Tom’s Note:

I’ve known Ray Yeager for nearly a decade and noticed that recently he received an award that interested me. His firm won the Green Workplace Challenge award for being particularly good at demonstrating sustainability at his company. Beyond simply sending a congratulatory note or running a press release, I wanted to talk with Ray to learn what he might share with our readers. Ever frank, direct and unfailingly polite (the call was interrupted because his dog was having surgery), what I discovered was a fount of useful information that anyone who operates or manages an HVACR company can use. Here’s how the conversation went.

Tom: Well, congratulations. It looks like you’re a hot shot [because of the award].

Ray: Yeah, it has very little to do with me and mostly to do with the people around me. They do a great job.

Tom: Well, good bosses always say that. I always wonder how true that is. I suspect there’s an element of both probably involved.

Ray: Yeah. I often wonder why I would have some success, but I always have to look at the people, not just my employees, but if you have a good, solid group around you at home, in my case, in church and smart friends and associates, it makes a heck of a difference.

Tom: That’s why I thought [your sustainability success] would be of interest to our readers. Just give me a little background about the award. 

Ray: OK. Well, I want to give you a little background on energy and DMI Companies. DMI Companies is what we call, our parent company, and the largest entity within DMI, is the Ductmate [business].

Tom: Which most people are probably familiar with in the HVACR industry.

Ray: Yeah, most people are familiar with Ductmate, and we have several other firms as well, but everybody ... thinks about Ductmate, maybe 70 percent of the total DMI Company. About 2006, we started really focusing on sustainability beyond just our products.

The Ductmate products, which were the beginning of our company, were related to energy-saving products back in the Arab oil embargo and then throughout the ‘80s as we developed products and focused on energy savings or labor savings.

Then we really started focusing on becoming a lean enterprise.  Lean and sustainability kind of go hand in hand. So in our strategic planning process we decided that we would make it one of our core principles.   We would continue to develop sustainable products and we would offer sustainable services as a product offering. But we would also focus on sustainable operations.

Shortly, thereafter, we introduced it to employees and said that we want to develop sustainable initiatives.  They are designed to change the culture within our organization for our employees so that they would focus on sustainability both at work and at home.

What we tried to do is say, OK, we’re going to work on sustainable products, sustainable operations, sustainable culture.  That’s really what our company started evolving toward after 2006. We are very involved in a number of activities in our communities; and our headquarters are in the Greater Pittsburgh area.

We have driven the costs down at our headquarters for energy usage. I shouldn’t necessarily say costs because costs go up and down, but energy usage has been driven down dramatically since we started focusing on it in 2006. Then we started working on water consumption reductions. Anywhere we could be more sustainable we put focus.  We started doing dumpster dives within our organization where we take our garbage, lay it out on a tarp and focus on what is recyclable.

We developed I think somewhere in the neighborhood of 17 recycling and reduction programs in our factory. We have a goal to get to zero waste to landfill by the end of 2015.

Tom: Wow.

Ray: Which is a big deal in a factory. I’m not 100 percent sure we’re going to make it but we sure are trying. That’s where our culture has gone and as part of that the Green Workplace Challenge ... by the way, in 2008 we actually won the sustainable manufacturer of the year in Western Pennsylvania.

I could show you articles about us over the years and when people write about us being sustainable and they write about us making a difference in our community it really helps keep that momentum going. In 2008 we won that award ...  In 2009 we won medium-size manufacturer of the year and a number of awards continuing on.

The Green Workplace Challenge is the most recent activity that we wanted to work on. It was a combination of a number of factors.  What they do is look at a year’s worth of data whether it is related to water usage, energy usage and other criteria. They look at that for a year and then the next year is your performance period. Now, interestingly enough, we won this and the performance period ended around June of this year.

Tom: They really seem to track it.

Ray: The interesting part was in the year prior we came in second place. What I’m most proud of, is if you think about that, how do you reduce or, add … this is a points thing. We don’t run it [the contest] of course, the Green Workplace Challenge organization runs it [Tom’s note: http://gwcpgh.org/]. During the previous period [ended May 2013] we came in second place. We were beat out by Eaton Corp. which is a pretty sustainable and professional company.

Tom: They’re headquartered in Cleveland across the street from where I started my entry into the HVACR industry.

Ray: They beat us. They came in first place but then the very next year we came in first place. That gives you an idea of how much we really did in a two-year period, going from one year coming in second place to the next year coming in first place. I think that’s pretty admirable that our people, team and staff work hard to continue.

What it ends up being, Tom, is just thinking about it. Sitting in my office right now I don’t have any lights on in my office. Everywhere we have recycling bins and everywhere we have signs that tell you to shut off your lights when you walk out the door. Almost every workspace has automatic light shutoffs. When I walk out the door, I turn everything off, including the power strip.

We have turn-downs for all of our heat and air conditioning, [and they] automatically turn down. Every office, from mine up in the corner to the office down in the bottom corner first floor, we maintain our temperature within two degrees. Pretty much everywhere around here it’s the same temperature. A few years ago, everybody was into comfortable work places for themselves. We decided to be different. We decided to say everywhere in our offices it’s going to be from 72 to 74 [degrees] in the summer and it might be 70 in the winter or something like that, but it’s within two degrees.

We said OK we’re going to take away all the space heaters, but in return we’re going to give you a sweater or a blanket for your knees. Because that’s where it’s usually cold—under your desk. We want the same temperature and we recognize that my 72 degrees and your 72 degrees feel different.

Tom: Astute observation.

Ray: We don’t want you to change your temperature in your room; we’re going to give you a sweater if you’re cold. So we have this sustainability program that focuses on folks. The concept is both at work and at home. At work in our sustainability program we have a points system. If you use a desk lamp instead of the overhead lighting, you get points. If you use day lighting instead of either of those you get [more] points. If you use the stairs instead of the elevator, you get points. If you turn off any electricity or you turn your power strip off you get points. If you use reusable silverware or cups, more [points].

We’ve got all these categories for the office and then we have a laundry list of the same kinds of things at home. I would say that we have probably 50 percent participation of our office staff in the sustainability program. We also have a health and wellness program and we probably about 70 percent participation. We actually give discounts on our health insurance so that’s why  we’ve ...

Tom: If they enroll in the wellness program?

Ray: Big incentive.

In sustainability, you might win some prizes but in health and wellness, you actually get money. That’s really the exciting part about us. We came in second, and then first. If you think about it, it would be virtually impossible mathematically for us to come in first again next year. As I understand it, and I don’t know the details of this, but we’re a part of an All-Star team right now in Western Pennsylvania in some kind of national Green Workplace Challenge. We’re teamed up with other people in our category on this all-star team.

But those are the kinds of things that our organization has thought about and focused on in the last few years. You know we realize that still our No. 1 strategic objective is to be profitable in a sustained manner. If you’re not profitable in a sustained manner, you can have all the programs you want …

Tom: How many employees do you have?

Ray: We have about 250 employees.

Tom: Wow.

Ray: The vast majority of them are in western Pennsylvania. We have our headquarters in Charleroi [Pa.] and a large factory. Actually two factories in Monongahela [Pa.]. Then we have a small warehouse with light manufacturing in Tulsa, Okla., and a factory in Lodi, California.

Tom: Is the award for all the operations or just headquarters?

Ray: For the headquarters.

Tom: Ok. How many people do you have at headquarters?

Ray: About 35.

Tom: When I listened to you, and I’m looking at it through the eyes of someone who might be a manufacturer or a wholesaler and two things seem to be clear. One is that you or someone else clearly recognized that you had to change the culture.

Then part two, you were putting in a habit, practice, whatever term you want, that you both instituted these changes and you stayed with those changes. Is that a fair assessment?

Ray: Yes. Sustainability is the hard part. You can work at it for a long time, but every program ebbs and flows, right? Every committee ebbs and flows and it’s ... and there’s no doubt our ...  sustainability program will ebb and flow over time. But, yes that’s very true. First, we recognized we had to change the culture.

Tom: It’s not easy, is it?

Ray: What we found, we actually went to a sustainability seminar a number of years ago offered by the Green Building Alliance.  It was all about culture change. It was all about trying to find the hot button for sustainability for each person. Consequently, when you learn about culture change, you learn people have different hot buttons.

A good example would be, for me, sustainable ventures that have cost savings.  I always point out to people that the door to sustainability [for me], is profitability. 

Every semester I teach a class in strategic [planning] at Edinboro University, my alma mater.  That class is all about sustainability and our programs here, so it’s fun to do.  It’s also a good way to keep that momentum going.

I find that if I keep talking about it, or doing something about it, then I won’t lose interest. 

Tom: I want to circle back, because you said a couple of interesting things.  I sometimes wonder if, for guys at the top like you, these days we’ve had enough information where you’re not automatically dismissed if you start using the word “green.” I think it’s fair to say that 20 years ago, some people would have thought you were a radical.

Ray: Yeah.

Tom: When I listen to you, and you touched upon it, people hear this, and they would acknowledge intellectually that it’s probably good for the environment, whatever that means, right?  But in the end, there is a bottom line to all of this, isn’t there? 

Ray: There is.  As I tell everybody in our organization and to people throughout the country, because I talk about this a lot, all projects must have a return on investment.  If something’s relatively inexpensive to do, we will just do it.  Anything that’s a significant investment, even if it’s a sustainable program, requires a return on investment.  The one conscious effort that we did make was that we lowered the hurdle rate, or the return rate that we require for sustainable projects. 

If, for example, and just using a simple payback method, we wanted a three-year payback for a significant investment on something in our organization, typically, we might increase that payback to 10 years for a sustainable program. That’s just simply a matter of a longer investment return. You need to have a good mixture of high-return projects thrown in with a sustainable project here and there.

Tom: OK.  There’s a very pragmatic approach to all of this, then. 

Ray: Yes.

Tom: Two more questions that are important.  One is, when you described all the things that you did, someone had to direct all this; and the myriad of duties that you have as the person [president & CEO] who then runs the sustainability show?  Did you lead this?  And if you did, how the heck did you ever find the time?  Or did you appoint someone, or did you pay someone to do it?

Ray: It is written in our strategic plan.

Tom: Really?

Ray: And has been there for a number of years.  There are three components in our strategic plan that identify sustainability.  One is our vision statement that talks about offering sustainable products and services.  One is our strategic objectives, of which we have four overarching strategic objectives in the organization; one of those four outlines sustainable operations. 

The third component is corporate initiatives to change culture, and we have three culture change initiatives that we have focused on for the last few years.  One of those three is to create a sustainable environment by changing the culture of our stakeholders, our employees, our customers, our vendors, our community.

It’s interesting that you say, “Is there someone to guide it?”  We’re a very strategic company, and so the guidance is ... I guess you could say that because of the way we do it, it’s become part of our culture.  It starts with ownership, and our board of directors that’s involved in developing and continuing on with the big part of our strategic plan.  Then the management of our organization works on sustainability and really implementing the strategic plan.

We do have a sustainability manager, and one of the things he works on ... He’s over in the factory, so he works on things like the zero waste to landfill initiative.  He’s also a production manager; he runs one of our factories.  We don’t have one dedicated person [in charge of sustainability].  A lot of big organizations have a dedicated sustainability manager.

Tom: Right.

Ray: We have a shared position here. When you say, “Is there one person directing it?”  I think about strategy all the time; that’s a very big part of my job.  Because it’s part of the strategy, then it’s part of my thought process all the time.  But profitability’s a big part of my thought process, and focusing on our vision and our organization, and our employees, because two of our strategic objectives relate to employee welfare.  One of our initiatives is the health and wellness of our employees.

The hardest thing is to get people to recognize and think about strategy.  We work hard at that. I’m not suggesting to you that we’re real good at it, because another part of our culture and our operations is developing a lean enterprise.  Lean, by its very definition, is continuous improvement, and so we always have a long way to go to reach excellence. 

Tom: I guess the other component is to convince employees that this isn’t the latest fad that you’re adopting, and in six months or a year it goes away and who cares, right?

Ray: Yes, and since we’ve been doing it for so long, they can probably recognize that it’s not going to go away.  But you’re absolutely right; in the early days, that’s one of the hard things, is to get them to realize that.  The one bad thing, though, the flip side of that, is that after a while, every program, as I said before, loses its momentum.

Tom: True.

Ray: One of the things that gives us momentum, for example, our health and wellness program and our sustainability program, is that we have quarterly lunch and learns ...  Twice a year, we have a sustainable lunch and learn, and a couple other times a year we have a wellness lunch and learn.  At the end of every year, we have lunches where we give out prizes and things like that, to try to keep those things going.

It’s funny, because these programs don’t hit a hot button for everyone in the organization, but culture-wise, for me, I’m a big profitability guy, I’m a big points guy.  Every day when I come into the office, the first thing I do when I boot up my computer is to fill out my health and wellness scorecard and once a week my sustainability scorecard.  I like points and I’m always trying to win.

Now, I typically don’t win in health and wellness; I always do really well, but ... I’ve been coming in second place in the sustainability side.  To me, those are things that push my hot buttons.  It’s points and profitability.  That probably makes sense for the president to be thinking like that, that’s part of my culture.

At home, I get points if I have more recycling in the bins than trash.  If you think about it, that’s a good way to get to zero waste to landfill.

Tom: Which I just did [at home] last night.

Ray: That’s how it becomes part of your culture.  I might be a little overboard, but I will tell you that I got an email from my daughter yesterday, Ashley, who reminded me that when she was an intern here she said, “You guys need to have recycling bins and garbage cans everywhere,” and telling me that I needed to get off my butt and get it done.

I probably argued with her, because she was a lowly intern, and I said, “Yeah, sure, Ashley.”  Now, it’s part of my culture.  She’s in law school and she pushed [me].

When I teach at the university, I explain to all those young people; they grew up with sustainable thinking more than we did.  I tell them when they get into the workforce, they’re going to be needing to push, in a nice way, their management to think about how to be a sustainable organization.

Tom: Ray, if someone reads this, and if they don’t have any real programs in place, reading this would be like swallowing an elephant, I suppose.  I guess what I’m asking now is this: I know you’re a HARDI member. If a fellow member were to call and says “Hey, Ray, give me a few tips on how to start with the beginning phase of doing this,” other than calling Ray on the phone, what would you say to him? 

Ray: Right.  I tell everybody, first of all, they need to crawl before they walk, walk before they run. In other words, take your time.  Don’t try to overlay a program like ours into your organization.  The other thing I say is you need to have at least some of these [practices], as a core part of your strategic plan.  The senior management needs to be committed to the program. And especially it needs to be related to return on investment.

Those are some key things, I think.

Tom: Is there an organization that assists businesses with sustainability, being green, that isn’t some radical bent that would cause business people to roll their eyes? 

Ray: In our particular case, in western Pennsylvania, we did a program with the Green Building Alliance, which is our local affiliate to the USGBC. There’s also the Green Workplace Challenge. And InterfaceRAISE. [Tom’s Note: See http://bit.ly/1Ap5lle]

Tom: Interface?

Ray: Those are the program groups that we’ve been affiliated with.  What ends up happening is, most of the time, we start out with these things, just like being lean.  We sent some people to lean training, and then we developed our own lean department, which is much better in the long run than third parties. 

Any organization, I think, that’s well run, and as I told you, our guys are awesome, I think what ends up happening is you take what you learn and then you just make it even better.  Those are some of the things that we’ve done.  We’ve had a health and wellness program for 15 years, because we thought that it was going to save us money in our health care costs.  That was the idea, back before these most recent wild and crazy times.

Tom: That’s a good punctuation point. Thanks for your time, Ray.

 Ray Yeager is president and CEO of DMI Companies. Contact Ray at (724) 258-0500, ryeager@dmicompanies.com or visit www.ductmate.com.