Listen to that sick feeling in your gut. Most of the time we try to avoid that nervous butterflies-in-the-stomach feeling. But Ralph Stayer owes his career success—and the success of the hundreds of employees he supervises—to going after that butterfly feeling.
“If the things you commit to don’t make you puke in the sink every now and then, you really haven’t signed on for a lot,” says Ralph, in his booming voice and plain Midwestern accent. His point is that it’s important to look inside at the things we’re afraid of and then go ahead and tackle ’em. That’s how he built his career at Johnsonville Sausage.
Ralph’s career started in one of the most comfortable, protected situations: a family business. It might have been easy for him to glide along and not push himself. Many people are in his situation today: Two out of five Fortune 500 firms are family businesses. And most American companies are run by brothers and sisters, mothers and fathers. So I include Ralph’s story in this book because obviously a lot of people are working in businesses owned by their families. And even if you aren’t, Ralph’s story can apply to most situations, family business or not—because it’s about how to manage people and improve yourself.
I really relate to Ralph’s story because I got my start through family—and, like him, I couldn’t sit back and glide. My uncle talked me into joining his profession as a financial advisor, and I started out at Prudential, the company where he worked. But, thankfully, my uncle made it clear to me that he was scaling back and didn’t have any positions for me on his team. Because I knew I couldn’t rest on my laurels and count on any more help from him, I had to make things happen for myself. Later, when I did find success operating on my own, my uncle asked me to join his team—it was then that I knew I’d made it.
So family business can give people a great start, but they don’t guarantee success; that comes when people push themselves into the gut-wrenching zone. For Ralph, the pushing began in college, when he was studying business and finance at Notre Dame. Ralph worked out things on paper and saw that the retail sausage business wasn’t going to make his family wealthy. Annual sales were about $1 million, and the three shops were profitable. But no matter how much he brainstormed, he couldn’t see how to make the sausage shops into a big, growing concern. Somehow, though, he knew he would find an answer.
The thought that he might not be able to help his parents grow their business gave Ralph a pretty sick feeling. After all, his parents had started the sausage shop in 1945, worked their way out of the poverty of the Great Depression through the sausage business, and sent Ralph to college in the hopes that he could help them grow the business. So he came up with something daring: create a wholesale manufacturing side of the business, which meant stepping up production, buying delivery trucks, and hiring more workers. It was a pretty big goal, but he couldn’t let himself aim for anything less.
So instead of just getting by in a comfy family job, Ralph asked his parents to let him create a position for himself where he would grow the wholesale side of the sausage business. Of course, they said yes.
Making sausage, Ralph says, “is not rocket science.” But keeping the product quality consistent with a proud family recipe is a daily battle. Or at least it was for him. So he tasted each day’s batch of sausage and gave the workers feedback. Sometimes it was perfect, sometimes too spicy, other times the quality of the meat might not be the best. Ralph worked hard on every detail of sausage making, selling, finance, and distribution—and it paid off.
In 10 years, Ralph had a profitable wholesale business, and his parents made him president of the entire organization. That was in 1978, the same year the company broke ground on a new production facility and started moving its sausage beyond Wisconsin and into neighboring states. Sales were growing at double-digit rates each year, and Johnsonville Sausage wasn’t a small, local producer anymore. It was a leading regional sausage supplier. Ralph should have been happy.
But the most interesting part about Ralph’s story isn’t his early success; it’s how he didn’t crash and burn. Because early on, Ralph listened to his gut: He knew Johnsonville Sausage was a vulnerable company.
Here’s the thing about problems: If you know they’re there, you can solve them. If you deny them, they’ll trip you up. Ralph listened to his gut: Underneath the success lurked a huge problem. Despite strong sales and profitability, Johnsonville Sausage was too large to be considered a small local brand (the kind that inspires strong community loyalty) and not big enough to compete with the large nationals like Armour Star and Oscar Mayer. Ralph needed to push and grow the company further, but that gave him the butterflies-in-his-stomach feeling—so he did it.
Whether you’re making sausage or doing financial planning, growth has its problems. The problem with growth, in almost any kind of business, is that as more and more people take part in the business, it’s harder to control the quality of the product. Ralph’s problem was that Johnsonville must grow—or else be targeted by national brands with more money to spend on advertising and marketing—but in order to grow, quality control had to improve.
“I realized I couldn’t keep on doing what I was doing,” Ralph recalls. Even though he was working more and more hours, “We were making more and more mistakes. People didn’t really care. They came, and they went. I tried every management recipe there was.” Ralph was reading management books as well as hiring consultants to study this and study that. Nothing was working. “I tried a bunch of stuff,” he says. “It was all about me trying to fix them.”
Then he went to a business event and heard a speech by Lee Thayer, a University of Wisconsin consultant. Something about Thayer’s common-sense talk made Ralph think he could help him with Johnsonville’s quality-control issue. But when Ralph asked the consultant to work for him, he got this answer: “It depends on what part of the problem you think you are.” Dumbfounded, Ralph felt like he’d been hit in the gut: The consultant was saying that he himself was the problem. After Ralph regained his composure, he saw the opportunity. “I said, ‘That’s great because if I’m the problem, then I have the solution. I can fix me.’”
First, Ralph sent a six-page letter to each of his employees—along with a $200 check. In the letter, he explained how Johnsonville’s workers could be the best-paid of the industry if the company continued to grow. And furthermore, employees would no longer be considered employees or workers, but referred to as “members,” members of the Johnsonville team. But they needed to figure out how to make the plant run better. Maybe the process would be a little chaotic, maybe some people thought it was pointless; no matter, Ralph was boldly going into new management territory. What gave him the courage? It made sense. For years, he’d been the center of the business: “I was everything back then, in my own mind. My people deferred to me. The more I did, of course, the less they did.”
Everything had to change, even the daily sausage-tasting where Ralph and two vice presidents graded the previous day’s product and told the workers what they thought. As they stood there chewing, Ralph looked over at his vice president of manufacturing and said, “Did you make any of this sausage?” The vice president answered, through a mouthful of sausage, “No, of course not. I was in a meeting with you all day.” Ralph stood there chewing and said, “I didn’t make any of this stuff either. Why are we tasting the sausage?” The production workers, he realized, were responsible for making the sausage, so they should be tasting it. “We went running down to the factory and told them, ‘From now on, you guys taste the sausage.’” Instead of feeling empowered, the workers’ response was, “How will we know if it’s any good?” Ralph felt horrible when he saw how little confidence the workers had in themselves. Empowering his “members” and making them accountable, he saw, was the real solution to helping Johnsonville grow.
After spelling out parameters for what makes great sausage—coming up with a scale for juiciness, tenderness, flavor, and texture—Ralph handed over tasting duties to the employees. But things didn’t turn out exactly as Ralph expected. The sausage didn’t just become more uniform—the sausage actually improved to be better than it used to be. How did that happen? Because the workers could see the cause and effect, such as which smokehouses supplied the best meat or where to get the best spices.
For years Ralph been working hard and using all his learning and resources to grow Johnsonville. But he’d forgotten about the learning and resources of his employees. Here they were, responsible people who could take care of themselves and their families, balance their checkbooks, and coach their children’s Little League teams. But he was not giving them the chance to be accountable and use their talents.
More and more responsibility was delegated from managers to line workers. For instance, when employees complained about the food in the vending machines, they were given a chance to research and find a better supplier. And when production workers resented working weekends, Ralph gave them the task of figuring out how to increase efficiency and reduce waste during weekdays so they could shut down the factory on weekends. The first changes were on the production end, but it gradually extended to every department, with “members” taking over everything from marketing campaigns to merchandising programs.
Certainly expensive mistakes did—and do—happen at Johnsonville because the greater the accountability of employees, the greater the risk. But instead of focusing on someone’s failure, Ralph says, “I prize the learning.” He sees the expense of losses as the cost of investment in the employee’s training. If you let someone go every time he or she makes a mistake, “you lose the investment.”
Johnsonville was becoming a pretty unusual place. Workers became “team members,” managers became “mentors,” and benefits (which sound like manna from heaven) became “compensation.” Changes came fast and furious; some people didn’t like it and left. But there was no turning back for Ralph, who was excited again about coming to work each day.
Ralph isn’t surprised that his experiment worked, but the numbers are amazing. Between 1980 and 1985, the company became more efficient and raised its return on assets. Sales climbed to $50 million by 1985, up from $15 million in 1982. Now sales are more than $600 million, and more than a third of net pretax profit now goes out in bonuses to the “members.” Even with all that bonus money paid out, net profit on sales has tripled.
“We make a lot of money, one of the most profitable businesses in our industry. But profits aren’t about money alone,” Ralph says. “It’s about people.” If the company has a year when it doesn’t grow by at least 15 percent, Ralph and his people take it as a sign that they’re stagnating. “It gets us back on track.”
All this focus on challenging himself—and his employees—means Ralph sees his career differently than when he first set out to build a wholesale manufacturing company. Instead of being the brains of the operation, as he used to see himself, now he sees himself as a coach and mentor. Instead of figuring out how to make more money, he says his job is “to figure out how to be the leader of the best sausage company in the world.”
That means offering plenty of coaching and career help to employees. “What’s the stretch? What gives you butterflies in your gut?” Ralph asks his managers. “Results are secondary; it’s about producing great people.”
Everyone’s goals are now posted on the company’s intranet. “Everyone sees it,” Ralph says. “You can’t hide.” For a factory worker newly arrived to the United States, the goal might be to become fluent in English within 2 years; for a manager the goal could be to become a nationally recognized expert and be a paid speaker on that topic. And Ralph’s goal? “To become a better leader.”
Even more interesting is how the company goal, to become the best sausage company in the country, has changed. Now that Johnsonville is an industry leader, “it’s not a stretch anymore” to be the best sausage company. So the Johnsonville “members” got together and changed the goal. Now it’s to become the country’s best company—of any kind. The old goal just wasn’t causing enough butterflies in the stomach.
Whenever I get butterflies in my stomach at the thought of taking a risk—doing my own radio show, talking about my work on television, or coming up with a new book proposal—I push myself through it, and then I’m glad I did. Now that I’ve met Ralph and heard his story, I’ll think of how he started as an employee working for his parents and then buit Johnsonville Sausage into a huge company that he now heads. Even though most of us may not enjoy that uncomfortable, fluttery feeling in our stomachs, Ralph’s story can help us to see it as a precursor to great things.
“Nerves and butterflies are fine—they’re a physical sign that you’re mentally ready and eager. You have to get the butterflies to fly in formation; that’s the trick.” | ||
| --Steve Bull | ||
And Ralph has a great philosophy for managing people: “I was lying awake nights trying to figure out how to make great quality sausage. That’s not my job. My job is to lie awake nights coming up with ways to get the people who are making the sausage to lie awake nights thinking about how to make great quality sausage.”
Whether you manage people now or will in the future, think of Ralph when you tackle a big goal. And if you feel butterflies, you may be on to something great!