January 9, 2003
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Malte vonMatthiessen

Malte vonMatthiessen moves on—
Doing business differently at YSI

When he took over as CEO of YSI Incorporated in 1985, Malte vonMatthiessen promised to company co-founder Hardy Trolander that he would make sure the company survived, that he would ensure its prosperity and that he would keep YSI independent.

Now, a few weeks after he retired and handed over the company’s leadership to Richard Omlor, vonMatthiessen feels satisfied that he delivered on his promises.

“I’d like to be remembered as someone who had a vision for YSI and who was able to bring into the company a group of folks who were able to make it happen,” vonMatthiessen said an interview last month. “I’d like to think YSI is making a difference in the lives of its workers, its customers and in the community. It’s always been about people.”

VonMatthiessen’s vision included an expansion of YSI’s unique structure of employee ownership and an emphasis on identifying YSI with the value of environmental sustainability. YSI’s environmental commitment has been challenged during the company’s ongoing investigation of groundwater contamination, which has been found on YSI’s property and on the properties of several of its neighbors.

The combination of employee-ownership and a focus on environmental sustainability has contributed to the company’s prosperity, vonMatthiessen believes.

“It’s all about making work meaningful so that people who work here feel good about what they’re doing,” he said. “At the end of the day, the companies with strong values are the survivors.”

When he took over in 1985, YSI Incorporated — then Yellow Springs Instruments — had 350 employees and sales of $15 million. Seventeen years later, YSI still has 350 employees but sales have quadrupled, topping $60 million and, in the last 12 years, its stock value has risen 500 percent.

“There’s been an incredible appreciation in the value of the business,” said vonMatthiessen. “We’re one of the few companies left in our industry that are still independent. We get lots of inquiries” from prospective buyers.

But YSI has no intention of selling out.

“Our objective has been to create a sustainable enterprise in order to ensure our independence,” he said. “The idea of independence has appeal to many who work here.”

It matters what appeals to YSI workers, since 55 percent of the company is employee-owned. All of the company’s current employees participate in the employee-ownership program, he said. The rest of the company’s stock is owned by Antioch University, former employees, retired executives and community members.

Shortly after he became CEO in 1985, vonMatthiessen expanded the company’s practice of employee-ownership, which previous management had begun. With the board’s approval, vonMatthiessen instituted new policies that resulted in extending voting privileges to all employees and providing workers with stock dividends.

“It was a lot of risk,” he said. “I knew coming in that we would have to make fundamental changes. But I never doubted that we could reinvent ourselves, and that’s what we did.”

Employee-ownership contributed to employee empowerment, said vonMatthiessen. Employees became even more self-directive when the company went through further restructuring in the early 1990s, he said. At that time, a national recession contributed to a downturn in business, and a recognition that company costs were too high. While many companies chose to cut costs by relocating in areas that offered cheaper labor, YSI management took a different road.

“Lots of companies were doing things like moving to China,” he said. “I think that’s crap. You have to look at how to reorganize yourself, how to make the work force more productive.”

Contributing to excess costs were excess layers of management, company leaders decided. Consequently, two layers of managers were gradually eliminated, said vonMatthiessen.

“We flattened the organization structure so that workers managed themselves,” he said. YSI workers formed teams which performed tasks previously done by management, such as monitoring themselves, making work assignments and evaluating their own performance.

Overall, the changes worked, vonMatthiessen said.

“People became more productive, more valuable to the business,” he said.

Also contributing to the company’s success has been a shift in its focus, said vonMatthiessen, from an emphasis on products — a variety of temperature monitors that produce highly accurate data — to an emphasis on markets.

Along with an emphasis on the markets came an emphasis on identifiable values, he said. Around 1995, company executives asked others in the field to identify YSI in terms of its values, and found that those values were not clear to the outside world.

“Everyone said, ‘great company, great products’ ” said vonMatthiessen, but people couldn’t pinpoint what, exactly, the company stood for.

YSI leaders chose to emphasize the company’s value of working to enhance environmental sustainability, said vonMatthiessen. The effort led the company to adopt the slogan “Who’s minding the planet?” YSI also chose to adjust work practices to lighten the company’s own environmental “footprint,” an effort that led to YSI’s being selected by the U.S. EPA as an environmentally conscious company.

VonMatthiessen’s desire to live his life according to his values has been growing since he came from New York City in 1961 to study at Antioch College. It was a heady, thrilling time to be a college student, he said, and especially to be a student at Antioch.

“The campus was alive,” he said, especially with civil rights activism. “There was a tremendous amount of energy. I had never been an activist but Antioch helped me refocus, become more involved.”

Following college, vonMatthiessen spent three years in Tanzania in the Peace Corps.

“That experience changed me fundamentally,” he said. “I developed a passion for the environment and the beauty of the natural world, and a belief in the importance of preservation.”

After returning to the U.S., vonMatthiessen worked for 17 years in human resources at NCR in Dayton, in what he calls a “diamonds and dirt experience.”

As an opportunity to learn about the business world, his time at NCR was “an incredible apprenticeship,” he said, and nothing could have better prepared him to run a business.

However, vonMatthiessen said, at NCR he became increasingly aware that his values were not the values shared by most people in the corporate world. So when he was approached by Trolander in 1985 about taking over YSI, vonMatthiessen was ready for change.

Adding to the appeal of YSI, he said, was its location in Yellow Springs, a community that influenced the shaping of vonMatthiessen’s own values as well as those of the company.

“We need to be a part of the community,” said vonMatthiessen. “The company’s history is here. The community has been helpful to us.”

However, YSI’s relationship to the Yellow Springs community was challenged nearly two years ago, when the company became aware of groundwater contamination on and around its Brannum Lane property. Initially, said vonMatthiessen, company leaders never considered the possibility that YSI caused the contamination.

“We absolutely believed it couldn’t be us,” he said, due to the company’s longtime emphasis on environmentally sustainable practices.

However, said vonMatthiessen, a few employees admitted last spring that they had improperly disposed of waste products.

“It was very hard emotionally for me and for a lot of folks,” he said of that discovery. “I felt ashamed. The problem affected people in Yellow Springs. We found out we were like other folks” who had contaminated the environment.

The company has tried not to be like other companies, however, in how it handled the discovery of its culpability, vonMatthiessen said.

“Most companies circle the wagons but we’ve done the reverse,” he said. “We’ve said, ‘Here are the facts, let’s be open and not try to cover it up.’ We’ve tried to be as visible as possible.”

As part of their process, YSI has sponsored meetings of the community Source Water Protection Committee, in an attempt to devise a community-based solution to the contamination. The company also paid $250,000 to extend Village water service to affected neighbors and, when a neighbor wanted to leave the area, bought the neighbor’s house.

Currently, YSI is under an administrative order from the Ohio Environmental Protection Agency, which was filed when the company claimed responsibility for the contamination. In the next few weeks, said vonMatthiessen, the company will finalize details of the agreement with the Ohio EPA and proceed with the remediation.

The company’s environmental situation has led to a federal lawsuit, which three neighbors have filed against YSI, alleging that hazardous wastes and chemicals from YSI contaminated the neighbors’ properties.

VonMatthiessen remains optimistic that the lawsuit will end positively.

“We will eventually have resolution with all of the neighbors,” he said. “It’s a matter of time.”

Coming to resolution with its neighbors over the contamination is one of the challenges facing YSI Incorporated, according to vonMatthiessen.

Other challenges include stepping up to the demands of an increasingly global market, which includes “learning to operate in different cultures, respond to different needs,” he said. Currently, YSI is a global company, with affiliates in California, New Jersey, England, China and Japan, and it will increasingly operate in a global market, said vonMatthiessen.

YSI is also poised to shift its focus from a “company that manufactures products into a company that provides data solutions,” said vonMatthiessen. While it will continue manufacturing, YSI will enhance its capacities to provide customers “an integrated suite of products” that relate to temperature monitoring, including expertise with data collection, he said. That shift corresponds to the increasing need of municipalities to monitor water and natural resources at a time when governments are cutting funding from agencies that traditionally have helped in doing so.

“We’re reinventing ourselves once again,” said vonMatthiessen.

VonMatthiessen will continue to address these challenges in his new position as consultant and his continued position as chairman of the YSI board. However, at 61, he wants to spend more time at his second home in Crested Butte, Colo., with his wife, Pam.

Their home sits within 3,500 acres of national forest, which provides a habitat to some 5,000 elk, said vonMatthiessen, who gets excited talking about the open spaces and beauty of Colorado.

All in all, vonMatthiessen seems like a satisfied man, having spent much of his working life leading a company he loves and now giving himself time to work a bit less and enjoy life a bit more.

“I have the best deal of all,” he said. “I live in a wonderful community and have a great companion and friend. What else could I ask for?”

—Diane Chiddister