CLAAS NORTH AMERICA HOLDINGS

An Interview with Leif Magnusson, President at CLAAS, Americas Region
By Chris Jolovich and Bailey Wood, Creighton University MBA students

We had the pleasure of interviewing Leif Magnusson, the President of CLAAS North American Holdings, one of the 2017 recipients of the BBB Integrity award.  In this conversation we discovered how CLAAS, a global leader in the agricultural machinery industry, retains integrity and fosters an engaged community.

Tell us a little bit about your background and how you got here.

I grew up in Sweden in a very small town. In fact, I think there were 400 people in my little town and I grew up in a rural environment. My family was involved in farming as well as forestry. As I grew up and went through school, I started university doing science but ended up being a dropout, but I had an opportunity to go to Australia. So, I left Sweden in my early twenties. I had a two-year contract; my intention was to go back to Sweden and continue what I was doing. But that two-year contract actually ended up being 13 years in Australia. Then as I got promoted over the years in Australia, I ended up moving to Singapore in Southeast Asia where we had a new market opportunity, mainly in Indonesia but also in Malaysia. Briefly I went back to Australia.  At this time, I had two kids, and the head office in Sweden wanted me to come back and do a project in Sweden. I told my boss at the time “I'll give you two years in Sweden and then you have to move me to an English-speaking country”. From there I was a part of a M&A team that was successful in buying a company in Wisconsin. I relocated to the US with that company in the year 2000 until 2008, and that's when my current employer, CLAAS, approached me. I thought it was a very neat opportunity for me to come to CLAAS I liked everything I knew about the company. So, we relocated to Omaha in 2008.

What made CLAAS attractive as an employer?

I think the fact that CLAAS is a family company, that's still a privately held business and they have a very unique way of taking or bringing in new talent into the company when it comes to internships, apprenticeships, different foundations, and their involvement with the schools. One thing that I really appreciate more and more is to actually work with people and try to make people successful. I saw a great opportunity for this in CLAAS. It was impressive how CLAAS was developing people and bringing new talent into the company, which indirectly is also good for the community.

Can you define ethics, is there a difference between your personal and professional ethics?

To me, ethics are values that represent a code of behavior and I think it’s the behavior that really comes from life experiences, moral beliefs, and it’s doing the right thing every time. So, to me, I would say, it’s having integrity, being honest, being accountable and being responsible. I think at the end of that if you can be trusted for what you do, that to me is what ethics stands for. Trust is a big part of what we are, our values in our company, and if I can be relied upon and trusted in my actions, I think that’s part of ethics. Between personal and business ethics, I think they have a lot in common, but, from a business perspective there could be certain governance or rules or even contractual agreements that could be at odds with your own beliefs that will shape your ethics.”

 Are ethics subjective to a time and place or objective across the world? 

That's a very good question because I've lived on four different continents, so I've dealt with people of different cultures with morals that may be a little different and I know I've always believed in my own values, so I think even though I've worked with all those different cultures I’ve always applied the same rules to ethics with all of my business interactions and personal interactions. Maybe I'm naïve, but I do believe that at the core of every one, I think we have very similar values but I think it comes through in a different way.

Where did CLAAS’s values come from, are they maintained?

We're still privately held, family-based, we are on the third generation even though the second generation is still the chairman of the Shareholder's Committee, Helmut Claas is the son of the founder, August Claas, Helmut is 92 years old, he is in the office every day.   Cathrina, his daughter, is the chair of the Supervisory Board which basically is who directs the board to carry on the business. And the values that they have, I believe still is communicated from shareholders level down and is being felt by employees I think at every level of the organization. So, she is very active, in communication, whether over video messages, site visits, and other things. She takes time to talk to people and she's very clear about what CLAAS stands for. So that’s where it starts.

How does moral courage fit into your organization?

The moral courage that we have is don't be afraid of change. Always have the innovation to build on that. Talking about the Business Ethics Alliance of their values we identify with, certainly, moral courage for us is what you talked about before. Why are we here? That is to make sure that our customers can continue to deliver produce in a cost-effective way so that we can afford to feed the world.

Could you give us some examples of ethics policies at CLAAS?

Without having the word ethics in there we have firmly in place multiple policies. Internally we have something called the PD documents which is Procedure Directive, so anytime there is an issue for example when dealing with a distribution agreement that PD would help guide us to make the right decision.  The other policy we have in place when it comes to decision making or approvals there is a check a balance system in place called the four-eye.  For example, you can’t issue a purchase order and then sign the invoice.  This policy isn’t in place to have more control, it is there to make sure people are asking themselves “Am I doing the right thing here?”

 Were there any challenges in getting your ethics policies in place?

I think when you come into the workplace or new employer and you get a good onboarding, it is a benefit to an employee rather than just turning up and getting a cubicle. I think that would be very difficult for an employee. We, have four things that we are looking at when onboarding new employees; respect, reliability, ready for change, and being involved. Those four pillars will always be revisited in our performance.

 What's your biggest challenge to fostering those four pillars in the company?

Communication, and I like to say “walk the talk”, if you see leadership or managers not adhering to those values, then it is really hard to sell it.  When it comes down to it, we need to lead by example.

Can you give us an example of an easy ethical situation that you've had to handle?

Generally, I can say this, if you follow your values, your integrity and your ethics, the decision may not be hard because you know what the right thing is to do, but to deal with it, is often hard. I’ll give you an example of an employee that is claiming a per diem lunch expense when his manager knew that he was out at a luncheon that was paid for. Ok, you sit down with that guy and say, hey, that’s not right.

Can you give us an example of difficult ethical situation that you've had to handle?

A number of years ago, one of our dealers in a core area, came to us at the end of July and said that they had decided to exit the business. So, we said ok, when do you plan on doing that? Because, we're thinking in four or five weeks from now, the harvest is starting and we had the 250 customers, in this territory. The dealer said, “We are exiting now.” So, what is the ethical thing for us to do?  We have 250 customers that had entrusted us in using our equipment going into harvest and if you are all familiar with harvest, this is their nervous time for farmers. The energy levels and the stress levels are very high. We had to make a decision, scouting the territory there was really nothing quick we could do in finding independent distribution. So, we thought the best thing for us to do is to open our own dealership, but we need to do it quick. So over three or four days, we built a business case, we negotiated with the company that exited to take over some people. We produced a decision paper for our board and our shareholders. And within 10 days we went from knowing what was happening to an approval by the shareholders to opening a dealership, we took over the people, we leased the facility, and we were in the market supporting our customers.

Was that decision financially detrimental to CLAAS?                                                

In the short term, yes, it wasn’t planned. But we made that decision because we had to fulfill the promise that was made to these customers.

 Do you talk about ethics of the company often?

I don't know if we use the word ethics, but we talk about who we are, why we are here, what's our purpose, and that you need to have integrity and accountability in what we do. From a business perspective, I think ethics is driven by who you are as a company, the values behind the company, and any management principles or governance that we have in place.

You won the BBB integrity award can you discuss the significance of that.

Leif: So, the company won the award. From a personal stand point, very gratifying and honored, I think it was a stamp of approval to be recognized because this is what we set out to be, and when that is recognized in the community that is very pleasing to me.

Was the award a byproduct of the culture or was it a goal? How did the employees react?

I know some people have commented on it and I think it is a good reference for us of who we are and what we do to have that recognition as we are developing our company. To be honest, it's not like everybody comes up and said, “Yeah, we won the BBB integrity award!” But I do believe it helps reinforce everything we try to do with our employees and having that recognition helps us to do what we want to do.

 Did you have any mentors over your career that shaped your ethical beliefs?

Having worked on different continents, I've had mentors every step of the way and I think that it is important to lean on what I learned from them. I think what I took away is that communication is important. If an ethical issue arises, you have to bring it up very quickly and you have to bring all of the involved parties into that conversation. When you're young, you're very quick to make opinions or take a side, what I have learned throughout my 30 years is don't get blinded by what is punching you in the face. Yes, you've got to communicate quickly, but be slow in making conclusions until you have learned what the full story is. What I learned from my mentors is that the message is key. So, the communication needs to have clarity and the breakdown of how we do things needs to be very simple and clear and then be repetitive. We all like to put a twist on it or change the story. But real success in driving culture or ethical values is repetition, repetition, repetition, repetition. People get sick and tired of me saying the same thing, but I know that's better than being all over the place. So, consistency in your message, clarity, keeping it simple and repeat.