Dick Resch
At his KI Industries, employees have 'skin in the game'
Being owners doesn't put employees on easy street at KI, a maker of office furniture whose stock is privately held by its workers and managers. No, CEO Dick Resch wants each of the 3,500 employees to feel like an entrepreneur, which might mean big rewards, and certainly big risk.
That also means employees need information to help run the business, Resch says. Detailed numbers get spread around the company, especially during a monthly meeting at its Green Bay, Wis., headquarters, where several dozen managers drill deep into material costs, sales and profits of divisions, and even individual products. "Everyone sees the good, the bad, and the ugly," says Resch.
Ugly? "Everybody knows who's doing well and who's not."
It's a high-stakes creative tension that has helped transform KI from a small player in nondescript office furniture-think folding chairs-to a fashion-conscious supplier to highfliers like Microsoft and Hewlett-Packard. Since Resch, 68, took over in the 1980s, the company's sales have gone from $45 million to more than $600 million, and KI is now the seventh-largest maker of office furniture.
Grubstake. Resch joined what was then Krueger International as a young executive in the 1960s, a small stake making him one of the company's few shareholders. Even he got little information, though, until he led the company through a couple of leveraged buyouts after the founder died. By 1986, he'd set up KI as nearly 100 percent employee owned; the only outside shareholders are committed advisers, including board members and attorneys.
KI has grown by rapidly producing furniture tailored to industries such as healthcare and technology, and even specific companies within those fields. Resch credits the agility to an informed, committed workforce and decentralized management. But shared responsibility and stakes don't mean everyone agrees; Resch and his managers make the decisions: "We don't have time for consensus."
Still, Resch says every worker is encouraged to think like a manager. Those monthly meetings are about training as well as operations, and the numbers make their way down to self-managed teams in an effort to spread financial literacy. "We try to teach people a common vocabulary," he says.
It's the language of business and investors. People work harder when they have incentives, when they "have skin in the game," Resch says. That's skin that can be won, or lost.
This story appears in the September 25, 2006 print edition of U.S. News & World Report.