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2024 Q2 Newsletter Interview Peter Feil, STOBER

ALTIX INDUSTRY CHAMPIONS INTERVIEW

One on One: Discussion with a Global Industry Champion: STOBER

Each quarter we sit down with Industry Executives and Thought Leaders to discuss the trends, challenges, and best practices that are transforming their businesses.

Today, we are with Peter Feil, GM at STOBER

General Introduction:

Peter, can you please provide a brief overview of your background and experience?

Thank you for this opportunity to share my thoughts on the importance of engaging in People Development in our businesses.  First of all, I love that you are communicating with other business leaders on important business topics through this forum.  

As an electrical engineer by degree, and having worked in product engineering, operations, and sales earlier in my career, I had a diverse background when I became General Manager and have stayed in that role for the past 25 years. Being a native German and having lived in Germany for of 13 years, I knew working for a family-owned German company would be a great fit for me personally.  Being able to speak the language and understand the culture helps me bridge the gap between our U.S. subsidiary and our German headquarters.  

STOBER Drives, Inc. is a 90-year-old company and part of the “Mittelstand” that is the backbone of the German economy.  With approximately 700 employees worldwide, 170 of those are employed in Maysville, Ky.  We are fortunate to be in industrial automation, a very strong and growing industry.  We manufacture high-end automation components, specifically gear boxes, electric motors, and electronic drives.  Basically, we provide the motion for anything that moves in a factory.

What is STOBER as a company, and what is its mission in North America? 

One thing I really enjoy about STOBER is that we have a lot of autonomy, so our German headquarters trusts us to run a U.S. company in the U.S. market serving U.S. customers the American way.  Our German heritage brings with it great engineering, precision manufacturing, and a  focus on quality & doing things the right way without compromise, which makes us unique in our industry.

Our overall mission is to provide what we call “perfect motion.”   Perfection, of course, is not always 100% achievable, but we strive to be as close to perfect as humanly possible.  When we survey our customers, the feedback we get is that they value the quality and precision of our product above everything else.  Quality engineering and the pursuit of precision is pretty much the DNA of our company.  We also strive to provide the best application support and the fastest delivery, and typically we can build a product to order and ship within one day.  We aren’t always the least expensive supplier of automation in our industry, but we are very confident with our value proposition, which resonates well with our customers.  

We serve industries that have very demanding requirements such as operation in harsh environments, precise positioning, extreme duty cycle with high acceleration and deceleration profiles, and long life without loss of motion over time.  Markets we serve include machine tool, food processing, packaging, robotics, and a wide variety of general industrial automation applications.  Our customers trust us to find the best solutions to optimize their machines to ensure their customers’ satisfaction.  

Not every motion application is a perfect fit for STOBER.  Less expensive, less precise products from competitors can perform many tasks in factories, and we’re not competing for those applications.  It is up to our marketing and sales team to identify the more demanding, more precise applications for which we are the best fit for our customers.  Thankfully, those demanding applications are plentiful in our markets.

The development of our core product families is primarily done in Germany.  In the U.S., however, we do product modifications, adaptations, and engineering to satisfy customer requirements. We are becoming more independent of Germany in many ways, doing more and more design and development specifically for the North American market, as well as manufacturing more of our own product components.

Innovation: 

How does Stober Drive approach product innovation within this context navigating the industry’s shift towards electrification, particularly in terms of adapting existing product lines or introducing new ones to meet the demands and opportunities presented by the electrification trend?

In the early days of existence, STOBER was very instrumental in innovating industrial automation, from replacing belts and pulleys that drove machines from a central power source, to providing individual motion control to each axis on a machine.  Today, our innovation continues, focusing on our customers’ specific needs and finding solutions to optimize their machine performance, including electronic diagnosis of machine characteristics.  In the current day, I would not call us “inventors,” but rather “smart technology followers.”   We stay abreast of the latest technology trends and make sure we are providing our customers state-of-the-art technology solutions that are adapted to their unique requirements.  STOBER offers a broad range of products, giving us the opportunity to provide options to our customers, resulting in the best final solution with premium components, often at lower overall system cost.  Our goal is to help our customers accomplish their solutions more effectively and efficiently than our competitors can. 

Human Capacity and Development:

How does Stober Drive prioritize the development of its workforce to ensure business success in the face of increasing scarcity of human capacity?

Human capital is the currency of the future.  Every company says that people are their greatest asset, but very few companies behave as though that were true.  Hypocrisy exists in the gap between words and deeds.  We believe, to the core of our being, that our people ARE our company, and that we need to invest in them accordingly.  The fundamental principle is that if you as a company put people first, they will also put you first.  If you meet their needs, they will be glad to meet the company’s needs.  In business, attention to financials first, and people second is counterproductive.  

In business financials, personnel appears as an expense in the income statement, not as an asset in the balance sheet. Therefore, many businesses do not treat their employees as the most important investment, rather they view employees as an expense to be manipulated as business conditions fluctuate.  In today’s economic climate, for example, some of our competitors are reducing their workforce due to lower sales.  Consequently, when investment in capital equipment picks up again in our industry, as it invariably will, these companies will be scrambling to increase their workforce again in a very competitive labor environment.  In the meantime, valuable talent and experience has been lost, which is very difficult to spin up again.

Fundamentally, we believe that people are our most important asset, and we should continually invest in them.  Consistently behaving that way is very important.  “People Development” in our company is very closely intertwined with our company culture and with our leadership development efforts.  To us, people development, culture, and leadership are inseparable.  It all goes back to the principles of Maslow’s hierarchy of human needs.  The 5 levels of Maslow’s pyramid are:  Survival, safety, belonging, importance and then self-actualization.  If a person is struggling at the lower levels of Maslow’s pyramid, he or she can’t fully focus on their job and what you want him or her to do for your business, and they can’t put your business first, because their fundamental needs are not being met.  For instance, they may have personal problems of various nature, financial, personal, family, health, worried about mortgages, childcare, housing, transportation, etc.  They may have worries related to their job, lack of job security, unhealthy work environment, a miserable boss, not properly trained for their job, overworked, etc.  As businesses, we cannot control their personal lives or home environment.  We can, however, provide a healthy, positive, motivating work environment in which their professional needs are met.  Hopefully that environment creates a positive effect that can spill over into each person’s private life.  

The more we meet the needs of the people in our workforce, the more engaged and productive they will be.  The statistics are not very encouraging, indicating 70% of workers in the USA are disengaged and only 30% are engaged. Our goal is to flip those numbers but achieving that is complex.  The principles are simple, but execution is not easy.  However, with strategic commitment and intentionality around all aspects of putting people first in our company, we can flip those numbers, giving us an advantage over our competitors who don’t prioritize their people.  

What strategies does Stober Drive employ to ensure that human needs are met within the organization, allowing employees to fully engage in their roles?

One primary goal at STOBER is that every employee is on a lifelong learning journey, growing both professionally and personally, and continuing to move toward becoming “the best version of themselves.”  We provide training and education opportunities in many ways, including our apprenticeship program, pre-apprenticeship program, tuition reimbursement, online learning opportunities, and in-house classes.

We have had an apprenticeship program since 2006.  We try to maintain between 7% and 12% of our population as apprentices, putting them through a 4-year program as full-time employees with full benefits and pay.  The program creates a talent pipeline to supplement our hiring.  High school kids can get exposure to our company through a pre- apprenticeship program, and they often graduate into our apprenticeship program.  We also offer tuition reimbursement for those seeking degrees.  In addition, we have online learning opportunities through our STOBER University platform.  We also teach soft skills, process skills, and technical skills to all employees through in-house classes orchestrated by three full-time HR employees who are dedicated to education and training.  This May, we had 15 employees graduate from various levels of education and we had a big celebration as part of Employee Appreciation Week to celebrate their achievements.

To create a positive, family-oriented environment, our culture team and activities team constantly plan and implement activities for our employees.  Some are formal, like our annual Christmas Party and annual summer picnic.  Others are less formal like small get-togethers of specific functional teams.  For instance, each employee gets to spend $200/year on any team-building activity of their choosing, as long as it includes their teammates.  Teams often choose activities such as bowling, golfing, attending a ballgame, or eating out several times throughout the year.  Holiday meals catered in our facilities are always a big hit.  

Through a survey process administered through a third party, our employees’ feedback has earned us the title of one of Kentucky’s “Best Places to Work” seven out of the last 8 years.  Last year we ranked 8th place among medium-sized companies in Kentucky.

Readers will wonder how you maintain a balance of the culture of people first and the culture of performance.

Explaining the connection between culture, leadership, people development and the top and bottom-line business results can be difficult.  The irony is that one serves the other.  Because businesses are typically managed with a focus on financials, especially considering shareholder value, we have to show a profit every quarter.  Companies who view people as an expense rather than an investment have difficulty maintaining focus on developing people as a strategy. To do so requires a paradigm shift for leaders and management teams, making a commitment to put people first.  The critical piece to make that happen is to have that paradigm shift take place at the highest levels of the company.

Developing a great culture from the grassroot up can be done, but it has to be fully supported at the top and trickle down throughout the organization.  It is tricky and not every company will pursue people development strategically, but what is the alternative?  We all know that talent and human capacity are scarce and getting scarcer.

How does Stober deal with the evolving needs of multigeneration workforce:

Fundamentally, if you go back to Maslow’s hierarchy of human needs, there is little difference among the various generations. People of all generations and nationalities fundamentally have the same needs and similar wants.  On a more nuanced level, there are differences.  The younger generations, for instance, want more flexibility in the work environment, like remote work, and they believe more in company “purpose” beyond the products or services provided.  Like previous generations, they also want autonomy at work and mastery of what they do.  I disagree with people who say the younger generations are lazy and unmotivated.  We believe that with flexibility and willingness to cater to the nuanced wants of the various generations, people from any generation can be very engaged and productive employees.  The younger generations are amazing in their ability to use technology to be more productive, as they grew up using technology that older generations had to adapt to.

Please tell us more about specific activities you do in terms of people’s engagement.

There is really no limit to what a company can do to create an engaging and welcoming work environment.  Most things we do in this regard costs little money and investment.  If people are empowered to decide what they want to do, allowed to do it, and supported, the efforts pay off more than tenfold.  We have cross-functional committees that make most of the decisions regarding activities designed to further our culture and work environment.

We also have a chip recognition program that entails employees taking a poker chip and handing it to someone else as an affirmation of something good the person has done.  As an employee collects a number of these chips, they can be cashed in for various company swag or PTO hours.

We want to create an environment where people feel welcome, where they have fun, and where they feel like they belong.  One metric I have is laughter.  It is a wonderful thing to walk in one of our buildings and hear laughter. If people laugh together, they’re happy working together and are engaged and productive. 

While we strive for an informal and fun work environment, we of course still must hold people accountable for doing their job well and being productive. Leaders and employees must hold themselves and everybody else accountable.  Accountability comes from the top down, and leadership is absolutely critical.  Processes and metrics must be in place to measure performance.  We like to measure results rather than activities.   Again, if you put people first and they appreciate what you do for them, then they will be motivated to do the right thing for the company, including holding themselves and those around them accountable for achieving results.

Have you seen over the many years of practicing that kind of culture that some people might misuse or abuse the system and you have to take action?

Absolutely. The good thing is, if you have a highly performing, self-motivated team, they will not tolerate abuse of the positive culture.  Teams will make “slackers” feel uncomfortable, and these underperformers will either self-select our or be pushed out.  If the teams themselves do not take action and resolve performance problems, then of course senior leadership has to engage.  Poor performers and poor attitudes cannot be tolerated, as they can undermine your culture very quickly.

How do you motivate your team to also work on continuous improvement of the systems and of the processes?

In my mind, there are three levels of continuous improvement, and they are all important:

  • First, if current standard processes are either not followed 100 percent or are flawed, then the functional team is responsible for correcting those situations.  Making sure standard processes are documented and followed is critical to the smooth operation of a business. That is one level.
  • Next, higher-level continuous improvement involves developing new processes, or new systems to help, for example, automate non-value-added tasks. Every company needs to improve what they do and how they do it. If you have your functional teams running the daily business, then your managers and other key employees can be focused on making those high-level continuous improvements.  Not easy to achieve, but with leadership training, interpersonal skills training, hard skills and soft skills training, professional development, etc. you can achieve that balance between both reactive and proactive continuous improvement that every business needs.  
  • Finally, the highest level of continuous improvement involves major innovations, like putting in new systems and developing new products and services.  Capacity needs to be available for those “growth” activities, so that the business can continue to be relevant in the market.

All those types of innovation and continuous improvement need to take place at the right levels of an organization.  Therefore, continuous improvement needs to be solidly embedded in the culture of a business.

With the importance you give to HR and being a people first organization, please talk about your Human Resource department.    

Our HR leader resides at the most senior level of our organization, and reports directly to me.  We have a staff of four HR employees in a company of 170 people.  Only one person does the administrator portion of HR, the hiring and compliance portions.  The remaining three are focused 100% on the people development piece.  

Businesses are notoriously poor at training and educating their employees due to a lack of understanding how people learn.  We have one person with a background in education, who had no experience in the business realm, and has brought us the principles, philosophies, and practices of education.  She has taught us how people learn, and she has implemented practices that actually help people not only understand what we are trying to teach them, but also understand how to apply what they learn.  We have another person who exclusively manages our learning management system, automating most of our education and training modules.  Another person is our apprenticeship coordinator who is responsible for guiding apprentices though their entire learning journey.   

Another important aspect of our success as a people-first organization is that we have our marketing team very engaged in our HR initiatives.  We market to our employees as much as or more than we market to our customers.  We focus both on branding our company to our employees, and on branding our company to prospective employees. It took me a long time to convince our marketing team that it is part of their job to build our internal brand within our workforce, but once they accepted that responsibility, it was a game-changer.  Our HR and Marketing teams work closely together to attract and retain talent and create a positive work environment.

You spoke about lifelong learning and embarking your employees on that journey of lifelong learning, what do you do if someone does not bring that mindset in our company?

If you apply for a job at our company and you don’t have that lifelong learning mindset you will likely not fit in. I personally have a problem with people not wanting to learn and grow, but I can’t be absolutely stubborn about that.  Some people are going to be more curious than others, but you are probably not going to find 100% of your employees that are eager to continue learning, so I have to compromise a little. 

At STOBER, employees are encouraged to learn in many different ways.  Some of the learning is mandatory, and you have to engage.  We will encourage employees to do more. If they refuse, they’ll feel uncomfortable and exposed, and will have to engage in some of it. When people interview with our company, it is made very clear that this is an expectation.  We also have a social covenant employees sign, explaining how we treat each other at our company.  When they join our company, they understand the expectations.  

When you look at your KPIs and your results or you look at your financials, or you look at your attrition, do you have better KPIs with your people centric strategy?

Cause and effect are very difficult to measure.  Our top and bottom-line financials are generally very good.  Is it because of our culture and people development efforts?  I believe so, but it is hard to prove an exact correlation. That is what makes encouraging other businesses to engage in culture and people development to the degree that we do so difficult.  You almost have to make that commitment based somewhat on faith.  It is very hard to measure.  Similarly, how do I measure how Marketing is contributing to my bottom line?  Neither is an exact science.  

But the results are good in our company, we are following our path, we are on a journey we are not going to abandon. You have asked THE perfect question and that is the sticking point with many business leaders.   They are not willing to make the commitment to put people first to the extent we are, to create that healthy environment, with the understanding or hope that the results will follow.  Again, it is not an exact science. 

Community Engagement:

What role does community engagement play in STOBER’s overall strategy, and how does the company actively participate in the communities it serves?

I’ll be very honest, many companies have a big budget for charitable contributions, or they will do a lot of community outreach.  Because we are spending so much effort, money, and  time internally on our culture we don’t do as much as other companies do in terms of financial contributions.  However, my belief is that by creating that positive culture in our company, which rubs off on the employees‘families, their children, their friends, their churches; by setting a good example of what a family should look like, we are doing more for our community than we would by  spending that money on charitable contributions.  We’d love to do both, and we do some charitable contribution, but our focus is on having a positive effect on the community through leading by examples, encouraging positive life skills and positive behaviors, and that rubs off on the rest of the community. We are very fortunate to be in a captive labor market.  We are in a rural Kentucky community, one hour from major markets, so our brand is very well established and our effect on the community I believe is very good.  

Our philosophy is giving people a “hand up” rather than a “hand out.”  We want to help people get ahead in life through their personal achievements, and we go to great lengths to help them accomplish that.

We have great relationships with professors at local universities and community colleges, and high schools.  We offer teacher externships, where teachers come to our company to get a better idea of our business.  Education is so far removed from business in general that they have no idea what is going on in business and unless they come in and experience it, they can’t promote a business to their students.  Education is so detached from business, it’s frightening, so we foster those relationships with the various schools.  We are on boards, advisory committees, etc. and do what we can to change that disconnect between education and business.  We benefit from it by getting exposure to the most talented and qualified students.  

You are an international company; how do you work in the same spirit of employee’s first also on that intercultural dimension? How do you bridge those cultures, German and American in both directions.

STOBER was founded in 1934 in Germany, a small family business, that grew to be a “Mittelstand” company.  There was a family mindset from the beginning—they hired friends and family in the community and created a culture where people are very important.  However, the bigger you get, the more difficult it is to hang on to that family culture. At STOBER, the family business DNA has carried the company through 90 years of history, and the family culture has been carried across the ocean to the U.S. Here in Maysville, we have carried leadership development, culture development, and people development to an even higher level than at our HQ in Germany.  In the U.S., we have been much more intentional and strategic about developing our culture, and we’ve spent much more time and effort on our HR and Marketing departments.  So, when our German colleagues visit us in Maysville, they are impressed with what we have accomplished culturally.

I think we are a bit unique in how we approach people development for a company our size.  We are certainly not the only ones doing what we are doing, but I believe a very small percentage of companies our size is investing as much as we are in the development of employees.  When we discuss this topic with other companies, trying to encourage them to do the same, they are very interested, but the rub is that although business leaders see the effect of what we are doing, and they want that effect, they may not willingly make the connection between the “why” and the “how” and then make the strategic commitment to be intentional about it. Unless somebody has that DNA and has the vision that this is the way a culture can be, to convince somebody to make that paradigm leap is very difficult.   

A more personal question as we wrap up, as a leader, you are challenged in many ways – how do you personally find your balance and keep your energy level high and a positive/forward-thinking mindset even in the most difficult times?

Two things:  One, my job is to make the business successful.  My job is also to grow people.  And as long as I am able to do both of those things, I am very happy and motived.  

I worked hard throughout my career to work myself out of a job, and to be the leader of people in my company, not the manager of my company.  I surrounded myself with people that take responsibility and accept accountability for their part in running our company, so that I don’t have to.  Quite frankly, I am not competent in most areas of the company anymore to make detailed decisions or to manage the individual departments.  Understanding that, and empowering my leadership team to take responsibility, and in turn empower their teams to run their departmental functions on their own, is vital.  I focus today on how to make changes to the company, how to evolve the company, developing strategy, and getting out of the way of cultural development.  It is a pleasure for me to focus more on the people side of business rather than on the financial, technical, and sales sides.  We have good people doing all the things that need to get done in our company and it is not me doing all those things.

I spend a lot of time with my grandchildren and my family. I feel I have a very good work life balance and it is because I let others “do.”  Certainly, the buck still stops with me, but I understand that others are much more capable of running the specifics of the company than I am. 

Thank you again, Peter, for being with us today and allowing for this Champions Interview! We are excited and honored to feature you and Stober Drives in the Altix Access Newsletter and Industry Champion Interview!