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06/02/2012

Leading Hy-Vee by Example

Photography by Dean Tanner, Primary Image Ltd.

When all was said and done, some Hy-Vee shoppers still wanted to buy lean, finely textured beef despite the backlash over it, which had spurred the retailer to pull the product from its shelves earlier this year.

So Hy-Vee reversed course, restocking the product a week after the controversy erupted. To Ric Jurgens, chairman, chief executive and president of the West Des Moines, Iowa-based company, offering the product was the right thing to do.

"In the lean, finely textured beef situation, we did the same thing we do for all the decisions we make," Jurgens told Retail Leader. "We listen to our constituents of all types, we find the facts, and we work together for a conclusion. One of the first questions we ask is, ‘What is the right thing to do?' And we're prepared to admit it if we made a mistake. We acknowledge that we are human beings and if we realize we are wrong, we fix it. We try not to have any corporate arrogance.

"We listen to our constituents of all types, we find the facts, and we work together for a conclusion. One of the first questions we ask is, ‘What is the right thing to do?'"

"In this particular case with the lean, finely textured beef, the ultimate conclusion was that it was up to the consumers to decide if they want it. It was not up to the media or up to Hy-Vee," Jurgens says. Today, the company carries some beef with the additive and some without it.

Doing the Right Thing

At Hy-Vee, those who know Jurgens say his do-the-right-thing approach to leadership and his inspirational influence will linger at the company long after his exit in June, just a few days before he turns 63. Jurgens' leadership has made Hy-Vee a stronger, more focused and innovative company, notes Randy Edeker, 49, president and Jurgens' successor. "Ric helped us refine our mission and our vision, and never let us lose sight of the fact that everything we do as a company is done in service to the customer," Edeker explains.

Jurgens has sought to impart to Hy-Vee's 60,000 employees, including 24,000 who own stock in the privately held company through its 401(k) match, the notion, "If you can make a difference, you should make a difference."

"A lot of decisions are being made within the walls of our stores that greatly affect people's lives, and I believe [we] have an obligation to help them make the best decisions possible in any way that we can."

In the context of supermarket associates, Jurgens says, "Let's be realistic: A lot of decisions are being made within the walls of our stores that greatly affect people's lives, and I believe [we] have an obligation to help them make the best decisions possible in any way that we can. Our industry needs to be proactive to do the right things to help consumers."

In the midst of the economic downturn, Jurgens encouraged employees to find new ways to improve the customer experience, ultimately strengthening Hy-Vee's financial health at a time when competitors grew weak. Under Jurgens' watch, Hy-Vee has grown to 235 stores in eight states generating $7.3 billion in 2011, compared with 219 stores and $4.7 billion in revenue in 2004, his first year as CEO.

"We not only survived the economic stress, but we continued to invest in new stores and upgrade existing locations, hired more employees, posted strong profitability and strong sales growth, and made no layoffs. What it says is that our people know how to adapt to consumer needs," Jurgens says.

Jurgens is clearly proud of Hy-Vee's efforts to improve the eating habits and general health of the communities Hy-Vee serves. Hy-Vee was one of the first to put Nu-Val nutrition labels on its shelves to help shoppers identify healthy products, and the company added dietitians in its stores, extended meaningful wellness programs to its pharmacy operations and sponsored the Hy-Vee Triathlon.

"Ric is a thoughtful and innovative leader," says Indra Nooyi, chairman and chief executive of PepsiCo. "Under his guidance, Hy-Vee dramatically grew its footprint while transforming into an industry leader in health and wellness. He truly embodies Hy-Vee's mission of making customers' lives easier, healthier and happier. I'm proud to call him both a partner and a friend."

Jurgens also led the front-of-package nutritional labeling initiative at the Food Marketing Institute and helped found the Healthy Weight Commitment Foundation. In his retirement he will remain co-chair of the Healthiest State Initiative, a program that aims to make Iowa the healthiest state in the country. (The state was ranked 16th on the 2011 Gallup-Healthways Well Being Index.)

Industry Influence

Jurgens' time as chair of FMI illustrates his ability to deal with challenges, says Rose Kleyweg Mitchell, senior vice president of government affairs for Hy-Vee. "His two-year term came at a time of great disarray, muddled finances, declining member participation and a host of other issues which needed immediate attention at FMI," Mitchell says. "He could have let the status quo prevail, given his already demanding schedule at Hy-Vee. However, while presiding over continued growth and record sales and profits at home, Ric was able to bring an enormous amount of much needed stability, fiscal housecleaning and new leadership to FMI."

At FMI, President and CEO Leslie Sarasin recalls that Jurgens was instrumental in encouraging necessary changes in the organization. "Ric and I were thrown into a working environment that was pretty high pressure, but we quickly became fast friends, operating with a great deal of respect for each other, tackling some big problems and knowing we both had a lot of people relying on us, trusting us and expecting a great deal from us," she says. "His attitude that there are sufficient opportunities for everyone to succeed, therefore our success doesn't have to come at another's expense, was key in keeping us on track and moving forward with a positive vision."

Good Decisions

Jurgens, a native of Des Moines and the eldest of four children, began working part-time at Hy-Vee while a senior at Iowa State University. He moved up, rung by rung, through the management ranks before being named president of Hy-Vee's Perishable Distributors of Iowa subsidiary in 1986. He returned to the parent company in 1995 as senior vice president and chief administrative officer, and in 2001, he was tapped to succeed then president and CEO Ron Pearson. In 2003 he was elected CEO, and succeeded Pearson as Hy-Vee's chairman in 2006.

Before he joined Hy-Vee full time, Jurgens interviewed for a job with a large national retailer outside of the food industry and asked questions about decision-making at that company. "I was told that everything was determined by the corporate office," he says. That prompted Jurgens to ask: "‘Then why do you need me?' Needless to say, they didn't offer me the job," he says, "but I wouldn't have taken it anyway, because I was already doing all of the things I most enjoyed as a part-timer with Hy-Vee."

From that lesson, Jurgens has empowered Hy-Vee employees to make decisions. "If you go to Ric with a problem or an issue, seeking his counsel, the first thing he's likely to ask is, ‘What do you think we should do about this?' You better be prepared to give your opinion or your best counsel on what to do," says Ruth Comer, Hy-Vee's assistant vice president of media relations.

Hy-Vee breeds decision-makers through a decentralized management structure that also pushes decisions–from pricing to hiring–to the store level, closer to the customer, Comer says. The approach can challenge vendors that operate with centralized buying processes, but they generally find a way to work within Hy-Vee's system.

During his tenure as CEO, Jurgens mapped out a bold course to refine the company's goals while reinforcing the fundamental values that have made Hy-Vee successful: friendliness, helpfulness, honesty, respect and dedication. While Jurgens is all about empowering workers, he also gives honest feedback. "He won't hesitate to tell you he thinks you can improve or do better in some areas as well," Comer says.

The same goes for wanting to improve customers' lives through healthier diets. "‘Making lives easier, healthier and happier' is more than just the corporate mission Ric helped craft–it's the personal motto by which he lives," Comer says.

Jurgens inspired Mitchell to participate in the Hy-Vee Triathlon through example. "I exercised regularly but would never have thought of participating in the Hy-Vee Triathlon if he had not first stepped up and said he was going to enter as a participant," says Mitchell, who has now competed in three Hy-Vee Triathlons.

As he ponders his next chapter, Jurgens has a list of hobbies, from cycling and sculling to painting, that he hopes to partake in, while working on the Healthiest State Initiative.

But some doubt Jurgens will ever give up his true passion as a merchant. "I'll take a merchant any day over a genius," Jurgens says. "But if you have a genius that's a merchant–and we have a lot of them in our company–get out of the way."

Meg Major is editor-in-chief of Progressive Grocer, a Stagnito Media publication.
Ed Avis is a freelance writer and editor in Chicago who has written for Crain's Chicago Business, the Chicago Tribune, Specialty Coffee Retailer, Tea Magazine, and many other consumer and trade publications.