Ken Robinson leverages economics and human resource strategies to increase productivity.
By Sigrid Tornquist
“One of the most universally disliked classes I took while pursuing my MBA at Tulane University was one about human resources,” says Ken Robinson, president of Engineered Textile Products Inc. (ETP) in Mobile, Ala. “But even while I was taking the class I knew what the professor was telling me was the golden truth of business management: your human resources are vital to your company’s success and are your most important asset.”
With an undergraduate degree in economics, and after two years working in sales for Honeywell International, Robinson returned to the family business in 1992 to sell industrial and environmental fabric products, ranging from tarps to geomembranes. Robinson worked in sales and took on increasing responsibility as he moved toward a position at the helm of the company.
In 2001, Robinson returned to school for his executive MBA. “My mother had her Ph.D. and was a professor of marketing,” he says. “She influenced me to continue my education so I could build on my experience to help run the business.
“The MBA process was a key turning point as to how I viewed running a business. That’s where I learned that some of my thinking was completely wrong.” What Robinson learned was wrong: the popularly held business management equation that P=R-E (Profit equals Revenue minus Expenses).
“Profit does not equal Revenue minus Expenses,” Robinson says. “What the P=R-E equation tells you is to maximize your price and keep your expenses as low as possible—which translates into paying your employees the minimum and trying to get every penny out of every job. You can see why that would cause long-term problems, because both your employees and your customers would be unhappy.”
What Robinson learned is that the better equation is: Profit equals Turnover times Margin (P=TxM). “That equation tells you that what’s really important in terms of a profit margin is how quickly you can move from one sale to another,” he says. “Rather than trying to minimize your expenses, which are your people, what you really should be doing is maximizing the speed and flow of your projects as they move through the company.”
The morale factor
For Robinson and his company, strategies to maximize turnover are based largely on how employees are treated, and how they perceive their work situation. “Of course you’re constantly looking for work-flow bottlenecks and trying to clear them,” Robinson says. “But from a people point of view, you can maximize productivity through boosting morale and motivation.”
Several factors contribute to employee satisfaction and motivation, according to Robinson, but paying them more is a good starting point. “One of my economics professors told us: If you want your people to show up to work, pay them more,” Robinson says. “Because from an economics point of view, the cost of missing work then becomes so great that employees think twice about staying home simply because they don’t feel like working that day.”
Paying employees more than the minimum going rate also makes them feel valued, as does paying attention to the work environment. Robinson focuses on listening to what employees are saying about their work experience and concerns, which has, among other things, resulted in upgrading the bathrooms in the plant. “I realized the bathrooms should be better than what people might expect for a manufacturing facility, so we spent the money to improve them,” he says. “It may seem like a small thing, but it’s important.”
Things like replacing the water fountain because employees feel the water tastes bad, or buying an extra heater for a cold corner of the plant, are connected to productivity. “Profitability doesn’t depend on the extra $100 spent on a heater,” Robinson says. “It depends on whether we’re getting things out the door quickly.”
Beyond the paycheck
Still, there’s more to motivating employees than good wages and paying attention to the physical workplace environment, Robinson says. Since he earned his MBA in 2003, he has worked to change the overall culture of the company by fostering an environment where employees operate under self-applied pressure to perform their duties. “Employees approach their work with an attitude of: ‘There’s work to be done; let’s get it done,’” he says. “It’s an attitude that is the result of how we hire people, treat people, and create a culture of mutual trust.”
The company’s hiring policy begins with administering the Wonderlic Cognitive Ability Test—a 12-minute, 50-question test used to assess the problem-solving skills of potential employees. “The only proven performance factor that’s a personality trait is intelligence,” Robinson says. “We use the test as a first phase of the selection process, and then use other determining factors to choose from the pool of candidates.”
Once hired, Robinson works to create a culture of mutual trust with employees, based on sharing information and being true to the company’s values, which for ETP is the Rotary Four-Way Test—four guiding principles based on the connection of service and business.
For Robinson, part of viewing business as inextricably connected to service is respecting what each employee brings to the table, which means recognizing the importance of the “company complainers.” “Every group has complainers, and every group needs them, whether they’re employees or customers or suppliers,” he says. “The complainers are the ones who point out to you what needs changing. Listen to them.
“People are our company’s most important asset. We try to remember that and be sure to follow our values,” Robinson says. “But I think every successful company does that.”