Social Responsibility in Times of Financial Crisis . . . from an Interview with Jan Blomstrann, President and CEO of NRG Systems

In 1987 NRG Systems formally acknowledged the effort Jan Blomstrann was contributing to the young company by bringing her on payroll.  Founded in 1982 by David Blittersdorf, the company’s main accounting system at the time was a proverbial shoe box of receipts.  Working as a nurse, yet intimately involved in the growing enterprise, Jan noted the need to create a balance sheet.

Ahead of its time in terms of producing instruments to measure wind capacity and capability, NRG business management systems lagged behind the creative engineering aspects of the company.  Jan decided to take classes at Champlain College learning about both business and computers, also in their neophyte stage in terms of small business accounting.

In the late 80s, Jan was not particularly interested in wind energy. “This was in the infant years of wind energy,” she recalled.  “At a trade shows there would be 50 people, all engineers very excited about how a gear box worked.”

In fact, when she spoke to people about what she was doing, the initial reaction was: “You’re doing what?  Making wind instruments?  Trumpets?  Can you make money on this?”

Nurse turned CEO implements SR policies instinctively    JanBlomstrann

She was interested, however, in creating a business organization and management systems to professionally run the company.  “I did like the business part:  accounting, hiring people, figuring out how we were going to offer health insurance.

Although she did not label it at the time, the policies that made the most sense to her were socially responsible.  “It was just the right thing to do, especially in terms of (employee) retention.”

“NRG Systems, by nature of the product, is contributing something greater into the world.  I don’t think I ever thought of (the employee policies) as ‘I’m going to do things in a socially responsible way.’  Things just sort of evolved.”

Those policies included a compensation package of both salary and profit sharing as well as other benefits based on their company values.  “Our core values go back ten years or so, when we first got mature enough to do a strategic plan.  We said; ‘Let’s write down how we have been operating for twenty  years, and document it.’  Those core values — Environmental Stewardship/Leadership, Fair Employment, Profitability, Integrity, Innovation, Dedication. Our core values were reflective of who we were.”

Her ambivalence to the company product changed as the business grew.  “In the late 1990s young people started sending in resumes,” Jan reminisced. “They said: ‘I don’t care what it is, is there a job for me?’” Jan was startled at the requests that were predicated not only on the wind industry, but by her socially responsible policies. “It was very infectious for the employees to see the success of the company.  We were contributing to a new way of being and doing business. Those years were very exciting.”

With the success of NRG Systems, there came a time to move out of their rented sheet metal building.  “We had a desire to create something that had a lighter footprint on the planet.  It was time for us to move, and we felt it would be nice to walk the talk.”  This impetus coincided with her being named President and CEO of the company in 2004.

Architect Bill Maclay was given a power budget and this mandate: create a building that performs well, feels good, and is inviting.  “The entire process led to a LEED certification that taught us along the way,” Jan remembered of her company headquarters.  “It was the fourth industrial building in the world to get LEED Gold.  All materials were sourced as locally as possible.  No off gassing furniture or carpet were specified, no formaldehyde, etc.”

Renewable energy industry stalls — SR policies challenged
“The entire renewable energy industry was on a steep growth curve from 2002-2008, when we built our addition.  Then, the crash affected our business, and the wind industry, as capital dried up, and no wind projects were being developed.  A year ago both the US and Chinese market further dipped at the same time due to public policies,” Jan explained.

After years of strong growth the wind industry stalled.  A world-wide recession, coupled with a Congress unwilling to work with the President in supporting renewables, made a comprehensive energy policy impossible. Jan noted:  “Renewables were left with a simple tax incentive policy.”  Financing dried up.  Projects stopped completely.

Quite suddenly, NRG Systems had to make serious, and extremely difficult, decisions. At the onset, it felt like the company was being ripped apart.  Jan found herself staying up nights.  “It nearly killed me to do what we had to do last year, especially letting people go. When a lot of profits coming are in, it can mask the more stressful aspects of running a business; it’s easier to be creative.”

“In the boom years,” she continued, “with the profit-sharing variable as a component of pay, sometime people earned 50% above base pay.  With the downturn, there were some quarters without any profit-sharing at all.  In these times both the loyal and cynical elements can come from employees.  Although the cynical element wondered out loud if management knew what they were doing, the loyal element buoyed NRG Systems.”

“For example,” Jan quietly told a story, “we had an older man in electronics.  It was a tough year morale-wise, and we were not making as much money.  He got a little discouraged and was going to get another job. We talked.  He thought about it and decided to stay.  I saw him a few days later and said, ‘Thank you.  I am so glad you decided to stay. I hope it will be a good decision for you.‘  His response:  ‘I could go to the other company and make more money, but my wife is sick.  If I stay here, I know I can go to her doctor’s appointments with her.’  People go through different stages in live and go through different things.  I want someone coming through the door happy to be here.”

“The soul of the company is still there,” Jan mused.  “Our values are still there.  In terms of the benefits, we need to get some of them back.  But, I am not looking for this just so I can benefit;  I want everyone to benefit as we grow.”

One example is the mental health of the company.  With the difficulties, Jan wanted to give the NRG Systems team an opportunity to process their stress as a group. “This fall, we brought in a consultant who works on happiness, leadership, and personal accountability.  I gave him the charge to give a recasting exercise.  How do we recast this time into a new intentional story?  How do we look at this time as a positive step in the evolution of the company?

“The entire staff was split into four groups and did this exercise.  I was not part of it so that everyone had a full chance to vent.  People expressed anger, frustration, doubt.  It was just therapeutic.  They all said they appreciated the opportunity to do so in a group supportive way.  It was a good chance to get it out.  The gossipy water-cooler conversations came down, and the faith in leadership is coming round.”

With creativity, SR values adhered to
Jan found herself questioning how to stay true to values during this transition, realizing that things could never go back to where they were.  She explored new initiatives to offer positive reinforcement and recognize people in ways other than cash with a constant wish to portray her sentiments:  “You are all valued, you are all here, we have a job to do together.  This is what we are going to do going forward to rebuild.”

“We prioritized and focused on doing what we need to do to keep what is most important, such as preserving 401(k)s.”  While maintaining NRG’s policy of Open Book Management, “I brought in the word “budget’”.  This is one way of keeping core benefits, and core values, while evolving the company as a whole.

In doing so, some green benefits stemming from the NRG Systems core value of Environmental Stewardship, had to be shelved.  Jan ruminated about the decision to no longer subsidize employee hybrid vehicles.  “I’ve had to take some of the benefits away. I could not do it anymore.  No one lost the benefit who already had it, but nobody new can access it.”

She also mentioned a change in the company holiday party where, in the past, a band had been hired.  This year, in recognition of all the musical employes, Jan smiled, “Two bands formed themselves and got up at the party!  It was all in house.  Although it was a little quieter, it was more fun!”

While some company policies had to change, there is great evidence that the company values of NRG have never been at risk.  As Jan said, “It does not cost money to have integrity.  There are values behind what we do that don’t go away such as community relations and corporate giving.  This is still an important piece.  We give away less, but our program is still there.  I really don’t think its an either or.  Neither is Flex Time.  It is easy to have flexible work hours regardless of bottom line.”

One particular change, Jan is very disappointed about.  “We brought in a chef in 2006 or 2007 and provided lunch four days/week.  During this transition, I had to take as much cost out of our budget as possible. I would love to put that back in.  I keep asking myself, ‘Is there something else I can do to make sure everyone gathers at noon and has that benefit?’

“Previously, no one was using cars.  Everyone would collect at noon and there was a company conversation.  Productivity-wise it was unbelievable.  Meeting was productive.  Now we’re back to people getting in their cars for lunch, or eating at desks.” Jan ruefully concluded.

“It is easy and enjoyable to offer such policies when you are profitable and growing and things look great.  It’s more difficult when it’s not.”  Jan is looking to create changes that are not only for now, but the long term health of NRG Systems into the future.

Market stress re-orients business; SR still foundation
Jan’s words conveyed her long term thinking and belief in the future:  “The past is the past. Don’t think that if a certain contract comes in, it will go back to the way it was.  We need to create a new future for ourselves.  New things might happen, but in a new way.”

“We’re in a real transition phase as a company.  I would describe us as a company that grew quite steadily, we had a tremendous record.  It was exciting and fun to be in this business.  The ability was there to provide a great experience for employees.

“The last couple of years have been a huge wake up call. We are about half the size in terms of revenue and 25% smaller in terms of staff.  There’s had to be a real refocusing on what does it mean to be in business and what does it mean to be a good business?  I am asking that question of myself.  A few people were not there in the beginning and now see a company that is much more serious and much more stressed.  Where is the room for Social Responsibility?

“How do I take this company to the next stage in a much less privileged way, and emphasize the social responsibility aspect?  How do I make sure we continue to evolve?  I don’t think it’s an either or.  I think a lot of those things we did in those years contributed to our success, our intellectual level, institutional knowledge.  Keeping people improves institutional knowledge.

“The company is now a smaller group, working hard.  Policies were put into place that, once things turn around, a smaller group will see the benefits of.  The structure is still all there.  The morale and feeling about the company will turn around.

“There is the story to tell that we went through hard knocks, had to let people go, but we survived as a group and will continue.  By letting go of things of the past, we will be far more careful; lots of lessons have been learned along the way.  We are a smarter and better business than we were three years ago.”

Several years in, after fully establishing the values and policies of the company, Jan started feeling a connection to what NRG Systems was producing as well as the business administration of the company: “I started getting excited about wind energy when we talked about distributed energy, all the things that start to make it more than a machine.  And wind energy doesn’t put out belching smoke!”

“Fast forward today, it is in my blood and who I am.”  Good thing for NRG Systems, the blood flows both ways.

http://www.nrgsystems.com

NRG Systems Headquarters • Photo by Carolyn Bates

NRG Systems Headquarters • Photo by Carolyn Bates

Julie Lineberger

Advertisements

An Interview with John Caldwell, Managing Director, Paradigm Properties

Paradigm Properties is one of our favorite stories because it is a traditional business, a property and asset management company, which started a service for their tenants called “Community Connections” to coordinate and provide volunteer events and donation drives.   Other property management companies saw the value of connecting and serving tenants like this and ultimately a separate nonprofit, Building Impact, was spun off to do this work for Paradigm and their competitors.   John’s story of how this happened, and how important it is to still serve community, is a good one.

SONY DSCKeep your values on your paperweight
John admits that he did not see this coming.  While his CEO, Kevin McCall, is a “classic liberal do-gooder”, John describes himself as more conservative, but with Christian values.  He  says that any social program “can’t get in the way of the company’s primary mission”, but if managed carefully, giving back to the community enhance the mission and the profitability of the company.

This mindset is what started Paradigm on an unlikely route.  As Kevin McCall, the CEO tells the story, one day a woman selling pies to raise money for the nonprofit Community Servings asked McCall if she could pass out fliers in one of his buildings, advertising the pie sales.  Her request sparked an idea.  Why not tap into Paradigm’s office buildings on behalf of multiple nonprofits?  What if Paradigm were to coordinate and offer an attractive menu of options for companies and individuals to serve their community?

Throw in some entrepreneurial zeal
Thus Community Connection was created in 1998 as a tenant appreciation program in buildings owned and managed by Paradigm Properties. The  building-wide volunteer events and donation drives were, at first, a simple gesture for tenants who leased space in the office buildings that Paradigm Properties managed.  Community Connection events, such as business attire drives and charity bake sales in the lobby, were meant to bring community involvement right to people’s doorsteps–to harness the collective energy, resources, and goodwill of companies and individuals that spent so much time in these very office buildings. By connecting over 20 nonprofit organizations with the community of companies and individuals in the buildings, Paradigm brought together people who wanted to play a greater role in making their communities stronger.

John would say that it wasn’t easy.  There was a period where “it wasn’t gelling.  There was a leap of faith quality about this.”  But by 2003, other property management companies had begun to imitate and work with Community Connection.   The annual impact of Community Connection was estimated at $300,000.  Paradigm had gone from selling pies to running a large scale volunteer operation.

Give away value
Paradigm found there was a great return to Paradigm in running Community Connection, but as it grew and other companies became involved, the question arose of whether to spin off this effort as a nonprofit that served multiple companies.

On the one hand, Community Connections provided tremendous value to Paradigm.  Press releases about CC “mentioned us in the same breath as our bigger competitors.”  The program demonstrated to tenants that Paradigm cared; about them and about the community.  It differentiated Paradigm in the marketplace.  “It opened doors, gave us talking points, enhanced our reputation and helped build our brand,” said John.  It built camaraderie among tenants and managers and among the employees of Paradigm.  It even became a hiring and retention benefit.

So why spin it off?  John says they had to face the greater good of the community whose nonprofits would be well served by having multiple property management companies working together.  It was hard to let go of the CC, “they were the fun people”, but it was the right thing to do.

Paradigm spun off Community Connections as the nonprofit “Building Impact.”    Building Impact expanded beyond the buildings owned or managed by Paradigm Properties and now partners with 15 real estate firms across greater Boston. These firms serve 47 buildings, helping over 575 companies and 20,000 people volunteer, donate, and connect to the community, right in the buildings where they work and live.

John admitted he is still conflicted about setting up Building Impact separately.  But, he said, “We can still go to third party owners and talk about Building Impact.  It is a powerful example of how we build relationships with our tenants.  While we haven’t quantified this, we know that it has made a difference in the bottom line.”

Re-invent again
Paradigm continues to live by the value of “do well by our community.”  For years they have had a  program called the “24 hour Club.”  They give each employee three 8-hour days to volunteer.  If they volunteer on a weekend, they get to take a day off during the week.

For a while, Paradigm found that the employees were either using this for volunteer work they were already doing, or just not using their three days.  Management then doubled down on support, encouragement, reward and even consequences.  “We started to talk about how important this is.  We instituted benchmarks (tied to using these volunteer days) at the end of every quarter and in the semi-annual review and said this could impact you monetarily.  We use this program in our initial interview and say, Just want to make you aware of this program that you will be expected to participate in.”  John said that it needs to be part of the DNA of the people who want to work with Paradigm.  “It’s a huge plus for 20 and 30 somethings.”

John mentioned one employee who was not active until she suffered from postpartum depression herself.  Now she is involved in an organization that works with new mothers.

John is quick to admit, “We’ve erred too.  At times we’ve emphasized it more than we should.  There needs to be a balance.  It can’t conflict with profitability.  We continually emphasize that synergy.

“We also need to align our volunteer work with our corporate mission.  We need to spend more time selling and celebrating.”  John is not letting grass grow under his feet, he is building, working, refining, and continuing to build mission into his work, a continual process of re-invention.

Do well by our community
Paradigm had a terrific experience with the power of connecting tenants to nonprofits and facilitating community change.  They started in their own buildings, grew to serve other companies, spun off a nonprofit, and then focused on their own volunteers.  In the process, they found they made a difference, in the community and in the success of their business.

Ellen Meyer Shorb

Pushing an Industry into Sustainability . . . from an interview with 
Cliff Cort, President
, Triumph Modular Buildings

Cliff Cort is on to the world wide trend of modular building, with his very own twist. He notes that while the US market is sluggish on modular, buyers in other countries have wholeheartedly embraced the construction system. “There is less disruption to the site. It is quick. All over the world, people are wanting modular.” His twist to focus on “highly designed” and sustainable modular may be the game changer the US is waiting for.  As Cliff says, “Green is old news now.  The building code is making green the law as of late.”

Being an effective entrepreneur is about staying on the market edge. Cliff built Triumph Modular Buildings, and is now creating a piece of the company that is on that edge, by going highly designed green. Realizing the modular industry was made up of structures that had not changed in 30 years, Cliff decided time was ripe for change. “I knew everything was barely legal. Yes, all modular classrooms are built to code, but nothing more. They were the cheapest possible things – windowless classrooms. It was disgusting. I knew there was an unbelievable opportunity to raise the bar. The school systems have been getting what they asked for which is the least expensive alternative.”

The Importance of a Champion

In 2006 an architect from Germany, then working in Maryland’s Montgomery County school department, started a design competition in the United States. Familiar with modular construction in Europe, she knew America was lacking and needed to put together better buildings.

Cliff and his associates entered and won the competition for a green and energy efficient modular classroom design. They flew down to Washington, D.C. for the award. At that point, it was just a design. Cliff wanted it to be a reality. “My daughter was going to the Carroll School, so I asked: ‘How would you like to be the first one in the country to have a green modular classroom?’

“Steve Wilkins was the head of school and there was no precedent for what we were proposing. No one in the country had seen any green relocatable classrooms. It opened the eyes of all the dealers and manufacturers in the country.”



It IS Possible to Push an Industry


“There is this green movement coming. Sitting in front of a bunch of mobile modular industry folks, I was pushing them. The market did not push them.

“I knew I was in trouble with them because they were looking to maintain the status quo and maintain their existing assets. They were very protective of their legacy mobile buildings and classrooms,” Cliff explained.

A turning point came when the Executive Director of the Modular Building Institute said Cliff was right. “We have to embrace the green movement,” concurred Lori Robert from NRB Manufacturing, Ontario, Canada, and Vice President of the Modular Building Institute Board of Directors.

Cliff then created a green modular building that Harvard University used as a child care center for 18 months as they renovated another structure. “It won all these green awards including recognition from the Massachusetts Chapter of the US Green Building Council.  One judge said he voted for it because it sat softly on the earth.”

The trend continues. “We are looking into new prototype modular classrooms now.  For example, the Sprout Space classroom below is designed by one of the largest architecture firms in the world, Perkins+Will.  We hope to be able to deliver it nationally for a compelling price.  The financial result of our green projects have yet to pay back any big results, although word of mouth works and we have been invited to work on interesting projects lately.”

Expanding with Ideas and Energy


“People in schools are now starting to ask for green. Finally they are asking for green modular classrooms, addressing what we have been working on for years. It truly is transforming the industry. We have built the best temporary classrooms in the country two years in a row now. They are green, sustainable and relocatable.”

Cliff is abundant with ideas, some of them really radical in the opinion of the current industry. “I am trying to be relevant to the movement.”

Cliff also has ideas for modular power pad, a modular off-grid solar internet cafe type structure pictured below.

“You need to take risks to innovate.  I offered a group of people in my office to take the test to become LEED accredited and proficient.  I said anyone who got it by January 1, I would give a $10,000 bonus to.  Sure enough, the one who passed the test left the company a short time after.”

Cliff is fast paced, continually thinking, continually revising, pushing his company into the future. He is, in fact, challenging the entire industry.

Julie Lineberger