I.C. System, Inc.

I.C. System, Inc.

Headquarters: Vadnais Heights

Inception: 1938

Family name: Erickson

What it does: Accounts receivable collection agency for businesses, contacting individuals and other businesses.

Number of employees: 600

Type of ownership: 100 percent family owned

Principal owners: Barbara Erickson, John Erickson Sr.

Number of family members in the business: 8

Number of family members on the board: 3

John Erickson Jr., president of Vadnais Heights-based I.C. System, one of the largest family-owned receivables management companies in the United States, makes it clear that he didn’t get his leadership position simply because he was the company founders’ grandchild.

“There isn’t actually a pass for a member of the family to come in and get a high-level job here,” Erickson says. “When I started with the company, and the same for my brother, I started out as a debt collector on the telephone, and I did that for a year. Then I became a supervisor, and I did that for a couple years. And then I became a manager of one of our branch locations; I did that for a few years.”

Receivables management is “another way of saying that we’re a collections agency,” Erickson says. It’s a business that his family has prospered in. Now employing 600, I.C. System has succeeded thanks to the contributions of those in and outside the family.

I.C. System founded by Ruth and Jack Erickson in St. Paul.

Ruth Johnson (formerly Erickson) takes over sole leadership of the company upon her husband’s death.

I.C. System becomes the first fully computerized collections agency in the country.

I.C. System experiences fast growth, with operations in all 50 states.

Company moves its headquarters to Vadnais Heights.

Opens a second office in Mason City, Iowa. (That office has since closed; I.C. System currently has call centers in LaCrosse, Wisconsin, and Fargo, North Dakota, in addition to its headquarters.)

Ruth Johnson’s daughter, Barbara Erickson, takes over as chairman and CEO.

John Erickson Jr. is named president.

I.C. System celebrates its 75th year in business.

Jack and Ruth Erickson started the company in 1938; after Jack’s passing in 1952, Ruth took charge. “She’s the one who gets a lot of the credit for growing us to the business that we are today,” her grandson says. Ruth Johnson (formerly Erickson), who passed away in 1995, guided the company’s significant growth in the ’70s and ’80s. (His mother, Barb Erickson, is chairman and CEO.) I.C. System experienced another big jump from 2000 to 2005, a period during which it doubled its revenues.

Licensed and bonded in all 50 states. I.C. System has “a pretty diverse client base,” he says. Small-business clients make up about 36 percent of the company’s revenue, the largest portion. Telecommunications companies are 24 percent, financial services 22 percent, and health care providers about 10 percent; utilities, government, and education make up the rest.

As for the company’s name, “it’s a puzzle to this day,” he says. What might his grandparents have been thinking? “We think it stood for ‘insured credit,’ but we’re not really sure what that meant. . . . We’ve sort of adopted the catchphrase ‘intelligent collections’ along the way, but it wasn’t what it meant when [the company] was founded.”

Currently, six members of the family’s third generation are involved in the business. His brother-in-law, Eric Johannes, an MBA, was recently appointed I.C. System’s director of marketing; brother Joe is an operations manager. Three of Erickson’s sisters are involved on a part-time basis: Jill Johannes is wellness coordinator, Kristy Campbell edits the company newsletter, and Jenny Jones is special events coordinator.

It’s crucial, Erickson believes, that there be no appearance of favoritism when it comes to him and other family members working at the company. Why is that important? “We want to give everyone the opportunity to advance and not feel, ‘Oh, great, there’s an Erickson I’m competing with for this job and I’ll never get it,’ ” he says. “I think that can be somewhat demoralizing.”

Erickson acknowledges that the appearance of nepotism can be “a difficult thing to avoid, because you want family members to understand the business.” It’s essential, the family believes, that members work in various departments, particularly those in the family who aspire to leadership roles within I.C. System. That said, Erickson believes that if a company is sensitive to staff concerns, hiring and promoting family members “can be done in the right way.” One way to do that is to make sure that family members who become company leaders learn the business by not starting at the top. Erickson himself followed an established five-year succession plan that prepared him to assume the company presidency.

Nepotism isn’t the only matter of appearance that concerns the family. Another is the reputation the collections industry in general. “I don’t think that our industry gets a lot of great press or a fair shake a lot of the time,” Erickson says. “It’s highly regulated—[it’s under] a lot of scrutiny.” Erickson believes that I.C. System has been “a leader in our industry in evolving out of that heavy-handed collection-tactics mode . . . . We talk a lot about tone and manner on the telephone, how to treat someone with respect and dignity, creating win-win conversations.” By “win-win,” Erickson means primarily that I.C. System seeks to negotiate payment schedules satisfactory to both customer and creditor.

One client that says it has a win-win relationship with I.C. System is Gillette Children’s Specialty Healthcare in St. Paul. Gillette Children’s sends receivables 120 days and older to I.C. System. “Our own collectors are very ‘soft,’ ” notes Sheila Robinson, the hospital’s patient accounting manager. “I.C. System understands that. They really treat our patients with the same respect and the same kind of hands-on care that we do in our own collection processes.” At the same time, I.C. System is able to post satisfactory collection results. “We have absolutely no complaints from our patients” about I.C. System’s approach, Robinson adds.

To minimize any complaints within the family, Erickson says that family members, whether working in the business or not, gather once a year—usually around Christmas “when everybody’s in town”—for an update on the company’s performance. I.C. System’s board, which meets much more often, consists solely of Erickson and his parents. I.C. System is also 100 percent family owned, but the family thinks that outside perspectives are valuable for the company’s success. Each quarter, company executives meet with an advisory group of “very sharp and successful businesspeople” who offer “great perspective on how other businesses handle similar situations,” Erickson says.

Among the business topics the advisory group offers guidance on are day-to-day management issues, big-ticket capital expense items, and executive compensation. “They have full access to everything,” Erickson says. The advisory group consists of four businesspeople and I.C. System’s general counsel; the company CFO and the family members involved in the business also attend the meetings. One of the newest outside members has an extensive career in the collections industry.

“There’s some discipline around having this group of outsiders come in every quarter,” Erickson says. “There’s discipline around having an organized presentation that lays out the past quarter’s activity. The reporting on the business is a healthy thing for the business to go through. It causes you to take a step back and look at what you’ve done and how things are going. It creates some formality.”

In addition to its general oversight, the board of advisors “will aid us in succession planning questions” in the future, Erickson says. It’s a little early to consider the fourth generation’s transition to I.C. System—the oldest of that cohort is 9 years old. Still, Erickson notes that that generation’s involvement “will be a challenge for us in the coming years.”