Business and Management
Submitted By jimmyara
Johnsonville Sausage Co. a wholesale producer of sausage products based in the small rural town of Johnsonville, Wisconsin, has grown and evolved from a family home with a store front and $4 million in sales to a business that experienced $50 million in sales in 1985 and well over 500 employees. Originally a retail based operation founded in 1945, the company decided to focus the efforts of its wholesale operations in 1965 with Ralph Stayer’s return from college. At this time, Ralph, who was officially named president of the company in 1978, and his father took a long hard look at the company’s retail and wholesale endeavors and made the decision to focus their efforts on building this wholesale segment of the business because it looked the most promising. Rapid growth came with this strategy and by 1985 the company not only had grown sales to over $50 million but also its return on equity to 27%. It was now a business that not only enjoyed an outstanding reputation but a substantial market share of 46% in the greater Milwaukee area. It had also expanded to Iowa, Indiana, Illinois, Minnesota, and several other neighboring states.
However, given the lack of an articulated plan that coordinated the company’s growth during these years, by 1980 the quality of the product had gone down, the satisfaction of the employees had diminished, and even Ralph started to feel uncomfortable with the business. He didn’t feel he was managing his people in the right manner and even came to think that he had “ruined a man” by making him a type of pre-programmed machine rather than an independent evolving human being. Therefore, as these events led him to question and reflect on his management’s style and approach, Ralph came up with the creation of the Johnsonville philosophy and the empowerment of the company’s employees, which to me is clearly the foundation of the company’s success. This change in philosophy’s first step was getting together and deciding what the company’s people ends were. Not only were the objectives decided upon cohesive and revolved around performance, but they also were now articulated. This created an environment in which the company’s vision was now knowingly dependent upon the performance of an organization where everyone is an entrepreneur. Once this new philosophy was implemented the company experienced a much more efficient and substantial growth, and the increasing empowerment of the employees led them to take on more responsibility and begin to enjoy their jobs again. This empowerment of the line employees and the management structure that empowered them was a crucial turning point in both the quality of the product and the quality of the work. It was crucial because it had created an environment where employees could own their work and the company. Therefore, these efforts to improve the company should be regarded as efforts to improve their own lives. Parting from Ralph’s perception that he was “paying them to think” helped him understand that he had to guide and teach, talk things through, and led his people to understand that “their job was to eliminate their job”, pushing them to analyze situations, make tough decisions, and resolve any disputes without his help. This empowerment was further strengthened by the fact that Ralph always looked at himself whenever he saw a problem, blaming himself and admitting part of the fault (Jim Collins’ “Mirror and the Window” trait in leaders), allowing him to respond and actively address the problem by asking questions, surfacing issues, and creating an environment where all the relevant parties could discuss those issues.
In regards to the organization’s structure, Ralph emphasized allocating and delegating responsibility properly, and always “deciding who owns the problem”. Therefore, as he realized that some individuals were unable to accept this kind of responsibility, he started bringing in new people who could share his vision and embrace the firm’s new philosophy. He hired new people to key positions that reported to him and as time passed all of them were delegated more responsibilities and authority. Over the years Ralph delegated more and more, became less and less involved in the day-to-day operations of the business, and worked on the principle that it’s “his people’s jobs to keep him informed and not his job to ask the right questions”…...