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INC.: You call your managers coaches. What difference is there between asking management to manage and asking them to coach?
STAYER: None, unless you absolutely change the nature of their jobs. If you want people to coach, then you'd better reward coaching. The bonus had better be developed on how well they build people; the promotions had better be developed on how well they build people. You darn well had better develop people.
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INC.: Let's say I sign on to make sausage at your plant. What would my workday be like?
STAYER: The whole concept is that we want each person to be a businessperson, responsible for the financials and everything else. So the people on the shop floor are responsible when the yearly budget gets done. You and your team will put that together, maybe with a financial person sitting in to help, although we've been at it for five years now, so people pretty much do it themselves. Every month you check out the stuff and record it, with measurements for your performance, your department's performance, your team's performance, on a daily or hourly basis, depending on what processes have to be controlled, tracked, and charted.
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INC.: All this in addition to my job.
STAYER: That is your job. It's the same in sales. Those people managed their own budgets and expenses, with discretion over what to spend for promotions, demonstrations, advertising, or whatever. We want to make them struggle with the issues and trade-offs, and we believe those are best handled at the point of action. When you have a merchandiser who gets promoted to salesperson, he or she hires a merchandiser as a replacement, and the bonus is tied to the hire because I want them to know what happens if they make a mistake.
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INC.: How is the company set up? Is Johnsonville organized by functional departments or product groups?
STAYER: Neither. We start with what does our customer want, not what do we make. We used to define our products by smoked, cooked, fresh -- how we made them. But [company president] Mike Roller said, "No. We're going to define them by how people use them, when they use them, why they use them." We have four sets of customers: retail, food service, processors, and institutional. So we got rid of our functional organization; manufacturing and sales became services to the people who run the business -- the people in charge of the retail group, food service group, etc. That's where the business is done. The rest of us are just support; all our factories and sales staffs are just services that are being provided.
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INC.: And you got rid of the QC department along with human resources?
STAYER: We don't have an anything department. Functional organizations become so vested in their own processes that they don't see the rest of the business. You wind up growing specialized idiots; they can only make a decision that takes care of their department, but not one that services the whole business.
That's why we talk team, team, team -- if you have any department that's a department unto itself, you're dead. If you think that quality is important, then you've got to get rid of your quality department -- it's got to become everybody's problem. Finally, we told our QC department that there would be no more quality control, it was going to be technical assistance. Your job is to eliminate your job, to teach it to the people out there. If you do it, we'll give you a better job. If you don't do it, you'll get different jobs.
* *
INC.: You've moved to a different job yourself, away from the day-to-day leadership of Johnsonville, on to your pasta start-up and your consulting business. Was that your goal from the start?
STAYER: I don't think my goal was ever to step away. My goal was to step back and not have to deal with the issues I was dealing with. I'm still emotionally attached; I live and breathe that company. But it became apparent that to be the best help, I had to get out of running the company on a day-to-day basis.
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INC.: Why?
STAYER: I was getting comfortable with it, and the minute that happens I know that I'm becoming part of the problem again. Your guts have to be churning every now and then or you're not learning, you're not pushing back the envelope. I loved it, but the well was starting to run dry.
I was facing the succession issue, too. I knew I had to get out of there to give other people the opportunity to see how well they understood the company. The real job as CEO is to make sure the people coming after you are better. I wanted to make sure that if something happened to me, Johnsonville would continue, and I wanted to start that transition when I was 43, not 60, when I'd have only one chance.
I started the pasta company out on the East Coast to get away. But I still needed something more. I got something out of the pasta company, but that was duplicating Johnsonville. So I started my consulting firm to go on learning, teaching a lot of people.
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INC.: If Johnsonville stopped growing, would you step back in?
STAYER: No. As a stockholder and owner, I'd ask the people there what they were going to do about it. We've had bad years, times when the raw-material market went through the roof and we couldn't pass the prices on. But the people said, "Let's start talking about what we have to do about it." In fact, we're going through one of those times right now. The numbers are horrible in the industry, profits down 50% to 75%. But our earnings are up substantially. So it works.
