More Than Just Staff

Attracting and retaining a team of dedicated and motivated employees is integral to company success.
By Holly Jessen | May 15, 2013

Like any industry, ethanol production companies face hiring challenges. For facilities located in rural areas, it can prove difficult to find experienced workers willing to relocate to small-town America. Another potential frustration is putting time and company resources into training employees who can be lured away into industries who may be able to offer more competitive compensation packages. “We have been a heck of a training ground for industries that can pay far more than we can,” says Tom Willis, CEO of Conestoga Energy Partners LLC, which operates three ethanol plants in Kansas and Texas.

The importance of hiring the right person for the right position adds another layer. Scott McDermott, a partner at Ascendant Partners Inc., puts it this way. “In the end you want to select the best talent not necessarily just staff,” he says.

Neal Jakel, general manager of Illinois River Energy LLC, tells Ethanol Producer Magazine that strong teams and employees aren’t created overnight. “It takes time and patience to find and develop a great team,” he says. He also points out that ethanol plants are highly technical businesses that require optimization, adding that it’s essential that the workforce has strong technical skills. “If you don’t have a technical work force from the information technology to the maintenance department, a facility will be leaving opportunity, i.e. money, on the table, which in these very tough economic times is not a prudent business practice.”

Brian Thome, CEO of Edeniq Inc., said developing the right team is of paramount importance to the development company—second only to safety. Edeniq, which is working on technologies for corn-ethanol facilities as well as second-generation cellulosic ethanol, doubled its workforce from 50 to 100 employees in 2012. The No. 1 focus during the hiring process is finding people who are a good fit for the team, he says. For Edeniq that means idea generators who work well in a team structure.

Tom Griffin, Edeniq’s chief technology officer, is passionate about the topic of finding the right employees and then keeping them motivated. For Edeniq, one make-or-break interview question is whether the applicant has a passion for biofuels, because those people are more likely to become sustained long-term employees. Asked to talk about an employee success story, Griffin said he started with a list of 15 employees and whittled it down to six coming from diverse backgrounds, experience and educational levels. “I get excited talking about our team,” he says, adding that he found it difficult to narrow the list down. “We have a really good team and I could go on for a really long time.”

Company Culture
One of the biggest difficulties facing employers is employees who come to work, punch a time clock and do as little as they can get away with until it’s time to go home, says Betsey Upchurch, CEO of P4 Consulting. They have complaints about the things their managers do but they, and often their managers, don’t have the skills or ability to create resolution. “So they just kind of grumble, grumble, grumble and resist,” she says, in her soft Southern drawl. “With margins like they are, you can’t afford that. You’ve got to have people there, working hard, paying attention and bringing things that are a problem—before they are a big problem—to your attention.”

P4 Consulting works with companies, including ethanol plants, on improving company culture for better success and profitability. Basically, it boils down to helping leaders lead and firing up employees so they are excited and engaged, rather than just punching a time clock, she says. The first step is assessing current company culture in four areas and identifying what it does well and in what areas it needs to do some growing. The list starts with evaluating the company’s mission or vision. “Do people know where they are going and why it’s important?” she asks. Clear policies and procedures allow a company to be consistent in execution. The next key point is empowering employees to work, grow and develop. Finally, there’s adaptability, which allows companies to move quickly in response to market signals and produce consistently quality products.

Improvement in weak areas starts with the leaders because the company culture, good or bad, is a direct reflection of what those at the top are doing. “In every company that we work with in any industry, people leave because of their boss most often,” she says. “If you don’t want your good people to leave then you have to have talented management.” In her line of work, Upchurch has encountered managers who run the gamut from terrible to marvelous. Some don’t have good management skills but they do have potential. “With a little development work, they end up being great,” she says.

Changing company culture is about creating a senior team who know what the company values are and understand what they are asking of employees. The next step is helping middle management catch that vision and know their place in it. It’s about shifting power down, which ultimately gives senior leaders more power, although it can be a difficult transition. Upchurch describes it as asking leaders to “quit being in the doing end of things and be in the inspiring, directing, creating, strategic end of things, and leave the execution and tactical stuff to supervisors, leads and front line.”

Upchurch talked about two specific projects at ethanol plants, in which P4 Consulting was able to help management empower employees with positive results. In the first example, teams of four to five people became involved in the interviewing and hiring process for operator and entry level jobs. When teams, including supervisors and leads, are in on interviews there were fewer hiring misfires. “What happens is, they pick better to begin with,” she says. “They ask hard questions because it’s not fun for them when they get someone that’s not good to be on the team.” The second project took place at an ethanol plant where employees were grumbling about pay levels. The feeling was that there was no clear system for determining how much people got paid. A task force of employees was assembled, with the direction that the executive team didn’t want to pay for seniority but rather ability and capability. The group examined each job and assigned monetary value for knowledge and skill levels. Under this system, employees don’t get raises on specific timetables, but when they reach specific markers. “Essentially, if someone comes to work for the company, they know on day one what they have to do to get raises,” she says. “It works because one, they created it, and two, they know what they have to do to make more money.” Turnover and employee grumbling went down significantly after the project was completed and it was revealed the plant’s pay scale was actually pretty consistent. “Mostly people were in pretty much the right spot but the difference was that they knew they were, instead of guessing,” she says. “Basically when people don’t have information they just guess the worst sometimes.”

Conestoga Energy understands the importance of cultivating a positive company culture, Willis says. Established in 2006, the company spent the first two years trying to build a business, not a culture, and as a consequence didn’t work well as a team. In fact, Willis says, the turnover rate in the first two-plus years was about 90 percent. By focusing on improving its company culture, training, teamwork and empowering employees, Conestoga Energy now has a 24 percent turnover rate for its plant employees, a number that is below industry average.

To get where it is today, the company spent a lot of time developing and defining its core values. Beyond just creating policies based on those values, Conestoga Energy takes the extra step of explaining why it’s important and how it impacts employees (who they prefer to call teammates) and the company in day-to-day operations. “Under the old corporate model of 25 years ago,” Willis says, “the boss asked you to do something—why? Because I told you so.” When employees understand the why and are given the opportunity to give their input on decisions, it leads to better buy in and performance. “We have a saying that we succeed or we’ll fail as team,” he says.

Of course, not every person will fit into Conestoga Energy’s unique family atmosphere, Willis explains. And not every team member is 100 percent happy every day. “But for the most part I think our people would tell you they feel empowered, they know where we’re going, why we’re going there and what their role is,” he says, adding that the company still has a long ways to go. “It’s like golf, the quest of impossible to ever play a perfect round of golf,” he says. “Every day it’s, ‘How do we get better?’”

McDermott agrees that it’s very important to have clear company goals that tie into management goals and goals for staff. “They want to believe that their leadership has a vision for the future for the businesses, so they are not just kind of swinging in the wind,” he says.

Training, Compensation
Speaking about the difficulty of competing for skilled workers with other industries with deeper pocketbooks, Willis said Conestoga Energy works around this by hiring untrained workers and training them on the job. “I can tell you this,” he says, “it’s a heck of a lot easier to try to grow them inside than it is to go outside and try to recruit all the time.” The key is to hire people with potential, desire and heart, things that cannot be coached. That’s where on-the-job training and continuing education come in. “You’ve got to invest in your people,” he says. “You can spend all the money you want on technology—and we’ve spent a lot of money in capital investment in technology—but they are only as good as the people that run them.”

Thome and Jakel also mentioned the importance of professional development. Edeniq sets aside a budgeted amount for ongoing professional development for each one of its employees. At Illinois River Energy, in addition to the training opportunities at a local community college, the company is developing its own in-house skill block program.

A challenging market environment takes a toll on bonus and incentive programs, McDermott says. However, as the labor markets improve, it’s important that ethanol plants stay competitive, ideally with compensation programs that combine performance incentives and profit sharing. Companies that pay out only basic hourly salary face challenges in keeping employees motivated. “What we have seen is, people are not as engaged to make these improvements to keep these plants competitive in that old structure,” he says.

Companies are at an advantage when they understand that it is in their best interest to make sure employees are offered performance incentive bonuses to help the plant reach for improvement milestones—even when margins are tight. “Frankly, it’s the difference between these guys making money and losing money these days,” McDermott says.

And, it’s important that those bonus plans aren’t based exclusively on the company’s financial performance, says Donna Funk, a member of the accounting and consulting firm Kennedy and Coe LLC. “The plant production employees, they can’t control what you buy your grain for or what you sell your ethanol for,” she says. Reward metrics based on what employees can control, such as plant cleanliness, safety and ethanol conversion rates, tend to motivate better.

Of course, it isn’t just about money. There’s no replacement for management telling employees when they have done well, McDermott says. “Staff knows when these companies are not doing well and even if you aren’t able to necessarily compensate them, you need to have recognition,” he says.

There are a multitude of things companies can do to show their employees they appreciate them. At Conestoga, Willis takes the time to send each employee a personal birthday card as well as quarterly meetings to thank team members. Jakel says Illinois River Energy gives awards for buying flex-fuel vehicles and clothing. Then there’s food, which Jakel referred to as the No. 1 motivator, adding that “a well fed employee is a happy employee.”

On the day that EPM interviewed Thome, Edeniq was having a barbeque, as part of a monthly employee luncheon schedule. On National Pi Day, one of the employees brought in pies to share. And two or three times a year the company plans family outings. The next one on the schedule is a company softball game and barbeque. “We work hard on making the environment fun for people to be around and spend time together even outside the working environment,” Thome says.

Author: Holly Jessen
Managing Editor, Ethanol Producer Magazine
701-738-4946
hjessen@bbiinternational.com