An up-close look at how one company came to embrace open-book managament and what that has done for business.
In the end open-book management works for one reason: it transforms human behavior. It gives individuals reason to care, knowledge to work with, and the power to act. It connects every worker with the ecstatic buzz of business and enables ordinary people to perform better than anyone ever expected. People like Leo Henkelman
Leo Henkelman is built like a bear. He speaks slowly, and his voice rumbles. His eyes have a way of making other people nervous. Strange, then, that for so many years, Henkelman was an invisible man.
To his employer, Sandstrom Products -- a $5.5-million maker of paints, coatings, lubricants, and other chemical soups -- Henkelman was no more than a strong back clothed in a blue-collared shirt, attending to a mill all day, mixing paint. Same platform, same mill, for more than a decade. It was his destiny.
Luckily for Henkelman, though, Sandstrom Products lost so much money for so long that eventually his bosses decided they had no choice but to give open-book management a try. The financial consequences of that decision were staggering. Sandstrom Products rebounded from a loss of more than $100,000 in 1991 to earn almost $800,000 in 1993. "Sales stayed about the same," says founder Jim Sandstrom, now retired, still amazed. "No new product lines. No new customers." Just profits, lovely profits.
But why? How did that happen? Where did the profits come from? That's our story here. The source of open-book management's power to transform company balance sheets is the power it has to transform lives. Doors open, walls crumble, ceilings rise. Sleeping potential wakes up, and ordinary people prove themselves capable of extraordinary achievements. People like Leo Henkelman. Open-book management gave Henkelman a shot at altering his destiny, and he made the most of it.
"I have a hard time remembering Leo being around when I first started," admits Rick Hartsock, a longtime manager at Sandstrom Products who bought a big piece of the company in 1992. "Didn't say much, didn't talk to many people, didn't have much of a presence." Now when Hartsock looks at Henkelman, he can only wonder, "Where have you been?"
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Leo Henkelman had needed a job, any job. For several years -- summers during high school, then full-time after graduation -- he had worked in a slaughterhouse. His dad -- Leo senior -- was a foreman there and had helped bring him in. That was in the mid-1970s, when manufacturing jobs were still plentiful in the Midwest. Henkelman's particular task, when he started, was to stand at a certain spot on the production line and hammer purple USDA stamps in nine places on every side of beef that swung by, carcass after carcass, five days a week, on a shift that began at 3 a.m. "An extremely boring job," he says.
But the pay was good -- so good that Henkelman never saw much point in going to college. Not that college was ever really an option. There were eight Henkelman children -- four girls and four boys. Leo was the oldest. (When he was in 12th grade, Wendy, the youngest, was in kindergarten.) For years, to keep food on the table, Leo's mother, Bettie Henkelman, worked in a grocery store. "She never really got a check," says Henkelman -- she just signed it over to pay the bill. Bettie died of emphysema in 1989, the day before her 52nd birthday.
The family was forever on the move, following Leo senior, who was following the money -- from Glidden, Iowa, where he worked on a farm (for $180 a month, plus a house), through a succession of meatpacking jobs in tiny towns in western Iowa, ending up finally in Erie, Ill., a farming community on the Rock River, just up the road from the huge Iowa Beef Packers plant in Joslin. There Leo junior completed high school and began his working life. "It was one of these choices," he says now. "I could either go into the military or go to work."
But then Henkelman got fired from the meatpacking plant for fighting with another employee (who ended up in the hospital). It made no difference that his dad was the foreman; it was Leo senior, in fact, who delivered the bad news.
Henkelman worked in construction for a while after that, but the pay was lousy. The boss kept promising him a raise, but the raise never happened. Then some friends who already had jobs at the company told Henkelman about Sandstrom Products, in Port Byron, Ill. The base pay -- $4.20 an hour -- was $3 less than what he had been making at the meatpacking plant, but the work was steady and reasonable (no weekends, no overtime, "a 40-hour-a-week job, and that was what I was interested in"). And above all, it was available just then. Henkelman put in an application and was hired as a paint runner, the bottom job in the plant, no experience necessary. "Putting paint in cans, and cans in boxes," he says.
Shortly afterward, Henkelman moved out of his parents' house and rented a one-bedroom apartment on Main Street in Port Byron, next door to Peacock's tavern, two blocks from the job.
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Port Byron, population 1,002, is a Mississippi River town -- the oldest river port in Illinois, according to a forlorn sign that faces the water. Today a visitor to Port Byron can still get a pretty good sense of what kind of company Sandstrom used to be just from the layout of the place, which hasn't changed. There's the plant, first of all, toward the south end of Main Street, a squat building with a sheet-metal skin that opens onto a loading dock, where the plant workers take breaks in the afternoon sun. The cinder-block laboratory adjoins the plant, but it's on a different level -- lower in physical space, higher in the organizational hierarchy. Behind the plant and the lab, up on the hill, is the office, a handsome clapboard building with views of the plant and the river.
When the new office building was built, in 1982, so was a covered wooden staircase leading from the back door of the plant up the steep side of the hill to the office driveway on High Street. Forever after, to Henkelman and the other plant workers, management was "up on the hill." To get there, you took "the stairway to heaven."
Henkelman's world, the plant floor, was dark and noisy and smelled strongly like a high school chemistry classroom. After about a year Henkelman became a mill operator, mixing paints in a giant blender, following formulas supplied by the lab. The pay was a little better, and the work was more engaging, but there were frustrations at every turn. The problems that came up were somehow always different and always the same: Henkelman would think he had a better idea about how to do something, he'd take it to the guys in the lab (who had college degrees and carried business cards and wore to work the kinds of clothes they could afterward go home and eat supper in), and they'd tell him, in so many words, to blow off. "It was like they hired me from the neck down," says Henkelman. "Warm body, strong back, weak mind."
