L&R Pallet Case Study Notes

L&R Pallet: Bringing God into the Business

L&R Pallet, a wooden pallet manufacturer in the Rocky Mountain region, faced chronic staffing issues.
James Ruder, the president, sought solutions to high employee turnover.
An incident involving an injured Burmese refugee employee highlighted the challenges of a refugee hiring program.

Founded in 1974 by Larry and Doris Ruder with $500.
Started in their basement, making and refurbishing pallets.
By 1993, had 12 employees and $1 million in annual revenues.
James Ruder took over the business from his father, operating with an "old-school" mentality.
Manufacturing environment involved hard physical labor with potential dangers.

High employee turnover: hiring 300-400 employees annually to fill 130 positions.
Turnover rate reached as high as 300%.
Desperate hiring practices: minimal screening, hiring anyone willing to work.
Ruder resorted to buying finished pallets from another company to meet demand.
Initial attempt to hire Bosnian refugees was unsuccessful due to integration issues.
Competitive hourly pay offered, but high turnover persisted.
2008 recession compounded staffing issues; undesirable work conditions led to employees leaving for other jobs.
Focus on punishing infractions rather than rewarding successes.

By 2010, sales declined from 16 million to $14 million, profit margin evaporated.
In March 2011, Ruder implemented new checks and balances, uncovering a significant drop in used pallets received.
An embezzlement scheme involving the assistant manager (250,000 stolen) and plant manager (20,000 stolen; cocaine addiction) was revealed, amounting to approximately 550,000 in losses dating back to October 2010.
Other abuses: employees blackmailed and threatened by corrupt managers.
Poor teamwork, lack of respect, and strained communication contributed to a negative work environment.

Company maintained customer base due to its reputation for quality pallets.
Ruder struggled with trust and managed the business alone for 18 months, working long hours.
Employees described the work environment as depressing.
Employees suspected of involvement in the embezzlement were terminated.

Ruder's family went on a mission trip to Peru, which deeply impacted them.
Ruder joined a subsequent mission trip where he experienced a profound spiritual moment.
He felt a calling to care about people and realized L&R Pallet was