KCI Technologies Inc Engineering the Future One Employee

KCI Technologies, Inc. Engineering the Future, One Employee at a Time by Profs. Vera L. Street, Christy Weer & Frank Shipper

The Foundations for Shared Entrepreneurship

Working Definition of Shared Entrepreneurship An ethical and dynamic environment where everyone is encouraged to step forward with new ideas, supported with encouragement and appropriate resources to develop them with minimal oversight, and allowed to share in the rewards generated by them.

Transitions � Started in basement 1955 � Purchased by Walter Kidde & Company 1977 � Purchased by Hanson Trust PLC 1987 ◦ Cultural Misfit ◦ Financial Misfit � Employee Buyout 1988 � ESOP Established 1990 (82% employee owned) � 1998 – 100% Employee Owned � Now – Changing from geographic to discipline-based organization

The Foundations for Shared Entrepreneurship Shared Leadership

Shared Leadership ◦ Formal Mechanisms �Elected Employee on Board of Directors �Two Employees on ESOP Board of Trustees �One Elected �One Appointed �Companywide Employee Committee � 36 Members �One from Each Department Terry Neimeyer, CEO Joined KCI 1977 ◦ Informal Mechanisms �Autonomy �Encouragement �Trust Nathan Beil President Joined KCI 1988

The Foundations for Shared Entrepreneurship Shared Rewards Shared Leadership

Shared Rewards � Short-Term ◦ 401 k with Match ◦ Managers 5 -30% compensation at risk every year ◦ Non-managers – zero � Long-Term ◦ ESOP � 6. 5% of Salary/Year �Vested in 5 Years ◦ ESOP Awareness �Guess the Stock Value �ESOP Bingo �Open Book Management

The Foundations for Shared Entrepreneurship Shared Rewards Shared Leadership Involvement

Involvement/Entrepreneurship � Examples ◦ Geographic Information Systems Group ◦ Technology Refresh Program Terry Neimeyer, CEO “It’s not like I come up with all these ideas. I’ve been here 32 years. My new ideas are limited. ”

The Foundations for Shared Entrepreneurship R&S Shared Rewards Shared Leadership Involvement

Obtaining Intellectual Capital: Recruitment & Selection � Reputation ◦ Challenging Work Environment ◦ Open Culture � Internal Posting � External Posting � Department Involvement ◦ ◦ Creating Job Description Pre-Screening Applicants Interviewing Making Final Hiring Decision Nathan Beil President “… finding talented people is a marathon struggle for us. ”

The Foundations for Shared Entrepreneurship Socialization R&S Shared Rewards Shared Leadership Involvement

Retaining Intellectual Capital: Socialization � Year-Long Formal Mentoring Program ◦ Launched Four Years Ago ◦ Senior Managers Mentor 2 -3 New Hires Each Year ◦ Retention Improvement – 33% � Communications ◦ ◦ ◦ Townhall Meetings Tele-, Video-, & Web-Conferencing Open Book Management Anonymous Survey Boxes Annual Survey Blog -- Anonymous “The culture is one where everyone, from the leaders at the top to the newest non-management employees, is in it together. ”

The Foundations for Shared Entrepreneurship T&D R&S Shared Rewards Socialization Shared Leadership Involvement

Building Intellectual Capital: Training & Development � Internal ◦ Informal -- Daily ◦ Formal �Project Management Academy �CAD �Safety �LEED �Software � External ◦ 80% Reimbursement First 5 Years -- 100% Thereafter ◦ Licenses Technical Development � Emerging Program Leaders ◦ 40 -60 Participants ◦ 5 Years or Less with KCI � Professional Program Leaders ◦ 20 Participants � Advanced Program Leadership Development “Excellent, excellent … I feel like I owe KCI … I mean, it’s huge. ”

Results � Engineering Excellence Awards � Outstanding Civil Engineering Achievement � 83 rd on the Engineering News-Record's list of the top 500 Engineering Firms � 7 th on its list of Top 20 Telecommunications Firms � 55 th out of the Top 100 ‘Pure’ Designers � LEED Gold Certification for KCI Headquarters

Financial Results 12+% Compounded Annual Return

Interim Report on Case Studies

Case Studies Progress Case Contact Interviews Draft Completion Results W. L Gore & Associates √ √ Case, A, Chap Herman Miller √ √ Case, 2 A, Chap KCI √ √ Case, A HCSS √ √ Case, A TEOCO √ √ Equal Exchange √ √ Maryland Brush Company √ SRC √ Atlas Container Company √

Interest in Employee Ownership

Two New Case Studies on Employee. Owned Companies Released “We are thrilled to be part of the expansion of employee ownership study and research in academia, ” noted Joseph Cabral, chair of the Employee Ownership Foundation. “It's a longstanding goal of the Foundation to increase knowledge of employee ownership among the world's academic centers. ”

Companies Practicing Shared Entrepreneurship � � � � � Lincoln Electric � KCI – Hunt Valley, MD Nucor � HCSS – Sugar Land, TX Worthington Industries � Equal Exchange – MA Springfield Remanufacturing � Maryland Broadband Coop Company W. L. Gore & Associates � Smith Island Crab Picking Co-op Herman Miller � Atlas Container -- Severn, MD e. Bay � TEOCO – Fairfax, VA Semco S/A , Sao Paulo, Brazil � Service Today – Easton, MD CH 2 M Hill, Englewood CO KI Incorporated – Green Bay

What Others Are Saying: On the W. L. Gore & Associates Case � “… case is excellent and students could learn a lot. ” Deborah Ancona, Seley Distinguished Professor of Management, MIT’s Sloan School of Management, & Faculty Director of the MIT Leadership Center

What Others Are Saying: On the HCSS Case � “… this is a terrific teaching case for an HR course!” Jody Hoffer Gittell Associate Professor of Management. The Heller School, Brandeis University, Acting Faculty Director MIT Leadership Center Massachusetts Institute of Technology