Steve Klotz’s gift of $1 million to EMU is Extraordinary.
Even more is the story behind it.
It would have been difficult to imagine how a middle class kid from Coldwater, Michigan could rise to a position where a $1 million gift was even in the realm of possibility, but Stephen J. Klotz, CEO of the Huizenga Group in Grand Rapids, is unquestionably an extraordinary individual – and that was apparent from the get-go.
Because his father was an engineer who owned a small construction company building bridges, working construction was always a part-time job option for Steve. But that aspect of the business wasn’t nearly as enticing to him as his mother’s work as a company bookkeeper. “I liked and was good at the numbers side of the business, and really enjoyed going with my mother when she visited accounting firms,” Steve recalls. But it wasn’t just numbers he was good at. Even with minimal homework time, Steve admits, he nonetheless graduated seventh in his high school class of 270 students – while working part-time and playing varsity football at a level good enough to be recruited by both EMU and Brown University.
Why EMU? I chose Eastern because I was confident I could be in the top 15 percent of the class. At Brown, and especially playing football, that would have been less likely. There was the cost issue, too, since an athletic scholarship wasn’t possible. Paying for my own education at EMU was doable because an EMU credit hour cost around $17 (by comparison, today’s cost is $580), and I knew not only tuition but room and board would be covered by my summer job earnings. That almost certainly wouldn’t have been the case at Brown.” In any event, Steve’s football career turned out to be a one-year experience at EMU. “I knew I just didn’t have the talent of some of my teammates – John Banaszak, for example, later became a defensive tackle with the Pittsburgh Steelers and played in three Super Bowls – but even more to the point, the academic transition from high school to college was tremendous, and with four or five hours a day spent in practice, I knew my academic work would suffer.”
What Steve Klotz didn’t achieve in football, he did academically as an accounting major in the College of Business. Singling out Assistant Professor John Keras, MBA, CPA, as a strong influence, Steve remembers that “John, like all the professors whose classes I had at EMU, was talented, hardworking, cared about the students, and was always accessible. That dedication was impressive in itself and in later years certainly did much to motivate my own behavior as a CEO.”
That later career began in public accounting with Touche Ross (now Deloitte), and it was there that a client, J.C.Huizenga, tried for two years to hire him. Huizenga then owned a small printing plate company that lost money most years and he finally convinced Klotz to come aboard as Executive Vice President with a mandate to make the company profitable. Two immediate issues caught Steve’s attention. The first was that the firm’s profit margins were unusually small for the industry, in the range of 15 percent. That’s what the market allows, the sales staff reported. But when he drilled down he noticed that the sales force was rewarded on the basis of sales volume, not profitability, so it was in their self-interest to sell as much as possible regardless of margin. When Steve restructured the incentive plan to reward profit as well as sales volume, margins grew from 15 percent to 28 percent in two years.
A second problem was that printing plate agreements with major clients, like the New York Times, were often done via a one-year contract, but the price of aluminum – a primary manufacturing component – fluctuated widely. That volatility meant a profit one month could turn into a significant loss the next. The solution in that case was to “forward buy” aluminum, essentially a hedge contract that would help manage the volatility and significantly enhance the company’s profitability.
These management insights obviously made an enormous difference to Huizenga’s operation – and account for Steve’s promotion from Executive Vice President to President after just seven months – but what distinguished his career even more impressively was a willingness to roll up his sleeves and do whatever it takes to demonstrate his commitment to employees and earn their support. The examples are many. In one case, when Steve told the maintenance staff “No one works alone in the building at night due to the risk of accident or injury so if that should be the case, call me and I’ll come in.” They did and he did. In another instance, when staff balked at shoveling out a toxic pit of silica sand waste, Steve put on a hazmat suit and did it himself. And when Huizenga purchased a company 100 miles from their Grand Rapids office, Steve drove that distance at 5 am weekly so he could attend early morning management staff meetings.
That kind of behavior – rare for any manager let alone a President – as well as Steve’s accounting-honed eye for the smallest detail and his management expertise, grew Huizenga’s management portfolio from a single company with 25 employees and revenue of $5 million, to what it is today – an organization with 7,000 employees and revenues of over $1 billion. That’s led to personal wealth, of course, but also to a practice of wealth sharing that’s little short of remarkable. The Huizenga Group has paid out over $13 million in bonuses to employees of companies it’s bought, improved, and then sold, with some long-time staff members getting payouts up to $50,000. And when the Huizenga Group buys a company, they also buy the property and invite employees to financially participate in the real estate trust as an additional performance motivator. On the personal side, Steve has generously supported healthcare, education, and other worthwhile groups and causes through his family foundation.
Steve has been able to keep up to date on EMU through his membership on the College of Business Dean’s Advisory Board, but his philanthropic support is rooted in the recognition that what he was able to do as an EMU student four decades ago – that is, pay for his own education through summer earnings – is today virtually impossible. That understanding is based not only on his personal experience of putting his three daughters through Hope College, but the broader realization that today’s college financing costs have impacted not only underprivileged students but those from the middle class, making higher education difficult if not impossible for many of these students. “Eastern Michigan University equipped me with the tools to be successful in life” he said. “We’re born with relatively similar skills and abilities; it’s education that makes the difference.” That’s precisely why his gift will Give Rise to exciting opportunities for students in the College of Business.