At Quad/Graphics, the employees run the show.
At Quad/Graphics, the employees run the show.
It is managerial hooky, known at Quad/Graphics Inc. as Spring Fling Each May, for just one day, the entire management team of the Pewaukee, Wis., printing company gets up and walks out -- leaving the rank-and-file to run the plant. Workers take the controls of 11 presses, each of which is worth more than $3 million. They supervise the binding and the shipping. They handle the paperwork and deal with the customers -- among them, Newsweek, Harper's, U.S. News & World Report, Playboy, The National Football League, and The Jacques Cousteau Society. For 24 hours, the employees have nobody to solve their problems for them; nobody to second-guess their decisions
The tradition began in 1974, when founder and president Harry V. Quadracci was looking for a way to get his managers out of the plant for a day of strategizing and socializing. The plan was to shut down production for the day, he says, "but then some [printing] work came in, and rather than cancel Spring Fling, we decided to let the hourly employees run the presses." Just like that? "Just like that."
Quadracci enjoys comparing Spring Fling to what is known in some high schools as "senior-class sneak-out" -- a day when the seniors are allowed to skip their classes in order to give the juniors a taste of life without upperclassmen. But this is much more than a sanctioned prank. Leaving 570 of his 700 employees unsupervised for a full day is, Quadracci concedes nothing short of a high-stakes business risk. Ask him what could go wrong and he hurriedly ticks off a list of potential glitches, as if dwelling on them would be a jinx.
In a state-of-the-art printing plant such as Quad/Graphics, where presses transform rolls of paper into magazine pages at a rate approaching 1,600 feet per minute, any slipup that goes undetected for long can ruin a considerable amount of the day's production and perhaps leave the printer with a six-digit loss. Just the "make-good" for an ad inadvertently run in the wrong edition of a magazine can cost up to $15,000. Then, of course, there is the immeasurable cost of the damage done to a printer's reputation if the blunder somehow embarrasses a customer. Quad/Graphics's mistakes have been relatively small ones, Quadracci says, but even the minor errors that no printer can escape are too expensive to shrug off. Something as simple as correcting a typographical error is often a $1,500 proposition.
Yet, year after year, Quadracci's gamble pays off. The managers meet, the presses run, and the problems are few. What is more, employee morale always seems to be better for the experience, because, although it wasn't planned that way, Spring Fling is something of a symbol for the kind of work environment Quadracci has fostered at Quad/Graphics.
"We operate on the concept of individual initiative and responsibility," Quadracci explains, "and Spring Fling gives many of our people their first chance to take the initiative -- to get involved, and see what responsibility feels like. By putting the employees in charge, even for a day, we show them that we mean what we say -- that we trust them and that we're willing to give them the freedom to make mistakes." Laughing, he adds, "Just so long as they're little mistakes."
With an estimated 1983 sales volume of $75 million, 11-year-old Quad/Graphics is the wunderkind of its industry. Statistics on the industry are sketchy at best, but Quadracci believes the company ranks among the 10 largest magazine-printing companies in the nation, and its growth is outpacing that of most competitors. While the growth rate of most magazine-printing companies in the $4.7-billion publication-printing industry is well under 10% per year, Quad/Graphics's sales volume maintains a compound annual growth rate of 30% to 40%.
Success of such speed and magnitude is rare for a rookie in this league -- actually, for a newcomer taking a swing at the technologically advanced, capital-intensive magazine-printing business, success of any kind is a departure from the norm. Many plants -- old and new -- die of undercapitalization, and start-ups are so scant that industry observers are hard pressed to name even five during the past decade without mentioning subsidiaries or expansions of existing companies and plants. No question about it, those in the know say, Quad/Graphics is an exception to the rule. And that makes Harry V. Quadracci a man to keep an eye on.
"If I want to get the attention of another printer real fast," says Angelo Rivello, Newsweek magazine's vice-president for manufacturing and distribution, "all I have to say is, 'Well, I understand that Harry's thinking about . . ." He whistles through his teeth. "Boy, you can see their backs go up and their hair bristle a little bit. Harry is formidable, and his organization is very formidable. That's because he's innovative -- not only in terms of printing technology, but in how he treats his people."
Competitors and customers alike comment on Quadracci's trend-setting three-day, 36-hour workweek, in which employees put in three, 12-hour shifts and then get three or four days off -- depending on whether it is their turn to pull a Sunday shift. Productivity rose 20% when the schedule was installed, and it falls by that much on the infrequent occasions when the work load warrants a switch back to a five-day schedule, Quadracci says. Some rival printers are starting to copy the system, recognizing the merit of running presses around the clock without working employees to a frazzle or paying staggering amounts of overtime.
Quad/Graphics is also known for its employee stock ownership plan and profit-sharing program, its extensive list of benefits and perquisites, its burgeoning employee-education and training program, and its unusually luxurious facilities. How many other printers, for example, can boast of letting their employees work toward college degrees on-site? Or building a $3-million employee sports center? Or of decorating with original art -- even in the men's locker room?
But all of this is just the physical manifestation of a good management philosophy, implemented by a man who is a natural manager, Rivello says. "Harry has the ability to make his employees feel that the jobs they do -- whether at the lowest level or the highest level -- are very important to the operation. That's the magic. That's why, while other printing plants are closing up, Quad/Graphics is still moving forward."
Quadracci is an unabashed fan of management theory. He reads every how-to book he can get his hands on, gleans something from each one, and expects everybody on the routing list to do the same. As a result, even lower-echelon managers are comfortable bandying about such terms as "participative" and "authoritarian," and many of them have at least a nodding acquaintance with Theories X, Y, and Z. Give them an opening to discuss specific strategies, and they will pay homage to The One-Minute Manager, by Kenneth Blanchard and Spencer Johnson, as well as the "management by wandering around" technique described in Thomas J. Peters and Robert H. Waterman's best-selling book, In Search of Excellence (see INC., July, page 34).
What is going on at Quad/Graphics is an amalgam of many management methods that -- with all due respect to Messrs. Peters and Waterman -- could well be dubbed "management by walking away." Quadracci has developed a work force that he can turn his back on -- a company that he can trust to virtually run itself. He has done it, he says, by emphasizing the word "responsibility." But he is not referring to the traditional, line-and-staff variety, in which a manager delegates duties to specific employees.
"We don't believe that responsibility should be that defined," Quadracci explains. "We think it should be assumed and shared. Nothing should ever be 'somebody else's responsibility.' Anybody who sees that something needs to be done ought to assume the responsibility for doing it." Leaning forward to emphasize his words, Quadracci adds, "Our people shouldn't need me or anybody else to tell them what to do."
The fact is, Quadracci often refuses to tell his employees what to do. For example, when Quad/Graphics's shipping department needed greater back-haul revenue to finance expansion of the trucking fleet, Quadracci handed each of his drivers the keys to one of the company's Peterbilts. From now on, he told them, they were owner-operators -- partners in a new division called DuPlainville Transport Inc. -- and it was their duty to make the rigs profitable on return trips. When the truckers asked what they should take on the back hauls, Quadracci shrugged.
"How should I know? I don't know anything about driving an 18-wheeler," the company president recalls telling them. "I'm not going to find you your loads." With that, he turned and walked away.
The truckers, many of whom had never been in business for themselves, spent weeks filling out forms requesting the Interstate Commerce Commission to grant them common-carrier status and hours on the telephone convincing brokers to push some business in their direction.
"Believe me, it was a big challenge for everybody," says fleet manager Larry Lynch. "We got stung a few times [by loads and destinations that were not as promised], but we got rolling."
Similar stories exist in the founding of each of Quad/Graphics's divisions. When Quadracci began to integrate the company vertically -- setting up work centers for inhouse graphics and lithographic plate-finishing, as well as for the research and development of new inks, better machinery, and more-advanced computerized controls for the presses -- he tapped people with expertise both inside and outside the company, told them to consider themselves entrepreneurs, and then turned them loose. When representatives of each fledgling operation -- Enterprise/Graphics, Martin/Colorplate, CR/T, Werkes/Tech, and Quad/Tech -- asked if he had any specific goals in mind, the answer was always the same.
"You're going to have to assume responsibility for things like that," Quadracci told them. They did. Now some of these companies-within-a-company have won awards for their innovations, and most sell their products and services to other entities -- including competing printers. Quadracci couldn't be more pleased. "We get to make a profit, and help make printing a more efficient, attractive advertising medium at the same time," he says.
Quad/Graphics's philosophy of managerial freedom, or "management by walking away," is at its purest when departments or divisions are setting internal policy. Once Quadracci leaves someone in charge of an area and its practices, he stays out. He never considers the door closed, though when things that might affect the entire company are not proceeding according to his liking. It is rare, but when such situations arise, Quadracci steps back in.
DuPlainville Transport was pulled up short when the truckers began buying more trucks than Quadracci thought their profits could support. On the other hand, he spurred the managers of Quad/Tech into hiring more engineers than they had planned. "They didn't think they could afford more people, but I knew we'd need them [to further the division's work in developing computerized controls for presses]."
Quadracci doesn't see such interventions as those of a boss pulling rank; he prefers to characterize them as guidance coming from an experienced teacher. "Sometimes people need a little help with their risk-taking, particularly if it involves spending money," he explains. "Sometimes they pay too much attention to the bottom line; sometimes they pay too little. That's when I have to assume the responsibility and make a management decision."
"Walking through here is like walking through the junior prom," Quadracci mutters, barreling full-stride through the door to the pressroom. As he passes, employees clad in blue coveralls -- some of whom look too young to drive, much less run a press -- nod or murmur a respectful greeting. Even though Quadracci invites employees to call him by a nickname, "Larry" ("it's a leveler -- it's not as formal as Harry," he says), most of the younger workers apparently prefer "Mr. Quadracci."
Quadracci talks as he walks, explaining the finer points of "assumed responsibility." No, he says, he does not automatically trust his employees to be responsible, and he does not immediately grant them full freedom to participate in any decision-making. He doesn't even allow new hires to wear the company uniform until they have served out a rigorous two-month probation period. Why all the restrictions? "Because they're kids," he says, with sudden toughness, "and they don't all have their heads screwed on straight when they walk in the door." Half of his workers are under 24, he points out, and many have never held a full-time job before.
"They're raw recruits, and as far as we're concerned, they're in boot camp for about two years," Quadracci says. "They get indoctrinated, brainwashed -- theirs is not to reason why. It's authoritarianism all the way until they've proven they're adult enough to handle a participative management style. I mean, if you try to reason with an eight-year-old, he's gonna steal you blind."
And so the instruction begins. Performance is everything, new hires are told; union shops may do otherwise, but nobody at Quad/Graphics gets any points for mere seniority. Absenteeism or sloth will not be tolerated. And, more than anything else, Quadracci and his managers impress upon their employees a pride of craftsmanship -- a respect for the presses, and exacting standards for the work they turn out. To drive this last lesson home, Quadracci himself teaches the "Intro to Printing" course offered by the company's education and training program (Quad/Ed).
Meanwhile, other staffers are, as Quadracci puts it, "mother-henning" these young employees into opening checking and savings accounts and instructing them in how to make use of their benefits. Those who don't have high-school diplomas are gently prodded into getting their high school equivalency certificates.
Indoctrination or no, all of this attention goes only so far in preparing new hires for the challenges that await them. "They're never ready for the responsibility," Quadracci says. "We always give them more than they feel prepared to handle." Over the years, a few employees -- most of them newly promoted managers -- have failed to grow accustomed to the burden, and Quadracci has granted their requests to be moved back into less-responsible positions. But given time, the vast majority become comfortable with their duties -- and their lack of supervision.
"Most of us were terrorized for the first couple of months after we became first pressmen," says Mike Collins, a 32-year-old employee who held jobs in three other printing companies before joining Quad/Graphics five years ago. "It's not as if you can't get help from the other guys if you need it. You can. But nobody holds your hand around here. There's no foreman standing over you like there is in other plants, telling you what's okay and what needs fixing. All you've really got to judge your work is your pride. It's a lot of pressure, but you learn to thrive on it."
In most printing plants, the first press man is an hourly paid worker who has no authority beyond running the press, and -- particularly if the plant is unionized -- it may take a person five to eight years to get that far. But at Quad/Graphics, first pressmen have been as young as 22, and frequently they have no more than five years' experience under their belts. Nevertheless, they are salaried managers who represent their company's first line of supervision -- each having responsibility for a multimillion-dollar piece of equipment and a five-person press crew.
Each press crew is an autonomous profit center that warrants its own entries in the company books. The first pressmen, therefore, are required to keep daily tallies on production levels and downtime. They also have a say in hiring, firing, and work schedules and almost total authority in the areas of cost containment, quality control, and customer relations. Another of their duties is to continue the training their crew members began in Quad/Ed -- a fitting assignment, since it was a group of first pressmen who initiated the education program.
Printing, like most skilled occupations, is learned primarily by doing. In previous jobs, Collins found out the hard way that experienced printers are not always eager to take junior employees in tow and teach them the tricks of the trade. "Sometimes the old-timers think, well, if it took them 20 years to learn something, they'll make the people below them wait 25 years to learn the same thing," he says. Agreeing that a more formal means of sharing knowledge would prevent similar attitudes from developing at Quad/Graphics, Collins and several other first pressmen appointed themselves to the task of starting a school. They wrote a rudimentary curriculum and began holding classes.
Collins says neither he nor anyone else in the group ever consulted Quadracci on the training program. Nor did they discuss its progress until a decision was made to hire a training director. How, then, did Quadracci find out about the program?
"I really don't know," says Collins. "Through the grapevine, I guess."
As that comment shows, there isn't much of a chain of command at Quad/Graphics. Not that the company lacks a hierarchy: Quad/Graphics has a full complement of vice-presidents -- in charge of finance, administration, manufacturing production, press and bindery operations, and distribution -- and under each of them is a supervisor or two, as well as a broad rung of managers. In the pressroom, for example, there is one vice-president, six supervisors (two for each shift), and 36 first pressmen. But none of these managers can say that his or her sole function is one of overseer. One management level does not exist to give orders to the next one down.
Consider the relationship between a pressroom supervisor and a first pressman, Collins says. "The supervisors don't monitor us. They're there to make our jobs easier. They order the supplies we need, and they coordinate the scheduling of the various presses. They also work with some of the customers now and then, but if there's a real problem, they wind up sending [the dissatisfied customer] to us anyway."
Quadracci says he wants his managers to be "involved, not executives." To his way of thinking, managers should be virtually indistinguishable from those they manage. That is why employees at the lowest managerial level -- including the first pressmen -- wear the same uniform as any kid pushing a broom or driving a forklift. Only the embroidery over their breast pockets sets them apart: The managers have their surname there; the hourly workers go by their given names.
Quadracci admits that, despite his best efforts, he has an "executive" or two that have "delegated to the extent that they are no longer very involved in the department." Stoically, he chalks it up to style. "You have to accept the fact that every department is going to be run differently, depending on where the leader is on the authoritarian-participative scale. You can't change them. After all, imposing participative management on everybody would be just as structured, or more so, as authoritarian management."
Little of the unique working environment that has come to characterize Quad/Graphics's management style was part of any grand scheme. On the contrary -- the company's early years were highlighted more by a series of close calls than by any deliberate strategy.
"When we started, we aimed at the wrong market, with the wrong equipment," Quadracci says bluntly. The market he and his 10 co-founders had targeted, that of newspaper inserts, was in a slump when the company opened for business in 1972. As if that weren't enough, their brand-new, $850,000 press couldn't be relied upon to produce quality work. It was an inauspicious beginning for a group of people who had launched the company with such high hopes.
Quadracci and most of his co-founders had been employees of W. A. Krueger Co., a Milwaukee printing company that Quadracci's father, Harry R., had helped establish in the 1930s. Some were managers -- the younger Quadracci had been corporate counsel and then a vice-president -- but others were union rank-and-file. What brought them together was a shared disapproval of how top executives had handled a lengthy strike. They split off to start what Quadracci said would be a "company built by employees for employees, instead of a company run by a management class against a counterclass." The elder Quadracci was too much of a traditionalist to put much stock in so-called enlightened management, but eventually he too joined the team -- as chief executive officer.
For nearly five years, survival was an exercise in outlasting the capital, as Quadracci and the others attempted to switch gears and break into the magazine market. Proclaiming that "capacity is the key" to attracting big-time magazine customers, Quadracci ran the press day and night (thanks to the three-day workweek), and thereby amassed the capital to buy the more sophisticated web-offset machinery he needed. Or, as was more often the case, that he hoped he would need. The company's debt-to-equity ratio (now at 3-to-1) soared as high as 8-to-1 during the height of Quadracci's spending spree.
These hectic times provided little opportunity for Quadracci and his managers to develop an organizational plan or set long-term goals. While the co-founders fended for themselves in the day-to-day operation of the plant, their president was out beating the bushes for customers and lenders, gathering industry intelligence that would lead to marketing ideas, and developing flashy ways of attracting attention to this unknown printing company in what was usually described as "some little town in Wisconsin." Quadracci fought anonymity, for example, with an ad styled after a Saul Steinberg -- illustrated New Yorker magazine cover to depict Quad/Graphics's hometown as the mecca of the nation. "Where in the world is Pewaukee? Ask print buyers for . . ." the caption reads, listing more than a dozen of Quad/Graphics's most prominent customers.
When in 1977 and '78 there were finally opportunities to sit down and begin plotting a more formal approach to organizational structure and strategic planning, business was booming, and most Quad/Graphics managers didn't seem to think it made sense to tamper with success. So they chose to ignore drawing up hard-and-fast job descriptions, they eschewed all suggestions of developing new layers of management, and they rejected the idea of forming centralized services, such as a personnel office. "We made a conscious decision not to lose sight of what made us big so fast," Quadracci says, "and that was being small. As long as we retain that feeling of smallness, the culture we've created will perpetuate itself -- no matter how big we get."
Now, as Quad/Graphics adds a second printing plant three miles down the road and sets its sights on a $100-miIlion sales volume in the not-too-distant future, there are those who wonder if the company can sustain its human-resources policies. Maybe it is too much to expect Quadracci to continue his combined duties as president, head salesman, senior marketing man, and motivator-in-chief. Maybe employees will be too far from the influence of Quadracci and his co-founders to gain the proper understanding of Quad/Graphics's responsibility driven work ethic. Maybe it is time to transform "assumed responsibility" into "delegation of responsibility." Some suggest things are already moving in that direction.
Quadracci, however, disagrees. The system, he says, is working well -- sometimes almost too well. He smiles, recalling an incident that occurred in 1980, one in which he found that his employees knew the rules better than he did.
Managers in the company bindery had taken it upon themselves to catch a handful of lunch-hour marijuana-smokers in the act, and they enlisted the help of a local narcotics agent. As a result of the agent's undercover work, five employees were fingered and terminated.
Quadracci strongly disapproved of the department's tactics, wishing aloud that he had been apprised of the operation beforehand. But when it came to issuing a reprimand, he held his tongue. " [How to handle the matter] had to be their decision to make," Quadracci says with a sigh.
The capper, however, came later -- when one of those who were terminated asked for his job back, and was refused. Quadracci departed from his usual policy and took the rare step of offering an opinion. The young man appeared to have been an innocent bystander in the incident, he said, and so it would be "all right" with Quadracci if the bindery reversed its stance and rehired him. But the president's okay didn't carry much weight.
"To my total surprise, they said no again," Quadracci says, chuckling. "They told me that the kid had broken the cardinal rule -- he had violated their trust. He had failed to assume responsibility for his own actions, so how could they trust him to assume responsibility for the success of the company?"
Quadracci, recognizing that he had been given a good dose of his own management theory, had no choice but to accept the bindery's will. After hearing the employees out, Quadracci -- the manager -- shrugged, and walked away.