A Conversation With Deere CEO Sam Allen -- Part 2

In Part 2 of IndustryWeek's Q&A with Sam Allen, the chairman and CEO of Deere & Co. discusses the company's strategies for retaining talent, John Deere's brand recognition around the world, and the current state of U.S. manufacturing competitiveness.

As chairman and CEO of Moline, Ill.-based Deere & Co., Sam Allen not only is leading John Deere's charge into global markets, but he also is a central figure in the efforts to ensure that U.S. manufacturing has the tools and policies to compete on a global stage in the 21st century and beyond.

Since January 2010, Allen has chaired the nonprofit Council on Competitiveness, and has been working with other members of the council -- from Applied Materials CEO Michael Splinter to MIT President Susan Hockfield -- to craft a national manufacturing strategy. The group will unveil the strategy on Dec. 8, as part of the council's National Manufacturing Competitiveness Summit in Washington, D.C.

Allen recently spoke with IndustryWeek about John Deere's global strategy as well as key competitiveness issues affecting the company and U.S. manufacturing. (To read Part 1 in this two-part conversation, click here.)

IW: The John Deere brand is such an indelible and enduring icon, especially in America's heartland. How strong is the John Deere brand image around the world?

SA: It's varied. For instance, we sold our first ag equipment in Russia 100 years ago, and we sold our first ag equipment in India 100 years ago. So in certain spots Deere is well known.

In China, for example, we were one of the first companies after Nixon went there to go over there, so this year we celebrated 35 years of being in China.

But Deere is known primarily for its large ag equipment. The challenge we've had and where we're trying to really broaden the understanding of Deere as we're globalizing the business is in small-horsepower equipment-small tractors and small combines. And that's the customer base that does not know Deere as well. And so we're very focused on increasing our brand recognition in those areas.

IW: Shifting back to Deere's home market, what have you learned about the state of American manufacturing competitiveness since becoming chairman of the council?

SA: First off, you have quite your own views before you come to the council, just because you're in manufacturing and you're a global company.

What you pick up when you're on the council is the diversity of industry and then the competitiveness in all the different areas [of U.S. manufacturing]. So I might not have been as well versed in areas like energy or aerospace as I would be after being on the council and listening to everyone.

But what has been interesting is that as we discuss it, some of the critical enablers of competitiveness end up being the same no matter what type of industry you're talking about.

IW: So are we in better or worse shape than you thought before you came to the council?

SA: I think because of what's going on in the global economy, specifically in the U.S. economy, that there's only one thing that we're in better shape on right now -- and that is today's value of the dollar. Anything we're doing here is more globally competitive [because of the dollar].

But in terms of what's going on in Washington, D.C., and the instability and uncertainty about what the future might bring from a regulatory standpoint, we're clearly not in better shape today than what we were three years ago.

IW: You've spent your entire career with John Deere, joining the company in 1975 after graduating from Purdue. What it is it about John Deere that has been such a good fit for you, professionally and personally?

SA: That's not unusual for Deere. In fact, we have a number of employees who are second- or third-generation.

I've had the good fortune not only to spend my whole career here, but also to be in a lot of different areas of the company. I spent part of my career in construction and forestry, part of it in the engine business, part of it in the ag business, manufacturing and running geographic regions from a sales/marketing standpoint. So it's been the diversity of exposure and experiences that's been really good from a professional standpoint.

I think personally what almost anybody with Deere would tell you is it's about the integrity of the company. We will be celebrating our 175th anniversary next year. One of the company's core values since the very beginning has been integrity, and I think it has lived up to it all that time.

And then I know whenever we do an exit interview, and someone asks what they're going to miss most about John Deere, they always say it's the people.

I think there's a culture of camaraderie, if you will, and some of that also is a camaraderie around who our customer base is, which is farmers and contractors around the world.

So those all lead to both professionally and personally [Deere] really having been a great company for me.

IW: I get the sense that exit interviews don't happen very often at Deere.

SA: No they don't. The way we would say it is if we keep you the first year, then we'll keep you for the rest of your career.

If look at people leaving for other than retirement or something like that, we're talking about turnover rates that are less than 1% in the United States.

And interestingly, when you look at some of the places like India or China -- where turnover ratios are very, very high -- our turnover rates will be higher than the 1%, but we'll consistently average about half the turnover rate of the industry standard [in that country] at that point in time.

IW: While we're on the topic of retaining talent, a recent Deloitte/Manufacturing Institute survey concluded that the skills gap is making it harder for U.S. manufacturers to innovate, expand and boost productivity. How does Deere attract and retain top talent?

SA: Well I think you end up with a number of different concepts or capabilities that support that.

One is we talk about our purpose, and our higher purpose is committed to those linked to the land, and a desire to help farmers and contractors both feed and shelter the world. And I think that opportunity to work in a business where you're doing that type of work resonates with a lot of people. And so I think that we have an advantage from that standpoint.

I think a second part is the culture that we talked about -- both the integrity piece of it and the camaraderie piece of it. And as a result it tugs at people before they leave, because they know that not every place has that type of environment.

And then we do pay well and we have our pay aligned very much with what our strategy is. So when people look at pay and look at benefits in a total-compensation format, we think we're very competitive. I've never found [compensation] to be a reason why people would stay, but if you way underpay, it could be a reason why people leave.

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