Johnsonville Sausage Company Case Study

Let me start by saying that Ralph Stayer has done an amazing job at leading and managing the growth of this company and that his accomplishments and decisions have made me reflect on several critical management decisions that my father has taken over the years in our family business. I would argue that Ralph's vision and drive led him to very successfully transition from entrepreneurial to professional management and that his decisions and actions enabled him to manage growth with tremendous success.

Johnsonville Sausage Co. a wholesale producer of sausage products based in the small rural town of Johnsonville, Wisconsin, has grown and evolved from a family home with a store front and $4 million in sales to a business that experienced $50 million in sales in 1985 and well over 500 employees. Originally a retail based operation founded in 1945, the company decided to focus the efforts of its wholesale operations in 1965 with Ralph Stayer's return from college. At this time, Ralph, who was officially named president of the company in 1978, and his father took a long hard look at the company's retail and wholesale endeavors and made the decision to focus their efforts on building this wholesale segment of the business because it looked the most promising. Rapid growth came with this strategy and by 1985 the company not only had grown sales to over $50 million but also its return on equity to 27%. It was now a business that not only enjoyed an outstanding reputation but a substantial market share of 46% in the greater Milwaukee area. It had also expanded to Iowa, Indiana, Illinois, Minnesota, and several other neighboring states.

However, given the lack of an articulated plan that coordinated the company's growth during these years, by 1980 the quality of the product had gone down, the satisfaction of the employees had diminished, and even Ralph started to feel uncomfortable with the business. He didn't feel he was managing his people in the right manner and even came to think that he had "ruined a man" by making him a type of pre-programmed machine rather than an independent evolving human being. Therefore, as these events led him to question and reflect on his management's style and approach, Ralph came up with the creation of the Johnsonville philosophy and the empowerment of the company's employees, which to me is clearly the foundation of the company's success. This change in philosophy's first step was getting together and deciding what the company's people ends were. Not only were the objectives decided upon cohesive and revolved around performance, but they also were now articulated. This created an environment in which the company's vision was now knowingly dependent upon the performance of an organization where everyone is an entrepreneur. Once this new philosophy was implemented the company experienced a much more efficient and substantial growth,