Can a Low-Cost produce have a Healthy Culture?

Is it possible to be a high-volume, low-cost producer and cultivate a healthy culture? Some would say no, if only because high volumes mean high efficiency and production methods that dictate and control employee behavior. At The Ziegenfelder Company, they figured out how to succeed at both.

Headquartered in Wheeling, West Virginia, The Ziegenfelder Company began as a candy business and is best known today as the producer of Budget Saver® Twin Pops, a frozen water-ice novelty. Its products are sold in retail outlets throughout the country. Ziegenfelder is also a 160-year-old family business with manufacturing facilities in West Virginia, Colorado, and California. The current owner and chairperson is Lisa Allen. Her leadership was the catalyst for the company strategy, growth, and culture. 

Allen joined the company as a salesperson in 1999. She quickly observed that there was an opportunity to sell their Budget Saver branded twin pops to food outlets like Walmart, which at the time had just 16 supercenters at the start of their food retail business. The vision for their branded product was built around a high-quality, low-cost item that all consumers could afford. The counterintuitive business model of consumer price sensitivity first versus corporate profitability on the backs of consumers was instinctive to both Lisa and her business-owner father. For the next four years, she and her sales team travelled the country, expanding the business with Walmart and adding national and regional grocery chains like Dollar General, HEB in Texas, Giant Eagle in Pittsburgh, and other large grocery chains. Her success helped move the company from a small, regional producer to a national brand. Sales, geographical reach, and employment grew. In 2003, her father promoted her to the role of CEO, while he took a half step back as president and chairman of the board. Lisa’s father passed away in June 2005, and soon after, Lisa became the majority owner of the company.

Managing a growing company with production facilities in three locations challenged Allen. She decided to hire a CFO to run the finances for the company and focused her energy on building a culture, putting employees (whom she affectionately labeled “The Ziggy tribe” first, customers second, and shareholders third. Since she was the majority shareholder of the company, it was not hard to convince herself that if employees take care of customers and customers continue to buy company products, profits would follow. And she was right. Under her people-first strategy, the company continued to grow and prosper.

Allen spent much of her time getting to know employees and their families. She encouraged her executive team to walk with her through the plants to also get to know everyone working for them. Interested in helping give people a second chance, her West Virginia plant made a commitment to hire reformed and recovering addicts, work-release prisoners who needed a jump-start prior to release, and newly released inmates who desperately needed an opportunity to reclaim their lives and livelihood. 

She held monthly meetings with her executive team and the next level of leadership to reinforce the importance of leadership, safety, and quality. At the core of her message was courage, trust, and togetherness. Everyone in the company went through workshops that reinforced trust.  Several policies evolved from the culture, including the practice of promoting from within. For those employees who did not embrace its culture, they were released from the company with grace and dignity. She tempered their exit with a message containing an apt  metaphor from Stanley McCrystal’s book Team of Teams: “Weeding the garden helps to grow healthier plants.” Allen added that this was difficult but necessary, even if the employee was a good producer. 

The company experienced catastrophic events over the years that illuminated what the culture meant to employee job security. One was a collapsed drain in its California plant that took two weeks to repair and rebuild. During this time, employees were not able to enter the plant. A second was an FDA and product recall issue that shut down its Denver plant for eight weeks, and, proactively by company leadership, its West Virginia plant for 6 weeks, while it cleaned, improved processes, and achieved FDA industry standards for food manufacturing. The third was a devastating fire that destroyed part of its Wheeling plant, causing major disruption in its production capacity. In each case, employees received full pay and benefits while the company repaired the damage. The company has never had a layoff in over 20 years and is committed to continuing this policy as part of its culture.

When asked what inspired her to focus on culture, she gave credit to her parents, who taught her she was no better or worse than anyone else—but she had the ability to do anything she chose. Another value she learned at an early age was to bring others along with her success. She also attributed inspiration from her Vistage experience with speakers, her Vistage chair, and collegial support from group members. Ziegenfelder being a small company, she brought in several outside resources to support the culture she had initiated.

In reflecting on the Ziegenfelder culture, two features stand out. The first is Allen’s willingness to partner with executives who were very different in skillsets and personalities but similar in values.  Her COO (who had been CFO) has always been a critical thinker who continually asks challenging questions. Her president and chief people officer (CPO) is a relater and a straight shooter even when it creates tension. Allen sees herself less as a businessperson than as someone deeply concerned about how people are treated. She is driven by compassion and empathy. Together, these three executives challenged each other for collaborative, diverse, and often unexpected outcomes. They made a powerful team

In December 2019, Allen stepped away from day-to-day management, promoting her COO to CEO. Although no longer a member of the executive team, she remains involved as a mentor to several “tribe” members, attends monthly financial meetings, and chairs the board of directors. 

The second feature is Allen’s dedication to the continuation of the company culture. In 2018, before retiring as CEO, she and her executive team reorganized the Human Resources department by changing its name to the Department of People and Culture and doing a national search for an executive who would fulfill her vision of preserving the company culture. This executive, who reports to the CPO, oversees three managers. One manager is responsible for the customary human resource functions of legal issues surrounding hiring and retention, employee relations, and coordination of practices across the three company facilities. The other two managers lead talent acquisition and learning and development. Allen sees this structure as preserving a legacy of a culturally driven company. But there is little doubt that the healthy culture she created in the company played a major role in making Ziegenfelder Company a financial success. 

Purchase Unleashing Human Energy through Culture Change, here: https://tinyurl.com/y7c53xqb.