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

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Development with Heart & Soul . . . . an interview with Melinda Louise Moulton, CEO, Main Street Landing

In 1982 Melinda Moulton and her partner, Lisa Steele, were two women on a journey to redevelop the Burlington waterfront.  They created an environmentally and socially responsible mission that guided them through 30 years and 250,000 square feet of built environment on Burlington’s Waterfront.  This is a powerful story about the courage to listen to your heart and soul to lead a business to true, lasting, as well as financial, success.

Their first attempt in the early 1980’s failed for a variety of reasons, but most compelling was the fact that it was too big to succeed and did not receive the community’s support.  Melinda remembered: “We knew it was not the right way to develop land, and we knew that there was a better, more socially responsible and sustainable way to develop the waterfront.  The failure of our first attempt allowed the phoenix to rise from the ashes which carried with it our social and environmental beliefs and a burning desire to succeed.”

Melinda and Lisa changed tactics, leading with heart and soul to create “a place for all people” with a focus on social justice and the environment.  They renamed the company Main Street Landing and created a mission that followed their beliefs and their values. “We interviewed architects and told them our simple mission: We care about people, the environment, and we need to make money. By 1988, we had written our sustainable mission. Our activist culture transformed into Main Street Landing,” Melinda reminisced.

“I still have blood on my hands from crashing through the glass ceiling.  Construction and development were primarily the work of men.  As women, we had a hard time being taken seriously.  We had to do the work and show other developers that we could do what 22 other attempts in 75 years never achieved: bring commercial development back to the blighted Waterfront.  It took two women to do it, and we did it with appeals and legal battles and disbelief. Most other developers did not believe we had what it took, we had to prove ourselves time and time again.  Fortunately, this was a driving force for us.

“Creating an environmentally sustainable development was the right thing to do. We did it with enormous emotion and drew from gut feelings and reactions.  The entire process was quite instinctive.   It was all about doing what felt right, everything was the feeling. For example, when we interviewed architectural firms our questionnaire said: Do you enjoy working for women? Are you happy? Who are you as a person? Do you care about the environment and social justice?  Do you consider yourself to have a big ego?”

Lisa and Melinda were all about focusing on the things that mirrored their values and beliefs.  They wanted to make sure that everyone would love and appreciate their work and know that they cared about how people wanted to experience the waterfront.  Melinda noted, “Everyone in Vermont has a special feeling about the Waterfront, and we wanted to tap into that and have them understand that although we owned the property, we felt more like stewards of the property.  Their opinions mattered to us.  The waterfront belongs to everyone, and we needed to be sensitive and open to that reality.”

Over the years Melinda and Lisa have been able to show that doing the right thing was also profitable.

When it came time for construction, Main Street Landing continued to follow their instincts when interviewing construction firms. Melinda remembered her thinking at the time: “We’re going to hire the sub-contractors based on trust and mutual respect, and a guarantee that they can meet our budget.  We won’t go out to bid. The architectural and engineering team is going to meet weekly with the construction subs and work on the construction drawings together in order to meet budget and create the best project possible.

“We said: ‘there is mutual love and respect between us – we all trust one another, and we want to work with you to create the best project possible and keep our numbers in line with our budget.  That’s what made it successful.” That, and the very smart, detailed business mind of Melinda Moulton checking out all ‘facts’ that any consultant, architect, builder or other consultant put forth. Working exhaustively long hours, Main Street Landing continued to do business on its own terms in order to honor their mission.

Trusting one’s gut means facing ongoing challenges and risks. After the successful redevelopment of Union Station, CornerStone, and the Wing Buildings, a mix of commercial, residential and retail buildings on the waterfront, they focused on the Lake & College building. Lake & College was developed with green construction goals for corporate, retail and a Performing Arts Center spaces.  (http://www.mainstreetlanding.com/waterfrontredevelopment/ main-street-landing/).  Main Street Landing also built a train station to support the return of rail to Burlington. Melinda lobbies for rail and is still awaiting its return.

In February 2005, however, they were still without tenants for Lake & College, and worry began to seep in. One blustery day, Jeffrey Hollander, then-CEO of Seventh Generation, called to see the space. “The wind was blowing, there was ice on the concrete floor, we walked up to the fifth floor, and the wind was just whistling and howling. Jeffrey said, ‘I think this is it. I want to rent 30,000 square feet!’” Melinda recalled her astonishment.

With Seventh Generation as a lead tenant, Main Street Landing began, in Melinda’s words, “creating a loving community that embraced and supported the tenants.  We nurture businesses to grow and succeed. We decided to allow dogs and babies, and encouraged a policy of ‘no whining’.  Our leases are mutually respectful, simple, and easy to understand, and our lease terms can be as short as month-to-month.  We also focus primarily on local businesses, start-ups, and nonprofits.”

“It’s all about the energy,” Melinda continued talking about the culture and the environment created among Main Street Landing tenants.  The Lake and College building is certified LEED Silver (Leadership in Energy & Environmental Design). “Unfortunately LEED does not recognize the social mission. The Green Building Council should take into consideration points for a socially focused development agenda.”

Melinda Moulton and Lisa Steele created quite a legacy with their unorthodox development and business acumen, yet they are still pushing envelopes and ceilings. Involved in nonprofit work that supports the environment, education, the arts, and social justice, Melinda revealed, “Both Lisa and I are more radical now than we’ve ever been. My time is running out. I have maybe 20 years, 30 if I’m lucky. I want to work with people to dig deep, evolve, and understand the normal process, the ‘101 of Development in this Country’, needs to change.”

Melinda’s final advice for developers and business owners: “It’s important to make money, no doubt, but more important is doing the right thing, following your heart, and using your mind, and insuring that you care about the Earth and its inhabitants – if you do that – the bottom line will be successful – and you’ll sleep well at night.”

http://www.mainstreetlanding.com

Julie Lineberger

Product is Not the Mission . . . an interview with Don Mayer, CEO, Small Dog Electronics

Don Mayer returned his draft card to the Selective Service with a letter, as an act of civil disobedience.  He then called the FBI  asking why they hadn’t come looking for him. Similarly, Don has always worked in the business world with an eye to how to make the world a better place.  He continues to ask the hard questions about his company and the impact it can and should have.

Are there some lessons we can glean from Don that would apply to businesses switching mid-stream?  Don would say, “Yes!”

Mission
Early on Don learned the “product is not the mission.”   He lived with the Dreamers in North Wolcott, Vermont, a farm community that tried to grow 100% of their own food for a year. When the community moved to West Virginia, he stayed on the farm and started North Wind Power, a wind energy company.  He and his co-founders hoped that windmills would solve the energy crisis of the 1970s.

One day he found himself in a room with uniformed Navy personnel, giving a presentation for North Wind Power Company, and had what he called an “out-of-body experience.  I looked at myself and wondered what I would have thought of myself when I was a draft resister if I could have seen myself in that room.  I realized I would have done ANYTHING to avoid being there and being a defense contractor.”

From this experience he took the lesson that the “product is not the mission.  It’s more important that you build a company with a responsible social mission.”  His current company, Small Dog Electronics, sells Apple gear out of Waitsfield, Vermont.  Its mission is to “create amazing products to improve people’s lives.”  The website says:  “We are a socially responsible company, which means we have a multiple bottom line.  The effect we have on our environment, community, customers, and employees is just as important as maintaining our profitability.”

Don believes you can and should measure all these parameters, not just profit, but Small Dog’s impact on people and the planet.

People
On the importance of how you treat the people that work for you, Don says that in every company he has run (up until a few years ago and the advent of direct deposit) he delivered paychecks by hand, with a handshake, and a thank you.  “One day at North Wind Power Company, we couldn’t pay.  There was still the handshake, still the ‘thank you’.  All the employees worked another three weeks until we could pay them.  It became apparent that respecting employees was a smart business strategy.”

Small Dog Electronics offers dog health insurance to its employees, allows dogs in the workplace, has exercise facilities and a book group.

The flip side to that, is the relationship with customers.  At Small Dog Electronics, “We use a net promoter score to measure customer satisfaction. (We read a book on this together in our company book group).  We survey every customer, every transaction.  One question we ask is, ‘Based on this transaction, would you recommend Small Dog Electronics?’  There is a 10 point scale.  8,9,10 are promoters; 1,2,3 are detractors.  By department, we inform staff how their total NPS score is doing.”

Planet
But how does a small company in rural Vermont make a difference in the environment?  With respect to its own energy use, Small Dog has recently installed a large solar photovoltaic array that powers 100% of the electricity of the South Burlington Store and a good percentage of the Waitsfield location. They have also installed a FreeAire cooling system for the server that uses outside air to cool.

Beyond Vermont, Don says, “We partner with companies that have working conditions that we support.  As we become a larger player, we have more influence.  For example, we have leather cases for iPads being made in China.  We ask about the content of the dye, the tanning process, the hours employees are working.  The packaging on the paper had a PET coating (a polyester film) and we had them change it to oil, which is more environmentally benign.  I said, ‘I want the most environmentally safe packaging you can come up with.’  We have a guy in China that teams up with the producers.  Because we’re bigger, we get more attention now.”

Another initiative that has impact beyond Waitsfield are eWaste collection days.  In 2006, Small Dog held a Free eWaste collection day on Earth Day. “We received 50 tons of computers, TVs, and other electronics.  The next year, we took in 150 tons.  Then 175.  Now Apple completely funds both Small Dog’s four annual eWaste collection events in Vermont and New Hampshire and weekly pickups of eWaste at each of the company’s locations. And manufacturers are paying for recycling. We got a lot of publicity within Apple.”  The collection of Ewaste is now free at all of Small Dog’s stores.  In 2010 Small Dog lobbied and had the best eWaste law in the nation passed in Vermont.

Profit
So what about the bottom line?  “You have to decide what kind of business you want to be. You can be a good corporate citizen.  But you need to build a business focused on more than profit and have to figure out how to do this.”  Granted, Don says, it’s easier for some businesses to do this than others.  Many companies have low profit margins.

Small Dog has a wide array of ways in which it, as a business, draws its customers, employees, and suppliers in, and tries to make a positive impact on the world.  “On our website, we list eight or nine charitable organizations, human rights, women, gay, dog welfare. If customers donate, we match customers donations to the maximum extent of our annual charitable giving budget.  When Haiti had the earthquake in 2010, we raised $35,000 in 48 hours for Doctors Without Borders.”

He gives the most credit to companies that build a socially responsible business mid-stream. “I’m more impressed with the local gas station owner who wants to be sustainable.  If you’re already in business, making the leap is difficult.”

Build the Business with a Socially Responsible Mission
What resonated in our interview with Don is that any business, with any product or service, can be run in a socially responsible manner.  It is the mission of the business, rather than the product itself, that determines impact in the world.  This impact beyond profit can be measured:  employee commitment, customer satisfaction, dollars raised, clean manufacturing, tons recycled, etc.  In fact, the many ways to measure how the “people” and “planet” missions are only growing.

Don exudes possibility.  With Don it is clear that an ordinary product can have an extraordinary impact.

smalldog.com

Ellen Meyer Shorb