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Ethics pays off in up or down economies, elevator exec says

by Ed Cohen

November 12, 2010

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Vance Tang, president and CEO of KONE, Inc.

It’s common for enlightened CEOs to talk about being doing well while doing good. But can you do it when business is awful?

You can, and you can even reap record profits along the way, Vance Tang, president and CEO of KONE, Inc., one of the world’s largest elevator and escalator companies, told an audience at Notre Dame’s Mendoza College of Business on Nov. 11.

KONE (pronounced KO-nay) is a 100-year-old, privately owned multinational. Based in Helsinki, Finland, it’s one of the Big 4 elevator companies along with Otis, ThyssenKrupp and Schindler. U.S.-based Montgomery Elevator, another familiar name, was acquired by KONE in 1994.

Tang became head of the company’s North and South American subsidiary in 2007. By early 2008, he said, he and other senior leaders were set to begin implementing an initiative to improve integrity, safety, customer service, employee wellness and community relations, among other aims.

Then came one of the worst recessions in American history. The construction industry nosedived 60 percent in 12 months. Almost overnight, he said, prices for maintenance services, the company’s most profitable area, fell 20 percent as cutthroat competition ensued for the remaining business.

The company went ahead with its initiatives anyway. These included free preventive care and a pedometer program to encourage employees to get more exercise, introduction of a clown-like character named Safe-T-Rider to teach kids about elevator and escalator safety, and a commitment to use more fuel-efficient, lower-emission vehicles.

Golf and sailing outings at leadership meetings were abandoned in favor of helping renovate local schools during a meeting in Chicago, for instance. At another meeting, in San Diego, teams of employees built bicycles that were then handed over to local underprivileged children.

The exercise was meant not only to demonstrate concern for the communities in which the company operates but to improve “engagement” with employees, Tang said.

As was evident from a video played during the talk, featuring employees reflecting on the exercise, the experience left managers feeling proud to be associated with the company.

Tang said KONE, Inc. set out to become the industry leader in five areas: safety (for both employees and elevator and escalator users, especially children), customer satisfaction, employee engagement, profitable growth and environmental responsibility.

When the initiative began, he said, the company ranked fourth among the Big 4 on every measure.

“You look at [those areas] today and in all cases we’re either No. 1 or 2. Customer satisfaction is up eight-fold. Profitability, we’ve improved it (by) multiples … we’ll have a record year in terms of profitability. So we believe that even in the short term we can do these things and deliver great results, too.”

Joining Tang at the talk were Chuck Moore, senior vice president for human resources, and Michael DeCicco ’84, director of HR Systems.

Their appearance was sponsored by the Berges Lecture Series of the Center for Ethics and Religious Values in Business and Institute for Ethical Business Worldwide. The series features senior executives speaking on their experiences of the ethical dimensions of business.