Statement of Fred
P. Keller, Chairman and Chief Executive Officer,
Cascade Engineering, Grand Rapids, Michigan
Hearing on Welfare Reform Success
April 2, 2002
Cascade Engineering is a manufacturer of products for the automotive, office furniture and waste container markets. We have about 1100 people employed including those in our nine U.S. plants and one in Hungary. Sales are about $200 million. I founded the company in 1973. We have been working with our community for a long time to solve some of its toughest problems. I believe that we have an opportunity as business partners to improve the quality of life in our community beyond the impact of doing business in the traditional way of “giving back” when we have some available money. In addition I believe we need to engage our communities to apply systems thinking to the problems to arrive at better solutions. I believe that we have plenty of resources in existing agencies, and revenue streams and if we could only learn how to leverage them better, we would be in a position to make massive improvements, specifically in our continuing cycle of poverty that exists in America today.
Summary:
I believe the nation has an opportunity to make significant new progress to reduce poverty!
I believe Cascade Engineering has demonstrated that moving people from poverty to not only a job, but a meaningful career, is possible.
We have learned that it is not rocket science, but the application of known principles that make a meaningful reduction in poverty possible.
We have most of all learned that these results are not the work of the government sector alone, not the work of businesses alone, and not the work of social service agencies or people in poverty or any one segment alone. Rather we have demonstrated that by the concerted work of all working together in a systemic problem-solving manner, we can effect a significant reduction in not only the welfare roles, but of the number of people actually in poverty.
What will it take?
Fully 22 percent of the 168 people that we added to our entry-level payroll in our Grand Rapid’s facilities in 2001 came from generational poverty. This raised our total to over 100 people now working in our factories who were formerly receiving welfare benefits. Our monthly retention rates have gone from 60 percent two years ago to over 90 percent in recent months.
As a result of this program, calculations by the FIA show that we have saved the State of Michigan $850,000 last year alone in reduced payments for assistance. These savings will continue year after year, because we are committed to this program,
Our program gained the attention of The Conference Board and is the subject of a research report titled “Corporate Community Development”. Reference report R-1310-02-RR
(http://www.conference-board.org/products/researchreports/dpubs.cfm?pubid=R-1310-02-RR)
A further case study is being written by Cornell University’s Johnson School of Business to document our efforts and to further study the underlying principles for its effectiveness.
How does it work?
We have found that there are three main ingredients in a successful program of moving people from welfare to a career:
1. An accepting culture in the organization. Businesses must simply work very hard at building a culture of trust among all employees and learn to value each human being that is employed simply for who they are, as well as the work they do. We have been working for years on this issue and try very hard to make this a reality.
2. Education of not only the incoming employees, but also of our existing employees, about what it means to be in poverty. They learn together why people who have been in generational poverty think and act differently than those who have been in middle class.
3. Most importantly a system of support for the people moving out of poverty as they learn new skills and are faced with the daunting task of living in two worlds. Retaining and even building the dignity of the individual making this move is essential.
This is not rocket science. It is putting known principles into action. The government sector is critical to its success, and yet it cannot do it alone. It is essential that business engage the community and work with the local agencies – primary among them is the welfare agency known in this state as the Family Independence Agency.
There are many critical elements, but having full-time social workers in our plants helping on a daily basis to KEEP our people working is essential. By being integrated in our factories they are making the calls to agencies to keep them on the job and working with them to find solutions to typical barriers to continued employment such as child care, transportation, health care and emotional support. Placing the agency in the midst of our workforce and making it clear that the objective is to have fully productive employees is wonderfully simple, yet exquisitely effective. Little problems, when caught early, help to avoid a disaster for the welfare-to-career employee.
Encouraging local experimentation and publishing best practices can only accelerate the rate of positive change. We have found for instance that by having our FIA social workers do an employment readiness assessment, those who are most likely to succeed are selected for employment now and the balance have assignments to work on so that they will be ready to be employed in the near future. A critical part of what we learned is that we needed to teach both our current employees, especially our front-line leaders, and the people who have been on welfare, the “hidden rules” of the classes as outlined in Ruby Payne’s book A Framework for Understanding Poverty (http://ahaprocess.com/AboutRubyPayne.html). This educational process helps each group understand the actions and behaviors of the other.
The result?
Well, to hear the stories of people whose lives have been positively affected by this program should be enough, but I can tell you that there is much more to it as well. The organization actually is more energized; people are more focused because they know that the organization values everyone there. We actually get more done and make more progress because people like to work for an organization that they know cares not only about them, but the quality of life in the community.
The State of Michigan benefits, the community benefits, the former welfare recipients benefit, our employees benefit, the company benefits! There are no losers in this equation. The traditional thinking that this must be a zero-sum game is plain wrong! When you build social capital in the workplace and the community you are not taking away from the profitability of the corporation. On the contrary you are building it up.
How can the government sector help?
By supporting this kind of experimentation: