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green@work : Magazine : Back Issues : Jan/Feb 2002 : Cover Story

Cover Story

Citizen Kraemer
by Katie Sosnowchik

It may seem a big leap from Little League coach to chairman and CEO of a $6.9 billion health care company, but Baxter International’s Harry Kraemer, Jr. doesn’t see it that way. The importance of balancing work-life issues—and the notion that it is possible to do well by doing good—are just two of the credos upon which Kraemer bases his leadership philosophy—beliefs that are widely communicated beyond the confines of his executive office to 45,000 team members in 100 counties worldwide.

 

 




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Harry Kraemer doesn’t proclaim that the company he has worked at for 20 years—and been CEO of for three—is perfect. In fact, he readily admits that there’s much progress to be made as the Deerfield, IL-based Baxter International travels along its journey to become a corporate “Best Citizen.” But, as a self-described optimist, Kraemer views the challenges ahead as opportunities—and relishes in the process of “constantly raising the bar.”

Baxter is doing so not just internally, but with outside stakeholders as well. In 1997, the company joined the Coalition for Environmentally Responsible Economies (CERES) and is a pilot member of its Global Reporting Initiative (GRI), a multi-stakeholder group working to establish a global framework for organizational sustainability reporting. It was also one of the original members of the Business Environmental Leadership Council (BELC) founded by the Pew Center for Global Climate Change, an influential NGO that is actively engaging the private sector in efforts to halt global climate change. Baxter was selected as the medical products industry group leader for the Dow Jones Sustainability Group Index (DJSGI), the world’s first global sustainability index that tracks the performance of leading sustainability-driven companies worldwide.

Kraemer is a strong proponent of transparency and looks for as much feedback as possible from as many constituents as possible. He is also equally supportive of the need to measure progress. Thus, Baxter keeps an annual balance scorecard which measures achievements and lists immediate objectives. “Every objective has a measure,” he says, “so to a certain degree, you are what you measure and you achieve what you measure.”

The unassuming 46-year-old joined Baxter in 1982 as director of corporate development; his journey up the corporate ladder culminated in being named chairman of its board of directors in January 2000. Kraemer doesn’t balk at tackling tough issues, preferring instead to keep things straightforward. His values-based work ethic and philosophy are basically grounded in this one simple premise: “The reality is that I happen to be a person, I happen to live on this planet and I’m blessed to have four small children and about ready to have my fifth. I also have 45,000 team members who, I would argue, are as interested in the environment, in the world, in social responsibilities as anybody else! I know this sounds trite, but at the end of the day, we’re all in this together.”

In a recent conversation with green@work, Kraemer explored in detail his thoughts about sustainability, shared values and the need for balance.

TELL US A LITTLE ABOUT BAXTER’S BEST CITIZEN INITIATIVE.

KRAEMER: We’re celebrating our 70th birthday this year, and I would say that being focused on doing the right thing—sustainability and shared values is something that’s been part of the company since the very beginning. I don’t think the fact that we have officially embarked on something called “Best Citizen” is really a major departure from what we’ve been doing for 70 years. In fact, William Graham, the first CEO of the company, always used to say that it’s great to be at Baxter, in an environment where we can do well by doing good. I think that encapsulates a lot of what we do; everything we do at Baxter is related to health care—it’s the only thing we do. We’re focused on critical therapies—if you need our products and services, you probably have some serious, life-threatening condition. And the fact that we can make products and provide services that are important, and do well by doing good—I think that’s the fabric of the company.

How do you achieve that when you’ve got 45,000 employees in 100 different countries?

KRAEMER: First of all, interestingly enough, I don’t think of us as having employees. We have 45,000 team members. That’s more than a semantic difference. Whether you’ve been around for 30 years or 30 days, you’re a member of the Baxter team. We try to make sure that everything we do gets encapsulated in what we refer to as our shared values—this is something that all 45,000 team members have a pretty good understanding of. When we talk about our shared values, we try to be very specific about the three R’s, which are Respect, Responsiveness and Results. Regardless of where you are in the world, regardless of your function, your business, your country, whatever, there are certain things that, if you’re a member of this team, are expected of you. The reality of it is, we are going to be respectful of one another, we’re going to treat everyone the way we want to be treated, in every way . . . we’re going to make sure that we’re responsive to one another, to our patients, to our customers.

We’re also going to be results oriented. We are going to do what we say we’re going to do. If we tell a renal patient in Omaha that she will get her supplies on Wednesday at 3 o’clock, it will happen. And that philosophy, I can honestly say, permeates throughout the company.

Who determines what is going to get done? Who identifies the results that Baxter wants to achieve?

KRAEMER: We have certain values, certain principles that we operate by. Now, how do we operationalize these? What are the objectives? What we’ve done over the last five or six years now is develop what we call our balance scorecard. The scorecard originally began with three goals: how are we going to be a best team, how are we going to be a best partner, how are we going to be a best investment? For each one of these goals, we have specific objectives.

Identifying objectives starts with what we call the EMT—the Executive Manage-ment Team, which is comprised of nine senior people who effectively work with me to run the company. We take the time to actually put together a balance scorecard for each year, using our shared values as the foundation and then listing what the specific objectives are for best team, for best partner and for best investment.

For example, regarding best team objectives, we ask, “Is everybody receiving performance reviews? Does everybody have a development plan? Is everybody receiving feedback on what they do well and what they don’t do well? Is everybody receiving training? Does everybody have a good understanding of what their responsibilities are concerning workplace safety? Is everybody doing something to help create a balanced work-life environment?” Those objectives get cascaded throughout the company, through various communication channels, to all 45,000 team members. So let’s say you’re running a division. In your division, you know what the overall company is trying to do and what you need to get done in your business, in your function. You understand how these pieces fit. You understand the connectivity of how this all fits together.

We do the same thing around best partner and best investment. The result is that everybody understands what we’re trying to do, how we’re trying to do it and how they fit in. This is an evolutionary process. You never get to where you want to be; you always raise the bar. The important thing is that employees are never asked to do something without having a good understanding of why they’re doing it, why it makes sense. Every objective has a measure, so to a certain degree, you are what you measure, and you achieve what you measure—if you don’t measure it, then let’s not talk about why it’s not happening.

How important is outside recognition, such as being named one of the “100 best corporate citizens” by Business Ethics magazine?

KRAEMER: As you continue to raise the bar for performance, it’s good to have an external reality check—validation. We talk about the fact that we want to be economically viable, but we also want to be socially responsible—we want to make sure that we are doing the right thing for the environment, that we’re setting an example for other companies. After all, somebody has to set an example; somebody has to be a leader. Why not us? In terms of the environment, how can we make sure that we’re leaving it a better place for our children and our grandchildren and society—that’s part of being a best partner, because we’re a partner not only to patients and to customers, we’re really a partner to the world.

When we talk about being a best investment, we’re trying to generate a return for the people who are shareholders. Who are these shareholders? Think about it—they’re us. We’re the people who have mutual funds, we’re the people who make premiums to insurance companies, which then invest the premiums so that when we have an accident, there are dollars to fund that. But we’ve got to do that in an environmentally friendly way, in a socially responsible way. So if we are creating a best team (and I’m a little biased—I think we really are), if we’re really being a best partner and making some progress, if we’re doing a pretty good job being a best investment, if we do those things consistently, then we probably have a goal of being recognized as an admired company. But, quite frankly, I don’t personally get wrapped up in whether a magazine recognizes it or not. I’d really like the 45,000 team members to feel that way. I’d certainly like patients and customers to feel that way, and I’d certainly like our shareholders to feel that way. I’d like society to think of it that way.

As we challenged ourselves by thinking about best team, best partner, best investment—we thought that maybe rather than having several objectives imbedded in these three bests, maybe what we really ought to do is create a distinct Best Citizen Initiative so that there is as much time and attention on that column as the other three. Is it a little bit semantic? Yes. Is it something that we weren’t doing before? Not really, but what I think Best Citizen does is give us a platform to apply equal time and equal weighting to something that’s absolutely critical to us as a company.

BY participating in PILOT PROGRAMS FOR the GRI and BELC, Baxter has put its progress out for the world to inspect. Isn’t that risky?

KRAEMER: I think the answer is probably yes, but that sort of fits into what we already talked about: most of this comes back to leadership. If you’re going to play a leadership role, by definition you’re going to take a risk because leaders are out ahead. When I spoke at the CERES conference last spring, people warned me that, because I am the CEO of a big, publicly-traded company, folks were going to have a lot of tough questions to ask. It was almost as if, because we’re a publicly-traded company, we’re somehow different than a lot of other people. The reality is that I happen to be a person, I happen to live on this planet and I’m blessed to have four small children and about ready to have my fifth. I also have 45,000 team members who, I would argue, are as interested in the environment, in the world, in social responsibilities as anybody else! I know this sounds trite, but at the end of the day, we’re all in this together. We all may have a different role to play, but guess what? We’re all interested in the same thing. The way I look at it is this: if we’re trying to do the right thing in everything that we do, then the more organizations, the more frameworks that I can sign up for—those are ways of inflicting discipline.

There are certain areas in which I think we’ve demonstrated best practices; there’s certain things we don’t do as good a job on. That’s why we’re trying to raise the bar. The fact is, there’s 45,000 people who wake up and say, “We’re going to live the values. We’re not perfect, but that’s okay. We’re going to make sure that we set an example; we’re going to hold ourselves accountable; we’re going to have as much transparency as possible. If people ask us things, then we’re going to tell them.”

Here’s another example: People have said to me: “Harry, there’s a lot of people who are asking questions about what Baxter’s position is on bioethics. It’s kind of a touchy topic! What should we tell them?”

Well, what’s touchy about it? There are emotions involved, yes; many different well-educated people have different views. But you know what? Leaders are going to have to take a stand. So we got a group of senior Baxter managers and scientists together and asked them to review the different sides of the issue and the pros and cons of each. Then we considered: if we want to do the right thing, if we want our actions to be based on values, if we want to set an example in an imperfect world without perfect information, then knowing what we know, what’s our position? The executive management team will talk about it and either we’ll agree and that will be Baxter’s position, or we’ll disagree and at the end of the day the leader has to make a decision. And I’ll say: “Based on the information we know now, this is our position. And let’s explain to people as openly as possible what we think.”

Twenty years ago when I joined the company, I’d go to the grocery store and somebody would ask me, “Is Baxter involved in such and such? What’s your position on this?” And I didn’t know. Not only didn’t I know, I didn’t even know who to ask. And when I’d ask somebody, they’d say, “We’ll get back to you.” I realized then that nobody really knew. So now I take this tact: I think we have a responsibility to tell people all the things I wish I knew 20 years ago—and we do. Because now when I go into a grocery store—or when someone who’s been at Baxter 20 days goes into the grocery store—and someone asks, “Would Baxter use fetal tissue?” We both can say, “No, we wouldn’t—here’s why. And here’s why we think it’s right thing to do. Yes, science changes over time, and there may be things that happen that will prompt another way of thinking. But based on what we know today, this is our position.”

Do you consider yourself part of a new breed of CEO?

KRAEMER: I realize this is a broad generalization, but in our parents’ generation, if you came to work and talked about your children or talked about your spiritual views, people would wonder if you were serious about the job, if you were committed. I think we’ve evolved—if we’re honest about it, what we really want to do is bring our whole self into whatever we do: job, career, family, children, spiritual views, health, social obligations. So if you create an environment that allows them to do that, then it’s more fun, it’s more fulfilling, it gives a little bit more of a reason for life.

I firmly believe that most people want to do the right thing. We have 45,000 people working to make products to save people’s lives. Do we want to do it in a way that we’re polluting the environment? That doesn’t sound very logical!

So if we’re all trying to create balance, why don’t we just openly talk about it? We’ve all got parents—hopefully they’re all alive—who are going to get older, and they’re going to need a certain amount of care. They nurtured us; shouldn’t we nurture them? If you need to leave at 3:30 p.m. to pick up your children and you’ve got a PC at home and you’ve got the capability of getting on the Intranet, then do it.

Part of this, I think, is evolutionary; part of it, maybe generational; part of it is sort of an awakening. When someone says, “Hey, Harry, I know we were going to get together this afternoon—any problem with me going home and taking care of a sick child, and I’ll leave you a voicemail message?” Fantastic! Super! I don’t waste a nanosecond wondering if she’s committed. Instead I wonder what I can do to support her. What can we do to support her? But that philosophy has to start at the top, and it has to be set by example. So if it’s 5 p.m. and we’re in a meeting and I say, “I’ve got the 4th grade girls softball team game that starts in 20 minutes. I’m the coach—I’ve got the equipment bag in the trunk, so I’m out of here,” the normal human reaction is to think, “Hey, you know what? If that’s okay for Harry to do, and I’m getting a voicemail message from him at midnight because he’s checked out between six and 10, you know, maybe it’s ok for me to do the same thing.”

I was very fortunate to go to a liberal arts school where they focused on the idea of educating your whole self. I didn’t go to college looking for a job. I went to college because, as the president said on the first day of school, “You’re going to spend the next four years not getting a job, but the next four years learning to educate yourself. You’re going to learn how to read, you’re going to learn how to articulate your position, you’re going to learn to think.”

How important is dialogue with and feedback from outside organizations?

KRAEMER: The more feedback I can get from as many constituents as possible, the better. If you’re going to be a leader, one of the most important requirements is self confidence—not an obnoxious ego, but a good sense that, “I’m okay. I’m far from perfect, but I’m okay. As a company, we’re okay.” You need to have enough self confidence to recognize that you can learn something from everybody.

For example, when a group comes in and they are focused on the issue of non-PVCs, here’s how I look at it: What do these people do? They get up in the morning, they probably have children, they truly believe this is important. These people are well-educated. They understand the issue, the chemistry and the physics behind the issue as well as anybody that’s at Baxter. We can learn something from these people, and at the same time, they can learn something from us. So we sit down and ask them, “What do you think we’re doing? What do you think we should be doing? What do you think the alternatives are?”

Through this dialogue, we can gain an understanding. We don’t have an agenda other than doing the right thing. So the more of these groups that we talk to, in my mind it’s all upside.

Do you have any mentors or people you look to for inspiration?

KRAEMER: I always think about Mr. Graham’s comment—I repeat it about 20 times a day—that we can “do well by doing good.” I’m also a great believer in a lot of Steven Covey’s work emphasizing the importance of taking the time to understand before you’re understood. I never go into a meeting and say, “I don’t understand where you’re coming from.” That’s not respectful. It’s a little obnoxious. If I take the time, I can understand your perspective and I ought to respect you enough to do that. Then I’ll decide if I agree or disagree; if I disagree, I’ll tell you why.

WHAT’S NEXT?

KRAEMER: I would say that the challenge continues, the journey continues. It’s a case of constantly raising the bar. I look at all the things we do on two scales: one scale is relative and the other scale is absolute. And I’m a pretty tough grader. How are we doing relative to where we were five years ago? I’d say we’re probably an eight or a nine. On an absolute scale of what we could do if we really continue to raise the bar, I’d say we’re probably a two. Now, I’m one of the world’s great optimists, right? So I consider that all opportunity. We have the opportunity to have a significant influence on health care, on how corporate America operates, on how global companies operate. So from my standpoint, we need to keep doing more of it.

The more influence you have, the more influence you will have. I think we have created more awareness of the type of values Baxter has . . . there’s a lot more people now that realize if they want to create balance, they’ve got a much better opportunity to do that here than at a lot of other companies. What percentage of people actually know that today? Maybe three or four percent of people. Would I love 100 percent of people to know that? Would I love so many people to be aware of Baxter’s shared values that the Human Resources department would have to barricade the place? Absolutely!

In my mind, it’s all upside, because so many people want to do the right thing—they just need an example. We all have a tendency to make things incredibly complex. But if we keep it simple, we’re going to win.


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