When the annual MEDRAD Day of Caring comes up in the conversation, John Friel turns to his communications person and
offers a suggestion.
“I think we need to juice it up a little bit,” says Friel, president and
CEO of MEDRAD Inc., a medical products company. “It’s almost
become kind of routine. I think we’ll need an extra push from me
to remind everybody, get them pumped up.”
Last fall, half of MEDRAD’s employees — at a cost to the company of about $150,000 in payroll — took part in the annual charitable event, where volunteers offer their labor to perform tasks
like refurbishing playgrounds and working in food banks and soup
kitchens. It’s the kind of activity that Friel says has as much benefit for MEDRAD as it has for the charities it helps.
Earlier in the day, Friel spent time serving sandwiches to
workers at MEDRAD’s new facility in Saxonburg, Pa., and he’s
tidying up some last-minute details for a trip to New York.
After a busy day, he’s still eager to talk about the value of an
engaged and happy work force when it comes to customer satisfaction.
And he always makes sure that he expresses his view of his
own role in the 1,700-employee company, whether at his
monthly presentation at employee orientation or at a school
career activity.
“The middle school has a career week, and they ask parents
to come in and talk to the kids,” Friel says. “So they ask me to
come in and talk about business. So I come in and tell them I’m
a CEO and ask them what they think about that. Usually, one
of the kids ends up saying something along the lines of, ‘That
means you’re the big boss, and you get to tell everybody what
to do, and wouldn’t that be cool.’
“I’m looking for them to say that because I tell them it really
doesn’t work that way. The big boss is the customer. They
don’t know anything about me, they don’t know anything
about our nice, new facility here. They know the sales reps,
they know the person talking to them on the phone. That’s who
MEDRAD is to them. Then you get the folks who supply those
people, the marketing people that figure out what the customers’ needs are, the R&D guys that design the products, the
manufacturing guys that make the products that are given to
the sales and service people who are selling them.”
Friel’s attention to keeping his employees motivated and satisfied has reaped its rewards on the human resources front
through employee retention.
“Our employee turnover is half what the Fortune 100 best-in-class companies are,” Friel says.
Since Friel was named president and CEO in 1998, the company has created 800 jobs.
And it’s benefited MEDRAD’s top line, as well. MEDRAD
posted $478 million in revenue in 2006 and has achieved 15
percent compound annual growth for the last 10 years.
The company has earned other top performer accolades, as
well. It won the Malcolm Baldrige National Quality Award in
2003, and it has earned honors as one of the best places to work
in Pennsylvania.
At MEDRAD, superior performance comes about because
there are high standards, the environment to achieve those
standards, measurements to gauge how well the company is
doing against the standards and also incentives for meeting
those standards.
“If you want to have a culture that’s employee- and customer-oriented, then you should measure how engaged your employees are, and you should measure how you’re doing against the
customer,” Friel says. “You get what you measure, and then
you reward and recognize. We reward and recognize people for
doing stuff for the customer and making MEDRAD an enjoyable place to work. Hopefully, that helps to sustain the culture,
even as we get bigger. “If you want to have people focused on
customers and focused on employee engagement and involvement, then that’s the way to do it. It’s a conscious, proactive
system for us.”
Following the five goals
Friel says everything MEDRAD does is predicated on its five
corporate goals — financial performance, growth, productivity, employee satisfaction and customer satisfaction — that
guide all of its activities. They are all interdependent, so from
MEDRAD’s perspective, contented and motivated employees
translate into happier customers, growth, lower employee
turnover, higher productivity and, in turn, improved financial
performance.
“We start out with our philosophy, why we exist,” Friel says.
“We have our five corporate goals that are evergreen that we
measure ourselves against. We reward and recognize people
for hitting those. They’re all interrelated. If you have happy
employees, they’re going to treat the customers better. If you
have good financial performance, you’re a strong company and
people like working for you. They all reinforce each other.”
When it comes to productivity, MEDRAD stays at its best by
measuring its results against a demanding standard. Friel says
the key to making sure that you are getting the right results is
to measure performance and to change the metrics and raise
the standards when it’s warranted.
“With productivity, we measure ourselves against the publicly traded companies that are in our industry, medical
devices, that are profitable and are at least at $100 million in
sales,” Friel says. “Our goal is to be in the top quartile in that
group, and we have moved up into the top quartile. If you do
the cut by companies with less than $1 billion, we’re actually
No. 1 on the list.”
In the case of customer satisfaction, when the scores were
running high, perhaps too high to be credible, and at a level
that might allow complacency, Friel and his team decided it
was time for a change. On a five-point scoring system, the company was counting responses of four and five as indicating satisfaction with MEDRAD’s performance. To challenge the
organization and give some room to improve its performance,
the company raised the bar.
“We were scoring 98 percent, so we raised the bar and said
we’re only going to count fives from now on,” Friel says. “That
dropped us down to 60 percent to 70 percent, which is still very
high compared to other benchmarks, but it gave us more
opportunity to say how do we get that up to 98 percent, like we
were with the fours and fives. So the idea is to keep pushing
yourself, keep challenging yourself, raising the bar and trying
to get better.”
To measure its performance when it comes to employee satisfaction, MEDRAD surveys all employees twice a year. Friel says
the survey achieves an 88 percent participation rate.
“My goal is to get to 100 percent,” Friel says.
When it became apparent that the company was scoring consistently high on employee satisfaction, instead of backslap-ping, MEDRAD decided to look at a more demanding standard.
“We were using a metric that we did fairly well against,” Friel
says. “We’re looking at another one now, the Fortune 100 Best
Companies to Work For, which is a different survey. When we
piloted it, we found out that we didn’t score as well against that
one, so we’re switching to it. The idea is to raise the bar. Don’t
do the one that you’re doing well against and say, ‘Hey, look
how good we’re doing.’ Do the one that challenges you a little
more.”
MEDRAD gives an incentive to all employees for good performance by offering financial rewards to everyone for reaching its scorecard goals.
“We have a gain-sharing plan where everybody participates in
a year-end bonus, and it’s based on how well we do against the
scorecard,” Friel says.
All of the measures except for employee satisfaction go into
the calculation, as it would tend to drive scores up by employees rating the company high on that metric.
“There, you’re basically paying people on how well they
score you,” Friel says. “It’s a conflict of interest. But the point
is, people have some skin in the game, and we share the performance with everybody. If we do well against these measures, we reward people for it, so there’s something in it for
them to do well against the measures.”
Employee communications
Friel places a premium on keeping employees informed. He
does it through his hands-on activities, like spending a day
working in various departments.
“I have this thing of going out and working in the departments; I’ll work third shift on maintenance,” Friel says, admitting his enjoyment for running the machine that cleans the
floors.
He issues a monthly report called Highlights, a document
that goes into considerable detail about the company’s performance and current activities.
“I do a lot of stuff to try to communicate with the employees through multiple channels,” Friel says.
This includes bringing in a group of field employees from
various departments twice a year to participate in the president’s council, where the individuals share their ideas and
views directly with him. Employees get a regular newsletter,
and as the company grows and it becomes more difficult for
Friel and other managers to make regular site visits to interact with employees, he looks for ways to fill the gap.
Currently, a companywide TV network to extend its communications capabilities is under consideration.
As committed as the company is to keep the lines of communication open with all of its employees, Friel recognizes
that some employees in certain circumstances may feel reluctant to step forward to report what they might perceive as
inappropriate practices in the company. For them, the company has an anonymous telephone hot line.
“If people are uncomfortable with the chain of command,
uncomfortable with coming to me directly, uncomfortable
with all of the other vehicles we have, they can anonymously
call in,” Friel says.
Friel says that strong financial performance makes it easier
to stay focused on things like employee satisfaction, but
points out that MEDRAD has managed to live its values and
stay on track with making sure that its work force is satisfied
through the ups and downs of the business cycle.
“It’s easier to do this stuff when you’re successful and everything’s going well,” Friel says. “The real test of your character
is when you get challenged a little bit. I’m happy to say that
we’ve had our cycles, we’ve been on the roller-coaster ride
just like everybody else, and I think whenever we’re in the
down cycle, we live this as much as we do when we’re on the
up cycle. That’s the test.”
HOW TO REACH: MEDRAD Inc., www.medrad.com
