For the past 23 years, Ken Couch, R. Ph., has been President of Smith Drug Company, the sixth largest pharmaceutical distributor in the U.S. with $2.4 billion in annual sales. Retiring this month, Couch shares important lessons he’s learned about creating a productive and engaged workplace.
JATHAN JANOVE: During your tenure, your company experienced tremendous growth and profitability. It also became listed in the World’s Most Ethical Companies by the Ethisphere Institute. What’s your secret?
KEN COUCH: Find the most energetic and enthusiastic HR people you can, and have them recruit and hire the most energetic and enthusiastic employees they can. Find people who like your organization, have a sense of purpose, are solution-oriented vs. blame-oriented, and who smile even when you occasionally step on their toes.
Positivity is contagious, just as is negativity.
JJ: What’s the origin of this emphasis?
KC: About forty years ago, I worked as a pharmacist in a local drug store. A customer in her 80’s frequently came to the store. Whenever she did, she’d point her cane at me and say, “How are you Dr. Couch?”
For a while, I answered, “Fine.” But she’d respond in a stern voice, “That is not an acceptable answer.”
Finally one day, she said to me, “Dr. Couch, when I come in here tomorrow I expect a better answer!”
The next day she arrived, pointed her cane at me, and said, “Dr. Couch, How are you?”
With energy, I replied, “I’ve never felt better!”
“Good answer.” After a pause, she added, “I know you’re lying, but it’s still a good answer.”
Forty years later, I answer that question the same way. I may be lying, but it’s still a good answer!
JJ: Once you’ve hired enthusiastic people, what company practices help keep them enthusiastic?
KC: We’ve done a number of things to keep our employees engaged. These include:
- Employee profit sharing – If our company finishes the year in the black, every employee receives 15% of their annual salary or wage as an additional contribution to their 401(k) plan, which they can invest however they like. As a result, over the years, employees who are not executives or managers have amassed over $1 million in their retirement accounts.
- Charitable giving – We created the Smith Drug Foundation. Employees donate to it and designate the charity or other 501(c)(3) organization to which they want their contribution directed. The foundation matches their gift dollar for dollar up to $7,000 per employee per year. The foundation makes the overall donation in the employee’s name.
- Cooperative Action Teams (CAT) – CATs do their work for short periods of time, typically 30 to 90 days, and seek solutions to specific challenges or opportunities. They consist of five people: two senior executives, two mid-level managers, and one hourly worker. At any given time, three or four CATs are in action. Based on feedback we’ve received, CATs have given employees a feeling of investment in the company’s future; and they’ve produced ideas that have benefitted the company.
- Smith Pride Day – Every month, we hold a Smith Pride Day, which involves activities and fun contests. Employees get prizes such as trinkets and mugs. Senior executives cook and serve the food. One of the employees’ favorites was my least favorite: “Dunk the President Day,” where well-thrown beanbags caused me to plunge into a large vat of water. There were way too many good arms, and the water was way too cold!
JJ: What about your personal practices as president–any ones you found especially helpful in promoting an enthusiastic and engaged workforce?
KC: My practices included walking through our main warehouse twice a day. I sought out employees, especially ones who weren’t in supervision.
Even after we grew substantially, I strove to remember every employee’s name, and I was not “Mr. Couch”; I was “Ken.”
I asked questions such as “How’s it going for you?” “Is there anything we can do better?” When I asked these questions, positively inclined employees became more so, and negatively inclined employees became less so. In addition, I often gained valuable ideas and improvement suggestions.
JJ: It sounds like listening has been a big part of your approach to.
KC: Far too many leaders think it’s their job to tell. I never felt that way. It’s a sad leader who thinks he or she knows everything. It’s always better to find out from the employees who actually do the work.
JJ: Have you made mistakes that could serve as valuable lessons to other leaders?
KC: Perhaps my biggest mistake was keeping people on after I knew they needed to go. With a passion, I hate firing people, and look forward to never having to do it again. Nevertheless, to be an effective leader, you must be committed to getting the deadwood out of your organization.
JJ: Can you think of an example?
KC: I recall hiring three senior staff members who had great credentials and did extremely well in interviews. I was excited to have them on our team.
After serious problems with their leadership surfaced, I took much longer than I should have in dealing with the situation. Only after I finally moved them out of the company did I realize the cost of keeping them on. I saw it in the dramatic increase in productivity and positive energy in the employees they had previously led.
Instead of continuing to ruminate because of my reluctance to fire, I should have pulled out a spreadsheet and done a cost/benefit analysis. Had I done so, I would have quickly realized we needed a leadership change.
JJ: Do you have any other suggestions or advice for leaders who aspire to create engaged energetic and positive workplaces?
KC: Just as many wonderful mentors guided me through my career, I have tried to cultivate a group of up and coming dedicated folks who can excel in the future. Always find ways to help them be better leaders and enthusiastic, dedicated disciples who strive always to do the right things.
Finally, after all is said and done (I retire), I will need someone to invite me back to the company picnic … so long as it’s not “Dunk the ex-President Day!”
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