Mike Hoffman, who retired Nov. 1 as chief executive of Toro Co., began at the company as an equipment-service representative in 1977. He worked his way through sales-and-management positions and was named CEO in 2005. Hoffman, 61, who also earned business degrees in night school, has worn blue and white collars. He remains the company’s chairman. Under Hoffman, Toro’s total return to shareholders rose 400 percent, far more than that of the S&P 500. Toro grew organically under Hoffman, who also diversified product offerings through acquisitions and focused on green technologies that consume less water and fuel. Toro posted record earnings of $231 million on sales of $2.4 billion last year.
Q: To what do you attribute Toro’s success over the last decade or so?
A: First and foremost, our strong cultural roots dating back to our founding, that, following challenging times in the late 1970s and early 1980s, were restored and strengthened by my predecessor, Ken Melrose. The strength of our culture is reflected in our employees whose passion for providing superior innovation and customer care helped us build long-term relationships with our customers. These values are reinforced by ongoing employee initiatives that focus on delivering strong results. Also, our capital-allocation [investment] choices have been successful.
Q: The total return to shareholders of Toro stock trounced that of the general market on your watch. To what extent did employees share in the rewards through compensation, profit-sharing or otherwise?
A: The high average-service tenure of our employees speaks to Toro being a good place to work. In 1985, [then-CEO] Ken Melrose and [the board led by former CEO] David Lilly formed an employee stock ownership plan. Employees share in the company’s success through ownership of Toro stock. We are proud to call employees “owners.” Our retirement benefits also include a profit-sharing program. Through these programs, millions of dollars are distributed to employee retirement plans annually. And we have a 401(k) plan with a matching contribution. Also, we have financial incentives for [nonexecutive] employees tied to achieving goals. When we achieve corporate goals, we share with employees.
Q: Where do employees line up in the list of Toro “stakeholders,” including customers and shareholders?
A: Our culture … starts with employees who care. Our people demonstrate that every day. Such employees are oriented toward doing more to serve customers by developing innovative products and services that drive market leadership. When you have people who care, and they take care of the customer, financial success ensues. Shareholder interests are also well served.
Q: You worked your way up, starting in the equipment-service end of the business 40 years ago. How did you get into management?
A: There are many paths to success. Mine was perhaps a bit unique. It definitely helped prepare me for future opportunities. Going to [two-year] technical school [in Mankato] and starting as a field service representative and progressing along the way to sales, marketing and management, while earning [undergraduate and graduate] degrees at the University of St. Thomas and Carlson School of Management at the University of Minnesota, gave me a broad perspective on business. Having a great mentor like Ken Melrose made a huge difference. It all worked out.
Q: What were the toughest times during your career?
A: I watched Ken Melrose make extremely difficult but necessary decisions in the early 1980s, including laying off more than half of our workforce. Had he not done that, we would likely have gone bankrupt. I marveled at his fortitude and compassion. When faced with a similar, albeit a far less severe challenge during the Great Recession [of 2008-09], Ken’s example helped me deal with having to lay off some employees after exhausting other alternatives. You never forget such painful decisions, knowing the impact on your people, who through no fault of their own, lose their jobs.
Q: What were the best days?
A: It is difficult to pick. There have been far more good ones than bad. Ultimately, watching people grow and new leaders emerge, like Rick Olson our new CEO. Other “best days” include the honor of being part of our 100th Anniversary in 2014. To celebrate with employees, customers and others.
Q: Would you do anything differently?
A: Toro has achieved much success. If I was given a “do-over” I would not change much, except investing even more in technology and perhaps re-prioritizing some investments we made. That’s Monday morning quarterbacking. I think we still won the game.
Q: What does retirement look like?
A: Tami, my wonderful wife of 31 years, and I are figuring that out. First we have to get through weddings of our two oldest children this year. The next chapter will likely involve new ways to serve, philanthropy, travel and perhaps pursue more education. I’ll strive to plagiarize a chapter from my older brother’s story [Bill, a medical-science writer] and stay curious in order to keep learning.