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  • by Lee Eisenstaedt

What It Takes To Build A Culture Of Leadership

A Conversation with Kyle Seymour President S&C Electric Company ( https://www.sandc.com/)



Kyle Seymour is no stranger to the advantages of running an ESOP. When he became the head of Cincinnati-based Xtek, a 100% employee-owned company focused on engineering components for overhead cranes and steel rolling mill equipment, he knew it was the type of structure he would always want to be a part of. In fact, when he was given the opportunity to join S&C Electric Company in early 2013 – a change that wasn’t without its share of risk – one of the determining factors was that it too was an ESOP.


During this Leading with Courage® in ESOPs conversation, Kyle shares his experiences past and present with ESOPs and why he’s become such a firm believer in it for its strong impact on cultures and leadership.


LWCA: Kyle, what makes you smile when you get up in the morning?


Kyle Seymour: For me, every day is different. Every day we'll have the challenges that you may dread dealing with, but you have to. Yet, every day we'll also have the rewards that make it all worthwhile. So it's about knowing that there's just something good that’s going to happen today.


One of the things about an ESOP company is that you are amongst your shareholders all the time. You walk in the plant and you're surrounded by your shareholders. Few things are more rewarding than having them come up to you and thank you for what you're doing for them. Those moments put a smile on your face and make it worth going into work.


LWCA: If there's one thing I should know about you, what's the most important thing I need to know about Kyle?


KS: Great question. I really enjoy putting that smile on the faces of the people who are benefitting from our collective work. I’m driven to grow and succeed from that.


One of the things that's neat about running any ESOP is that you don't have to worry about the conflicting interests between your shareholders and your team members.


There is none. And because of that, you can work with them as people, not as numbers, heads or any of those things. You work with them as people that you treat with dignity and respect.


LWCA: As part of that, do you find there are less barriers shall we say between you as the CEO and the rest of the employees? Many times the employees are intimidated or afraid of the boss.


KS: It depends on how you approach the job. You can’t treat it like it was just any other “President” job. You have to consciously work to bring down those barriers to being approachable. You have to make yourself one of them. That’s the recipe for succeeding in an employee-owned company.


In your previous book, Lee (“Being A Leader With Courage”), you talked about being humble and I think that becomes even more relevant in an employee-owned company – particularly as it gets further along that maturity continuum where people become conscious of their position as owners. They will become indignant if you treat them as something other than owners, so you have to consciously work to overcome the natural power dynamic inherent in any organization to be approachable. That is a critically important thing to do in an ESOP company.


LWCA: Take a few minutes to share how you got into the position you’re in right now. What was the path?


KS: My path began when I was running a company in Cincinnati. I built a friendship with a gentleman who was running an ESOP company that was a heavy-duty manufacturer. He invited me onto his board because I had a machine tool and manufacturing background. I joined his board and over a period of time, I ended up succeeding him as the CEO for that company. That was my first exposure to an ESOP and it didn’t take long for me to conclude “This is what I'd love to do for the rest of my career – to be the CEO of an ESOP company.” About 10 years later, I joined the board of S&C Electric Company and I ended up succeeding the CEO there as well. S&C was a much bigger company and it was at a different stage of its ESOP maturity. With 20 years in manufacturing leadership and 10 years of experience as a CEO of an ESOP, I was a natural person to come in and lead it. That’s how the sequence worked out for me to be here.


LWCA: Do you think someone without ESOP company experience can succeed in the job?


KS: Sure. But there are some basics you have to have: Being humble, placing a high value on people, and taking a bit of a longer-term view of success and longer-term view of the company, etc. Those are so important in any ESOP. So I think if you have a basic disposition about treating people with dignity and respect as well as a strength in communicating well with people – trying to talk with them rather than at them, doing things for them rather than to them, you can run an ESOP.


LWCA: To get to where you are, you must've made some sacrifices or compromises either personally or professionally. What comes to mind in that regard?


KS: I've always resisted making career decisions that took a big personal toll either on me or my family. I'd always either try to find a way to work around it or simply not go there. Taking the job running the ESOP in Cincinnati was actually a step that made my life and my family's life easier. I went from 75-80% travel in a global company down to a company that was relatively geographically concentrated. So it changed my personal demands quite a bit. I still had long working hours, as you expect, but it was easier personally for me to do that, so it wasn't really a sacrifice to go there.


The move to S&C was tougher because it required a relocation of my family from Cincinnati to Chicago at the time when my youngest son was an incoming freshman in high school. The job change itself was not a big risk for me, but the relocation was a risk for my family and we did a lot of soul searching before making the commitment. We agreed to do everything possible to reduce the risk, particularly for my son. LWCA: What sort of things did you do to take the risk out of it?


KS: One of the big issues was where to live in Chicago? We started out with a commute radius around my company and ended up letting my son pick the high school within that area where he would like to go. That turned out to be a huge deal because he became invested in our family decision. About a year into it, he told me that he was better off for having made the move. You can’t imagine how big a win that was for me and my family.


LWCA: Can you name a person who had a tremendous impact on you as a leader? How did they impact your life?


KS: Stephen Covey’s “7 Habits of Highly Effective People” was probably the most important influence on my development as a person and as a leader. It really made a difference in how I approach things in my career and I practice all seven habits to this day. There were several other business books like that I read diligently early in my management career, and which helped to shape the way I approached things as well, but the “7 Habits” was foundational for me.


LWCA: What made you want to be a CEO?


KS: Early in my career, I didn't set out to be a CEO. It came in a series steps that each seemed sensible at the time. In my last year in the US Navy, I managed a large program and decided that general management was for me. I went to business school as a transition into the manufacturing world and aspired to run my own business or a little P&L. I got my chance and progressed rapidly through the management ranks from there. I actually stumbled into the CEO jobs by getting onto boards, then realizing there was a leadership succession need and looking at the job and saying, “Oh, I could do that.” And sure enough, it worked out that way with both Xtek and S&C Electric.


LWCA: Did you make your interests known in that job or did someone familiar with the company and the board say, “Hey, we think you would be a good candidate for this?”


KS: In both cases, I was approached by another Board member and I was taken by surprise when that happened. But it didn’t take me long to get my head around the idea since as a Board member I was already well versed in what the companies needed.


While the succession needs were different in each case, I was a good fit in both. So in a sense, I was just lucky, being in the right places at the right times, being able to spot a great opportunity and being ready to jump on it when it came.


LWCA: Have you found that there to be a real tension between the short-term and the long-term decisions you've had to make in an ESOP? A crisis, for example, that you had to get very short-term oriented on?


KS: In any company that's the case. You're always balancing the current performance against what you’re building for the future. You can always spend more now to build for a better result later but the price you pay for that is that you make less now. Even in an ESOP company, you weigh that trade-off all the time in areas such as R&D for example. In an ESOP you still have to strike a balance, but as long as you don’t put the Company at risk, you can take a longer view and when we see something that clearly has a benefit, we can take that hit in the short term to have that better pay off in time.


On the flip side, since your shareholders have their retirement nest egg in your hands, you have to take a different view about making high risk bets and you may have to sacrifice some growth opportunities to do so. That is a small price to pay to have such a great ownership model.


LWCA: When you think about your experience with ESOPs, is there a story you tell ESOP leaders about your experience with employee ownership that makes it real for them?


KS: Yes. Early on when I took over at Xtek, it was a mature ESOP and they were doing pass-through voting by the employee owners for the board members in the annual election. This is something you commonly see in ESOP companies once they get to the point where the employees have most of the stock allocated to them. So basically, I had to get re-elected to the Board each year in an employee vote. In my first year on the job, I thought I was doing pretty well communicating, making good decisions and the like. Well, I barely got 50% of the vote. I was stunned. I'd never been in an election before. I was sitting there thinking, well, now I know what politicians feel like because they consider it a victory if they get more than 50% of the vote. Yet, I was devastated. It was a wake-up call for me. It made me realize that I needed to be more connected with people. I thought I was doing the right things, but they may not have known or seen that. They may not have understood that. So I spent the next year plugging in. I started going on the rides with the motorcycle biker clubs and started going to skeet shoots with our shooters. I was doing more town halls. And I was, even personally, handing out profit sharing checks.


What I learned is that being the President of an ESOP is kind of like being the Mayor of a small town. You have to invest in it in the same way that you would as the leader of a town or village if you want to get re-elected. I actually made it kind of a joke after that, that I was desperately trying to get re-elected each year. I'd go out and tell people, “Hey, I'm pandering for votes,” and shake their hand. Sure enough, over three years, my percentage went from barely 50% up to over 95%. So the advice I give to people is to go engage, be visible, be approachable. You’ve got to interact with people and make them know that they're important and that you care about their work.


LWCA: How do you avoid backsliding on that sort of commitment to time to connecting with people?


KS: One thing you can do is to get plugged into routines that remind you of what you’ve got to do. You can institutionalize things like town hall meetings, so you can make a schedule for it and just do it when the time comes.


LWCA: Have you ever seen it where people interpreted it as insincere, that you're just doing it for re-election purposes? KS: It took a bit to convince people that I was sincere and that was part of the work through town hall meetings where I'm taking their questions and treating every question with respect. I'm never saying that's a stupid question. I'm listening to it. I think over time, people get that and start to believe that you're sincere and not just playing them. But it does take work and it takes time to get to that point and you've got to stick with it. That's why I didn't get to 95% approval in the first year. It took me three or four to get there because it built on itself. LWCA: Have you followed that up then with any regular feedback on how you're doing? KS: I do. In my seven years at S&C, I've done a full 360 Assessment at least twice. That’s where I get the feedback from people around me on how they see me. And I'm always finding that there are some things to which I'm blind in that feedback. I take it seriously. I sit down with the people that gave it to me and thank them for it. I share what I’ve learned about myself and the kind of things I'm going to do with that feedback. I've got a virtual town hall board here, which is really interesting. I started doing it about three years ago. We’ve got several thousand people that are on the virtual town hall board. Basically, they can write something on the board and ask me a question or make a comment and I'll respond to it. I always take it seriously, no matter how silly the question might be. I'll get expert answers and I'll post it back. And when I make a post, everybody in the company can see what the question was and what I said about it. I can't go a week without somebody posting about something and it runs the gamut from “it’s too hot in the building” to “how are we going to get more business in China?” In the last couple of years, we have also done two broad employee engagement surveys. I share the results with all of the employees and solicit their help in working on the areas where we needed improvement.


Collectively, all of these activities make you listen to your employees and press you to do something with what you hear. I think that is a key ingredient in the success of an ESOP company.


LWCA: In an organization that is a mature ESOP, what do you do to keep that Culture of Leadershiprelevant to the employee owners?


KS: You have to be smart about setting expectations that you can fulfill because if you get people all excited about being an owner and then a year later they get their first allocation of stock and it's not a big amount, they can become skeptical or cynical about the ownership. The key elements of ownership are having a meaningful financial stake and a feeling of having a voice in how things are done. If you have both of those, then people feel like an owner.


Early on in the startup phase of an ESOP, they don't have the meaningful financial stake built up yet. But what you can do is work on the voice part. So that's where the town hall meetings and constant reminders that we're team member owners here and that matters. It's about caring about people and being able to invest in things for the long term. That’s why it's a valuable model and why I love working for an ESOP company. There’s a lot of two-way street communication for people early on. Then as you get more mature and people get bigger balances in their accounts, the financial part starts to kick in.


(Click here to learn more about the phases of an ESOP in the article co-written by Kyle Seymour and Lee Eisenstaedt on the "ESOP Maturity Continuum.") LWCA: What are you doing now to ensure that you continue to grow and develop as a leader?


KS: I still read a lot and try to stay current on what's happening in the world. I try to stay current with the body of developing management knowledge and understand it. Because the world does change and we have to adapt to it as it changes. That's the main thing for me.


There’s a lot that goes into creating and strengthening a Culture of Leadership. Like succession planning, self-awareness, employee engagement and understanding the behaviors of what forms a cohesive team and high-performing organization. Where do you even start?


Right here with Leading With Courage Academy. We’ve built customized roadmaps for leaders realize the full benefits of their ESOPs and we’re ready to do it all over again for you. Talk to us today at 312.827.2643 to learn how we can develop assessments and workshops that register a phenomenal impact on your leaders, managers, individuals and teams.

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