Kent McElhattan Featured

8:00pm EDT September 21, 2006
 If you ask Kent McElhattan what his job is, he might say he doesn’t have one. That’s because he defines his role at Industrial Scientific Corp. as more of a lifestyle than work. McElhattan has turned some of the traditional dogma of how to run a successful company on its ear. While he’s certainly not dismissive of financials, he looks at them more as a means to improving the company’s operational performance than as the endgame. Those values have helped the company achieve a pretty impressive performance. With the acquisition this year of French company Oldham, S.A., the revenue at Industrial Scientific — which designs, manufactures, sells and services gas monitoring instruments and systems — should pass the $150 million mark, up from $65 million in 2003. Smart Business spoke with McElhattan about putting employees first, measuring performance and why he shows up at the office.

Give credit where credit is due.
It’s our employees that deserve all the credit for the success of the company, not me. Our most cherished management philosophy ... is the statement that we believe that good financial performance is the result of doing the right thing for employees first, customers second and shareholders third.

We’ve always believed that; it’s been our management philosophy for 21 years. We hire hungry, humble and smart. Those three attributes are what we’re looking for in people. If we give them good work and support them with great tools, they’ll do better work for our customers than people will do at our competitors.

If we have great people doing great service for our customers, then we’ll have good financial performance. So our philosophy is kind of upside-down from traditional American philosophy.

Quantify performance.
We have charts and graphs covering everything under the sun. We measure every detail about this company. Our mission statement, for example, says, ‘Design, manufacture and sell the highest quality products for the preservation of life and property and provide the best customer service.’

To someone from CMU, that just sounds like a bunch of smoke. They want to know exactly how we measure that, so we’ve developed those measurement systems. Highest quality means what? When you say, ‘I have quality,’ that’s more of a philosophical position, so we have translated it into something that we can all understand, like a chart or a graph or a number.

Performance metrics are the key, and then sharing those metrics openly and periodically with people. If highest quality is our objective and our warranty costs are going up or we have an issue with some component on board an instrument, we’re obviously not headed in the right direction.

So we drill down underneath all those numbers and get to the root causes and keep solving the detailed issues so that ... at the end of the day, we are at the highest quality level in our industry or we are at the best customer service levels.

We don’t think we’re good in an area just because someone says we are. We just don’t believe that kind of stuff. We need to see it in a numerical form, some quantifiable number. Then we’ll believe that.

Use financials as the barometer, not the objective.
We look at the financial performance at the end of the month and say, ‘We must be on the right track’ or ‘We’re not on the right track.’ You use the financial performance to make adjustments to what you’re doing.

We don’t start with the financials and say, ‘How are we going to achieve this set of goals?’ We tend more to start with more philosophical goals and let the numbers show if we’re reaching them or not.

Practice compassion.
One of the underrated things that tends to fall out of view in these discussions is compassion.

I don’t know if it’s a skill or character trait, but I think people need to be compassionate in these positions, to understand how hard our people are working, or to give them the benefit of the doubt... The things that are memorable to people and mean a lot to them are compassion, humanity, more in that zone.

Leverage the brainpower of people.
The best business experience I had was in a factory in Ashland, Ky., that was heavily unionized, and I was on the management side.

The smartest people at the table were the union people. They had all these smart people; they weren’t as educated as the management staff was.

I had the (good) fortune to go through three labor negotiations on the management side and see how smart the people were on the other side and how much they wanted to contribute. It was management that held them back. That was where I really grew into this idea of employees first.

If you get good people and they speak up, you unleash a power within a company that most companies aren’t paying attention to. If you can develop a relationship with these people and get them to see that they’re (the) company, and they have ownership over the way the company operates, then they come up with the smartest, most brilliant suggestions you ever heard, and then I think it’s management’s responsibility to say yes as often as you can, rather than say no.

Stay involved at the basic level of the business.
I’m not particularly inspired by working for the numbers and just for the financial department. We need to do real work, deliver real value to our customers, help them with their challenges, understand the collective skills and talents of our people and then apply them in a way that is intelligent and can make a contribution to our customers. That’s what inspires me.

Pay a lot of attention to your company; live it, love it, be emotionally involved with it, be involved with it at every level. If not, go find something that you can be involved in, that you can dedicate your life to. If you don’t have passion, you’re not going to ignite anyone else’s passion.

HOW TO REACH: Industrial Scientific Inc.,