Profile of Human Technologies, a New York based social enterprise focused on creating jobs for people impacted by disabilities.
Human Technologies Corporation (HT) is a social enterprise creating jobs for people impacted by disabilities, primarily through the provision of logistical, janitorial, and light manufacturing services to prominent public sector customers, including the Departments of State and Defense. HT has benefited from AbilityOne, a program created by the Javits-Wagner-O’Day Act in 1971 with the goal of providing a more direct path to federal contracting for organizations with a majority (75 percent) of work performed by people with disabilities. However, HT’s work extends far beyond AbilityOne into non-federal agencies and the private sector, guided by a deep appreciation for the particular strengths of its employees and an infectious culture of empowerment. Key drivers of HT’s growth include:
A passionate “affirmative business” culture. HT is committed to changing the disability system. The organization’s annual reports consistently emphasize the contributions of its employees. The Inspirational Storytellers program, launched in 2011, is explicitly intended to develop the ability of staff to share their experiences. There is a commitment to creating the opportunity for employees to become self-advocates. In 2014 HT underwent a rebranding campaign and launched a new logo and tagline: The Power of People with Purpose.
Longstanding relationships with key customers. HT has trusting, reciprocal relationships with a number of key customers, including public agencies at the federal and state level— and none that has been as critical as the Department of Defense, which goes back over 60 years.
Consistently bold targets for business growth and a relentless focus on execution. HT has aspired to and largely realized a rapid pace of growth, particularly in recent years, led by an ambitious and entrepreneurial CEO, Rick Sebastian. HT is planning for another year of expansion in 2015, hoping to increase revenues from $33 million at December 2014 to $45 million by the end of the year (a 36 percent increase).
After almost doubling its revenues since 2011 from $18 million to $33 million, HT is poised for even more rapid expansion, building off new relationships with several large public and private sector customers. The organization is in the process of adding several new employees across a myriad of job types and skill levels.
HT provides high-quality jobs for people with disabilities—dispelling the notion that having a disability does not correlate with talent, drive, and excellence. HT sees itself as a catalyst for transforming the disability system so that individuals with barriers to employment have the opportunity to work and to achieve their fullest potential.
HT is, first and foremost, a business, yet all decisions are made with one question in mind: in the words of Board Chair John Bullis: “If we do this for the bottom line, how many people can we hire, and how many jobs can we lock in for the next year or two?” While contracts have come and gone, the most important shift has been from manufacturing to providing a range of services connected to logistics and kitting. HT’s business lines evolve and shift to adjust to the ever-changing environment. Many of the stand-alone businesses—including a precision sewing company and screen printing and embroidery operation—have been assimilated into HT’s fulfillment and supply chain logistics departments. HT currently has three main business lines:
- Supply Chain Logistics (48 percent of 2013 revenue). Provides solutions covering assembly and production, warehousing and inventory, sales and service, and order fulfillment. This line of business was created in 2006 and is part of almost every contract.
- Facilities Management & Environmental Services (27 percent of 2013 revenue). Professional cleaning/janitorial and grounds maintenance. This group provides HT’s largest employer base. HT is looking to grow its total facilities management with both private and public customers.
- DOMA Document Solutions (new in 2013). High-tech document management, provided through a browser-based cloud service. Originally created to digitize documents from HT’s Mental Health Clinics, DOMA now provides a complete service solution for document transfer, digitizing, and return for external clients as well.
HT’s approach centers on a commitment to transparency and honesty. Over the years, HT has cultivated trusting and reciprocal relationships with customers and suppliers aligned with their method of conducting business. Al Munoz, the Director of Strategic Sourcing at USDA—a large federal government buyer of uniforms and kits—explained the relationship:
“When we first brought HT on board, we thought it was nice to work with AbilityOne, but [it] wasn’t much of anything. Watching them shift, change, alter their procedures to make it more convenient for us to do business with them and be so accommodating of our requests, and watching them continue the business with USDA, you really feel like you’re a part of it. This is something we had to embrace at USDA as well; if we hadn’t been open to having an honest dialogue with them, they would still be selling us 40-year-old uniforms, and someone else would be giving us the rest of it.”
Nearly half of HT’s customer contracts fall under the AbilityOne program. AbilityOne allows procurement officers at the federal level to enter into sole source agreements with a pre-vetted pool of contractors that use people with disabilities for at least 75 percent of the labor on a project. HT’s ability to anticipate customer needs, identify opportunities to improve efficiencies, and make adjustments quickly explains in part why they are successful in obtaining this business.
HT also manages one other enterprise with a different focus, Mental Health Connections, which operates two outpatient mental health clinics and a satellite office in New York State. The clinics were opened in 1992 when HT responded to an RFP for mental health clinics in Oneida County, NY. HT won the bid, and the clinics have been in business ever since. The clinics act independently as a line of business and provide services to the general adult population of Oneida County. Many HT employees are clients, and in case of an emergency, HT can send a non-client employee to the clinic for immediate care.
HT holds three core beliefs:
- Each of us makes an impact
- Work done well makes everything possible
- The work of our people transforms communities
Every employee is treated equally at HT. Employees with and without disabilities receive the same benefits, wages, and retirement plans. They are expected to meet high manufacturing performance targets while receiving human resources supports like focused training on operating within limitations. Sixty-two percent of HT’s 600-strong workforce are people with disabilities, approximately 42 percent of whom have mental disabilities, 23 percent intellectual disabilities, and 35 percent other disabilities. Thirty-five HT employees are veterans.
HT implemented an enhanced internal support system in 2012. There are three main elements:
- Internal Support Specialist (ISS). The ISS meets with all new employees to discuss their specific disabilities, how the disability manifests itself for each new employee, and the types of support each individual will need to succeed on the job.
- Front line Supervisor. All information is shared with an individual’s supervisor so that, when issues arise, the supervisor is fully trained and prepared to address them at the front line. Supervisors participate in the design of the employee’s accommodations at the worksite, creating a personal investment for success from all parties.
- Individual Eligibility Evaluation (IEE) App. HT capitalized on an AbilityOne mandate to complete an IEE for each employee working on an AbiltyOne contract. In April 2014, HT hired a technology company to create an app that electronically tracks the IEE data, prints the reports required by AbilityOne, and highlights, in real time, any issues or accommodations that the supervisors are experiencing with their employees. HT applied the IEE across contract types so that all employees with disabilities are served in the same way.
HT encourages employees to share their stories and the impact that work has had on their lives. In 2011 a program now called Inspirational Storytellers was launched. This initiative trains interested employees in providing compelling personal testimony. Employee stories, and the data to back them up, are most often used in two ways:
- Empowering employees to self-advocate. Employees share their own stories with internal and external audiences in a way that can impact others and highlight the fact that they are part of the community with something to contribute.
- Policy work and lobbying. HT’s Inspirational Storytellers group grew out of the SourceAmerica’s annual Grassroots Advocacy Conference, where employees and their families share their personal stories with legislators in Albany, NY and Washington, DC. As Linda Forth, VP of Human Resources, explains: “The only way to influence is by letting the folks casting votes understand the impact of those decisions.”
HT was founded in late winter 1953-1954 when the mayor and seven other heads of industry in Utica were looking for a way to integrate disabled veterans from the Korean War, incorporating as Mohawk Valley Workshop to provide rehabilitation services and training. The business has been wholly transformed since. In its own telling, HT was a “special needs provider” in the 1960s and 70s, a “human services provider” in the 1980s, an “affirmative business” in the 1990s and early 2000s, and a “social enterprise” beginning in the late 2000s. Each shift in labeling provided HT with the impetus to change practices and policies, helping move the business forward.
Embracing the Principles of Affirmative Business
The story of HT’s growth is as much about cultural change as it is operational excellence —a journey that began in earnest in 1992, when the board embraced the teachings of John Durand, a leading advocate for “affirmative business”—the idea that disabled workers should receive the same benefits, pay, and conditions as non-disabled coworkers and supervisors. Durand’s work inspired the board to rename the organization Human Technologies Corporation in 1992, which marked a very intentional shift to becoming “people-oriented,” according to Sebastian.
It took more than a decade to fully implement the principles of affirmative business, a process which accelerated with Sebastian’s arrival as CEO in 2004. There was a renewed focus on breaking down silos that served to separate “staff” from “participants” (those with disabilities), many of whom were paid under a Special Minimum Wage Certificate through the U.S. Department of Labor that provided wages commensurate with their individual productivity, resulting in most earning less than minimum wage. During that time, there was also a different benefit structure and the company held separate social events for participants and HT staff. It was only after Sebastian began to institute policy changes that participants began to be referred to as employees and integrated with the rest of the staff.
HT’s efforts in 2004 and 2005 to give workers with disabilities all the rights, benefits, and risks of being employees remain the single greatest transformation for HT. Most notably, in 2005, HT began paying all employees the New York State minimum wage or above. The effect was immediate and dramatic. Counterintuitively, there was a 17 percent drop in employee productivity, driven primarily by non-disabled, disaffected workers laboring alongside colleagues with disabilities. Workers with disabilities also became more abundant for HT, suggesting the sub-minimum wage had been a significant disincentive preventing capable people from working. And culturally, by aligning all employees, HT found that the priority quickly turned to the welfare and growth of the organization, rather than simply pushing product out the door.
Over the next several years, HT’s focus was doing business like a business. Weaning itself off dependence on government funding and quoting jobs that would create a profit were primary goals. Reductions in funding meant HT had to return a portion of its workforce to the Special Minimum Wage Certificate. There are fewer than 50 employees under the certificate today. Through attrition and discontinued hiring in these areas, the company will end the use of such certification over the next couple of years. The rest of the organization continues to pay minimum wage or, in most cases, far above minimum wage plus full benefits.
Building Business Expertise: From Chasers to Choosers
The concept of social enterprise began to take center stage for HT beginning in 2005, and with it came a different approach to the organization’s businesses. Rather than scrambling for work that employees could do, HT discovered what employees were good at and took those services proactively to the market—a shift described by COO Gregory Frank as moving from being “chasers to choosers.”
This led to the emergence of logistics and kitting as HT’s core business. Instead of just sewing and printing, the team put the whole package together and created the platform to inspect and deliver it. “Let’s be the one phone call our customer wants to make,” says Sebastian. The result was a reinvigorated focus on the development of operational infrastructure and market/management know-how:
Operational infrastructure: The first bundled contract arrived in 2007 from the U.S. Forest Service, related to a uniform line. The contract focused 65 percent on the product and 35 percent on the service (aggregating product, kitting, and distribution). This contract was initially to purchase and supply uniforms identical to what the Forest Service had been wearing for 40 years, but HT helped the Forest Service create a new, much improved product. According to the customer, “HT put all hands on deck, addressed every single complaint, and eventually changed the whole thing top to bottom. In the end we got better uniforms, better quality, and better pricing.”
The infrastructure put in place to fulfill the contract allowed HT to have a meaningful conversation with other prospective customers, backed by real facilities, metrics, and processes. HT has evolved its kitting production to the point that, since 2011, every new piece of business has included a services component. Warehousing, distribution, and logistics have increased the number and variety of jobs for HT and helped establish a more lasting partnership with its customers.
Know-how: Consistent with the desire to build rather than chase business, HT also began hiring from industry. Until around 2007, HT had hired people focused on human services to run the operations, many of whom had limited business training or experience. Moving forward, HT decided to strategically focus on hiring business and technical experts, but with a human focus as an integral part of their belief system—new hires excelled at the business functions of their job, but came to HT because they believed in the mission. The first hire was a VP of Manufacturing, with 20 years of experience as an executive in a sewing company. The second was a Director of Warehousing. According to Sebastian, these and other hires led directly to HT’s businesses becoming independently sustainable.
Becoming a “World-Class Business of Choice”
In 2010, at a leadership retreat in the Catskills, HT’s employees and board committed to a new vision for the organization: being a “world-class business of choice, creating global transformation by unleashing human potential.”
Among the most important implications was a determination to disavow government grant funding. According to Sebastian, the restrictions that accompany government funds had become a distraction. In 2003, 30 percent of an $8 million budget came from New York State. By the end of 2014, New York State provided $400,000 of a $33 million budget. Getting to zero government subsidy is an operational imperative. HT’s model—to hire and retain employees long-term—does not align with the traditional, transitional employment model most often funded with government dollars. Achieving an operational goal of becoming fully self-sustaining will allow HT to grow in accordance with its own vision for success.
The new vision was also accompanied by an audacious goal of doubling the number of employees in five years, which required a year-on-year growth rate of 15 percent across all businesses through 2015. HT will not reach its goal; the enterprises have grown around 10 to13 percent annually in the past five years. However, the aggressive business development effort has positioned HT for a breakout year in 2015 thanks to an openness to innovation and two significant new relationships:
- US Department of State Bureau of Diplomatic Security (BDS). HT cultivated a flagship relationship with the US Department of State in 2014. The logistics contract was won competitively (i.e. outside of the AbilityOne program) and has expanded from one to four offices at BDS. It is expected to account for just under 50 percent of top line revenues for HT in 2015 and could grow to two to three times that amount in three to five years. The contract is a high-stakes engagement for HT—providing 12,000 security guards around the world with clothing HT has touched directly, either in the production or packaging cycle. The quality of service must be exceptional, and because it has been, BDS has become a vocal champion of the business. HT is also working on transferring the agreement into AbilityOne, which would enable other federal agencies to contract for the same services without the need for competition.
- LED manufacturing and distribution. Another major development for HT in 2014 was the addition of LED manufacturing and distribution through a contract with a private company in Santa Clara, CA. Sebastian says HT could not have won the business five years ago, as it requires a high level of demonstrated total solution expertise, patience, and cultural fluency in order to meet the idiosyncratic demands of a private corporation.
As HT has evolved, so, too, has the board, with 100 percent turnover in the last 10 years. The board now looks and operates more like a corporate board, including members who are more senior within their own organizations and more diverse—including additional female representation and representation from new industries such as IT, logistics, and the legal profession. Board Chair John Bullis describes its role as challenging the organization to stay on point, with a laser-like focus on the mission of creating jobs. Sometimes the board is a supporter, sometimes a challenger. According to Bullis, HT’s growth has resulted from the expanded relationships that come with quality work.
Asked what distinguishes HT, Bullis comes back to the centrality of culture. HT is about connection to each other, he says. For all 15 board members, that includes being assigned two staff as mentors within the organization, one in administration and one in operations.
Performance and Impacts
HT expanded its workforce to 683 employees in 2014, 62 percent of whom have a disability. HT also employs 35 veterans, and 27 employees have worked with HT for over 20 years. HT tracks its impact using total employee hours, wage rates, hours worked by disability type, and other employee demographics.
HT tracks a range of financial metrics, including overall financial performance by business line, region, and contract; financial and employment growth by line; and a new rolling performance measure that tracks profitability relative to funding. As part of its business metrics, HT also tracks the performance of its services, including orders processed and shipped, number of items returned, items shipped without defect, and accuracy in order processing. COO Greg Frank cites these numbers as “eye opening, especially for customers wary of what people with disabilities can do. [They] also help customers realize they can offload their administrative burden to HT, since the quality is higher than in other places.” Other highlights of HT’s performance include:
- Revenues have grown from $18 million to $33 million since 2011, primarily driven by ht’s warehousing and distribution businesses
- Federal contracts are growing rapidly and in 2014 accounted for 56 percent of sales. New york state accounted for 36 percent of sales and commercial contracts for 8 percent, although this number is expected to grow with the led business
- The 2015 budget is 50 to 60 percent higher than the 2014 budget
- 99.89 percent of products are shipped without defect
- HT has a 99.91 percent rate of accuracy in order processing
HT has a bold long-term vision: generating at least $100 million in revenue, several thousand employees within and outside of New York State, and contracts with a wide range of public and private actors. Third-party logistics has the most upside, according to Sebastian. In order to grow the janitorial enterprise, HT will need to do a better job embracing green cleaning processes and technologies.
Despite the ambition, HT’s race to achieve its vision has been superseded in the short term by a new challenge: leadership transition. At the time of finalizing this case study, in winter 2014, Sebastian announced his departure from HT after more than a decade as CEO.
Bullis says the board has been working on a succession plan for some time. Sebastian was a high-quality, high-profile leader constantly being courted by other organizations. The board has created an ad hoc search committee, with a focus on maintaining the quality of services even as HT remains open to new lines of business. Bullis believes HT’s new CEO will be a high-profile manager with core competencies in quality assurance and sustainability. Modest growth would be considered a success in the short term, says Bullis, and the leadership team remains strong and excited about the direction of the company.
While HT has a long history and deep local connections that are useful, scaling is not a 30- to 40-year proposition, according to Sebastian. Recent work to align employees and board around a vision of impacting extremely disadvantaged populations has been more essential. The willingness of the organization’s leaders to put in long hours building business lines, traveling, educating the organization on cash flow, relating to people in a board room, and connecting with diverse customers and people with cognitive disabilities, all while not missing a beat, are imperative to HT’s continued success. Says Sebastian: “You need to have a backbone. You need to be able to get past the challenges. You need to take ‘no,’ and you need to develop a philosophy that says ‘behind the last ‘no’ is the ‘yes,’ and that ‘yes’ is what the world depends upon.’ And that’s what we’ve done.”
With an unwavering eye on increasing the jobs available for workers with disabilities, HT is focused squarely on growing business lines and providing stable jobs and services of the highest quality.