Organizational Culture, Growth & Succession

By Vern Dosch, CEO of National Information Solutions Cooperative

Some industry analysts might argue that establishing a technology company in the Midwest is not the best long-term decision. After all, given the numbers of IT employees who are retiring now and in increasing numbers over the next 15 to 20 years, no one expects to find a surplus of IT experts in small- to medium-sized cities in our region.

That view is shortsighted. Knowing what I do now about connectivity and the work ethic in the Midwest, and about National Information Solutions Cooperative’s (NISC) history of growing our employees into leadership roles,
I would found a technology company here today without hesitation. We get to live where we want, and we also get to be part of a fast-paced, cutting-edge technology industry.

Founded in the 1960s as North Central Data Cooperative in Mandan, North Dakota, we started out providing software and IT services for two rural electric cooperatives and one telecommunication cooperative.

In 2000, North Central Data Cooperative merged with Central Area Data Processing in Missouri to become NISC. For the next two years, we got to know each other and worked on turning our former rivalry into teamwork.

Today, NISC has grown to serve 14 million end users in 50 states or territories and in Canada. Our member-owners—main customers—are mostly utility cooperatives and telecommunications companies. NISC provides integrated IT solutions for consumer and subscriber billing, accounting, engineering and operations, and many other leading-edge IT solutions.

NISC employs 1,132 workers in Cedar Rapids, Iowa; Lake St. Louis, Missouri; Shawano, Wisconsin; and Mandan, where 465 of our employees work.

Succession planning 

Because of our company culture, NISC’s overall turnover is just 4.5 percent, less than half the industry rate of 11 percent.

Fifteen employees retired from NISC in 2015, and another 15 in 2016. We anticipate 12 retirements in 2017. In sum, about 1 percent of workers retire per year, and we expect this to remain constant for the next five years.

At first glance, it seems NISC isn’t seriously affected by baby boomer retirements. But don’t be fooled—for every 10 retirees with an average of 25 years of service, your organization loses 250 years of knowledge and experience—longer than the United States has been a country. Even with solid succession planning, the gap left by just one seasoned employee is a real issue.

Larry Estal at the 2010 TechAdvantage Conference in Atlanta, GA.

Larry Estal at the 2010 TechAdvantage Conference in Atlanta, GA.

Larry Estal, NISC’s former national sales manager, is one of those seasoned employees. Estal, who retired at the end of 2014 after 45 years of service, brought enormous value in the relationships he formed with NISC customers. I’ve never met anyone who could recall names and personal information about others like Estal. He flawlessly modeled ethical behavior and was always available to mentor employees.

A talented national sales manager is critical to a company’s success, so we began planning for Estal’s succession four years before he retired. Although we understood we couldn’t replicate Estal’s gift with people, we could have him train rising leaders to emulate his appreciation and respect for others.

Estal took regional business managers to meet prospective clients, as well as customers with whom he had long, established relationships. He made introductions and made everyone comfortable enough to let the employees he was mentoring take the lead in client discussions.

Estal’s replacements were young enough to be his children and, in some cases, his grandchildren. He treated them as family and when he had medical issues, they picked him up at home and brought him to the office.

Building Culture through Shared Values

When I became CEO of NISC in 2002, I had reservations about the value of ‘company culture’ because it seemed to be a soft science with little bearing on our bottom line, innovative software design, or the satisfaction and engagement of our employees and customers.

I soon discovered NISC’s bottom line is positively affected by that company culture. From 2001 through 2016, NISC’s target annual revenue growth rate was 5 percent. Our actual rate ranged from 6 to 10 percent. [Please note that as a cooperative, we approach revenue from a cost management perspective, rather than maximizing prices. Typically, we build a 5-percent margin into our pricing model for products and services. Sales revenue growth above 5 percent, therefore, precisely reflects business expansion.]

The formation of NISC’s shared values was part of building the culture that allows us to see results like these. Following our merger, front-line employees, not management, were asked to identify company values that would make them proud to work for us. This was risky since we weren’t sure whether senior leadership or the board of directors would support the committee’s recommendation. A no-confidence vote would reverberate throughout the entire organization.

At the end of three days of meetings, the committee proposed six shared values for NISC to embrace: integrity, relationships, innovation, teamwork, empowerment and personal development.

In this rapidly evolving industry, companies must reinvent themselves every five years. This requires a recurring, steep learning curve, as employees reinvent themselves to accord with company objectives and personal aspirations.

Creating a Learning Organization

For senior leaders, this evolving culture shifted our mindset from being people-managers to being team coaches. Like many businesses, our performance review process had become so complex that employees began to feel it was punitive rather than supportive. I remember clearly the day I ran into one of our rising stars following her annual performance review. She was dejected because her score had dropped from a 4.66 to 4.65 out of 5. This focus on a hundredth of a point made me realize we needed customized coaching rather than one-size-fits-all management.

In response, we brought Ken Blanchard’s Situational Leadership® II training to all supervisory staff. Within 18 months, our employee engagement scores increased by 5 percent and then by 13 percent over the next three years.

We initiated other best practices. For three months every year, we instituted an intense learning period, the Employee Learning Quarter. As catalysts for growth, we offer Abstract, the world’s largest library of business book summaries. We provide access to Pathways Learning Management System and to Linda.com, an online resource with over 4,000 courses taught by experts in business, technology and creative skills. NISC also provides tuition assistance for employees to enroll in graduate degree or certification programs.

Many of NISC’s decisions are guided by quarterly employee surveys on topics such as engagement, satisfaction and relationships with supervisors. We are now ‘best in class’ (in the top 10 percent) out of 7,000 companies nationwide in 80 percent of measured categories.

Growing Our Employees

Unlike most IT companies, NISC doesn’t outsource services, nor do we ship projects overseas. In the short term, it would be easier and more economical to have software developed overseas. But that would literally disconnect our products from our customers. From idea to installation, NISC employees do the work, which enables customers to have input at every stage of development.

As a result, customer satisfaction rates consistently average 98 percent and employee satisfaction ranks almost as high. Our customer attrition rate is less than 0.5 percent per year, compared to the industry average of 20 percent. We invest for the long term in growing our employees. Tomorrow’s leaders are being trained in-house today to meet all the needs of NISC’s customers.

Servant Leadership at the Office

Servant leadership has been integral to the evolution of NISC’s corporate culture. My exposure to servant leadership began in the 1970s as an undergraduate and then again in the 1990s as a graduate student at the University of Mary. Sister Thomas Welder, then university president, spoke to our classes about the humble authority of servant leadership, which she models. This resonated with me as it did with NISC’s senior leadership team, four of whom also completed degrees at the university—as it resonates for more than 75 of our Mandan employees who studied there.

We find that employees who embrace the Benedictine value of leading by serving others become leaders in tune with NISC’s shared values. Accordingly, we recruit with a candidate’s character, values and motives for applying in mind.

There is no ‘servant leadership’ line item on a balance sheet, yet I believe customers and visitors feel its influence in how our employees welcome them, respect their input and honor their presence. It’s not coincidental that what we measure—revenue, retention and recruitment—remains consistently high.

Andrew Cooper, a Technical Systems Engineer in charge of Cloud operations, works in his cubicle. This is his eighth year at NISC, which Cooper says is "a great company to work at. We don't get stuck in red tape while trying to implement innovations. Things are very lateral here. I'm not afraid to walk into Vern's office to ask a question or propose an idea."

Andrew Cooper, a Technical Systems Engineer in charge of Cloud operations, works in his cubicle. This is his eighth year at NISC, which Cooper says is “a great company to work at. We don’t get stuck in red tape while trying to implement innovations. Things are very lateral here. I’m not afraid to walk into Vern’s office to ask a question or propose an idea.”

50th Anniversary & Beyond

NISC commemorates its 50th anniversary in February 2018. When it started a half-century ago, the average cost of a new home nationwide was $14,250, the Beatles released “Sgt. Pepper’s Lonely Hearts Club Band” and computing was confined to massive mainframes.

When Keith Horntvedt, now Sr. Manager Professional Services, started working at NISC in 1981, IBM released its first personal desktop computer. By the time Cindy Levi, now Team Lead Member Support, joined NISC in 1990, Microsoft began shipping Windows 3.0.

In Andrew Cooper’s first eight years at NISC, for example, there has been no need to ask senior leadership about MS-DOS programming tricks. But Cooper has inherited a legacy from senior leaders in the embrace of mentoring, the five-year reinvention cycle, the vast repertoire of organization and customer knowledge, and the modeling of NISC’s enduring shared values, together with the 1,500-year-old Benedictine tradition of servant leadership. And now it’s time for Cooper and other budding leaders to instill our culture in newer colleagues.