Hallmark cares enough to send the very best … jobs to China
Everybody knew what the e-mail meant. It went out last fall to employees of the Production Art Division of Hallmark Cards. It said that manager Lee Burner had scheduled a mandatory meeting for the next day. Somebody from HR would be there.
Production artists were told to report to a conference room in the Rice Center, a section on the south side of Hallmark’s Crown Center headquarters. The Rice Center is often the place for fun times at Hallmark, where the company hosts motivational speakers, including Ami James, a tattoo artist from Miami Ink. But the employees figured that some wouldn’t return to their jobs at the end of the day.
Burner, who didn’t return phone calls from The Pitch, is an upper-level manager with a reputation as a man willing to wield the ax. In early 2007, he warned the Production Art Division that some positions might be cut or that the department itself could disappear. “We will be a smaller company in the next two or three years,” he predicted at a meeting last spring, according to an employee who was there.
The meeting in October was supposed to mark the end of Burner’s reorganization of the division. He had already spent three months analyzing each position. But Hallmark employees often joke about how change happens slowly there — sometimes giving the example of how the Kwanzaa line took years to develop — and so far, nobody had been fired.
Burner’s presentation in the Rice Center included a slide show. At one point, a pie chart revealed the department’s new job titles. Burner breezed over the slide and was about to continue when somebody shouted a question.
“There’s no part of that pie that says ‘production artist’ anywhere. Where’s our portion?” the employee asked, according to an artist who was there that day.
“Well, we don’t know right now,” Burner replied.
“Are there going to be layoffs?” the employee asked.
“Well, we can’t say,” Burner answered.
By the end of the presentation, Burner had revealed the real point of his speech. The artists in the Production Art Division would no longer be working on art. The creative portions of their jobs would disappear. No longer would they be working on the designs of cards, party supplies or novelty items. Now they’d be called “print production technicians,” and instead of designing artwork, they would only be checking to make sure that outsourced artwork was ready for printing.
“It essentially becomes almost pushing-a-button work, with no creative portion,” one of the department’s artists tells The Pitch. “When we applied for these jobs, we had to turn in a portfolio and show we were artists. Now there’s no creativity.”
Hallmark has been outsourcing its workforce overseas for the past decade. A company that once was synonymous with Kansas City now has a shrinking local staff. Still owned by the Hall family, the private company doesn’t have to report layoffs. But according to a company spokeswoman, Hallmark has lost a quarter of its workforce since 1999.
Hallmark blames the layoffs on competition, largely from the Internet and e-mail. But the company is far from suffering. On March 31, Hallmark reported reported $4.4 billion in revenue for 2007, up 8 percent over 2006. The company has reported at least $4 billion in revenue per year since 1998. Hallmark won’t release its profit numbers, but a spokeswoman says the company had double-digit growth last year in its earnings.
Outsourcing and job cuts may seem normal for corporate America, but Hallmark founder Joyce Hall created his company with the idea of valuing his employees over all else. Hall protected every employee during hard times — even through the Great Depression — until he retired in 1966. The company mantra, still printed on cards and posters given to employees over the years, promises “That the people of Hallmark are our Company’s most valuable resource.”
The Pitch spoke with about 30 current and former employees over a three-month span. Not all of them had bad things to say about Hallmark. Some lauded the company’s sabbatical program, its “creative renewal days” and its willingness to pay for employee education. In fact, many of those who have been fired or pushed out still say it’s a great company that values creativity and knows how to inspire artists.
But most spoke of an environment where the threat of layoffs is constant. Where older workers fear their age might cost them their jobs. Where corporate-sounding terms such as “personal improvement plans” have replaced the family atmosphere.
James Hamil remembers what it was like to work at Hallmark when Joyce Hall treated his employees as the company’s most important asset. Hamil hasn’t worked at Hallmark for more than three decades, but he still speaks of it as if he were talking about an old friend — especially when he tells a story about the day Hall bought him lunch.
After 15 years in Hallmark’s art department, Hamil decided to go out on his own in 1973. Hamil wanted to see how he could do selling his watercolor paintings while still freelancing for his old company. A few days after he quit, he came back to the downtown office for a meeting and decided to take a late lunch in the Crown Room, a 585-seat Hallmark cafeteria that’s famous for egg-salad sandwiches, cowboy cookies, Thanksgiving turkey dinners and company gossip.
Hamil was standing in the tray line when Joyce Hall walked up behind him. Hall had retired in 1966, so employees didn’t often see him in the Crown Room; until he retired in 1966, Hall ate there every day around 1:15 p.m.
“Come on, Jim,” Hall said, “I’ll buy your lunch.”
It was the first time Hamil had talked with Hall about anything besides business. Hall told Hamil about how he escaped Kansas City summers by vacationing at Grand Lake, Colorado, and how you couldn’t judge people by the way they dressed. Back then, Hall’s story was known to everyone who worked at Hallmark, mostly because they’d heard it from Hall personally. Hall, a high school dropout, started the company in 1910 with a shoebox of postcards that he sold while living out of the YMCA in Kansas City. He expanded to greeting cards two years later, and within four years, the company had grown so fast that Hall bought his own print shop. His first card, printed in 1916, carried a message that seemed to personify his approach to business: “I’d like to be the kind of friend you are to me.”
By 1921, Hall had 120 employees, with salesmen in every state. During the Depression, his loyal workers took pay cuts to avoid layoffs. Even as the company went international, Hall stayed involved with every detail. He often sat in on mundane meetings with every department, signing off on ideas presented on his preferred medium: 3-inch-by-5-inch cards. He gave small bonuses of $10 or $25 to someone at a meeting who came up with a good idea. Hamil recalls Hall picking, from a stack, one of the cards he had designed — it was a church on a hill with a lyric from “Go Tell It on the Mountain” inside. The card went on to be a best-seller. “Every department thought he watched nobody but them,” says Hamil, who at 71 is now a successful watercolor painter in Overland Park. “But the truth was, he was in on everything.”
After he retired, Hall turned over control to his only son, Don Hall Sr. Employees had watched the younger Hall grow up. When Don Hall was born, Joyce Hall sent chocolate chip cookies throughout the headquarters. He often took his son to work, according to a Hallmark brochure produced for the company’s 80th anniversary. The elder Hall stayed on as chairman of the Hallmark board after his retirement, but as his influence waned, so did the family atmosphere. In 1973, the company did away with the refreshment carts that Hall sent around every afternoon. Gone were the cold milk and hot tea served by a woman who rang a bell through the offices. Instead, and to this day, vending machines dispense free snacks and drinks at different times throughout the day.
When Hall died in 1982, the company he had started from a shoebox was worth $1.5 billion. A year before his death, Hall told American Brands magazine that his goal had never been to accumulate wealth. “I didn’t go into business with the idea of making money,” he said. “The opportunity for furnishing a service is more important than money as a motivating force for man. If you put service and quality first, the money will take care of itself.”
By the time Don Hall Sr. retired in 1985, Hallmark needed to be modernized. That year, former Kansas City Southern executive Irvine O. Hockaday Jr.
was named CEO, becoming the first person outside the Hall family to run the company.
Hockaday, who didn’t return a phone call from The Pitch, quickly began computerizing the company, resulting in a widespread change of personnel. The change forced out many longtime employees who were either not willing or not capable of trading easels for computer screens. Longtime employees tell The Pitch that several hundred lost their jobs in the automation that took place from the early ’80s into the ’90s.
It’s hard to see a switch to computers as anything but good for a company. But in the late 1990s, Hockaday made another push to eliminate a portion of Hallmark’s workforce. This time, the motivation was money. He wanted to triple sales to $12 billion by 2010. At a press conference on August 17, 1999, company spokeswoman Julie O’Dell said Hallmark wouldn’t lay off employees to make that goal happen — but that’s exactly what was coming. In March 2000, Hockaday held a press conference to announce that meeting the $12 billion goal would mean departments would be “consolidated.” The company would cut jobs in order to make itself more nimble.
As part of the restructuring, upper management installed a new performance evaluation program in many departments. It was a “rank and yank” process similar to the one made famous by former General Electric head Jack Welch and used by companies such as Ford, Enron and Cisco. Under the system, managers must identify subpar employees and document their inefficiencies in order to justify firing them. The system has many critics, who say it pushes out good employees simply to hit quotas. It also opens up companies to wrongful-termination lawsuits; Ford paid out $10.5 million in 2004 to employees who said they had been fired without reason under the forced evaluations.
Hallmark spokeswoman O’Dell says the forced evaluations were discontinued after one year. But several current and former employees say Hallmark still uses an evaluation program that requires managers to give bad evaluations to good employees and that regularly leads to layoffs.
Hockaday retired in 2002, and Hall’s grandson, Don Hall Jr., took over. The new CEO said he was abandoning Hockaday’s plan of increasing revenue. “The $12 billion goal,” Hall wrote in a company newsletter, “has become a distraction and it’s time to put it aside.”
Don Hall Jr. didn’t end the company’s harsh evaluations. Last year, many departments learned that Hallmark had begun a second round of restructuring. Some employees have already been laid off, and more cuts are expected later this year. Managers say the evaluations cause them to fire employees who are actually doing well.
One former Hallmark manager says she told her supervisor that nobody in her department should be ranked poorly. She was told to identify a few employees who would be given “personal improvement plans.” She would assign them more work, and if they couldn’t cut it, they’d be fired. “I said, ‘There is not enough money in the world to do this,’ and I quit.”
Another former Hallmark department head who worked there for two decades says she was given similar directives. “Even if you had 10 outstanding people in your department, you had to find one who was less,” she says. “That’s what drove people crazy. If you built a great team, how do you tell them that one of them has to be scored at the bottom?” Evaluations were god at Hallmark, the former manager says. Many supervisors spent two months filling out lengthy evaluations before the deadline at the end of February.
“I remember spending every Super Bowl writing evaluations,” the former manager says. In the end, she got her own forced evaluation. She was fired earlier this decade — she asked that The Pitch not specify the year so that she wouldn’t be identified — and never given a specific reason. A friend told her, “You were prom queen for a long time. It’s time to consider that someone else is prom queen now.” When she received her own poor evaluation, it was humiliating. “How can I be valued for so long, and all of a sudden I have no value? When they make a decision, it’s ruthless.”
Kevin Goodale was also a casualty of the forced rankings. Goodale had worked at Hallmark for 25 years, most recently in the engraving department. In 2001, his supervisor put him on a “personal improvement plan” for being too slow.
“Why are you doing this?” Goodale asked.
“I don’t know,” he recalls his supervisor saying. “We’ve got to group people into thirds.”
Goodale tried to work faster, but engraving isn’t a job you can hurry. When his quality suffered, his manager told him: “I’m recommending you for termination.”
Goodale agreed to retire on his birthday on October 7, 2004. He says it felt like he had lost a family member. “We’ve grown up with these people. We’ve seen births, marriages, deaths,” he says of his fellow employees. “It becomes a second family to you, and then it all gets stripped away.”
Still, Goodale often recalls the good days. “When it was good,” he says, “it was the end of the rainbow.”
Another employee, who asked that her name not be printed, says she got the same treatment. She designed cards for Hallmark in the 1970s and recalls a company that still treated its employees like family. Back then, each department would make Christmas ornaments for the tree in Joyce Hall’s office, and she took pride in picking out her design on Hall’s tree. She left the company and returned in the 1990s to discover it had changed. “Once he [Joyce Hall] let subordinates take over, that family feel was lost.”
She was fired in 2001, and because her supervisors gave her no specific reasons, she believes it was because of her age — she was in her 50s. “Some people would fight that. Some people would get a lawyer. But I just couldn’t focus on something that could make me so bitter,” she says. “It robs you of your life.”
One recently laid-off writer says the constant downsizing makes Hallmark a tough place to be creative. A humor writer, she says it had become difficult to bring in funny ideas when people were worried about losing their jobs. Before she was fired, she says, her job description became more and more unclear; she figured they didn’t want to set quotas for her because then she might have hit them and stripped them of a reason to lump her into the forced rankings.
“People are browbeaten to come up with submissions, and then you’re looking over your shoulder to see if your supervisor is coming for you.”
Clara Johnson Scroggins has written nine books on Hallmark’s Keepsake Ornaments. The company used to bring her in every year so she could review the next season’s lineup. Hallmark also paid her way on nationwide trips so she could talk to women’s groups about what to expect from the next series. Her books, printed by small publishers, are now prized by collectors. “You could say,” Scroggins says by phone from her home in Tampa, Florida, “that I am the foremost expert on Keepsakes.”
So when Hallmark was preparing to celebrate the 30th anniversary of Keepsake Ornaments in 2003, the company asked Scroggins to star in a promotional video. The video was called “A Stroll Down Keepsake Lane,” and it played on a loop in Hallmark stores across the country.
Scroggins flew to Kansas City and was taken to the production department at Hallmark’s headquarters. There, employees had built a fake-snow-covered Keepsake village out of cardboard, with ornaments as the people. In the center of the scene was Don Hall Jr.
Hall played the part of the village mayor. He read from cue cards and asked Scroggins questions about her three decades collecting ornaments.
“He was just a nice, nice man,” Scroggins recalls, “a perfect gentleman.”
It’s rare to find anybody with much else to say about the current head of the Hall empire. Unlike his grandfather, Don Hall Jr. isn’t a hands-on manager. Not much is public about the 51-year-old Hall. Little has been published about his personal life. According to Forbes magazine, Hall stands to inherit one of the country’s richest private companies. His father, 73-year-old Don Hall Sr., is listed on Forbes‘ list of the world’s richest people, with a net worth of $1.8 billion.
The younger Hall’s bio on Hallmark’s Web site is just 151 words and does little more than recite his résumé: Hall has worked for the company since 1971. He became vice president of the creative department in 1995, and two years later switched to product development before taking over as CEO in 2002.
It’s rare to see photos of Hall when he’s quoted in news reports. However, Hall does occasionally give interviews, sometimes to far-flung media outlets. In a 2002 article in a magazine published by Northwestern University’s Kellogg School of Management, Hall said he wasn’t comfortable in front of the camera.
In October 2007, Hall gave a short speech to a group of bloggers the company had flown in for a two-day summit. It was the first time Hallmark had held such an event; organizers hoped that the seven bloggers from around the country would help the company understand how to compete online. The bloggers weren’t famous; they were mostly just part-time writers such as Stephanie Quilao, a Bay Area blogger who writes backinskinnyjeans.com.
One blogger, Beverly Mahone of North Carolina, tells The Pitch that Hall came in for a five-minute speech. He wore a plaid shirt and a pair of slacks and thanked the bloggers quickly before excusing himself. “He was so reserved,” recalls Mahone, who writes for thebabyboomerdiva.com. “He didn’t give you the impression that he was the big CEO of Hallmark.”
As CEO, Hall has overseen the outsourcing of many jobs that used to be done at the Kansas City headquarters and at plants in Independence, Lawrence, Topeka and Leavenworth. Since 2005, Hallmark has eliminated 2,100 jobs worldwide, slimming to a workforce of 15,900 in 2007, according to O’Dell, Hallmark’s spokeswoman. The Kansas City headquarters, which had 5,700 employees in 1999, is now down to 4,200.
Meanwhile, the Hall family has seen its revenue climb — by $300 million in the past three years alone, according to Hallmark press releases. The company releases revenue figures but not profit numbers, so it’s unclear if the job cuts are to keep the company healthy or simply to increase the Hall family’s take.
The year Don Hall Jr. took over, Hallmark closed the printing plant at its headquarters on Grand. The move marked the first time since 1914 that the company wasn’t printing cards in downtown Kansas City, Missouri. (The only cards now printed at the headquarters are from a closet-sized machine displayed in the Hallmark Visitors Center.) Steve Doyal, Hallmark’s senior vice president of public affairs, told The Kansas City Business Journal at the time that all 340 employees who worked at the closed printing plant had been given the option of transferring to facilities in Kansas, but it’s unclear how many took that offer. “It wasn’t an easy decision,” Doyal told the Business Journal. “It was a smart decision.”
O’Dell, who had promised no layoffs as part of the $12 billion revenue goal, says she stands by her statement. She tells The Pitch that the company has never undertaken widespread layoffs; rather, layoffs have happened as job duties have been redefined. “There are times where employees don’t have the skill sets for their new jobs,” O’Dell says. “Nothing has changed in the way we value our employees. But that doesn’t mean that there aren’t going to be changes [that will] lead to job loss.”
Hall rarely makes public appearances, but a speech he gave at the 2007 Governor’s Summit in Kansas City is still online. In it, he speaks about the need for Missouri and Kansas to work together. But it sounds like he could be championing outsourcing as a way to compete globally.
“We are in a race without a finish line,” Hall said. “The competition is the rest of the country and, indeed, the rest of the world. We must build muscle not only to stay in the race but to be at the head of the race.”
When Winson Shuen moved to Hong Kong to work for Hallmark in 2005, it was obvious that the office didn’t run like other Chinese workplaces. For one thing, most of his fellow employees worked a standard 40-hour week, unlike many workers in China, who are required to stay for unpaid overtime. And then there were the parties.
Every month, Hallmark threw a party in its lobby for anybody whose birthday or anniversary fell during that month. Everyone broke for the day around 4 p.m. to snack on fried chicken wings, samosas, candy, salad and soda. “I hadn’t seen anything like it in China,” Shuen tells The Pitch. “They were quite nice to their employees.”
Shuen’s title was graphic art engineer, but his duties were mainly quality control. He paid regular visits to the Chinese factories that Hallmark hired to print its greeting cards, wrapping paper and the gift items sold at Hallmark stores. With Hallmark outsourcing more and more of its work, it was a busy job.
When Shuen left in 2006 to move back to the Bay Area, Hallmark had 300 employees in Hong Kong and was preparing to move into a bigger space in the 70-floor Harbourfront Landmark building to accommodate more. “We were just growing so fast,” recalls Shuen, who spoke to The Pitch by phone from San Francisco. “We were adding new people all the time.”
According to online job listings, Hallmark continues to hire employees in China, even as it lays off or fires employees in Kansas City. One online ad boasts that Hallmark needs employees “in support of our rapidly growing global procurement activities” in China.
It’s unclear how many jobs Hallmark has outsourced. Shuen estimates that Hallmark was contracting with at least three Chinese factories and was looking to expand in China when he left. Hallmark has responded to press inquiries about outsourcing deals — when they’ve been made public. In June 2007, the company transferred some ribbon-making work overseas from its 50-year-old plant in Lawrence. The plant still makes ribbons for Hallmark, but a portion of the work that used to be done there is now handled by a Chinese factory. When that outsourcing announcement was made, the company also said it would close one of its two factories in Leavenworth and put the other up for sale.
Not all of Hallmark’s work has gone overseas. In 2004, the company signed a $230 million, seven-year deal with Dallas-based Affiliated Computer Services Inc. to handle IT work. The switch required 135 employees to move from Hallmark to Affiliated. Hallmark said it would save $50 million by switching the positions to the Dallas firm.
Among the jobs lost this year were five in the “writing studio.” Those cuts occurred when the company redefined job titles and created “required specific skill sets” that some of the writers didn’t have, O’Dell says. Two of those writers retired, one left the company with severance pay and two took part-time positions, O’Dell says.
Meanwhile, in its Kansas City headquarters, many employees who spoke to The Pitch complained that complicated jobs once handled by longtime employees are now handled by temps who lack training.
One Hallmark temp who spoke with The Pitch says temporary workers are looked down on and, in some cases, cordoned off into wings by themselves. She’s working on a special project with a pool of temps who are not permitted to go elsewhere in the building. She says she recently was told not to drink from the water cooler of a nearby department because employees had chipped in to pay for it. “We are treated like second-class citizens,” she says. “It’s horrible the way they treat us.”
Over in China, though, Shuen says Hallmark has been good to its workers. He says the company gave directives to its factories that the workers shouldn’t be required to stay for unpaid overtime. “We had to tell them, in America, we only work from nine to five and then we go home,” he says.
Wendy Gong, another Hallmark employee in Hong Kong, says workers there get many of the benefits available to employees in Kansas City. In an e-mail to The Pitch, she writes that employees can be reimbursed for the cost of outside training, “which is totally unexpected” in other Chinese companies.
“Hallmark is a good company,” she writes, “no matter in Kansas City, Hong Kong or China.”
In January, when The Pitch first requested access to Hallmark employees and to Don Hall Jr., spokeswoman O’Dell said she would not make anyone available. But after The Pitch spoke to or left messages for about 50 current and former employees, she agreed to set up a meeting.
At 3 p.m. on Friday, April 25, O’Dell has assembled three Hallmark managers in the Crown Room. She says they have not been told what to say and are free to “speak their minds.” O’Dell and the managers sit at a round table in the center of the empty cafeteria. With light streaming in from a bank of windows overlooking Crown Center, the gold-crown-shaped lights that dot the ceiling are turned off.
All three managers give a similar description of a working environment where talented artists mostly enjoy their jobs. Jeff Manning started 25 years ago as an artist at Hallmark and worked his way up to director of Creative New Ventures. “The people and talent here are exceptional,” Manning says. “Coming from art college, you see that this is the best of the best.”
The managers defend Hallmark’s evaluations policy, arguing that it’s necessary to keep the business afloat. Cassie Atteberry, a human resources manager, says the reason some employees complain about the harsh evaluations is that Hallmark hires only top candidates, who might not be used to criticism.
Tara Morrow, who started at Hallmark writing cards 12 years ago and is now vice president of writing and editorial, quickly agrees with Atteberry. “People come here from art school or from other companies where they’ve been a big fish in a small pond,” she says. “But then they get here, and the talent pool is so high that now they’re struggling.”
“The way that I think of it,” Atteberry explains, “is that if you tell somebody they have food in their teeth, it’s not nice. But don’t you want somebody to tell you when you have food in your teeth? In the same way, don’t you want somebody to tell you when you’re not doing well at something?”
When The Pitch asks the managers about the morale in an office where a quarter of the workforce has been lost, O’Dell interjects. “Let me just jump in here, because we didn’t talk about this before,” she says to the managers. “The desire to be a smaller and more nimble company was part of our business needs, and I think we can all agree to that.”
The managers nod. “We’re a consumer-based organization, and we need to respond to the marketplace if we want to thrive,” Manning adds.
Some employees do complain, Atteberry says, about the jobs that have been eliminated while Hallmark maintains generous benefit programs. “Employees say, ‘Well, how do you have all of those things and then still let people go?’ I tell them, ‘Well, that’s not the same thing.'”
Those benefits include the farmhouse in Kearney that employees can use for daylong retreats and meetings. The Victorian home, used by Hallmark since 1991, includes a studio for ceramics, woodworking, blacksmithing, weaving and papermaking. Such benefits are necessary, Atteberry says, to help employees come up with creative ideas. In October, for instance, the finance division took its new hires to the farm to brainstorm ideas on how to do things differently. “You just can’t put people ahead of the health of the company.”
Atteberry says that, when telling an employee that his or her job has been eliminated, managers explain that it’s to keep the company healthy.
“We’ve been around a hundred years, and we want to be around a hundred more,” Manning adds.
The managers concede that they don’t have any figures to back up that assertion.
All four of the employees at the table say they firmly believe that the Hall family would never deliberately cut jobs simply to drive up profits. It’s a common refrain at Hallmark, where the generous benefits program and the value on creativity have fashioned a largely loyal, if shrinking, workforce.
“The Halls are the most genuine and trustworthy people,” Morrow says. She places her hand over her heart as she speaks. “I do not believe they would cut employees for profits.”
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