DeKalb Feeds in Rock Falls, Illinois, had a great 2011—profits are up, quality is high and employee turnover is almost non-existent. In fact, 44 percent of the feed mill’s 50 employees have been there more than 14 years.
Is there a secret formula? According to president Kelly Keaschall, DeKalb Feeds doesn’t really have a secret; what it has is a number of initiatives that have made DeKalb Feeds a place where people want to stay, work and create an atmosphere of success.
Employee stock ownership plan
Perhaps one of the most notable things about DeKalb Feeds is its employee stock ownership plan, or ESOP (see sidebar). The company’s ESOP was formed in 1985 in part because of unpleasant memories of a company buy-out in the 1960s, and because of the foresight of Ben Heimann, the president of DeKalb Feeds at that time. Heimann wanted to create a way to pass the company on to another generation, and the ESOP was a perfect tool for the job. He wanted to have a business structure in place to transition the company long before his eventual retirement in 1998.
However, an ESOP is also an employee benefit. Employees begin receiving shares in the ESOP for their first full year of employment. Shares are based on the employee’s pay as a percentage of the company’s overall payroll, and when an employee retires, they sell their shares back to the ESOP. Value of individual shares is based on a yearly appraisal by an outside firm that determines the company’s value. If an employee decides to roll the funds from their ESOP disbursement directly into a 401K, they can avoid paying taxes on the disbursement.
Keaschall admits that having an ESOP in and of itself doesn’t necessarily attract employees, and ESOPs are not the easiest thing to understand. Furthermore, interest in them often takes a while to build. “However, once an employee has been here eight to 10 years, they begin looking in their ESOP account and start getting actively concerned about how the company is doing,” Keaschall says. “The company’s performance often begins to mean more to them than the raise they’re going to get, so the ESOP becomes a big deal for them.”
Health care plan
DeKalb Feeds is self-insured, purchasing its health care plan through an outside brokerage. However, managing costs to the company depends heavily on cooperation from employees. At DeKalb Feeds, employees tend to listen to suggestions for managing health care costs since, ultimately, money saved means a stronger profit for the company—and the employee.
“We sit down each year and have an all-staff meeting and talk about managing health care costs,” Keaschall says. “Going to a local PromptCare as opposed to an emergency room can mean thousands in savings. And even for major services such as surgeries there are options that can reduce the cost to the company without compromising care or quality. With the ESOP, I think we get better buy-in from employees in this area. Otherwise I think there could be a tendency to think ‘Well, I'm just doing my company a favor by going along with these less expensive healthcare recommendations.’”
Transparency in finances
In 2006, management at DeKalb Feeds decided they wanted even more buy-in from its employees. As a result, they decided to share more information about the company’s performance with its employees.
“I decided that the best way to get buy-in was just to tell employees where we were at,” Keaschall says. DeKalb Feeds now sits down annually with its employees and reviews information that in many companies is considered privileged.
“We go through and we tell them where we're at on production cost, where we're at on delivery cost for each plant, we tell them where our tonnage is, where it grew, where it didn’t grow, what we've done with all the sow centers that we work with, our goals for the next year, and how I think we can achieve them,” Keaschall says. “If employees don’t know what our corporate goals are for the next year, how are they going to help us achieve them?”
Keaschall recalls that in 2006 there was a certain amount of disbelief at the staff level at the first company meeting—after all, these were numbers and information that typically had been reserved for the eyes of top management. However, ultimately the meetings had the desired effect. After a few years, a staff member shared this observation with Keaschall: "I think one of the reasons that everybody is pulling on the rope a little bit harder is because everybody understands the importance of it more now.”
Since spreadsheets and numbers don’t always tell the whole story about what may be happening in a certain segment of DeKalb Feed’s operations, Keaschall uses those times to educate staff about some of the challenges or circumstances that certain divisions face.
“If production costs are higher in one location you might ask ‘Why is that? Is it too much overtime, or is it not enough tonnage or critical mass?’ It might simply be that we didn’t have the personnel available to make more feed. Sometimes the answers aren’t immediately obvious.”
While it might seem to be a simple and even logical move, DeKalb Feeds has made an effort to match its employees with the right tasks. Case in point: one employee had, over the years, reached a point where he was doing so many different tasks within the company that it began to be clear that replacing him down the road could be a serious challenge.
Finally Keaschall sat the employee down and insisted that he train others to do the varied tasks he had taken on over the years.
“This employee was very key to us, but we had to learn from him. It made everyone’s quality of life a little better too, and now he doesn’t have to work 65 or 70 hours a week.”
DeKalb Feeds had an extraordinary year in 2011, showing a 46 percent increase in sales over 2010. However, Keaschall is quick to put that in perspective. “I'd like to sit here and say we did something really phenomenal, but when we started 2011 you were looking at $4 corn, and what we ended up with was $7 corn, so this is where you get almost 8 million dollars in growth.
Our true growth in terms of loads shipped would be about 17 to 18 percent growth. However, we really did have a good year.”
“I won’t sit here and say that a strong market and good management isn’t important. It is,” Keaschall says. “However, at the end of the day it really comes down to the people.”