RDO Equipment CEO reflects on 12-year cultural shift
MOORHEAD — RDO Equipment, based in Fargo, is known as the largest network of John Deere construction and agricultural equipment dealerships in the country, with some 60 locations and operations in a dozen states, as well as in Russia, Ukraine and Australia.
But Christi Offutt, its CEO, says striving to be the best is more important than being the biggest, and that involves a “stakeholder philosophy, not a shareholder philosophy.”
Christi, 43, a daughter of Ron D. Offutt Jr., 70, the company’s founder and chairman, has been a top manager in the company for a dozen years and CEO since 2006. She is one of four of Offutt’s children who are in management posts or have spouses in the equipment company or its related farming or business enterprises.
She spoke in a luncheon series in the Lorentzsen Center for Faith and Work in the Barry Auditorium of the R.D. Offutt School of Business at Concordia College in Moorhead, Minn., on May 10. The center is named after her father, a Concordia graduate and a primary benefactor.
“A company’s culture is the biggest single differentiator between you and your competition,” Christi told the group. And while RDO specializes in John Deere, she said the culture is even more important than whether the equipment you sell is green, red or yellow.
In her luncheon speech, Christi was introduced by her father, one of the world’s fabled potato growing and processing businessmen. Ron D. Offutt Jr. expanded into the John Deere store enterprise, as well as vehicle sales, real estate and related ventures with gross revenues in the combined ventures in the neighborhood of $2 billion.
Ron Offutt (“Ronnie” to his friends) recalled that he realized in his early 50s that John Deere is a great business but a “bad business to die in.” He realized that none of his children were involved or seemed interested in the equipment business and that if something happened to him, “John Deere would be the one to decide RDO’s fate.”
To deal with this, Ron Offutt recalled his decision to take the company public on Jan. 24 1997, in an “initial public offering” of stock shares in the New York Stock Exchange. “What seemed to be a very good idea at the time was both a blessing and a curse,” he said. The timing initially was good because lots of IPOs were going on, a lot of changes were made and the company raised more money than anticipated.
“The curse was that analysts expected continued growth through acquisitions, but John Deere quickly put the brakes on growth because they didn’t want one dealer getting too big,” Offutt recalled. RDO went into other platforms of business, which put stress on the leadership, even as analysts reported quarterly sales and market share expectations. “The leadership, including me, became more and more focused on the financial results of the company instead of what’s really important. And what’s really important, which I was to find out, was the employees and the customers,” he said.
When the company missed the quarterly expectations, the stock “got trashed,” Offutt said. Only one geographic region in the company — Christi’s, in the Midwest — was hitting its sales projection numbers. In late March 2000, the board determined new leadership was in order, and that Christi was producing results. They made her chief operating officer, Ron Offutt said.
The company was made private in June 2003, and it’s grown under a corporate strategy his daughter refined.
From the start, Christi, who holds a law degree and had gained some outside experience in Washington, D.C., and then in a Minneapolis law firm, strongly felt companies are in the customer service business but also the people business.
Christi came home to RDO to be made vice president for strategic planning in 1998, vice president in the Midwest Agricultural Division in July 1999, and chief operating officer in January 2001. She took a year off in 2005, and returned as CEO in late 2006.
She says she’s emphasized “building and sustaining a responsible corporate culture,” which shifted toward a change to a “balanced stakeholder” versus shareholder philosophy, and a “great-place-to-work culture based on servant leadership, transparency, personal growth and — above all — trust.”
Instead of focusing on shareholder financial results, she focused more on employees and customers. Other key stakeholders are manufacturer partners, owners and the communities where the company has stores.
“My job is to optimize value creation for all of them,” Christi said of her work. The company makes decisions using a “stakeholder wheel” with RDO Equipment at the center, but employees, customers and manufacturer partners, all share segments of the next, inner circle ring. Decisions are measured at the store, region and company level and are discussed at monthly business meetings.
Christi told the crowd at the luncheon that she is most gratified about RDO employees’ passion and commitment to the organization. She quoted her conversations with employees, including a mechanic in Texas who enjoyed being treated with respect and “as an individual that does important work for our customers.” She said that while the company sells “greatly branded” products such as John Deere and Vermeer, it’s actually in the “service and customer solutions” business.
Christi said the company philosophy is that employees who are close to the customers must be empowered to make decisions.
Every location has monthly “open-book meetings” and they review the financial results of the departments and stores. “Every RDO team member can go on our system and pull up the P&L of any department of any store, or the company overall,” she says. There are discussions about how the team can impact the numbers. The company pays a quarterly profit-sharing bonus to every parts and service team member.
There are no secrets, she said, and that is one of the things that new employees mention as different, especially if they have been hired from other organizations. “One of our true guiding principles is radical transparency for all of our stakeholders, but especially our team members,” Christi said.
The Upper Great Plains is a “tough geography for attracting and retaining people” so the company seeks to retain employees. The company is a value-centered organization with core values, including an unwritten one — having a lot of fun. They annually give team members $200 and eight hours of paid volunteer time to spend in their communities — more than $1 million annually.
RDO Equipment spends 15 percent more for training than comparable-sized organizations. The company has a 30-month Management Institute for company leaders. Every team member has a “learning plan” that is discussed in annual reviews.
Managers are trained to be better communicators. The company has a policy of promoting from within where possible. People must feel valued and know that what they do is valued.
The company partners with the Great Place to Work Institute, a human resources consulting, research and training firm, with U.S. offices in New York and San Francisco. Among other things, the institute helps measure whether employees feel fairly compensated. Christi said that today, internal company surveys show that 90 percent of employees surveyed indicate a high degree of trust in the organization.
In his introduction, Ron said Christi taught him two lessons: the company could not grow faster than it grew its people; and a great place to work is not only the right thing to do but it will create great business results.
“The passing of wisdom doesn’t always go one way,” Ron Offutt said. “Generally, you think the passing of wisdom is from the older, more experienced person to the younger and the inexperienced. But I’ve learned that it goes two ways.”
Mikkel Pates, Forum News Service, INFORUM