by Jay Gordon, Editorial Director
Every new Kwik Trip store built since 1991 is owned by Convenience Store Investmentsand CSI is owned by all full-time Kwik Trip co-workers with five or more years of service. CSI shares should increase in value as mortgages are paid off.
When he tries to recruit people to work in one of the 13 stores he is responsible for in Minneapolis/ St. Paul, Kwik Trip District Leader Brian Dapper doesn’t have to feed anyone a line about the company. “Long-term they are going to be more successful,” he says. “Their initial salary always plays a big part, but even more important is the culture hereknowing that your contributions are not going to go unnoticed and that you genuinely have a stake in the future of this company.”
Lots of companies have a stated desire to be “the employer of choice.” Just as many talk about fostering a sense of “ownership” in the business among their employees. Few ever truly achieve these goals, and fewer still achieve them the way Kwik Trip doeswith an extraordinary approach to employee benefits that is unique not only in the c-store industry, but in the business world as a whole.
Three components of the chain’s benefits strategy-profit-sharing, equity ownership and culture combine to give Kwik Trip a decided advantage in several key areas of the business that effect costs, consistency and the quality of the Kwik Trip offer.
Profit-sharing. According to the Profit Sharing/401k Council of America, the national average across all business sectors for company contributions to profit-sharing plans is 15.5% of total net profit. The average may be slightly higher in the convenience store industry, and Kwik Trip executives say they know of a few of their peers that contribute up to 25% of their profits to employees.
But they are aware of no company that contributes 40% of total net profits to its co-workers.
That decision was made by Kwik Trip President Don Zietlow and is supported unanimously by each member of his family. It is a decision that flows from his personal faith, his desire to invest in his community and his sincere appreciation for the effort that 6,700 people make on behalf of Kwik Trip every day.
“I have lived here all my life, and I’ve seen a lot of companies sold [to outsiders] and lots of people lose their jobspeople who built those companies,” says Zietlow. “I didn’t want to see that happen here.
“We ask our people to work 24 hours a day, seven days a week, 365 days a year,” he adds. “We ask them to be honest, to keep the bathrooms clean, to take care of our customers and say thank you to them. We’re always askingbut what do we offer in return? So we decided to share a pre-determined percentage of our profits with our co-workers. You have to give to get, and it doesn’t bother me or my family to give back. If our people feel they have a future with Kwik Trip, they’ll perform to a higher standard and be more likely to stay.”
Two key benchmarks suggest that Zietlow’s approach works. Kwik Trip has achieved one of the lowest turnover figures in the industry, at 38% company-wide, and just 10% for store leaders. Also, the chain’s total shrink (including cash shortages and drive-offs) is just 0.5%a fraction of the industry average.
Equity ownership. But the commitment made by the Zietlows to Kwik Trip’s co-workers doesn’t stop there. While the profit-sharing plan can be thought of as an “income partnership” between Kwik Trip and its co-workers, the chain has also an “equity partnership” to reward longterm employees: a program called Convenience Store Investments (CSI).
Every new Kwik Trip store built since 1991 is now owned by CSIand CSI, in turn, is owned by all full-time Kwik Trip co-workers with five or more years of service. (No Zietlow family members participate in CSI.) Enrollment is automatic, and shares are accumulated at the rate of one per year. The maximum number of shares an employee can currently own (13) would have a book value today of more than $35,000. While new owners are added each year, share value increases as mortgages are paid off and cash is distributed to CSI (see sidebar, p. 52). The first mortgages are set to be paid off in 2007.
“CSI is like owning a piece of the rock,” says Kwik Trip Controller Jeff Wrobel, who notes that CSI members have built up $18 million in equity through the program so far.
“If we left the real estate in the company, our family could keep it,” says Don Zietlow, “but we couldn’t afford to pay the taxes on it. So we said we could either lease the real estate to a third party, or we could allow our co-workers to own it.” For Zietlow and his family, the decision was an easy one.
Since 1991, CSI shares have grown in value at an annualized rate of 24%. “The list of investments that had a consistently higher return over that period is pretty short,” says Mike Ancius, Kwik Trip’s director of corporate finance, planning and taxation. “Don didn’t want the real estate in his estate, but the bigger reason is that [the Zietlows] are not dynasty builders. They’d rather create a dynasty for their employees.”
If District Leader Brian Dapper is any indication, that’s exactly what’s happening. “CSI is one of those things that we’re all aware of but we won’t fully realize what we’ve got until we retire,” he says. “I’m probably never going to touch that money; I’m going to will it to my son.”
Culture. Still, co-workers come to Kwik Trip, and stay at Kwik Trip, as much for the benefits they can’t see or spend as the more tangible ones like profit-sharing and CSI. And the most significant of those “intangible” benefits is being part of a team that respects and appreciates what you do.
Susan Cunat is a good example. She was working part-time as an associate for a competitor when her company was acquired by Kwik Trip.
“I had become familiar with Kwik Trip and had heard about the benefits and long-term opportunities there,” she says. “The fact that they contribute 40% of their profits is extraordinary; I’ve heard of companies giving back, but never at that level.”
But equally impressive to her was how quickly the company recognized her potential and gave her an opportunity to be a store leader; she has been running a Kwik Trip store in Plymouth, MN, for the past year.
Kwik Trip’s career pathing has also been a benefit for Linda Liebe. Her husband is also a store leader, and she would stop by his store on her way home from work and occasionally help out with odd jobs while she was waiting for him to finish his shift. Liebe eventually joined Kwik Trip part-time, and soon graduated to become shift leader. She then received an offer to join Kwik Trip’s Certified Assistant Store Leader (CASL) program, and now she is a store leader herself in Stevens Point, WI.
Tami Jansen has a similar story. She came to work for Kwik Trip parttime based on the experience of her husband Rick, a store leader in Lakeville, MN. Now she is a store leader also, but it’s Kwik Trip’s family atmosphere that has touched her most deeply. “We lost our 7-year-old son a few years ago, and Don [Zietlow] donated a computer to our son’s school in his name,” she says. “We had never even met him at the time. He’s such a great man, and he has been so good to our family. It’s tough to put into words.”
Zietlow believes that taking care of Kwik Trip’s co-workers will result in those co-workers taking care of the chain’s customersand the communities they live in. “Our vision is to be the workplace of choice,” he says.
“We want everybody to be proud to work at
Kwik Trip, and to know that they can make a difference.”
Getting to the next level
One of Kwik Trip’s key 2005 objectives is to improve its “people processes,” and it has assembled a cross-departmental team to focus on opportunities in this area. “The business we’re running today is a far cry from the one we started with 40 years ago,” says Director of Human Resources Tom Reinhart, who will lead the team. “The demands on our people are changing dramatically. There used to be a handful of people in the store, now there are 15 to 20. It’s not a gas station anymore. It’s a service business. We don’t want people to tend gas pumps. We don’t want people to have to fix the coffee maker. We want them to sell food, and focus on the customer. If we want to get to the next level we have to improve the professionalism of the staff.”
Kwik Trip will start by being more aggressive about promoting its existing benefits. It will also develop a better understanding of how co-workers value benefitsand then tailor packages to create more value. Lead-ership skills will be a priority, too. “We have great people, we just have to kick it up a notch,” Reinhart says. “We know the traits we want people to have; now we need to develop interviewing packages around those traits. We’ve always been ‘do-ers.’ Now we need to be managers and coaches. We’ll get from 40% turnover to 30% primarily with people skills.”