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Man in the Mirror: How a New Human Resources Approach at L&R Pallet Changed Everything
Man in the Mirror: A new human resources approach has boosted profitability and solved the labor shortage crisis at L&R Pallet. It all started with changes at the top and a special worker initiative involving foreign refugees.
By Chaille Brindley
Date Posted: 10/1/2016
Man in the Mirror
A new human resources approach has boosted profitability and solve the labor shortage crisis at L&R Pallet. It all started with changes at the top and a special worker initiative involving foreign refugees.
James Ruder, president of L&R Pallet in Denver, Colorado knew he faced a huge problem. His company had hit a ceiling – finding and keeping labor seemed almost impossible. Growth and profits were getting harder to come by as he couldn’t keep enough quality employees to make it work. Just like the pallets his company repairs, his business was broken. And he was the one who would have to change first if he was ever going to fix his company.
Ruder recalled that his attitude changed after a mission trip to Peru. He said, “It boils down to God bringing me some opportunities, and he changed my heart. God sent me to Peru and grabbed my attention down there. I thought my mission was going to be to help the people down in Peru. I had no idea that God was just trying to change James. God wanted to make me a project, and through that He changed my business and has given me a platform to speak from.”
Ruder explained that the culture just like the people was broken at his company, and he wanted to alter the focus from just making money to making a real difference in the lives of the people who work and interact with L&R Pallet.
Even though he said that he was far from a saint and had some things in his past just like anybody else, Ruder stated, “Our real program is about people, and about me finding purpose in my business. I wanted something more than just getting up every day looking for a new account.”
Ruder added, “I never wanted to be remembered as the guy who made a whole lot of pallets in Denver. I want to be remembered as somebody who was a great guy to work for and in some way impacted the lives of my employees for the better.”
Ruder explained, “I just know that a lot of business owners are searching for purpose, and that is a big part of the story here at L&R Pallet.”
Facing major problems that were limiting the potential in his business, Ruder and his management team took a risk. A couple of years ago, they looked to refugees to help solve their labor shortage. People who had fled their home due to war, persecution or economic hardships were making a new life here and could provide the dependable labor supply that Ruder needed to succeed.
After a few years of a steep learning curve, L&R Pallet has solved its labor crunch with more than 82 employees coming from refugee populations that have moved into the Denver area. The company is as profitable as it has ever been, and Ruder has overseen a culture shift in his company that has put a focus on all employees not just the refugees.
Ruder commented, “I just know my mission is bigger than the refugees; they are part of it. The refugee program is what has attracted all the media attention. But my mission is really about all of the people in my company.”
The story at L&R Pallet has captured the attention of Denver area media including TV stations and the Denver Post. Ruder’s company was recently featured on a TV segment for the 700 Club, a national Christian news and culture program. And a video about Ruder’s company was featured at the Colorado Prayer Luncheon (http://ww.coloradoprayerluncheon.com/. The event included speeches by the governor of Colorado and mayor of Denver. Also, Ruder is scheduled to speak on a panel at the Western Pallet Association annual meeting in January 2017.
Ruder explained, “Our program isn’t just about refugees. People come through my door every day that are broken. People have baggage. They have lots of stuff going on in their lives. It is not traditional for any business to put up with that at work. We are too busy trying to get the job done. Many companies take the attitude of just leave your problems at home.”
Ruder added, “I don’t think what we are doing is rocket science. But people are trying to figure out how to be bold in the workplace, and they just don’t know how to do it.”
People First Focus
What changed at L&R Pallet? Ruder would be the first to admit that it started with him. He had to be willing to slow down and view people differently.
Ruder suggested, “I don’t care what ethnic group or background you come from, our HR program is about helping our employees with their problems. You will become a better employee as we help you deal with personal challenges and become a better person.”
The company began offering a chaplaincy service to employees where independent chaplains visit the plant weekly and are there to listen and connect employees in crisis with the necessary resources. In addition, managers wanted to know about the lives of workers so that they can help them deal with problems at home so they can be better focused when they are at work.
This goes against contemporary business wisdom about keeping to a minimum company involvement in the private affairs of employees. Many companies are too afraid of lawsuits or are worried about violating privacy. Plus, many managers are too busy getting out the next order to really be concerned with the personal troubles of employees. But that is a short-sighted view that will eventually cost you good workers and productivity.
Ruder said, “My biggest asset is not my machinery but my people. We focus on fixing the machines. Why don’t we do a morning check on our people to make sure everything is going okay?”
Even though many company owners run scared of their employees and don’t want to open up the company to legal worries, Ruder said that this new approach has never led to employee complaints or legal threats. A major reason is that everything the company is doing in terms of pastoral care, religious services, language training and addiction recovery assistance is voluntary. Ruder explained, “Our real goal is to develop programs that help people get off addictions or learn how to be a better spouse or parent.”
Ruder is quick to point out that he is not running a charity. You have to be willing to pull your own weight and work hard. Some people don’t like the new approach and they weed themselves out over time and go find another place to work. But by changing the culture so that employees know that management cares about them, employees’ attitudes have changed. This new approach has helped improve loyalty, attendance and the dependability of the workforce.
L&R Pallet has assigned one employee to be responsible for overseeing the personal and spiritual development of its workforce. This person works with chaplains who are licensed ministers. The idea is that this full-time employee will help target and point the ministers in the right direction of people who need help. This person attends management meetings and helps to ensure that the employee focus remains a priority. For example, if an employee has a severe sickness in the family he can identify the concern and help the chaplain as well as management take proper steps to ensure the worker is given what he needs to care for his family. From flexible work schedules to time off if necessary to chaplains’ visits at the hospital, L&R Pallet wants employees to know they matter.
Ruder suggested, “There is not an abundance of people, and there are a lot of jobs out here. Our goal is to become a destination – so that when they hear about us in the community, they desire to work here. Yeah, it is a hard job, but it pays well, and we treat people right. We aren’t giving handouts, but we will work with anybody who is willing to work hard.”
Shifting Culture Means a Better Business
Besides finding purpose, the new HR strategy has resulted in a better business according to Ruder. He explained, “Turnover is more significant than we can imagine. When you can slow it down, you can improve your profitability. When you can get buy in from people and they start working together, it can make your company more successful. The dollars show up.”
Ruder added, “My gross sales has not increased, but my profits are up. In the first 18 months of taking a new employee approach, my net profit doubled. And in the following 12 months, the net profit doubled again.”
A key is that turnover kills productivity requiring you to retrain workers, and you lose any sense of culture and business memory every time a new employee comes through the door. Those costs lead to waste and inefficiencies that are huge and drag down the bottom line.
One benefit of refugee and immigrant labor is that workers’ compensation claims and lawsuits have gone down. Ruder said that refugees don’t look for a free ride when they get hurt and are eager to return to work when they can. L&R Pallet has not had one worker’s compensation lawsuit from a refugee. But during the same time frame he has had more than $250,000 of worker’s compensation claims from a much smaller group of traditional American workers.
L&R has also fired some customers because they were bringing down morale. These companies were difficult to please and constantly abused workers. Ruder walked away from hundreds of thousands of dollars’ worth of business because it led to a toxic work environment where everyone was stressed and blaming each other.
Refugees to the Rescue
The part of L&R’s new HR approach that has gained the most attention is its focus on refugees. While they have proven to be a reliable source of labor for the pallet company, the entire process of integrating them into a business has been a major challenge. Ruder recalled, “Working with refugees has been great, but it is probably more work than anything I have done in my life. It is messy and dirty and hard. And I don’t think that always comes through the story. It looks really easy in the video.”
A few years ago, the company began its refugee program with seven people from Burma. This group was successful from the beginning. One mistake that some companies have tried to do is to hire one or two refuges and to just drop them in the general workplace population. But that doesn’t work; you need to hire enough to create a team and a culture. You must realize that many of these refuges speak no English and will struggle to communicate unless they are around people from a similar background.
Ruder recounted, “I was very successful with the first seven. They had been here a few years. They were very productive right out of the gate. We thought they were all going to be that productive.”
Some of the subsequent groups were not as successful for a number of reasons. The company tried to grow its refugee workforce too quickly without understanding cultural barriers. Ruder explained, “We discovered that we had 17 different languages spoken among our workers. Another big misconception is that people who come from the same area speak the same language.”
Ruder said, “We were putting people together who spoke different dialects, and they couldn’t talk. And we didn’t know that.”
Also, as the company gained traction it began to attract the attention of new refugees. But these people may be job jumpers and may look at it more as a charity case than a real job. Ruder commented, “Immigrants who just arrived today are probably the hardest ones to employ. Sometimes those people have to be here a while to get acclimated to what life is like in the United States.”
Ruder said, “A pallet place is not a glamorous place to work. And they immediately thought there must be a better job around the corner. So, we saw a lot of turnover with newcomers.”
Also, when refugees first enter the country their language skills are much less than those who have been around a year or two. And when people first enter the country they have lots of work absences for government appointed meetings with social workers and doctors. L&R Pallet is flexible to help refugees meet these challenges and attend all required appointments.
Ruder declared, “If you handle refugees like you handle every other employee, the program will fail. You have to have better training.”
One of the biggest challenges is the need to completely rethink and redesign your training and safety programs. Many of the workers didn’t even read and write their own languages. You had to make pictorial and gesture-based training to convey key concepts. With so many languages and dialects in the facility, the company made a chart to identify each dialect with a color code. Every worker wears a hard hat with the language colors marked on it. This helps the managers know which translators are needed for regular communications, training and meetings.
Ruder said, “You have to be willing to slow down and train the refugee employees right and manage them.” He added, “Traditionally, the Hispanic workforce, we would give them three days to figure it out, and if they didn’t we would replace them with the next worker.”
But the training process for refugees can take weeks. Ruder stated, “There is a huge difference between translating and communicating. That was a huge breakthrough for us.” The idea is that if a translator doesn’t understand what is being said, you are not really communicating. One example was that injuries with nail guns at first went through the roof. Workers would act like they knew what they were doing and were following the guidelines. But then they would go off and do things that were dangerous. Then, the company had to completely rethink its safety approach and significantly reduced this problem.
L&R Pallet took an empty office and turned it into a training space. This allowed for the training to be down away from the noise and distraction of the shop floor. The company also conducted dexterity tests to see who can work with what tools. You have to remember that many of these people have never worked with powered hand tools or heavy machinery. If they were lucky, they used to work with an axe, a hoe or a shovel.
A longer training program helped people get over their fear of using tools and provided the time to learn how to do things right. Training focused on demonstration and then asking the employee to demonstrate what he or she learned. Besides just the language barriers, you need to understand cultural differences.
Ruder laughing said, “Especially with people from Asia, I always explain it as we stand and they squat.”
One example of a cultural difference is that the Burmese workers even for those who are not religious have a long history of Buddhism in their culture. And karma is a very real thing in their minds. They want to please the boss, but they don’t want to do anything to upset other workers or lose face with them. Honor and respect is a very real concern. Ruder said that as a result they didn’t want to insult or correct another worker, and this created a bit of a problem when one of the Burmese workers was made a supervisor.
For more insights on working with refugee labor, see the article that will appear in the November issue of Pallet Enterprise.
Kingdom Economics – Christian Gospel at Work
A big part of the new HR approach at L&R Pallet is the effort to understand employees. Ruder commented that many people do not understand the refugee situation. He declared, “I have yet to meet a refugee who is thrilled that their parents were killed, their house was burned down, a family member was raped, they were starving for years and had nothing…Many would like to go back home if they could.”
The focus on employees can be seen by services and training offered as well as special celebrations offered at various times of the year. And when the company tries to help those in crisis, the focus is on listening and connecting to resources, not providing advice.
The Christian Gospel is going forward to employees by regular actions of managers and company leadership. The company provided gift baskets at Easter and a special religious service conducted by the chaplains in multiple languages. All of the outreach efforts are voluntary. And even for those employees who don’t want to participate, they can take a free meal and go rest in the shade.
Ruder had an epiphany about his business. He stated, “My business is my church – that’s almost 500 people who I can speak into their lives when you consider all of the employees and their families.”
He pointed out that the average church in America has about 100 people. And yet, he spends more time around his employees than their own pastor or family does in a week. He wants to take that time and attention and use it to produce lasting change in his workforce. Ruder said, “We are seeing people commit their lives to Christ who have worked for me for years. People are hungry for authentic Christianity.”
Hearing about the success, Ruder said that everyone wants to know what the secret sauce is. But it isn’t that he or his team is that brilliant, he said. Ruder gave the praise to God for changing his heart and priorities.
Ruder admitted, “I thought I ran a Christian business because my mom and dad were Christians. I am a Christian, so that means this is a Christian business. So what does that mean? Well, we are really good people, and we do honest things, and we treat people right. But there could be so much more to it than that. I am discovering the responsibility to steward that business for the Kingdom of God – to truly impact my employees and customers.”
A key thing to understand is that you don’t have to go to a foreign country to live on mission. One of the best mission fields is the workplace where you are around people every day, and some of them will be in crisis over the next few months. And for Christians, there is no secular business compartment where our company lives should be kept apart from our priorities and ethics as a Christian. But many people live this way according to Ruder. He said that he used to do that to some degree because he didn’t want to seem too preachy or offend people.
But the real secret to L&R’s recent success has been the change that took place at the top. The man in the mirror who ran the show, he had to change first. Ruder recalled, “We put on this worldly economic view, and we focus only on the bottom line, and we are afraid of Kingdom Economics. When I wasn’t worried about the dollar, when I wasn’t serving the customer for what they spent, our profits improved… I am not in it for the dollar any more, but we are measuring success in greater ways than ever.”
Admittedly, Ruder said that he is struggling to figure it out just like everybody else and wants to remain humble because God is the one who has made it all possible.