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0606 HR Magazine: Taking Care of Their Own

By Bill Leonard   6/1/2006

HR Magazine, June 2006


Vol. 51, No. 6

Under Chairman Bill Greehey, Valero Energy demonstrates how a commitment to compassion and community service can lead to success.

Bill Greehey, chairman of Valero Energy Corp., says his formula for success is simple: Care more about your employees than you care about yourself. It’s hard to argue with the corporate results he has achieved.

Greehey has led Valero Energy through a remarkable 26 years of growth and transformation. Since the company’s inception in 1980, Valero has become the largest refining company in North America, with approximately 22,000 employees and assets of $33 billion. Last year, the company ranked No. 22 on the Fortune 500 list of the largest U.S.-based corporations.

Valero Energy, based in San Antonio, is consistently ranked among the best places to work and reached No. 3 on Fortune magazine’s 2006 list of “100 Best Companies to Work for.” Valero employees at all levels sing Greehey’s praises, saying that he is the rare top-level executive who is just a “regular guy” and shows time and again that people are the company’s most important asset.

HR Magazine Senior Writer Bill Leonard interviewed Greehey two days after he appeared in a Feb. 21 taping of “CEO Exchange,” a public television series sponsored by the Society for Human Resource Management and produced by Chicago PBS affiliate WTTW. Greehey discussed how HR practices have played a central role in the company’s growth.

HR Magazine: Valero Energy Corp. was ranked No. 3 in the latest Fortune magazine listing of “100 Best Companies to Work for.” What do you think makes Valero such a great place to work?

Greehey: First of all, I think that it’s a real compliment to our company. Two-thirds of the weightings for the rankings are based on confidential surveys sent to employees at random. And if you consider the growth Valero has experienced over the past four years, about 80 percent of the employees are new to the company. This means that the employees who have joined Valero through mergers and acquisitions have totally embraced the culture just like our longer-term employees have.

I think the reason that we are No. 3 on the list is that we truly do put our employees first. We’ve never had a layoff in our company’s history. We offer the best salaries and the best benefits, and we give stock options down to the lowest level in the company. All nonexempt employees are eligible for stock options, and everyone has received at least one month’s pay with our all-employee bonuses for the past several years.

Another thing that has worked for us is our volunteer council, and we encourage our workers to get involved and give back to the community. During 2005, Valero employees put in 220,000 volunteer hours. When you have a volunteer council, everybody feels good about giving back to the community, but the other big benefit is that all employees work together on these volunteer projects, including the executives, which I believe has built a stronger feeling of teamwork and camaraderie. If you ask our employees to describe Valero in one word, I think that they would say “family,” because we do take care of our employees.

HR Magazine: Have you found it difficult to sustain that caring attitude for employees and keep it pervasive in the company? Greehey: We’re all part of the same team at Valero. Everyone is treated equally with equal respect, and no one ever is talked down to. The respect and attitude toward all our employees is an important part of our culture. I tell everyone who is hired or promoted to the management team at Valero that the real secret to their success is to care more about your employees than you care about yourself. This really is the golden rule at Valero.

Also, when we started this company 26 years ago, we had a mission statement that Valero would be a good corporate citizen and give back to the community and to be a caring and involved company. I’ve learned through the years that people who care about the community and want to contribute also are the ones who truly care about the company, their jobs and the people that they work with, and this really is key to our corporate culture.

The caring attitude and culture has really worked for Valero. If you take a look at the company’s success, we are not only one of the best companies for shareholder returns; we’ve also been one of the best companies for giving back to the community. Valero has won the [United Way of America’s] Spirit of America Award twice, which honors the best of the best among companies that give back to their communities.

HR Magazine: How does Valero differ from all the other employers that claim that people are their No. 1 asset and that they, too, care for their employees?

Greehey: The caring attitude is truly a part of our corporate culture, and it is something that we not only preach but we live every day.

Last year, we had several hurricanes strike the Gulf Coast where many of Valero’s refineries are located. When Hurricane Katrina was headed right for New Orleans, we did our advance planning days ahead of time. And I told all our employees that we were going to take care of every single one of our workers affected by the hurricane. So, we purchased 60 house trailers to provide emergency housing to anyone who needs it, and we collected food, supplies and chain saws and had all these supplies ready to go at one of our retail distribution centers in Texas.

As soon as the hurricane had passed, our trucks were on the road and providing food and supplies not only to our workers but to anyone in the community who needed help. We sent employees from our headquarters in San Antonio to cook and prepare food for our workers in the areas hit by the hurricane. We also have what we call a safe fund that is designed to provide up to $10,000 to any Valero employee who needed it. We hired insurance appraisers who went to our employees’ homes in the hurricane area, and any employee whose home was damaged received the money immediately instead of having to wait for their insurance company to pay up, which could take weeks if not months.

Every Valero employee who showed up at the refinery was given $1,500 in cash because all the banks were closed. And these were not loans; it was free money that our employees did not have to pay back. Valero employees also went to Wal-Mart and bought new clothes and distributed the clothing to anyone who needed it.

It was all about taking care of our employees and putting them first. My philosophy is simple: The more you do for the employees, then the more they will do for the company.

HR Magazine: You mentioned Valero’s rapid growth in recent years through mergers and acquisitions. How have you ensured that Valero’s unique corporate culture has remained intact through this period of growth and change?

Greehey: What we do in each acquisition is to make certain that we do more for the employees than the previous owner [did]. We will invest more in the refineries and more in the community than had ever been done before, and we then take great care to make the employees feel that they are an integral and important part of the company.

As soon as we buy a company or refinery, our HR department is the first one on-site. HR goes in there talking about our salaries, benefits, retirement plans. When we buy a refinery, we repaint, put up signs, landscape, and starting day one employees will see a change.

I really would like to make one comment on HR. I think HR and PR need to work closely together, because what you are really doing is selling the company to the employees. No one does that job better than public relations. I think those two departments must work closely together, and to have an effective HR department you must have an effective PR department.

HR Magazine: So, you believe HR’s key role in mergers and acquisitions is to build effective communications with the new workers?

Greehey: HR probably has the most important role in this process because they’re the first ones on-site whenever we acquire a new refinery. Immediately after a merger or acquisition, HR provides the information, and they serve as the conduit between the new workers and Valero.

The employees find out immediately what their salary and benefits package will be. They will also learn of the special recognition programs and other events the company sponsors for employees, like cookouts, golf tournaments, awards ceremonies—all the special programs that we have.

The initial meetings with HR are then followed up by me visiting the refinery. I will meet first with management to go through the plans for the refinery. I hold roundtables, when I might meet with 20 to 30 managers. I discuss with them our corporate culture and our strategic vision—and I find these roundtables a lot of fun. More importantly, it gives them a chance to voice their concerns directly to me, on what they like and dislike. After these hour-and-a-half or two-hour roundtable meetings, most of these managers are so sold on Valero that it’s unbelievable.

After the roundtable meetings, we then hold a barbecue the same day at the refinery. The senior management, me included, will put on aprons, and we serve each employee at the refinery. As the employees come through the line, we visit with them. At noontime as everyone eats, I get up and talk to the employees about Valero and field questions from them.

After the barbecue, we will tour the refinery and meet with employees who couldn’t attend because they had to work. I will climb up on the units and take a look at them and talk with the people who are operating them, and this really makes an impression. By the time we leave after a day and a half of meetings, tours and barbecue, the typical response from employees is: “This is just too good to be true.”

I always schedule a follow-up trip a year later to take a look at the facility and make sure that we’ve lived up to our word. When I come back, employees will usually say: “Everything you said that you were going to do, you’ve done more. It’s even better than you said it would be.”

HR Magazine: Many people might think this all sounds too good to be true and might ask: Can the costs of maintaining this type of corporate culture eventually overshadow the benefits?

Greehey: My philosophy has always been that we don’t emphasize the expense side. What I emphasize in this company is to spend your time trying to figure out how to improve the operations, how to increase our yields, how to increase the capacities of the refineries and how to make this company run better. What we have discovered is that if you emphasize those points, then the revenues you earn in return are so much more than you ever spend on the expense side. It’s just a different philosophy, I suppose. So many companies are much too cautious and don’t spend the money to make money that they just don’t do as well.

If Valero is going to keep up our current success, we have to be a growth company and continue to offer more opportunities for our employees. We have to give them the chance to develop their job skills and have the feeling that they are an important part of this company’s success.

HR is going to have the responsibility of maintaining this culture and hiring good people who embrace our corporate culture. We also have to make sure that we are always better than our peer group in what we do for our employees. An important part of HR is to keep senior-level managers informed about what’s happening in the company and what things we can do to make things better.

HR Magazine: Do you believe that recruiting and hiring the right people in the tightening labor market is the major challenge now facing your company?

Greehey: I believe the most important thing is continuing the strong culture that we have as a company and building on that strength, and that means we have to hire the right people. Labor is going to be a critical issue going forward, and hiring good people to come to work for your company is already a major challenge. The reputation that Valero has within the industry has definitely made us an employer of choice. People want to come work for us, and that is because of our strong culture and our caring attitude for our employees.

The biggest challenge that I believe HR faces is that there are going to be more jobs created, but there are fewer people coming into the job market. There are choices that these people are going to make, and they will want to work for the best companies possible. The challenge we have is to make absolutely sure that we are the best in our industry.

Bill Leonard is senior writer for HR Magazine .

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At a Glance  

Bill Greehey is chairman of the board of Valero Energy Corp. based in San Antonio. From the company's beginning in 1980 to Jan. 1, 2006, Greehey served as CEO and chairman of the board. He announced in fall 2005 that he was relinquishing his title of CEO but would remain as chairman.

For the past two years, Forbes magazine has ranked Valero on its list of the Platinum 400-Best Big Companies for superior financial performance and shareholder return. And Investors Business Daily recently ranked Valero No. 3 on its Big Cap 20 of top performers in the S&P 500 Index.

Greehey serves on the board of trustees of the United Way of San Antonio and Bexar County and on the board of directors for the Southwest Foundation for Biomedical Research. In 1986, he was named distinguished alumnus for St. Marys University in San Antonio, and in 1998, the university granted him an honorary doctorate of philosophy.

In October 2002, Greehey was inducted into the Texas Business Hall of Fame, and in December 2000, he was selected to receive the Horatio Alger Award. He is a native of Fort Dodge, Iowa, and a veteran of the U.S. Air Force.