Floridian of the Year
Floridian of the Year: Colin Brown
CEO / JM Family Enterprises
By the time Brown joined the company, Jim Moran was serving as JM's chairman. Pat Moran, one of his three children, had become JM's president and CEO. She recalls interviewing Brown for the general counsel's job and being impressed with how dynamic he seemed. "Personally, we got along so well and always have," she says.
Brown was promoted to chief operating officer in 1997 and succeeded Pat Moran as president in 2000. In 2003, he became CEO, the first non-family member to run the company. "Our company was getting a lot larger and more complex, and we were looking to grow," she says. "There was no one else I would have chosen for the job. He knew our culture and the people, and he knew our family."
Brown has said that the hardest business challenge the company has faced came in 2008 and 2009. "It wasn't just a recession. It was a depression," he told the Duke roundtable in 2011. "By the end of 2008, our car sales dropped 40%, and we had to lay off over 700 associates."
Brown still describes March 2, 2009 — the date of the mass layoff — as one of the lowest points of his career. "I knew we had to do it to keep the company above water, but it was very painful, given that these people did not deserve to lose their jobs," he says. "I had my senior officers take a 65% pay cut. I took a 75% pay cut."
There have since been other challenges — Toyota's sudden acceleration problem and production slowdowns in the wake of the Japanese earthquake and tsunami. But the company is back to setting sales records, with 2015 poised to be "an-other record year" after 5% growth in 2014, Brown says.
A regular contender for the nation's top workplaces, JM has long been proud of its employee benefits, which include 401(k) contributions and profit sharing. The first Friday of each December is known as bonus day, when annual bonuses go out.
A year ago, to celebrate a strong 2014, JM surprised its employees with a second bonus check. "We were thrilled to do it, and there were lots of happy people," says Carmen Johnson, JM's general counsel.
Company executives worried that not everyone was sharing equally in JM's success, however. "A bonus, while terrific, really doesn't help people budget on a month-to-month basis," Johnson says. "It's not going to change their standard of living."
Brown assigned a group to study whether the company should raise its wage floor — and if so, by how much. The group then analyzed federal government data to get a sense of how much money an employee needs to make ends meet.
The group came back with a recommended minimum wage of $13 to $15 an hour, based on a "bare-bones" personal budget for a worker, Johnson says. Brown wanted to get employees to a "sustainable" lifestyle and decided to set the floor at $16.
"If you're part of our family, then we believe you deserve to have a quality of life," he says. "We wanted to make sure that people who live paycheck to paycheck have enough money to buy milk."
Pat Moran, who continues to serve on JM's board, says Brown told the trustees last spring that he was considering the possibility of a $16 minimum wage and got full support from the seven-member board, which also includes Pat Moran's two siblings and their father's widow, Jan; Brown is the board's presiding member.
The only pushback Brown received was for his sense of urgency, Johnson says. "He wanted it done in two weeks, and we said, 'Uh, it's a little more complicated than you think.' "
The idea of moving newer workers to a pay grade that compensated them as much as more experienced or tenured workers in the same type of job was an issue, she says. The company decided to extend raises to the first five pay grades, including about 600 employees who already made $16 an hour or more — they got an average bump in pay of a little more than 6%. Although that left three-fourths of the staff without a raise, most were happy for their lower-paid peers, Brown says. "We got a big lift in terms of people just being energized."
Brown says the wage hike will eat a little into the company's bottom line, but he has no plans for layoffs or other expense reductions. He declines to discuss profits in detail, except to say that they're big enough to cover the $6 million tab.
Brown now would like other em-ployers to follow suit and consider boosting pay for low-wage workers. JM's chief administrative officer, Ken Yerves, says that while some businesses "have commended us," none has asked how to go about raising its own base wage.
Russ Eisenstat, executive director of the Center for Higher Ambition Leadership, based in Burlington, Mass., says that increasing pay from the bottom up requires a CEO who thinks in the long term.
"It takes a strong stomach because you're making an investment upfront," he says. "You have to believe it's going to pay off over time in terms of lower turnover and higher productivity."
Eisenstat adds that family-owned businesses don't face the same pressure as publicly traded companies to produce short-term gains for shareholders. "Frankly, it's harder if you're a public company dealing with Wall Street," he says.
Brown makes the case that putting more money in workers' pockets is good for the economy and generates jobs. But he doesn't necessarily advocate for policy change at the local, state or national level.
A father of three, Brown has a grown daughter — also with a Duke law degree — who owns and operates a coffee shop in Durham, N.C.
"I don't think she could afford to pay people $16 an hour. So I'm not telling her she has to do that," he says. "On the other hand, I do believe people deserve to get a decent wage if at all possible."
Ultimately, Brown says, JM's raises were financially feasible and consistent with the company's corporate culture. "There are certain people who run businesses and treat people like they are a disposable asset. I think those people totally misunderstand what makes good business. If you drive everything only to the bottom line, you might gain in the short run, but you will not gain in the long run."
In 2014, about 40,000 workers in Florida earned the state's then minimum wage of $7.93 an hour. Tipped workers received a separate sub-minimum wage. Together, workers with wages at or below the Florida minimum made up 4.2% of all workers paid on an hourly basis.
Source: U.S. Bureau of Labor Statistics
In 2004, Florida voters approved a constitutional amendment that established a statewide minimum wage, tying subsequent annual raises to the Consumer Price Index. The Florida minimum rose to $8.05 from $7.93 in 2015 and will remain at $8.05 in 2016 because of low inflation. The federal minimum is $7.25, the same as it has been since 2009.