller, Chamales, and mentor Carole Garland stepped in when Kelly McFadden, 32, started drinking again after 4 1/2 dry years. After talks and two sick leaves, Hiller says, "we got to the end of our rope. She was coming to work drunk, spilling food, telling us she had cancer." They gave her an ultimatum: rehab or termination. Omni helped her find a treatment program, and colleagues covered her accounts, so she wouldn't come back broke.

Some might read this as a cautionary tale. Not Chamales. "Kelly is one of our very solid, top-producing executives," he says. "To find one of her caliber is not easy." Back at work after a few months, she tries to convey her appreciation: "This is my home, my family."

Chamales has ambitious plans for his workers. "Two hundred twenty million in gross sales by 2002," Chamales says. "That's the big hairy goal." And if that expansion causes stress, not to worry: Omni's new call center has a discreet, well-lit counseling room.


By Ed Leibowitz in Los Angeles

This article was originally published in the Mar. 1, 1999 print edition of Business Week's Enterprise.


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