Why Lee Delp was right for MOPAC

Realizing his familyÕs third-generation meat-packing company needed to change, Curt Moyer hired as CEOÑof all peopleÑ a former insurance executive.

By Kerry Pechter

In a restored one-room schoolhouse not far from his familyÕs meat-packing plant, Curtis F. Moyer had called one of the most pivotal meetings in the Moyer Packing CompanyÕs 120-year history. Here, in the same room where the 72-year-old chairman had once learned arithmetic and grammar, he was about to introduce his choice for the companyÕs next CEOÑand its first nonfamily leader in four generations.

With his family gathered nervously around a big table in the company-owned schoolroom, Moyer presented his nominee, Lee Delp, a 48-year-old consultant and former insurance executive with no prior meat industry experience. Then Moyer and Delp waited for the familyÕs reaction. It was swift and emotional, a mixture of gratitude and relief.

ÒI took to them and they took to me,Ó recalls Delp. ÒIt helped that we had similar backgrounds.Ó Delp, like the Moyers, is a Mennonite with deep roots in this increasingly suburban corner of Pennsylvania Dutch country. ÒI still wasnÕt quite sure about the business, but the family was sure about me,Ó Delp says. ÒIt was a unique meeting. There were a lot of tears.Ó

Like many family businesses, Moyer Packing of Souderton, PennsylvaniaÑknown as MOPACÑwas in a transition crisis. Though Curt MoyerÕs son and daughter are involved in the company, neither was eager to run the $570-million agribusiness, which is one of the top 10 in the industry but competes with giant Midwestern conglomerates such as IBP Inc., ConAgra, and Cargill.

Indeed, it would take a rare individual to solve the MoyersÕ succession problem. The meat-packing industry is not for the squeamish. It is a raw, tough business with thin margins, boom-bust cycles in the supply of cattle, and daily scrutiny by U.S. Department of Agriculture inspectors. These circumstances inevitably fostered a hierarchical culture, one not ideally suited to managing MOPACÕs diverse, high-turnover, blue collar workforce.

It was surprising, then, that Moyer went outside the family, outside the company, and even outside the meat industry to hire his replacement. Delp had spent 20 years with the National Liberty Corporation (now Providian Insurance) in nearby suburban Philadelphia, where he rose to vice president.

It was all the more surprising when Delp turned out to be exactly what the company needed: someone whom the family could entrust with the responsibility of bringing substantial change while preserving the familyÕs values.

ÒLee brought skills that we lacked,Ó says Michael Silverberg, one of the three senior vice presidents. ÒI personally did not have a problem with Lee coming on board. Lee is bright enough to know that heÕs only been in the meat business for two years and doesnÕt know all the answers. But he does ask the right questions. IÕm an operations guy and if you can keep me out of the political stuff IÕm happy. I think CurtÕs strategy was brilliant. The way he transitioned Lee in and himself out was done brilliantly. The company never took a step back.Ó

Religion and change

Prior to DelpÕs arrival in 1995, Moyer Packing had known only family leadership. Curt MoyerÕs grandfather, a farmer and Mennonite church deacon named Jacob A. Freed, started the original butchering and rendering operation in 1877, selling beef to the public, cowhides to tanneries, and tallow to soap and candlemakers. He passed the business to a son-in-law, Abram F. Moyer, who peddled fresh meat, bacon, lard, and scrapple in nearby towns from the back of a horse-drawn wagon.

Abram Moyer divided the business among four sons: Nelson, Jacob, Abraham, and Curtis. It was under their tenure that the business took off, growing from $10 million in sales and 150 employees in 1965 to $70 million in 1975, $351 million in 1985, and $570 million last year. Abram MoyerÕs original farmhouse still stands, but today it is adjacent to an office building, a huge barn for steers awaiting slaughter, a vast plant where the cattle get broken down into parts, and a parking lot dense with semi-trailers that say MOPAC on the sides. Less than a mile away is a rendering plant where bones and fat are cooked into industrial oils and pet food.

Curtis took over the business after the deaths of his brothers, but as he approached retirement in the 1990s, he had no obvious successor. Since his son, Glenn C. Moyer, and daughter, Dolores Howell, did not aspire to the top job, Curt, now in his 70s, began looking outside for a successor, though he did not start a formal search.

ÒThey needed someone with outside experience, with experience running a larger corporation,Ó says Delp. ÒAt National Liberty, I had managed several subsidiaries. Most of all, I was experienced in long-term vision and planning, and MOPAC needed that expertise. Also, Curt didnÕt want to bring in somebody from the beef or rendering industry because he already had leadership in those areas.Ó

At the same time, the family was worried that an outsider might change the corporate culture in ways they wouldnÕt like. Indeed, whoever succeeded Moyer as CEO would have to feel comfortable with his children, his niece and his nephew, who also worked in the business, and their Mennonite backgrounds.

Mennonites first settled southeastern Pennsylvania 300 years ago, along with the Amish and the Quakers, and they share those groupsÕ mores of pacifism, humility, and simplicity. The first tenet of MOPACÕs formal business values, for instance, is, ÒWe believe we must honor God above all else, and that he would have us value people above things.Ó (Such is the familyÕs humility that the members declined to be interviewed for this article.)

The ideal successor would also need the fortitude to cope with the tough realities of the meat-packing industry. On the same farm where Jacob Freed slaughtered one steer a week, MOPAC now slaughters 1,800 a day, producing three million pounds of ground beef and 80,000 boxes of various cuts of beef every week for customers like WendyÕs, Kroger Supermarkets, Sysco Corp., and Japanese importers. By nature, meat-packing is a cyclical, thin-margin industry in which mistakes are rarely forgiven. ÒThis industry has a reputation for being rough and tough,Ó says Lee Delp. ÒThe people we compete with are very harsh.Ó

MOPACÕs next CEO would also need a gift for recruiting, training, managing, motivating, and retaining a highly diverse workforce. One of the first things that a visitor to MOPAC notices is that the signage, announcements, and memos are printed in three languages: English, Spanish, and a transliterated form of Vietnamese. About 85 percent of MOPACÕs 700 beef production workers are either Hispanic or Asian.

Wearing hard hats, yellow rubber boots, white smocks, Kevlar safety gloves, and even chain-mail aprons, they labor for an average of $9.60 an hour. Many do not speak English well. (The Spanish-speaking populations of nearby Allentown, Bethlehem, and Reading have swelled enormously in the past decade.) Repetitive motion injuries, as well as deep cuts, are a constant threat. MOPACÕs annual turnover rate among production workers is high, though low by meat industry standards, says Delp, so the company must continually recruit.

Focus on relationships

Although theyÕd met years earlier, Moyer and Lee Delp grew closer in 1994 through the Mennonite Economic Development Association (MEDA), a church-affiliated group that underwrites projects in developing countries such as revolving-credit programs for small businesses. Moyer was active in the local chapter, called the Clayton-Kratz Fellowship. Delp became president of MEDA shortly after leaving his career with National Liberty. He wanted to spend more time with his family and Òto do something closer to the Mennonite Church.Ó

Delp had never left Pennsylvania Dutch country. He was born only two miles from the MOPAC plant, studied mathematics at a local college, and earned a chartered financial consulting degree at American College in nearby Bryn Mawr. During the Vietnam War he was a conscientious objector. As an alternative service, he and his wife were houseparents for dependent and neglected children before he joined National Liberty.

Over time, Delp and Moyer grew closer. Delp became a MOPAC board member. He was soon involved in operations and then, in the spring of 1995, was proposed as the first nonfamily CEO. ÒI started on April 1, 1995,Ó Delp says. ÒWhen I told my friends I was going into the meat industry, they said, ÔWe always knew you were full of baloney.ÕÓ

Leaving the operational management to the existing team, Delp began introducing ÒsoftÓ management skills into a hierarchical, taciturn culture. ÒI see myself as a pastor who happens to be in the business world,Ó he says. ÒThatÕs my calling. I focus on relationships. One of my first bosses told me that 75 percent of business is people. IÕve learned that that was wrong. I think 90 percent of business is people.Ó

Delp describes his interactions with the family as relaxed, with each respecting the otherÕs role. ÒIn the business, they all work for me. Glenn, for instance, has budgets and goals and responsibilities. But in the shareholdersÕ meetings I work for them. ItÕs strange, but it works for us. Curt Moyer is still the chairman. He spends more time with his family now, but we talk frequently.Ó

Opening up the culture

One of the tools that Delp used to open up MOPACÕs culture was the 360-degree appraisal process, in which top managers are evaluated anonymously by peers and direct-reports. Instead of hiring an outside consultant, the company licensed a do-it-yourself software package called 20/20 Insight from Performance Support Systems of Newport News, Virginia, to help manage the program and tabulate the responses. The officers, including Glenn Moyer, who is the vice president of corporate engineering and maintenance, all went through the program.

In MOPACÕs reserved culture, the 360-degree appraisals were a bit of a shock. ÒWhen I got my results back it was very disconcerting,Ó says Robert Daubenspeck, the director of human resources and one of the in-house counselors who discusses their 360-degree results with other managers. ÒI already knew what my Ôflat sidesÕ were, but I thought that nobody else could see them. In fact, they could.Ó

It was strong but welcome medicine. ÒThere were a couple of areas that I thought I was good in, but my peers did not agree,Ó says Silverberg, who runs MOPACÕs beef division. ÒI chose to share my results with my peers and subordinates. I thought that if I was open with them, they could help me grow in areas where I was deficient. Over the past two years, IÕve found it very helpful.Ó

ÒEverybody who has been through it has been changed by it,Ó adds Ella Roush, MOPACÕs vice president of communications. ÒPeople see it as a tool for personal growth and development, not for punishment or humiliation.Ó In fact, MOPAC hasnÕt been able to keep up with the enormous demand for Ò360sÓ that itÕs getting from middle managers and supervisors, she says.

To strengthen the sense of openness and candor, Delp decided to share financial details among the top two dozen managers. In the past, no more than a handful of family members and senior executives ever saw the bottom line numbers. ÒMy philosophy is that if people know the good and the bad, maybe they can come up with some solutions,Ó Delp says.

MOPACÕs executive team, meanwhile, introduced a wide range of human resource changes, including benefits and morale builders that were intended in part to make MOPAC the Òemployer of choiceÓ among the regionÕs Hispanic workers. The management team created a program to fast-track minority supervisors. The team ordered extra compensation for the many salaried employees who worked 35 or more Saturdays in a year. Calling for a Òzero-accidentÓ culture, they made injury-preventing ergonomic changes to the production line; for example, to reduce repetitive stress injuries, they taught production workers how to make fewer cuts in stripping meat from the bone. MOPAC also began offering health benefits to production workers after three months on the job instead of 12.

ÒNot all of this is costly,Ó Delp says. ÒI send handwritten notes to employees on their birthdays, anniversaries, and when theyÕre hospitalized.Ó Finally, to ease long-standing tensions between the company and its livestock vendors, Mike Silverberg invited 800 cattlemen to MOPAC for a weekend.

But the accomplishments Delp seems most proud of are the companyÕs statement of values and its strategic plan. MOPAC published its values in Mennonite fashion, commissioning a calligrapher to hand-letter them on a Òfraktur,Ó a colorful, diploma-like wall hanging, of which various renditions appear in offices throughout the company. ÒI believe that owners of family businesses have an inalienable right to establish the values for the organization,Ó Delp says. ÒAnd, through a year-long process, the Moyers and management developed a set of business values that express their desires for the company.Ó

The companyÕs strategic plan, which is confidential, took 18 months to write, involved the efforts of 70 employees, and covers every segment of the business. ÒWe had always known where we were going,Ó says human resources director Bob Daubenspeck. ÒBut before Lee came on board it was never down on paper, or even discussed outside of a very small group. It took a long time to get buy-in from everybody. But that seemed like the right way for us to do it.Ó

Remarkably, the strategic plan is only a page long. ÒWe wanted something that people could refer to every day, not something that would gather dust on the shelf,Ó says Roush.

Staying competitive

The initiatives set forth by Delp and his management team are hardly unique or revolutionary. Indeed, they should sound familiar to anyone conversant with the general principles of lean manufacturing, empowerment, and team management. But such ideas were new for MOPACÕs culture. So much so that the messenger of those changes, ironically, could only have been someone like Delp, who shared the values of the family owners.

If organizational change was palatable to the Moyer family because it came wrapped in familiar language, it was acceptable to the nonfamily executives because Delp was able to make the case that a strong, cohesive culture would help the company remain competitive in a rapidly consolidating industry. ÒCulture has phenomenal leverage when it comes to the bottom line,Ó he likes to say. ÒWeak cultures get in the way of high performance. If you think about how much time people waste going in circles and squares and triangles instead of in one direction, I think youÕll know what IÕm talking about.Ó

It remains to be seen whether Delp will simply be a bridge manager or whether the family plans to retreat permanently into the role of owners and let professional managers handle the daily responsibilities. ÒIÕm only 51, and we havenÕt had any discussions about who will succeed me, other than to say, ÔLetÕs make the existing management team as strong as possible,ÕÓ Delp says. In any case, the grandchildren who are interested in the business will probably still be too young to take over when Delp reaches retirement age.

Part of DelpÕs job has been to teach the business to Curt MoyerÕs teenage grandchildren, who will inherit the company. One already works in the business, and others are coming along. Delp also handles the familyÕs estate planning chores. He himself has no employment contract or agreement other than a handshake. Trust seems implicit in all relations between him and the family.

After three years, the effects of MOPACÕs culture change have been subtle but significant. Sales in 1997 were up $20 million over the previous yearÕs $550 million. The management team has remained intact. Injuries to the workforce are down an estimated 67 percent. The company is sweating through the down years of the so-called cattle cycle, but doing so with less distress than before. (Because of the gestation cycles of cows, there is a lag every five to seven years in the companyÕs ability to meet the demand for beef.) ÒThe ÔarrowsÕ arenÕt all pointed in the same direction yet,Ó says Mike Silverberg, Òbut weÕre getting there. ItÕs a long process, but you can sense it. You can feel it.Ó


Kerry Pechter is a business journalist in Allentown, Pennsylvania. He is a former Wall Street Journal reporter and the author of two books on career management.