ITW brings social impact to education
In today's episode, we explore another inspiring Corporate Social Responsibility (CSR) case study with ITW (Illinois Tool Works). We discuss how they built a high school, the David Speer Academy, and the impacts to the students who attend and graduate.
Furthermore, we explore how the school addresses ongoing labour shortage issues while creating a diverse workforce pipeline. We also provide advice to CSR pros just starting a new program and how to plan a major CSR initiative from the lessons learned from ITW.
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So today I have two special guests. One is a guest co-host Kathryn Pisco with Benevity and the second is Rosemary Matzl, who is the Vice President of Community Affairs with Illinois Tool Works. So I guess let's get right into it.
So, Rosemary, can you tell me a little bit more about Illinois Tool Works and we'd also love to learn [00:01:00] about your decentralized and entrepreneurial culture that we've been hearing about and why it makes for a unique business model.
Introduction to ITW
So, first of all, thanks for having me.
I'm honored to participate. So Illinois Tool Works was founded. Gosh, I think probably now about 107 to 108 years ago, by the Smith family. Who also founded Northern Trust.
It's [00:01:30] a company that's been around a long time. We go more by ITW today versus Illinois Tool Works because it sounds like a small Illinois based company with that name, but we are Illinois Tool Works.
And today we are a global organization, a fortune 200 a diversified manufacturer with several lines of business and, yeah, so that's kind of ITW's [00:02:00] history. ITW was founded with very strong values and a very strong culture.
And in that, and given our diversified business the Smith family was always one of those families and they still are today where they believe very strongly about giving back to the community.
Probably long before we ever heard the terms corporate social responsibility, community affairs, community [00:02:30] relations.
This is what they've been doing for many, many, many years.
And it's a tradition. ITW feels very strongly about, stays committed to, and it really...
Not only is it engaging for our employees and the families of our employees, but it also we choose partners with them strategic impact within the communities where our employees work and live.
So, yeah, so decentralization [00:03:00] is key to ITW given the various segments of business that we have, where each of our lines of businesses and our divisions need to do what's right for them and right for that line of business, without getting caught up into a centralized strategy that might not work for everybody.
Which is also how we do our community affairs program.
You know, some of it is centralized like our matching gift program or scholarship programs, our volunteer program United Way.[00:03:30]
But we, we really make decisions as a board with a budget that primarily supports Chicago, unless there's something that has scale across all of our segments.
Other than that, we really rely on our segments to make their own decisions. And what's important for their line of business and the product that they produce as well as the communities where employees work and live.
I think you already answered the question I was about to ask, but maybe you can even go a little bit deeper. I'm so impressed.
I've always been so impressed working with you or crossing paths with you in the Chicago CSR space.
And I know that you've been VP of community affairs for 12 years, which is so impressive.
So I'm curious if you could tell us a little bit, even more about the CSR program, but really about kind of its evolution over these 12 years, or even beyond that, given the fact that [00:04:30] ITW has been around for over a 100 years.
Evolution of ITW's Corporate Social Responsibility Program
So our funding is managed by a board of directors, our ITW foundation board, which is basically five of our suite suite executives, including our chairman and CEO, Vice Chairman, CFO, General Counsel, Senior VP of HR, and then myself as part of that group.
And essentially for what we do here in Chicago, [00:05:00] we really divide our funding very strategically and probably made that pivot seven years ago is when we made the pivot under what was considered our enterprise strategy at that time, which it was actually at ITWs 100 year anniversary that they put out a business strategy for the first time and it was called the enterprise strategies.
So we really took all of our programs to align to it.
So essentially our commitment here is 60% towards [00:05:30] education and 40% towards arts and culture.
And then the funding decisions that our segments make they do that independent of that.
And not to say that those things aren't important or things that they don't fund within their respective markets, but like our food equipment group, for example, it's a commercial food equipment group.
They have a strong presence in Trail Ohio, and they ended up building a signature program there called the Hobart Kitchen, [00:06:00] which serves the hungry.
And when you think about the line of business and their core competency, choosing something like that, choosing the social issue of hunger ties to their core competency, nicely.
In our construction business, they might do the same with organizations like habitat for humanity and so forth.
Again, because it aligns to their core competency as a business.
So it's not only about the funding that they might do or the product that they might donate, [00:06:30] but it's also mobilizing volunteers with all of the programs that they underwrite, which again, gives them a line of sight to a social issue that aligns to their core competency, which feels really good.
So from a funding perspective and the budgets that I manage we pull those numbers together at the end of the year and all of our various locations, will also [00:07:00] input their product donation value as well as in country currency into a separate system, which we then roll up and bubble into an entire ITW giving story.
Awesome. I love how you talk about the ability to have really a unified strategy, but also allowing those business units to really invest and donate and give in something that also aligns with our core competency.
It makes so much sense. We're seeing that, I think as a trend [00:07:30] across the board, but it's easier said than done so great work on that.
And we're also seeing more companies really shifting their funding strategy for greater impact while also seeking out ways to really empower their employees.
In a previous conversation, you and I, you told me a little bit about your flagship program, the David Speer Academy, and I was just blown away.
And so I was wondering if you could talk a little bit about this and [00:08:00] how you're kind of making and measuring impact for both the community and ITW. Excuse me, employees.
CSR Example: David Speer Academy
So for us the Genesis of the idea really came from a beloved chairman and CEO, David Speer, who passed away eight years ago.
And we really wanted to do something in honor of his memory. And I think we could have looked at any museum and put his name on a wing or on an exhibit, [00:08:30] and believe me, we looked at a lot of things.
But we really felt like what would really be true to David and true to ITW.
So we chose to build a high school on the west side of Chicago in a very under-served, high-risk, low income area that was considered an academic desert until we moved in.
It's a STEM high school.
So it ties to ITWs core competency [00:09:00] as a business.
And we chose a partner called Noble who really has a model of just excellence in terms of academic achievement in an open enrollment environment.
So if you go to a noble high school like ITW David Speer academy, these kids don't have to test that.
It's open enrollment.
And so they not only have academic excellence and a track record [00:09:30] to really support that.
But they also do a lot with the students to really build their character during the four years that they have them.
And we really felt that so our high school is a thousand kids fully loaded, which it has been since we were considered all four years, it's always been completely enrolled with a waiting list.
But we really felt like what an amazing gift to give [00:10:00] back to be for every class that graduates, we really looked at it like we're putting 250 more David Speers into the world people with a solid character, a good STEM base and so forth [00:10:30].
And we really felt for ITW, we were also addressing a workforce issue with STEM careers, being high in demand and a pipeline that continues to shrink as my generation is exiting the workforce and so forth.
And a lot of STEM-related jobs be it welders or plumbers, or you name it.
We really felt like we're, we're also addressing a workforce issue for the industry overall, as well as given the demographic, the diversity demographics of the school, we're also producing a future diverse pipeline of candidates into engineering, health and science and then again, a lot of the trade roles as well.
[00:11:00] So it really felt like a hand to glove fit.
It was a difficult time actually deciding on the school because you know, here in Chicago, when we approached the mayor about it, it was right as he had just closed down 52 Chicago public schools that were considered failing or [00:11:30] low enrollment, whatever it might be.
And the premise was, if we were to do this, A, we couldn't do it in an existing vacant building.
And B we had to find an academic desert.
And we found the academic desert in Belmont Craigen Austin.
And then the next miracle happened is were there looking at a piece of real estate that was available and it was a tortilla factory that would have been very difficult quite honestly, [00:12:00] to convert into a school.
And as we left the tortilla factory, we kind of got a little turned around and found a lumber yard on five acres for sale by owner.
So that is what we purchased. And we kept one structure of it in place, which is the roof of our gymnasium.
But essentially we just built a brand new high school altogether with the gymnasium, [00:12:30] the football field.
Because to find five acres in Chicago anywhere is pretty close to impossible.
So it was like really kind of fell in our lap in such a meaningful way. You can't even make this stuff up.
And just as you talk about it, I can just feel the passion. And I know that you've had some tremendous outcomes and results.
And that really struck me as you talked about workforce development too, I wouldn't be surprised, may have already happened [00:13:00] if you have some David Speer Academy graduates that are working at ITW one day and also just how well, it also aligns not only to really honor a significant leader from ITW, but also really aligned with the 60% focused on education.
So it seems like it just really checks all those boxes and at the same time as has been really successful and also pretty inspiring.
How the David Speer Academy impacts the students
It really has been, and today we are a thousand kids, fully enrolled have been for the last, [00:13:30] I guess... Boy, I guess the last four years, because we only took in a freshmen class at a time.
And the other key component that I can't go without mentioning is the leadership team of this school.
They operate decentralized as well so they really fit the ITW model, even though they're all part of the noble network.
And I believe there's 17 high schools that are a part of the Noble network.
Each principle operates as their [00:14:00] own chairman and CEO to do what's right for the community that they're based in.
So that is what allowed us to choose STEM specifically, which this is the only STEM school as part of that network.
And we also put in some unique programs where as our students... So next year, June of 2022 is when we'll be graduating our first set of college graduates.
And [00:14:30] so some of the unique things that we built into the school that ITW helps underwrite, but again, under the great leadership of the school and all the resources that they have is that when the kids are rising juniors in high school, that summer, all of them go live on a university campus and they go all over.
I mean, we have had kids go outside of the United States to university where they live on campus. They live [00:15:00] in the dorms and they take STEM-related classes.
So that the back half of their education, junior and senior year, they could probably focus on more of an elective.
Do they want to get into engineering? If so, do they want to get into civil engineering, welding engineering?
Do they want to get in health and sciences so that the back half of their education is more tailored to their area of interest.
And then in their senior year, instead of going to school [00:15:30] on a Friday, all the children in their senior year work an accredited internship.
And probably 57% of the employers and who take the children in these internships 57% of them are ITW partnerships that we've had that we hosted at the school and made the introductions and so forth.
So basically graduating high school, they now [00:16:00] have an accredited internship where they went to an employer and they come to ITW as well, where they spent October through April doing meaningful work in the field that they've chosen.
And last year, our graduation rate was 100%. 97% of the kids went on to college onto university. They received $37 million in scholarships.
So the bottom [00:16:30] line out of pocket expense is very low for these families because of the scholarships they are able to receive and have earned.
97% of them are also the first in their family to go on to college. And the average family income is anywhere from like 25 to $35,000 a year.
So we also outside of developing tomorrows future diverse workforce we really feel that this will have [00:17:00] economic impact.
You know, I mean, even if, even if a student should choose to go into a two year welding program to come out and be a welder given the amount of open needs there are in that area today people will say there's somewhere...
Or the schools will share that there's somewhere for every student coming out with a two year welding certification, they get anywhere from three to five offers, $50,000 [00:17:30] and above. So right there, they're already almost doubling down the family income.
That's an amazing and very inspiring story, especially like the work that you've done with all these kids and being able to build a school, that's great.
That's I don't know, that's just tremendous from my point of view.
And I think though we do have a lot of CSR professionals listening and they're [00:18:00] definitely going to find your story very inspiring, but at the same time too, what kind of advice would you give to them?
Because I know this could feel a little daunting for them to plan, to get the internal buy-in, to fund, to execute a program of this magnitude.
How would they go about starting?
And I'm sure this didn't and like start at the with all these grand plans, it must've started somewhere and then you just kind of grew into it, right?
How CSR's can start and implement a major program
[00:18:30] Yeah. I mean, for us, it was... It's hard to go out there and just say, "Hey, we're going to build a school."
You know, let's be honest the, the city has to support it.
They have to have a need for it.
It can't be a school just because a company wants to come into the community and put their name on it, because you don't want to cannibalize the schools that belong to the city and to the states that are funded in that way.
You know? So it takes a lot [00:19:00] of research and it takes a lot of connections within the city to see if there is an appetite.
And in our case, there was because of the academic desert that we identified.
There is another school in that area, but it's selective enrollment. So the kids do have to test it.
And there are a lot of kids that I don't know how many they take, it could be 30% of their total population who applies, but then it kind of leaves other kids [00:19:30] kind of going into neighborhoods, schools that could be underperforming or low enrolled or, and, and perhaps doesn't have a lot of the special services.
You know, I think the other thing for ITW, we were really poised to do this because of our employee facing benefits for us when our... Like our first year, it was our engineers who said, "Wow, we want to work with this freshmen class."
Because again, we only took in one class at a time till we got fully loaded. And [00:20:00] they were the ones who developed the robotics program.
They were the ones that went there every week and taught robotics and did robotics with them and traveled with them.
And it was our women's group that did the same with the girls group.
You know, so far our employees for them, it's a line of sight and I think that's the most compelling thing you could say because they meet the kids.
If they have a child who's there as an intern with them, they get to know that student for the eight months [00:20:30] that they're there.
So they really have a line of sight to impact.
And I can tell you, when you go to one of our graduations, there's not a dry eye in the house because we all feel like, well we lost David and it was such a loss, but we gained a thousand children in our life.
That has a very close... They feel like they're a part of the ITW family, as much as we feel like we're part of the ITW [00:21:00] David Speer Academy family.
So really makes a difference because people really do want to get engaged.
And we have folks who are candidates looking to add an opportunity at ITW and they go on our website and they're so impressed with the ITW David Speer Academy and the fact that, wow, I've got something like this that I could get involved in.
So it's kind of to... For a company just to say, "Yeah, we want to go out and build [00:21:30] a school." I think there's a lot of homework that has to go behind it.
And just a lot of due diligence in terms of what is that footprint currently who are the leaders in academic success?
You know, where are the academic deserts, where there could be an opportunity and then the whole real estate piece and everything else that goes with it.
For us things fell together very nicely, but I'm not sure [00:22:00] that's the case in all cities and, and even right now in Chicago building more schools, we'd have to start all over again.
So interesting to hear you talk about that too, because as you were talking through it just continue to be impressed.
But also I was thinking, okay, maybe there is a flagship program that maybe it isn't building a school, but as I was thinking about the themes you talked about, is it something that makes social impact?
Does it [00:22:30] ally with align with some of the core pillars of social impact that the company wants to make?
Does it also align with the business and make sense?
And then at this time, is there also an employee engagement component, which you spoke very nicely to as well.
And for ITW, the David Speer Academy seems to hit all of those questions in buckets, and then some, but those could be maybe some of the questions that someone that's, that's trying to brainstorm [00:23:00] in their own company thinks of those things.
Whether or not it's a school or something else that, that kind of hits all those notches.
And when you really think about it, you don't have to build a school and put your name on it, to own a school.
You know, I mean, what if as a company, you decide to adopt a school and then you're 100% all in you don't have to build the school, but you can adopt a school and be completely all in the same way ITW is [00:23:30] with the ITW David Speer Academy.
You know, we could do this with other schools without building them and putting our name on it. It's just a matter of...
And could you imagine the world at where it would be if every major company just adopted one school? I mean, it just, the kids love... I mean, the relationships develop over the four years, they're there.
And I could tell you like our students, even in their freshman year [00:24:00] in introduction to ITW when they join is they go to ITW businesses for the day and they learn about welding.
They learn about food equipment, they learn about construction. They learn about all our different segments and get some hands-on experiences.
And then they come back to corporate and they have lunch with our chairman and CEO, Scott, and they get an hour of his time open mic.
And Scott is at the school, his wife Nancy is at the school, [00:24:30] our executives are at the school, so they really have access.
And I think that's just it as for all the schools, particularly in high-risk and low-income areas, it's how do they get access to companies and to careers and really feel like there's an organization out there that really cares about them and wants to invest.
Yeah, and quite honestly, I grew up an immigrant kid [00:25:00] and I was the first in my family to graduate high school.
My dad was a Glazer, my mom cleaned houses.
And when you grow up in that kind of environment graduating high school is considered advanced education.
And back in the seventies, when I went to a Chicago public high school, they really just put you in a work study program so that you would come out of high school with a trade and go right into a career, which is what I did. [00:25:30] And what a lot of kids did back then.
Or some went to college, but when you're in an immigrant high school, like I wasn't in, which actually was in the Guinness Book of World Records for having the most languages spoken under one roof in the 70s.
That was just kind of your outcome.
And when you look at these kids.
Again, 97% of them, the first in their family to go beyond high school, it's because they've had an introduction to [00:26:00] what that looks like.
They've spent time on a campus. They spent time in a corporate office. They spent time doing what they're interested in, in an internship. So it all just kind of... It just really comes full circle.
If you don't mind, I'd like to not so much switch gears, but just go a little deeper on the employee engagement piece that you, that you referenced.
You know, obviously not necessarily the beginning of why the David Speer Academy, or maybe some of your other programs were [00:26:30] created, but it seems like something that the team keeps in mind, we've talked on previous social impact show episodes about the big challenge that companies face with their employees, not being engaged only about a third of according to Gallup, say that they're actually engaged 51% say they're disengaged and 16% say they're actively disengaged.
And it's estimated this costs hundreds of billions of dollars a year in lost productivity.
On the flip side, [00:27:00] when employees are engaged and this isn't anything new to you, but productivity increases absenteeism decreases.
There are 59% less likely to turn over.
And so anyway, long way of saying, I read an ITW CSR report that you regularly survey your employees and that 82% of your employees recommend ITW as a place to great place to work.
And 78% of ITWs are really happy in their jobs.
And [00:27:30] that's a staggering number, especially given the fact that the culture is not centralized. It's not like everyone has that same experience cause they're all at the headquarters?
So I'm hoping you can talk a little bit about how ITW does such a fantastic job at engaging employees.
And then maybe if there are any mention any challenges that you run into in engaging employees around impact.
How ITW engages employee and challenges faced?
Yeah, well, it's definitely human resources topic that has been studied.
And I think you could also layer on [00:28:00] generational studies.
Cause when you look at this workforce entering the workforce today, like for like offers, they're always going to choose the more socially responsible organization.
Because that's what they look for in their employer outside of a meaningful career, feeling valued development and all those other aspects.
So again, I think given the size of our organization and given like... I don't work in the business, [00:28:30] so I'm sure one of our executives who's hands-on in the business might be able to explain this better than me.
But when you look at core tools that tool kits that we use, like our 80 20 principle, which I'm sure anybody who's heard about ITW knows that 80, 20 and so forth,.
Those are things that, regardless of where you're working in the organization, you apply them equitably into [00:29:00] the role that you're in.
I think for ITW employees, they're equipped.
They're equipped with the right tools. I think our values really layer on again.
Regardless of where you're working there's still a core set of values. It doesn't matter where you work in this world.
There are certain things that we believe in terms of respect, trust, shared risk and other things. [00:29:30]
And then I think because of the diversified aspect of our business and these unique tools that we have, that you don't actually get pigeonholed or fall into a category where you're considered specialized.
So there's movement within the organization that if you're a strong engineer working in say the medical device area and an opportunity opens up somewhere else within the organization, [00:30:00] maybe another state, another line of business you're considered for that opportunity.
You know, because again, it's those core skills that really lend themselves to the success regardless of where you work within ITW.
And then you look at other programs that we have like from a philanthropy perspective, we really believe strongly in supporting our employees [00:30:30] and their philanthropic passions and so forth.
So North America, for example, has a matching gift program where employees can give up to 5,000 to charities of their choices and we match it by three.
We also give employees a hundred hours to volunteer and we will compensate that not for profit at $10 an hour for every hour, they validate.
We also have two scholarship programs, one that's administered by [00:31:00] scholarship America and the other one national merit that awards scholarships to the children and dependents of our employees at $3,500 a year.
And then lastly, United Way is like the partner of choice for us when it comes to running a campaign. And it's because they are structured structure just like ITW. They are highly decentralized.
So Rosemary, I guess what is next for Illinois Tool Works in terms of your CSR program or [00:32:00] what's what's the next step and what's the next level of progression?
What's next for ITW's CSR programs?
Well some of it is unexpected. So like this past year with the pandemic, a lot of the, what next was, are responding to the needs of the community, whether it was state or city level here in Chicago, when all the students had to go remote.
We contributed $2 million to what was called Chicago connect, which gave everybody access to [00:32:30] internet because there were so many students, particularly in black and brown neighborhoods who did not have internet access.
So that was kind of the, you there's always these unexpected what's next, but I think for us, the what's next is to continue to look at the strengths of our program, continue to measure the outcomes of the impact, and then continue to layer on [00:33:00] more work or more maybe enhanced strategy to where market conditions take you, to where business needs take you and so forth.
But I think the one thing that will probably not change is the decentralized way that we do this. So the what's next, there's probably 72 versions of what's next around the world for ITW in their respective markets. [00:33:30] But yeah, I think for us, it's...
For us right now with the David Speer Academy is taking it to full potential.
And that's another term we use at ITW. You know, we've done great work, they're hitting the numbers out of the park. And I shouldn't say we've done great work.
That leadership team has done amazing work with those students.
ITW feels so proud to be along the journey and be a resource and roll up our sleeves and be willing to come in there and help.
But the full [00:34:00] potential will start next year as kids seek out employment. So I think the biggest what's next for us will be the next four years of looking particularly at that project.
And are the jobs available for these students? Do they have what it takes and seeing it get to full potential.
Awesome. And if any of our viewers or listeners want to know more about yourself [00:34:30] or the Illinois Tool Works, I guess, programs, or even the David Spear program where would they be able to find you?
Sure. Well, first of all, they could go to ITW.com and under corporate social responsibility, you'll see a corporate social responsibility report that does have a section and just what we do in the community, but for all the folks that are out there, the one thing I can say has helped me most in my career.
And I spent 22 years in [00:35:00] HR before I moved over to corporate social responsibility.
So I have spent probably the last, maybe 18, 19 years in corporate social responsibility. 12 with ITW and previous to that, transitioning from HR to develop corporate social responsibility for a professional services organization called Hewitt at that time, which was also global.
And one of the things I learned as I transitioned with experience, [00:35:30] but really not experience in this place is that there is no competitive intelligence in the kind of work that we do.
And people are willing to share information, share their learnings.
It's just, I would just highly recommend... You could absolutely feel free to reach out to me. I'd be more than happy to share anything I can that would help benefit you and your business.
Because again, the more we [00:36:00] all do the better the world really has the possibility to be, which is why there is no competitive intelligence.
But I would also encourage you. I know here in Chicago, we have a group with all of my counterparts and we're all together on the same email.
So if anybody has a question like, "Hey, I'm thinking about developing a matching gift program.
Can you share your information?" They'll probably get about 150 replies from myself and my counterparts giving them the information. [00:36:30]
So I would highly encourage you that if you don't have that kind of group in the area that you're at, get to know your counterparts and start it, I would also encourage you to join any of the associations.
I know Boston College conference board, what Benevity is doing here, what a great way of bringing it together.
A peer group like this for shared learnings.
I would just highly suggest that you think where can you gain access to [00:37:00] people who are part of this audience?
Because that to me is the greatest learning I had in my career was just talking to my counterparts and learning what others are doing.
Question of the day
how have you been able to unite your business? Especially one, if you're a similar to Illinois Tool Works, which has a decentralized and entrepreneurial more culture, how would you have been able to unite that under one CSR vision or program.