Partners in Prosperity
Bob Krowech says he has identified the missing link between people,productivity and profits.
All for one, one for all.
That’s the motto of Bob Krowech, 60, who founded Eden Prairie-based Heat Recovery System Technology Inc. (HRST) to provide consulting services and specially engineered products to the power and steam generation industry. Krowech and his band of engineers all receive the same below-market base salary and share equally in the firm’s success.
Krowech’s “share and share alike” vision was fully formed when he left his position as technical engineering manager at Deltak LLC, a Plymouth-based boiler manufacturer, to found HRST in 1999. After 22 years in the industry, his frustration with what he perceived as corporate gluttony had reached its boiling point. “A lot of corporations will say, ‘We’re all in this together,’” Krowech says. “But what they really mean is, ‘If things go bad you’ll get laid off, and if things go good we’ll get rich.’ I wanted HRST to be the antithesis of that mindset.”
He’s done that. HRST’s salary structure is simple and straightforward. All employees are given the opportunity to buy company stock at the time they’re hired. They can add to their holdings each January after the share price has been recalibrated at year’s end.
On December 31, half of the firm’s annual profits goes to stockholders in proportion to the number of shares they own. The other half is paid out to all employees as a bonus in proportion to their salary, whether or not they own company stock. In January 2005, $380,000 in profits—on 2004 revenues of $1.5 million—was divvied up between Krowech, seven full-time and two parttime engineers, a field technician, and an administrative assistant.
The impetus for the structure clicked in after Krowech read Stephen Covey’s business best-seller, The 7 Habits of Highly Effective People, in the early 1990s. “Covey said that once you figure out what your values are, decision-making becomes easy,” Krowech says. “The result may not always work out the way you envisioned, but at least you feel like you did what you did for the right reason. And that’s a tremendous feeling.”
His interest piqued, Krowech began scouring business publications for examples of value-driven management practices. When he founded HRST, creating a value-based salary structure was a no-brainer. “I decided to share profits equally for two reasons,” he explains. “One, it’s the decent thing to do. And two, people will put out an incredible effort when they’ve got a stake in things.” “Everyone wants to do whatever they can to make the company better,” says HRST employee Scott Wambeke. “I don’t know how many times I’ve heard people at other companies say, ‘That’s not my job.’
I haven’t heard that once since coming here. If something has to be done and it’s good for the company, everyone chips in. For instance, Brenda, our administrative assistant, often helps me out with paperwork so I’m freed up to charge for more billable hours. She knows that at the end of the year, she’ll benefit from that.”
Financial incentive may be the most obvious ingredient in HRST’s esprit de corps, but it’s not the one that stirs the pot. Krowech knew that only capable, confident, and conscientious people would accept a below-market base salary in order to link the quality of their work directly to their financial future. “People like that aren’t motivated by financial success alone,” he says. “They take great pride in their work and in their team. They’re not going to let the customer or their fellow employees down.”
— Phil Bolsta