An open book
Kiolbassa Provision’s management style stresses a values-based corporate culture and total transparency for its employees.
April 7, 2015
Growth has always been seen as a sign of a healthy company. Increased sales, expansion into new territories, relationships with new customers — those are all positive developments. However, a company that’s growing also has to keep investing in its internal structures, because too much growth too quickly can be disastrous.
To consider Kiolbassa Provision Co.’s growth curve over the last several decades, imagine a hockey stick. After years of steady, healthy 17 percent annual growth, the company’s sales leapt forward in 2012. Suddenly, sales grew by 24 percent annually. That growth curve may seem enviable, but the company’s systems and processes, which worked fine for years, started to break down under the weight of the increased production requirements and expenditures. Too much growth, President Michael Kiolbassa admits, could have destroyed the company.
Fortunately, the company adjusted before the worst could have happened. Kiolbassa dedicated himself to changing the company’s internal operations, using techniques like open-book management and values-based culture. Those changes were embraced by the company’s team members. As a result of that acceptance, Kiolbassa Provision is now much better prepared to handle both the opportunities that lay ahead and the challenges that come with them.
Michael Kiolbassa is the third generation to oversee the business, which has been producing quality sausages since 1949 — as one would expect from a family with a last name of “Kiolbassa.” Since Michael came into the business in 1987, the company has grown from a local Texas favorite to a national brand, with products in grocery stores and club stores across the country.
Not long after joining the family business, Kiolbassa says that he went on a local radio show and promised listeners that if they bought one of his and decided it wasn’t the best sausage they ever ate, they could get their money back.
“My Dad wanted to fire me!” he jokes, but that guarantee is still used in advertisements today to tout the quality of the product.
“I believe that two things are critical to our long-term success,” he says. “One is maintaining that craft mentality. That’s what brought us to the dance, and that’s what will carry us forward. As we grow, we have to stay focused on that. We make a heck of a lot of sausage in the plant, but all of it is hand-crafted.
“The other thing I’m all about is culture,” Kiolbassa continues. “If you have the right culture, you’re going to be very successful. That’s why we invest so heavily into the culture side of our business. That’s basically my job, culture – making sure we have the right environment for our folks to really succeed.”
Values and transparency
Sausage has always been a part of Kiolbassa Provision’s business, though the company originally started as a beef and pork packer that also produced a branded sausage product. Eventually, the wholesale meat business overshadowed the sausage business. Shortly after Michael Kiolbassa joined the company, he and his father, CEO Robert Kiolbassa, decided to phase out slaughter in favor of sausage. By 2005, the company was out of the packing business.
With a focus on custom products and hand-crafted, quality sausages, Kiolbassa Provision has been able to partner with retail customers who appreciate the family tradition, the custom sausage options and, naturally, the quality. Starting with H-E-B stores in Texas, Kiolbassa has been able to expand nationwide with retail partners like Costco, Publix and Winco.
As leader of a smaller processor, it was easy for Michael Kiolbassa to keep track of the company culture. As the business grew, more employees were brought on and a second shift was added, it became more difficult. He says that he realized what was taking place in the company when he would sit down with employees to talk with him. Their response was frequently, “I enjoy working for you, but my boss is a jerk.”
Kiolbassa Provision employed a DiSC management system to help improve communication between employees. DiSC is a type of personality test that determines your primary personality traits. People fall into one of four categories: dominance, influence, steadiness, and conscientious. The characteristics of each of those four categories help determine how a person leads, learns and communicates with others.
Kiolbassa Provision helps put that theory into practice on the plant floor. Every employee has colored stickers on their hardhat, identifying which personality category they are. That information allows supervisors to talk to their workers in a way that makes the most sense to them.
Michael Kiolbassa himself is an “I” for influencer, which means that he’s enthusiastic, optimistic and open to collaboration — valued skills for someone who sets the tone of a company’s culture. Lance Peavler, the total quality management director, is Dominant, which means he has the perfect take-charge attitude that you would want from someone in charge of a company’s quality systems. Tabatha Rappmund, the QA Manager, is Conscientious.
“That means she’s very detail-oriented and cautious, which is exactly what you want in your QA manager,” Kiolbassa explains. “I have to speak to her in a way that she can process what I’m saying. She understands that I’m a high I, so I don’t want the details. She wants the details, but I’m a big picture guy. And [Lance] just wants to get things done.”
“It helps to know how to approach people and help them learn better, in ways that they will understand,” Rappmund adds.
To supplement that information, team members are also assigned number values to represent their level of development. That way, a supervisor knows what type of coaching to offer.
“If I say ‘He is in D2,’ which is a development stage, everybody will know exactly what we mean,” Kiolbassa explains. “D refers to Development Level, and S refers to Support Level, and you want to make sure that you are matching your level of support with the development level of the team member.”
A team member who is D1 or D2 can’t simply be told, “Go make 10,000 pounds of sausage,” because they lack that knowledge. They would require closer support and step-by-step goals in order to succeed, and the supervisor would adjust his or her management accordingly.
“It’s the same thing when you get to D4,” Peavler notes. “You don’t have to micromanage them, because they already know it. They appreciate it, and you can focus your attention where you need it.”
The net effect of the values-based culture is that everyone in the company can speak with a common language. A team of 180 people with a variety of backgrounds, personalities and experience can communicate smoothly and effectively. A simple colored sticker on a hardhat helps one team member know how to explain a certain problem or situation to another, in the most effective way possible.
By reducing miscommunication issues and fostering a healthy working environment, Kiolbassa Provision helped its team members maximize their potential, with many moving into management positions as they developed their skills. Ismail Jaber, vice president, production support, notes that about 35 percent of the company’s leadership team came up from the plant floor.
“In an industry like ours, a lot of our team members are coming into this building looking for a job. We are creating careers out of these jobs. My meat buyer, our safety coordinator, our scheduler, the smokehouse supervisor, they came through the floor.” he says. “It’s not like a law firm or an accounting firm, where you have a minimum educational experience required. We get folks out of high school. To be able to teach them with that language that Michael is talking about, it’s really amazing.”
Kiolbassa says that the culture and improved communication skills came in handy over the last couple of years, as the company endured its growing pains. Not only did the company have to improve its infrastructure, it also had to navigate the challenges of rapid growth.
Around 2013, employees started talking about the need for a new facility. Michael Kiolbassa, meanwhile, was thinking about the need to have enough cash to pay for all the growth.
“When you’re growing your company, you’re eating through a lot of cash. Inventory starts to rise, accounts receivable starts to rise, cap ex starts to rise,” he points out. “I had to bring in a system of financial literacy that would teach everybody in our company how to think like I think – how to think like an owner.”
He discovered an open-book style of management after consulting with management experts Vern Harnish and Jack Stack. Stack’s book, The Great Game of Business, provided a template for the company to follow.
Open-book management is exactly that — complete financial transparency. Kiolbassa Provision hosts weekly huddles on Monday afternoons, where all of the department heads gather. The meetings start with examples of the company’s values in action, where team members are celebrated for extraordinary efforts during the week. Every facet of the company’s balance sheet is then updated and discussed, from unexpected costs to financial windfalls, and all of the numbers are then relayed to the departments during their own meetings. Questions are encouraged. At the end of the day, every single team member is completely aware of the company’s financial health, as well as their proximity to earning a bonus.
Michael Kiolbassa says that the transformation within the company was instantaneous.
“We had built a culture through values-based leadership that had a whole lot of trust within our organization,” he explains. “When we opened up the books and created that level of transparency, it magnified the trust in our organization, and most importantly it unleashed creativity that allowed us to quickly develop the systems and processes necessary to keep up with our growth.”
Last year, when rising commodity costs had a serious impact on the bottom lines of many meat processors, every single team member was aware of the outside pressures impacting the company. In turn, suggestions poured in on ways to reduce costs, from more efficient scheduling to ways to reduce rework. One employee in shipping & receiving noted the high cost for jalapenos and was able to find a better price elsewhere.
John Canales, plant manager, says that the company set up minigames as a way to generate improvement ideas. One such game, “Beat the Beef,” tasked the team to develop a more cost-effective formulation for sausage without changing the quality. It generated significant cost savings.
“Through our efforts with trying to find the best mix to find a certain fat content, we find the cheapest cut that we’re able to combine with three or sometimes four lean contents,” he explains, pointing out that a straight 85/15 meat block can be expensive.
“It’s a combination of the production team and the procurement team working together to find an inexpensive but high-quality meat product and combining them in the best and most cost-effective way possible,” Canales adds.
Now that everyone at Kiolbassa Provision is fully aware of the company’s finances, their perspective has changed. One project the company is developing involves ring sausage. The employees don’t necessarily like ring production, so in the past it could have caused some grumbling on the production floor. Thanks to the open-book management style, they see the big picture.
“We know that it’s additional sales that goes to the bottom line, and the guys are excited about it to get those additional sales,” Canales says.
What hasn’t changed
Kiolbassa Provision’s management strategies may seem very modern, but when it comes to the actual production of the sausages, the company is in many ways old-fashioned — by design. While the company has invested in technology where appropriate, there are certain aspects that still require a human element. It may make for a more labor-intensive process than other sausages, but Michael Kiolbassa believes that the hand-crafted quality of the finished product is too valuable to sacrifice. Some companies have made suggestions that the company change its formulation to work better with modern equipment, but that will not happen.
“We tried to automate some of these processes,” he says. “We get equipment people come in all the time, and we try it, but it doesn’t work on our product because our product is so different from everybody else’s.”
Production begins with small batches, explains Rappmund.
“Most sausage companies probably make 1000-pound batches; ours are 150 pounds,” she explains. That could amount to more than 450 batches per day.
The production floor utilizes a bowl chopper instead of a larger mixer/grinder, which creates a coarse-ground product. Rappmund notes that the bowl chopper operators have to take a class and pass a test in order to work on that machine, because it’s so integral to the quality and consistency of Kiolbassa sausages.
Other areas of the plant are more automated. The newest addition is a packaging line that was installed in late 2013. It handles about 30 percent of the company’s packaged products in five different product configurations.
Jaber says that the addition of more automation has been discussed, but larger mixing equipment just doesn’t fit with the company’s quality standards.
“We are going to stay true to what we started with, which is a craft sausage. If you go to what is typically used in sausages, a mixer/grinder, our product won’t look the same,” he explains. “We tried it on an R&D basis, and we just didn’t like it. We bought a mixer/grinder in 2008, and we ran it for less than a week.”
The company is landlocked with neighbors on each side, so expansion is not an option. Michael Kiolbassa credits Jaber for laying out a production floor that produces the most sausage possible in a limited space — about 67,000 pounds a day in just over 23,000 square feet of production space.
Now that Kiolbassa Provision’s internal operations have been strengthened, the company is able to focus on growing the business. New initiatives hopefully will see the company growing on both coasts in the coming year with organic sausages (West Coast) and Halal-friendly sausages (East Coast). Fortunately, the sales team is constantly able to find supermarkets that are looking for something more than another low-price sausage product.
Founder Rufus Kiolbassa died in 1960, and current CEO Robert Kiolbassa left college to take over. He continued with the principles that his father set forth, and the company continues to live by them to this day. One of Rufus’ quotes, embraced by Robert and still repeated by company team members, describes the company’s philosophy today: “The quality of our products will be remembered long after the price is forgotten.”