Collaborative Culture

September 6, 2017 04:00 AM
The Maschhoffs is led by Ken Maschhoff (left) and his wife, Julie, and Karen Maschhoff and her husband, Dave. The brothers began farming in 1979.

Dave and Ken Maschhoff went into business in 1979. Dave was 17, and Ken was 15. The brothers didn’t think like typical teenage boys. Their drive and energy built The Maschhoffs LLC.

Today, the company is the largest family-owned pork operation in all of North America and the ninth largest in the world.

That sense of collaboration and trust has filtered down from the company’s owners to define leaders’ relationships with employees and production partners. Hands-on training, resource sharing and other tactics have helped the massive organization scale quickly and ensure quality across multiple states.

It all started with that first venture.

“We had each accumulated $2,000 to $3,000, and we borrowed $3,500 from our grandparents,” Ken remembers. “We bought 40 acres of ground on our own without a co-signature from Mom or Dad because we had the 25% that we needed for the down payment.”

They bought the land for $580 an acre, sold it three years later for about $1,500 an acre and kept the coal rights. With that money, they financed 50% of the 135-sow herd their parents, Wayne and Marlene Maschhoff, owned. In 1992, they bought out their parents’ interest and expanded to 1,400 sows. They had three employees and a couple million dollars in sales.

Compare that to the operation’s 1,300 employees and $1.3 billion in sales in 2016 and it’s evident the brothers’ cohesive bond and complementary strengths have paid enormous dividends. They share a tight-knit working relationship with their spouses. Dave’s wife, Karen, and Ken’s wife, Julie, co-own the business with the brothers.

Path To Expansion. The Maschhoffs’ annual growth rate of 22% can be attributed both to the addition of new facilities and to the acquisition of other companies.

“We always bought when the markets had just been through a bloodbath. That’s opportunistic growth,” Ken says. “When we didn’t have opportunity, we used those years to grow organically with breeding barns or operations that flowed into our genetic potential.”

The owners have invested in businesses outside of production agriculture to diversify the family’s base. Those businesses create a cushion when the protein market is less profitable.

“To say how much we grow or contract in the future depends on the risk-adjusted rewards in the business,” Ken says.

Their 550 Midwestern production partners receive assistance from The Maschhoffs in their financial preparation. The operation provides a comprehensive report, including an income and expense budget.

For the past three to four years, the Bank of Springfield has helped finance more than 15 barns for The Maschhoffs’ production partners.

“The projections provided by The Maschhoffs give production partners a good idea of what to expect financially, particularly in the first two or three years,” explains Mike Halsne, regional president, Bank of Springfield. “Their estimates have been quite accurate. We use this information to do our projections.”

Bank of Springfield uses loan programs from the Farm Service Agency (FSA) to help mitigate interest-rate risk for borrowers. FSA lending programs allow the bank to provide a long-term fixed rate of up to 15 years so production partners know their borrowing costs.

Halsne says the bank works closely with The Maschhoffs in the beginning of the loan process. He is comfortable with the relationship because he has seen how the company helps its business associates. “If new partners need additional assistance with any part of the operation, The Maschhoffs will send in their own people or other production partners to help them get back on track,” Halsne explains.

Early Empowerment. The ability to take action came naturally to Dave and Ken, starting from the time they took over the hog business.

“We were deciding where to purchase concrete and lumber, and at what price, and where to sell the hogs, and negotiating prices with the packers or the buyers,” Ken says. “Mom and Dad gave us that responsibility, letting us know how bad it felt when you didn’t succeed. On the flip side, we also had the rewards and the feeling of self-worth when we were successful.”

If their dad thought they were doing something too risky, he would say something and “pull them back a little,” Dave says. The brothers have used that same philosophy with their employees while growing the payroll.

“In the early stages, I remember giving people on the crews certain responsibilities,” Dave says. “When they’d come to you, you might give them a little advice, but you wanted them to own it. It would have been so much easier to just tell them how to do it, but this was the only way they were going to learn.”

Train and Release. The success of the Maschhoffs’ leadership strategy is evident when the executive team observes employees talking to strangers about their job.

“They say, ‘This is how we do it,’” Dave explains. “They are the owner of their portion of the business. They don’t say, ‘Well, the Maschhoffs do it like this,’ or ‘Ken and Dave do it like this.’ They say, ‘We do it like this.’”

Although that sense of ownership is critical, the Maschhoffs think it’s equally important to recognize team members and attend company events in person. Members of the executive team go to open houses and meetings hosted by production partners.

“When you’re working side by side with employees, and working just as hard as they are, it goes a long way in building trust and credibility,” Dave says. “You are an equal.”

At first, Dave and Ken hired friends and people they knew. As the operation grew, they realized not every team member would have a farm background. Julie initiated and championed the company’s early human resources efforts, creating policies for its first employee handbook.

Business entities that provide the Maschhoffs with trucking, grain production, construction and other needs are managed independently, but employees of each entity receive the same overall training.

Turnover is still too high, they acknowledge, especially for nonmanagement positions, and they are investing in retaining talented workers. Julie moved out of HR by about 2004 to focus on public relations and public policy, but her positive influence remains.

In 2005, for example, assistant director of genetics Randy Bowman compiled numerous photos and SOPs into a printed manual. The manual now measures 4" thick, and “it gets fatter every year,” Julie says. It’s meant to not just tell employees what to do but to show them. “It was a way to make sure we were all trained in the right thing the same way,” she says.

In spite of those investments, the Maschhoffs point out no amount of training will make someone a great employee if culture is lacking.

“You always treated people with respect,” says Karen, talking to Dave and Ken in the boardroom. “You had already established the culture of how to treat people as equal team members. I think that goes back to the fact that Wayne and Marlene treated you as equals.”

New Business Model. Some of their early consulting veterinarians proved instrumental in helping them dream bigger and outside the box of day-to-day production practices. Among them was Ralph Vinson, a veterinarian based in Oneida, Ill.

“He challenged us to think beyond just building buildings,” Dave says. At the time, the farm didn’t have any contract production. “He helped all of us think about the power of using somebody else’s assets and capital—not just financial assets, but human capital,” Ken says.

That meant creating new win-win scenarios to enable The Maschhoffs to grow alongside other producers. “The starting point is they’re just very good people,” says Mike Ellis, an animal science professor at the University of Illinois. “They have a genuine passion for agriculture and swine production, and they’re very production-focused. They’ve set their goals to have one of the best pork operations in the U.S. and world.”

The responsibility of sustaining growth for the business and the industry is great. To help ensure pork demand and market access grows in the U.S., Ken Maschhoff serves as president of the National Pork Producers Council. He understands the importance of trade to Mexico and Canada and is a proponent of the North American Free Trade Agreement (NAFTA).

The pork industry is “all for modernizing NAFTA,” he says, “but we cannot support efforts that would undermine the livelihoods of America’s 60,000 pork producers.”

That kind of stability among family farmers is essential to the  model The Maschhoffs have created within the pork industry. Although the Maschoffs might have started with a 10- or 12-year contract, Ken points out, they aimed to build relationships lasting 30 and 40 years.

“We wanted to build an asset that was worth more at the end of the contract than it was at the beginning,” he says. “It allowed them to have a more diversified operation with less risk and a better return.”

How to Build on Core Values

The Maschhoffs team develops business relationships grounded on a set of core values crafted in 2003. That foundation has allowed the company to grow exponentially, not only through production partners but also by attracting and retaining talented employees.

When company executives interview people for management positions, they try to find people whose values align with their own. Those values include respect for everyone on the team, commitment to hard work and environmental stewardship, and dedication to innovation.

“If they are aligned with the values, it’s going to be a good fit,” says Dave Maschhoff, one of the organization’s four owners. “If they don’t, it doesn’t matter how much training they have.”

The investment in hiring and onboarding a higher-level manager is significant, so getting the right fit is critical.

“It’s not just energy and time—it’s also a huge financial cost to the business if we get it wrong,” adds co-owner Ken, Dave’s brother.

13 Tips to Lead in a Collaborative Environment

Business leaders must make every effort to “maximize time, talent and tools to create value in the global economy,” author Evan Rosen argues in his book, titled “The Culture of Collaboration”. Here are some of
his suggestions.

  1. Use your ears and eyes more than your mouth
  2. Ask questions
  3. Earn respect by walking in the shoes of others
  4. Invite team members to think like leaders
  5. Coach and guide rather than insist
  6. Take calculated risks
  7. Build demand for collaborative tools and approaches
  8. Ensure grassroots buy-in
  9. Master collaborative tools for distance leadership
  10. Reward people for sharing, rather than for hoarding, information
  11. Align recognition and reward systems around collaboration
  12. Perpetuate collaborative culture by instilling it in others
  13. Be consistent in attitude while embracing innovation

Important Dates in Maschhoff history

1851 – John and Mary Maschhoff arrive from Germany and begin farming in Washington County, Ill.
1899 – John’s grandson, William, and his wife, Marie, purchase a farm near Hoyleton, Ill., which the Maschhoffs still own and operate today.
1939 – William’s son, Ben, and his wife, Frieda, purchase a farm south of Carlyle, Ill., which is now the center of the Maschhoffs’ operations.
1956 – Ben’s son, Wayne, returns to run the family farm with his wife, Marlene, after serving in the U.S. Air Force. They focus on raising corn, soybeans and hogs.
1961 – Wayne and Marlene build their first 700-head finishing barn, bringing their animals inside to protect them from extreme temperatures and predators.
1972 – Wayne is named the Illinois Pork All-American. The award recognizes him as the top Illinois pork producer under 40.
1979 – Wayne and Marlene’s sons, Dave and Ken, enter into a 50-50 partnership called Maschhoff Pork Farm Inc. with their parents.
1992 – The farm ownership officially shifts from Wayne and Marlene to Dave and Ken.
1998 – The Carlyle feed mill is built to continue and strengthen quality control in animal nutrition.
2003 – Maschhoff Pork Farm Inc. officially becomes The Maschhoffs Inc., and the Carlyle office is built.
2005 – The Maschhoffs acquire all of Land ‘O Lakes swine assets, doubling the size of the pork operation.
2007 – A 20,000-sq.-ft. addition to the Carlyle office is completed.
2008 – The Maschhoffs acquire Blackjack Pork LLC of Ames, Iowa.
2010 - The Griggsville Feed Mill begins construction.
2011 - The Maschhoffs acquire NPP, LLC in Columbus, Neb.
2012 - Jason Lodgsdon is named CEO of The Maschhoffs.
2013 - The Maschhoffs acquire GNP Company. Maschhoff Family Foods forms as a result of the acquisition and becomes a holding company for The Maschhoffs’ hog production business and the GNP Company-branded chicken business. Maschhoff Family Foods opens its St. Louis office.
2016 – The Maschhoffs sell GNP Company and refocus on the pork business.
2016 – The firm becomes the largest family-owned pork operation and the fourth-largest pork business in the U.S.

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