Foldcraft Co.: Transformational Journey
Steve Sheppard
Chair and CEO, Foldcraft Co. (Retired)
CEO, Winds of Peace Foundation (Current)
IntroductionIntroduction
Incorporated 1948Incorporated 1948
100% Employee-Owned S Corp100% Employee-Owned S Corp 350 Members350 Members 4 Wholly-Owned Subsidiaries4 Wholly-Owned Subsidiaries
2006: $50MM Consolidated Sales2006: $50MM Consolidated Sales
Companies, Products, ServicesCompanies, Products, Services
TransformationalTransformational
Values-BasedValues-Based
Foldcraft Business ObjectivesFoldcraft Business Objectives
Grow Equity By 12% Per YearGrow Equity By 12% Per Year
Diversify Our BusinessDiversify Our Business
Manifest Employee OwnershipManifest Employee Ownership
Improve Competitively and GloballyImprove Competitively and Globally
Simple….But How?Simple….But How?
What if…?What if…?
We could substantially increase the involvement and satisfaction We could substantially increase the involvement and satisfaction of our employees, and in the process afford better benefits, twice of our employees, and in the process afford better benefits, twice the retirement income of comparable companies and higher the retirement income of comparable companies and higher wages?wages?We could increase productivity at our company by an average of We could increase productivity at our company by an average of 5.3% annually?5.3% annually?There is a “magic pill” that could boost our investment rate of There is a “magic pill” that could boost our investment rate of return by 2.7% every year?return by 2.7% every year?There is an initiative that can increase sales, employment and There is an initiative that can increase sales, employment and sales/employee by 2.4%?sales/employee by 2.4%?We could increase the likelihood of the longevity of our firm by We could increase the likelihood of the longevity of our firm by 15.2%?15.2%?There could be a strategy that would better assure our firm would There could be a strategy that would better assure our firm would continue operating independently?continue operating independently?We could eliminate corporate income taxes?We could eliminate corporate income taxes?
What if…?What if…?
We were working for the benefit of ourselves We were working for the benefit of ourselves and our co-workers, not some absentee and our co-workers, not some absentee owners?owners?We had the opportunity to create real wealth We had the opportunity to create real wealth through owning equity?through owning equity?We could buy into owning a company without We could buy into owning a company without investing any of our own money?investing any of our own money?We woke up one day and realized that we really We woke up one day and realized that we really will become old and retire some day?will become old and retire some day?We had the opportunity to create twice as many We had the opportunity to create twice as many retirement bucks as the average worker?retirement bucks as the average worker?
What’s Different in an ESOP? What’s Different in an ESOP?
ExpectationsExpectations
Opportunity for Wealth-BuildingOpportunity for Wealth-Building
Covenant With Each OtherCovenant With Each Other
Corporate Culture IntrospectionCorporate Culture Introspection
Wider Focus on EmployeesWider Focus on Employees
Engaging, Teaching, Communicating, Engaging, Teaching, Communicating, Understanding the ESOPUnderstanding the ESOP
Ownership “Magic” Ownership “Magic”
Opportunity for Culture ShiftOpportunity for Culture Shift
Holistic DevelopmentHolistic Development
ParticipationParticipation
OwnershipOwnership
StewardshipStewardship
Membership in an organization means that we Membership in an organization means that we have have chosenchosen and accepted this playing field. This and accepted this playing field. This choice and acceptance becomes our contract. choice and acceptance becomes our contract. Our desires for compensation, self-expression, Our desires for compensation, self-expression, participation…whatever we want from a place…participation…whatever we want from a place…are viable only so long as we can commit to the are viable only so long as we can commit to the mission, results, constraints, principles, difficulties mission, results, constraints, principles, difficulties of the larger institution. If we cannot support of the larger institution. If we cannot support these requirements and boundaries, then we these requirements and boundaries, then we should leave. Stewardship offers more choice should leave. Stewardship offers more choice and control in exchange for a promise…. and control in exchange for a promise….
What I Promise to You:
*Open Book Management *Member Involvement *Stewardship *Servant Leadership *Listening *Vision *100 Best Companies *Change *Opportunity
What You Promise to Me:
*Partnership*Commitment*Participation*Attitude (Courtesy, Respect)*Body, Head, Heart*Change*Self-Management*Peer Pressure*Desire to Be All That You Can Be
ESOP NoteworthyESOP Noteworthy
Outstanding Employee-Owner in America, Outstanding Employee-Owner in America, 19931993
Outstanding Employee-Owner in Outstanding Employee-Owner in Minnesota, 1993, 1994,1996Minnesota, 1993, 1994,1996
Outstanding Employee-Owned Company Outstanding Employee-Owned Company in Minnesota, 1996, 1998in Minnesota, 1996, 1998
Outstanding Employee-Owned Company Outstanding Employee-Owned Company in America, 1998in America, 1998
Foldcraft StatisticsFoldcraft Statistics
47/200 Participants Own 6-Figure Accounts47/200 Participants Own 6-Figure Accounts
The Average of Those 6-Figure Accounts Is The Average of Those 6-Figure Accounts Is More Than $160,000More Than $160,000
30/47 Accounts Are Owned By Non-Managers30/47 Accounts Are Owned By Non-Managers
19 Accounts Are Owned By Factory 19 Accounts Are Owned By Factory Participants, 11 By OfficeParticipants, 11 By Office
Average of ALL 200 Accounts Is More Than Average of ALL 200 Accounts Is More Than $75,000$75,000
CORPORATE WELLNESS:CORPORATE WELLNESS:
I NTELLECTUALS OCIAL
E MOTIONALS PIRITUALO CCUPATIONALP HYSICAL
II. Open Book Management:II. Open Book Management:Chapter and VerseChapter and Verse
Chocolate Chip CookiesChocolate Chip Cookies
The Great Game of BusinessThe Great Game of Business
The School Desk CompanyThe School Desk Company
The ESOP HuddleThe ESOP Huddle
Weekly ClosesWeekly Closes
Individual Profit/Loss StatementsIndividual Profit/Loss Statements
White Boards, Hour-by-Hour ChartsWhite Boards, Hour-by-Hour Charts
III. Foldcraft’s Lean Journey
Pella Visit
5/98
Industry Week
publishes“Kaizen
Blitz”
9/97
Participatein Pella Event
6/98
1st Foldcraft Shopfloor
Event
8/98
Unleashing Ownership PotentialUnleashing Ownership Potential
Kaizen TeamsKaizen Teams
Inside and Outside, All MembersInside and Outside, All Members
Intense, Focused, Accountable (25%-Intense, Focused, Accountable (25%-50%-40%)50%-40%)
Educate, Facilitate, Elucidate, CelebrateEducate, Facilitate, Elucidate, Celebrate
Cara’s StoryCara’s Story
Foldcraft’s Lean Journey
1st Foldcraft Kaizen Event Results:
• Proved to ourselves that it could be done
•50% Floorspace Reduction
•66% WIP Reduction
•25% Productivity Increase
•The Vent!
Foldcraft’s Lean Journey
4/02
Tool & Die
BecomesProcessBuild
FoldcraftAcquires
BakerFurniture
4/02
KaizenComes
ToBaker
5/02
Results Achieved ‘98-Present:Results Achieved ‘98-Present:
• Process Lead-Time 66%• Floorspace 42,000 sq. ft.• Productivity 240% • Claims 48%• On-Time Ship 95.2% 99.3%• Significant product expansion
• Insourcing previously purchased items
Foldcraft’s Lean Journey
Kaizen Continues Every Day, Every Hour!
•Monthly Events•Point Kaizens•HOT Lab Work•Public Events•Hour-by-Hour Charts•White Boards•Etc.
Does It Make A Difference?
•Competition (Falcon)
•Customers (YUM!)
•Acquisitions (Millwork)
•Share Appreciation•Distributions
Cross Boundaries•Transformational•Educational Travel•Third-World Realities•Broadening Member Thinking•Educating Re: Diversities•Global/Cultural Sensitivities
Foldcraft Foundation
•Funded by Foldcraft•10% Pre-Tax Profit•Separate Member Board
•Established 1997
•Global Focus
IV. The Global ContextIV. The Global Context
Winds of Peace FoundationWinds of Peace Foundation
Martha Valle ValleMartha Valle Valle
Honduras ESOPHonduras ESOP
Organizational WorkshopsOrganizational Workshops
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