CSR Wire just picked up our article!
CSR Wire just picked up our article!
Dear ReWiring Followers – This month’s post is a draft of an article we are shopping around. Any suggestions are most welcome! E & J
Fast Steps to Make the Ordinary Business Extraordinary: becoming a socially responsible business mid-stream
by Julie Lineberger and Ellen Meyer Shorb
Do you have a successful business, make good money, yet still unsatisfied? Perhaps there is a quiet fire in your belly gnawing at you, wondering: “Is this all there is?”
Cliff Cort of Triumph Modular decided to stoke those embers and rewired his business to create significant positive change not only in his own business, but in his industry as a whole. Cort wanted to build a legacy, he wanted to do something creative, and he wanted to make buildings he was proud of. While running a successful modular construction company, he latched onto the idea of offering Green Modulars (energy efficient and built with non-toxic, renewable materials). Fast forward ten years and now Cort is at the forefront of green modular buildings and making an impact around the world. In addition, he transformed the industry from formaldehyde boxes to non-toxic good design!
But what if you are hauling trash? Making cheese and milk products in Vermont or managing properties in Boston? Can you sell Apple products or vitamins or trucking services and make a difference in the world? Can an existing companies go SR/green?
What is a socially responsible business? SR businesses don’t evaluate or drive their business strictly on the financial bottom line, but rather a number of factors, including: environmental footprint, employee engagement, and connection to the community in which they do business. All SR strategies must be financially viable. In fact, our research shows that SR strategies add to the bottom line.
Ordinary businesses can go SR mid-stream We’ve spent the last three years interviewing companies with ordinary products and services about making the change to be driven by SR principles. These are not companies that were created to sell a green product, nor to serve their local community nor produce their product with minimal environmental impact. An increasing number of existing companies are changing how they do business and finding that doing so breathes new life, competitiveness, and efficiencies into production and market differentiation.
Strategies to re-orient an existing business How do you change an existing business to make it socially responsible? In talking to businesses across the country and across industries, we found 5 common and effective steps to “make an ordinary business extraordinary”:
• Stoke the Fire in Your Belly “Believe in what you’re doing, stick to it, hang in there.” This is not a simple group of aphorisms. The first step to rapidly make your ordinary business extraordinary is to WANT IT, to want to make a business that is much wiser and responsive and profitable. This means listening to yourself, tapping into your own hunger, fueling the fire in your belly.
Jan Blomstrann entered NRG Systems, a wind energy measurement device company, as a bookkeeper. Inspired by instituting SR human resources and supply chain policies that transformed her company, Jan transformed the company of which she is now CEO.
When Jan began, she was interested in creating a business organization and management systems to professionally run the company: accounting, hiring people, figuring out how to offer health insurance. 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. In the late 1990s young people started sending in resumes. 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.”
• Be a Champion or Hire One In an existing company, deep changes need a champion to educate and get buy-in from a variety of stakeholders.
When Ford Reiche owned Safe Handling in Lewiston, Maine, he spent two decades following the climate change debate, but made no changes in his trucking and transportation company until he met Andy Meyer. Andy was switching careers and wanted to make a difference in the environment; Ford saw his hunger and aptitude and hired him as his first “Chief Sustainability Officer.”
Meyer dug in, spent a lot of time on the floor, in the warehouses and docking garages and, with Ford’s support, initiated a sweep of initiatives that engaged the employees in thinking about how to save energy, thus saving the company money. Meyer started a program of noting good ideas and accomplishments on small steps with dollar bills at staff meetings. It was at once such meeting that an employee presented his research on a sign that requested people not to turn off a light switch. As it turns out, the light had been left on for three years and no one knew why!
• Build Unlikely Allies After 13 years with Cabot Creamery, Jed Davis was an assistant in the Marketing Department when he became filled with the idea of making the dairy cooperative more environmentally sustainable. It took him three years to convince Cabot management, but now the cooperative is being honored as a leader in the industry and individual farmers are greening their own businesses.
Currently Director of Sustainability, Davis worked across the Creamery to reduce solid waste. When Cabot controller Ed Townley first heard of Davis’ socially responsible goals, he rolled his eyes. Then Townley ran the numbers and realized the value of SR ideals both in terms of employee retention and reduced costs. He quickly joined forces with not only Davis, but Ed Pcolar who actually went with the trash hauler to the dump to count trash! After that experience, Pcolar had all departments weigh their solid waste and figuring out how to recycle just about everything. A few years into their initiative, the Cabot Creamery CEO was given an award for being an iconic leader!
• Implement Low Hanging Fruit First New Chapter Sustainability Manager Sara Newmark drew up a business plan to bring the Brattleboro, Vermont, company to its national leadership in sustainability. She initiated New Chapter’s sustainable policies with simple recycling, and in purchasing. Although she had created a business plan for the initiative, she saw a need to implement a few visible changes to start and then inspire others to follow.
She and company owner, Barbi Schulick, asked all the department heads where they could make green improvements, then followed up. An early and simple change was to check who was using recycled paper. As it turns out, different departments were sourcing their paper from different places. While recycled paper was more expensive than some were using, when all the departments switched to recycled paper, the bottom line expenditure for paper was less than had been previously spent.
Each department created goals and metrics to measure their results. An overall matrix for goals that included Fair Trade sourcing, carbon footprint, solid waste, and energy use was developed. The company then celebrated the department that recycled the most and who saved the most.
Little by little, day by day, they wove sustainability into the fabric of everyday work, getting it into everyday conversation. They didn’t see changes right away, nor get immediate satisfaction, but SR values started to become part of the way New Chapter does business. Now sustainability is who New Chapter is.
• Evaluate ROI from Multiple Angles and Share Casella Waste Systems Vice President Joe Fusco noted the coming changes demanded of his industry. Fusco says that they went from “hauling trash” to “managing resources.” Formerly any byproduct of a business was carted away to a landfill. Scraps of lumber, plastic, metal, packaging and food byproducts, all went to the equivalent of a cemetery to be buried.
Casella entered the recycling business and began to track repurposed resources. They celebrated with employees at each step by measuring and reporting out the difference they were making in environmental, community, employee satisfaction, and financial bottom line.
To assist in measuring what matters on a SR level, companies may use evaluation mechanisms such as the B Lab Impact Assessment (http://b-lab.force.com/bcorp/AssessmentReg) or Green America’s Certification Process, Green Gain, (http://www.greenbusinessnetwork.org/green-business-certification/how-can-your-business-get-certified.html). Such Corporate Social Responsibility Reporting, or Benefit Corporation Analysis, gives fodder to celebrate successes with the entire company.
Going SR mid-stream is harder and easier than simple change management In interviewing these companies, we asked ourselves, ‘Is this traditional change management? Are the strategies that we have outlined above the same that a company would have to use if switching a product line, expanding overseas, or consolidating three factories?’ In fact, the differences are important.
Going SR/green is a challenging transformation for a company to make because the field is still being created. In some cases, measurement tools have to be created industry by industry. Cabot Creamery joined with other dairy companies to design industry metrics and tracking, evaluation and reporting mechanisms.
Last, measuring financial success can be more difficult. The tie to employee retention and SR strategies is not always a clean nor direct causation. Payback terms may be longer than traditionally calculated. The metrics for success are not always an existing part of reporting systems to investors, shareholders, and owners.
On the other hand, markets and consumers are increasingly hungry for products and services that are made and distributed with a social conscience. We now have a language for SR, the “multiple bottom line” (planet, people, profits), “green”, “sustainable”, etc. The companies we talked to found that going SR engaged and retained employees. Resourceful ideas came from employees. Consumers were more attracted to companies with a social conscience. Energy savings and recycling saved the company money.
Perhaps most difficult to quantify, but most clear to those engaged in these transformations, is the fact that the employees and owners feel personally revitalized, engaged, and committed due to the conversion of companies to run in a socially responsible way. This intangible but powerful benefit can greatly propel a substantively significant change in business tactics.
This is an opportune time to go SR Ten years ago, making this kind of conversion would have been more difficult. An advisor on the board of an architectural firm recently admitted that 15 years ago she dismissed a strategic priority of the firm to be “sustainable.” Now the firm says, “We were green when it was just a color.”
There is momentum, a cultural change in the market, and a hunger among owners and employees to continue doing what they do so very well, but to positively influence the world, the environment, and their community, as they do so. While converting to be a socially responsible business can be logistically, culturally, and politically challenging, it is, hands-down, a smart business decision.
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
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.