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 Internationals
Harry Kraemer, Jr. doesnt see it that way. The importance
of balancing work-life issuesand the notion that it
is possible to do well by doing goodare just two of
the credos upon which Kraemer bases his leadership philosophybeliefs
that are widely communicated beyond the confines of his executive
office to 45,000 team members in 100 counties worldwide.
Cover Story Articles
Harry Kraemer doesnt proclaim that the company he has worked
at for 20 yearsand been CEO of for threeis perfect.
In fact, he readily admits that theres 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 opportunitiesand 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 worlds first global
sustainability index that tracks the performance of leading sustainability-driven
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 doesnt 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 Im 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, were 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 BAXTERS BEST
KRAEMER: Were celebrating
our 70th birthday this year, and I would say that being focused
on doing the right thingsustainability and shared values is
something thats been part of the company since the very beginning.
I dont think the fact that we have officially embarked on
something called Best Citizen is really a major departure
from what weve been doing for 70 years. In fact, William Graham,
the first CEO of the company, always used to say that its
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 careits the only
thing we do. Were focused on critical therapiesif 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 goodI
think thats the fabric of the company.
How do you achieve that when youve
got 45,000 employees in 100 different countries?
KRAEMER: First of all, interestingly
enough, I dont think of us as having employees. We have 45,000
team members. Thats more than a semantic difference. Whether
youve been around for 30 years or 30 days, youre 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 valuesthis
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 Rs, 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 youre a member of this team, are expected
of you. The reality of it is, we are going to be respectful of one
another, were going to treat everyone the way we want to be
treated, in every way . . . were going to make sure that were
responsive to one another, to our patients, to our customers.
Were also going to be results oriented. We are going to do
what we say were going to do. If we tell a renal patient in
Omaha that she will get her supplies on Wednesday at 3 oclock,
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 weve 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 EMTthe
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 dont 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 lets say youre 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 were trying to do,
how were 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 theyre
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 measureif you dont measure it, then lets not
talk about why its 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, its good to have an external
reality checkvalidation. We talk about the fact that we want
to be economically viable, but we also want to be socially responsiblewe
want to make sure that we are doing the right thing for the environment,
that were 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 were
leaving it a better place for our children and our grandchildren
and societythats part of being a best partner, because
were a partner not only to patients and to customers, were
really a partner to the world.
When we talk about being a best investment, were trying to
generate a return for the people who are shareholders. Who are these
shareholders? Think about ittheyre us. Were the
people who have mutual funds, were 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 weve
got to do that in an environmentally friendly way, in a socially
responsible way. So if we are creating a best team (and Im
a little biasedI think we really are), if were really
being a best partner and making some progress, if were 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 dont personally
get wrapped up in whether a magazine recognizes it or not. Id
really like the 45,000 team members to feel that way. Id certainly
like patients and customers to feel that way, and Id certainly
like our shareholders to feel that way. Id like society to
think of it that way.
As we challenged ourselves by thinking about best team, best partner,
best investmentwe 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 werent
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
thats 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. Isnt 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 youre going
to play a leadership role, by definition youre 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 were
a publicly-traded company, were 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 Im 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, were all in
this together. We all may have a different role to play, but guess
what? Were all interested in the same thing. The way I look
at it is this: if were trying to do the right thing in everything
that we do, then the more organizations, the more frameworks that
I can sign up forthose are ways of inflicting discipline.
There are certain areas in which I think weve demonstrated
best practices; theres certain things we dont do as
good a job on. Thats why were trying to raise the bar.
The fact is, theres 45,000 people who wake up and say, Were
going to live the values. Were not perfect, but thats
okay. Were going to make sure that we set an example; were
going to hold ourselves accountable; were going to have as
much transparency as possible. If people ask us things, then were
going to tell them.
Heres another example: People have said to me: Harry,
theres a lot of people who are asking questions about what
Baxters position is on bioethics. Its kind of a touchy
topic! What should we tell them?
Well, whats 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, whats our position? The executive
management team will talk about it and either well agree and
that will be Baxters position, or well disagree and
at the end of the day the leader has to make a decision. And Ill
say: Based on the information we know now, this is our position.
And lets explain to people as openly as possible what we think.
Twenty years ago when I joined the company, Id go to the grocery
store and somebody would ask me, Is Baxter involved in such
and such? Whats your position on this? And I didnt
know. Not only didnt I know, I didnt even know who to
ask. And when Id ask somebody, theyd say, Well
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 agoand we do.
Because now when I go into a grocery storeor when someone
whos been at Baxter 20 days goes into the grocery storeand
someone asks, Would Baxter use fetal tissue? We both
can say, No, we wouldntheres why. And heres
why we think its 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 weve evolvedif
were 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 its more fun, its
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 peoples
lives. Do we want to do it in a way that were polluting the
environment? That doesnt sound very logical!
So if were all trying to create balance, why dont we
just openly talk about it? Weve all got parentshopefully
theyre all alivewho are going to get older, and theyre
going to need a certain amount of care. They nurtured us; shouldnt
we nurture them? If you need to leave at 3:30 p.m. to pick up your
children and youve got a PC at home and youve 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 afternoonany
problem with me going home and taking care of a sick child, and
Ill leave you a voicemail message? Fantastic! Super!
I dont waste a nanosecond wondering if shes 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 its 5 p.m. and were
in a meeting and I say, Ive got the 4th grade girls
softball team game that starts in 20 minutes. Im the coachIve
got the equipment bag in the trunk, so Im out of here,
the normal human reaction is to think, Hey, you know what?
If thats okay for Harry to do, and Im getting a voicemail
message from him at midnight because hes checked out between
six and 10, you know, maybe its 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 didnt go to college
looking for a job. I went to college because, as the president said
on the first day of school, Youre going to spend the
next four years not getting a job, but the next four years learning
to educate yourself. Youre going to learn how to read, youre
going to learn how to articulate your position, youre 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
youre going to be a leader, one of the most important requirements
is self confidencenot an obnoxious ego, but a good sense that,
Im okay. Im far from perfect, but Im okay.
As a company, were 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, heres 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 thats 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 were 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 dont
have an agenda other than doing the right thing. So the more of
these groups that we talk to, in my mind its all upside.
Do you have any mentors or people you
look to for inspiration?
KRAEMER: I always think about
Mr. Grahams commentI repeat it about 20 times a daythat
we can do well by doing good. Im also a great
believer in a lot of Steven Coveys work emphasizing the importance
of taking the time to understand before youre understood.
I never go into a meeting and say, I dont understand
where youre coming from. Thats not respectful.
Its a little obnoxious. If I take the time, I can understand
your perspective and I ought to respect you enough to do that. Then
Ill decide if I agree or disagree; if I disagree, Ill
tell you why.
KRAEMER: I would say that
the challenge continues, the journey continues. Its 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 Im a pretty tough grader. How are we doing relative to
where we were five years ago? Id say were probably an
eight or a nine. On an absolute scale of what we could do if we
really continue to raise the bar, Id say were probably
a two. Now, Im one of the worlds 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 . . . theres a lot more people now that realize if they
want to create balance, theyve 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 Baxters shared values
that the Human Resources department would have to barricade the
In my mind, its all upside, because so many people want to
do the right thingthey just need an example. We all have a
tendency to make things incredibly complex. But if we keep it simple,
were going to win.