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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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