Toro Co. CEO Mike Hoffman has proved a shareholder’s delight.
The company’s stock price has tripled since he took the helm of the Bloomington-based maker of products that dig, install, mow, blow and irrigate. And the company is headed for profit and sales records this year.
Yet Hoffman believes Toro’s foremost “stakeholders” are employees.
“It starts with an engaged workforce,” he said in an interview last week as the firm celebrated its 100th anniversary. “That drives [good products and service] and customer satisfaction and, ultimately, shareholder success.”
“That’s always been true here,” Hoffman added. More so than ever as Toro’s employment has hit a record 5,050 around the globe. Along with last week’s celebration, Toro also opened a $25 million addition to its headquarters.
Hoffman, 59, is the rare CEO who started in the business with a blue collar. Toro hired him in 1977 to repair lawn and snow equipment.
“I was a ‘mobile service representative,’ ” Hoffman recalled. “I wore a tie and coat, which would come off and I would roll my sleeves up and get my hands dirty. My nature is still to ‘fix things.’ That can get me in trouble. But I’m more of a product guy than a sophisticated marketer.”
A graduate of what is now the South Central Community College and technical school in Mankato, Hoffman and his younger brother used to joke that they graduated from “MIT,” meaning “Mankato Institute of Technology.”
But Hoffman’s folksy style belies a precise mind, seeded by his mentor and predecessor, retired Toro CEO Ken Melrose, a graduate of the real Massachusetts Institute of Technology.
Melrose, a crack strategist and marketer, took over the company at its lowest point, during a near-brush with bankruptcy in 1981-82, and drove it to success for 24 years.
Hoffman earned undergraduate and graduate degrees in business in night school after joining Toro. He rose through sales, marketing and operating jobs over nearly 30 years.
He faced his own moment of trial during the Great Recession of 2008-09, when Toro was forced to temporarily lay off and seek early retirements from workers.
“Mike Hoffman has always been a straight shooter,” said Bill Frels, a veteran portfolio manager at Mairs and Power funds. “We have owned Toro since the 1980s. It’s been amazing what they have done for stockholders without penny pinching. Hoffman is a little like CEO Pat McHale at Graco in Minneapolis. Work their way up from the factory. These are not mercenary managers from the outside who sell themselves to the highest bidder. They understand their companies and their industry. And Mike is a great manager of people.”
Jeff Appelquist, who wrote an unvarnished history of Toro for its centennial, said Hoffman, when asked about his expected legacy, responded, “I don’t know.” Asked what he would like as his legacy, the self-effacing Hoffman told Appelquist, “He was a good leader. And he was one of us.”
As an award-winning author, former Marine infantry officer, recovering lawyer and corporate warrior at Target and Best Buy, Appelquist has an eye for the traits of good leaders.
“He treats people right,” Appelquist said. “He is also a tough, exacting boss who expects a lot. He is whip-smart, has an engineer’s eye for detail, knows his industry … and is a very good strategist. He cares deeply about the people he works with and the wider community. He manages and learns by walking around and talking to people. He is also extremely well-read.”
Hoffman doesn’t tout performance numbers and metrics as do some CEOs.
He’s happier to point out that Toro’s “employee engagement” surveys in 2009, amid layoffs, early retirements and pay cuts, reflected an understanding of why management was doing what it was doing. At a time when profits were halved and revenue dropped 20 percent, Hoffman and the executive team took the lead on compensation cuts.
“We kept our commitment to research and development,” Hoffman said. “I worried that we were borrowing too much against ‘employee equity.’ But when we surveyed in 2010, they told us that they knew we had to do it and we did it in the right way. And things [continue] to move in the right direction.”
Toro is considered a good place to work. Skilled line workers can make $50,000 a year or more, plus profit-sharing through an employee-stock account and a 401(k) plan match. Each employee gets at least 40 hours of training yearly. And there is tuition reimbursement for outside learning and scholarships for kids. A number of these benefits were initiated by Melrose.
Hoffman grew up in Blue Earth, Minn., one of eight kids. His father was a Green Giant factory worker who rose to management, and his mother was a nurse.
Although Hoffman earned $8.3 million in cash and long-term stock compensation last year, the married father of three has lived for years in nice-not-ostentatious Apple Valley. “Money allows us to do things,” Hoffman added. “But a bunch of the money [I’ve made] will be gifted to others.”
Hoffman enjoys travel, including flying his large, extended family on nice vacations. He’ll mow his own lawn when a teenage son is too busy with school and sports.
The moderation extends to Toro. The executive team remains in the older part of the headquarters while others move into the new building. About 1,000 employees work at the Bloomington campus.
Toro executives generally fly coach class. That said, Hoffman has built up so many frequent-flier points that he often upgrades. There will be no corporate jet or off-campus executive offices. Those were the types of things that preceded Toro’s near-death experience in 1981-82.
Hoffman likes to walk and bicycle, including an annual charity ride to Duluth with Toro and nearby Donaldson Co. employees. Hoffman reads widely, particularly history. He eats in the employee cafeteria, and enjoys work wandering Toro’s offices and plant floors.
No retirement plans yet.
“I’ve been lucky,” Hoffman said. “Life is too short to not like what you do.”