The Latest Update on the Starkey Imbroglio

EDEN PRAIRIE, MINNESOTA — In what may become a flurry of lawsuits, a shot was fired across the bow late last week, as a wrongful termination lawsuit was filed against Starkey Hearing Technologies seeking nearly $11 million in damages following the abrupt dismissal of four senior executives.

The lawsuit, filed by former Operations Vice President Keith Guggenberger, alleges breach of contract, defamation of character and spying.

In a recent report in the Minneapolis Star Tribune, Starkey owner Bill Austin is accused of “marginalizing and ignoring” Ruzicka after he failed to promote Brandon Sawalich.

Sawalich, who currently holds the position of Senior Vice President of Marketing, is also Austin’s stepson. According to the report, Austin was then described as “yelling and bad mouthing” Ruzicka and Guggenberger around the office. The October 4th article goes on to mention that the lawsuit alleges that Sawalich learned of a possible plan by Ruzicka to leave Starkey at the end of his contract in January, 2016, and intercepted e-mails between Ruzicka and Guggenberger.

Unusual Situation

As multiple reports on the situation at Starkey have indicated, it is extremely rare, but not unprecedented for a private company to abruptly fire several long-tenured executives–especially ones with successful track records. Ruzicka and the others terminated by Starkey were credited by many with helping to drive revenue from $8 million a year around 1980 to an estimated $500 million a year in 2006.

A September 16th Minneapolis Star Tribune article provides valuable insight from one business expert on the pitfalls associated with running a large private company. The piece also sheds light on the “hands-on” vs. “hands-off” management style of CEO Bill Austin.

Who Was Let Go?

After the terminations, the company removed the images and executive’s bios from their website. Hearing News Watch was, however, able to obtain some of the biographical material that had previously been posted prior to the mass firings.

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Left to Right: Keith Guggenberger, Larry Miller, Scott Nelson and Jerry Ruzicka

Keith GuggenbergerSenior Vice President of Operations

  • Held both technical and management positions during his career. Guggenberger leveraged his business and quality background into information technology and held the position of Vice President of Information Technology for three years before expanding to lead Operations.
  • Guided Starkey Hearing Technologies’ Manufacturing, Materials, Quality, and Process initiatives.
  • Holds a Bachelor of Science degree from the University of Wisconsin-Stout in industrial technology.

Larry MillerSenior Vice President of Human Resources

  • Began with Starkey Hearing Technologies in 1987 as an HR Assistant and eventually was promoted to Vice President of Human Resources, his responsibilities included recruiting, benefits, payroll, commercial insurance, health and safety, training, and employee relations.
  • Prior to joining Starkey Hearing Technologies, Miller was the Associate Director of the Better Hearing Institute in 1979-1980 and the Manager of Information Services at the AG Bell Association in 1975-1979.
  • Holds a Bachelor of Arts in humanities/journalism from the University of Pittsburgh and his Master of Science in information sciences from the University of Wales, Aberystwyth, Wales.

Scott NelsonChief Financial Officer

  • Held a variety of management positions during his career at Starkey Hearing Technologies, including Director of Cost Management and Worldwide Controller.
  • Used his international experience to develop his skills and take over all aspects of the Finance and Accounting functions of Starkey Hearing Technologies’ global operations. T
  • Guided Starkey Hearing Technologies’ expansion into new markets as an officer of the company.
  • Holds a Bachelor of Science degree in accounting from the University of Minnesota and a Master’s degree in finance from the University of St. Thomas.

Jerry RuzickaPresident

  • More than 35 years of industry experience. Promoted to president at the age of 29.
  • Considered by many to be the driving force behind Starkey Hearing Technologies’ manufacturing systems, quality assurance systems, education programs, product engineering and facility expansion.
  • Began his career as a Starkey Hearing Technologies technician.
  • A teacher, lecturer and innovator, Ruzicka developed coursework in Quality Systems and Product and Project Planning. He holds an Associate degree in computer technology and a Master’s degree in business management.
  • HIA President for several years, as previously reported by the Hearing Review
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Susan Good & Jeff Longtain

Lawsuits and Allegations

Several days after the initial firings of the four executives, Jeff Longtain, president of Starkey’s Oregon subsidiary Northland Hearing Centers and Susan Good, senior director of the Starkey Medical Network were also abruptly terminated.

Both were long-time Starkey employees and were allegedly close to Ruzicka.

Also axed in the company purge were two executive assistants — Julie Miller, who worked 40 years at the company and is married to Larry Miller, and Kim Mohlis, who was at Starkey for 37 years. In a story reported in the Twin Cities press, Mohlis thought the firings might have been the result of “a power struggle” between Ruzicka, Starkey founder Bill Austin and Austin’s stepson, Brandon Sawalich, who is Starkey’s head of sales and marketing.

According to several sources, Sawalich has the inside track to assume the vacated leadership position at Starkey. As first reported by the Minneapolis Star-Tribune last week, in 2011, Sawalich was considered a leading candidate to become chairman of the Republican Party of Minnesota, and went on to serve as party treasurer from 2013 to 2015. He also served two terms as president of the not-for-profit Freedom Club, which donates money to support conservative candidates for office in Minnesota and nationally. He also has a strong presence in the Starkey Foundation, a well-known charity organization.

starkfndIn July, the Starkey Foundation’s fund raising tactics were scrutinized by local media. The reports includes this list of major Starkey Hearing Foundation contributions from 2006-2013, obtained from the IRS.

Praise & Criticism

Interestingly, only days before the corporate shakeup at Starkey, the Star Tribune published a piece examining the unlikely rise of Starkey and its CEO Bill Austin, who purchased the company over four decades ago for $13,000 and built it into the nation’s largest hearing aid manufacturer—worth an estimated $800 million today. The piece also explored the Starkey Hearing Foundation, highlighting the many good works it performs by providing hearing aids to thousands of people worldwide in need each year and also examining some of the questions being raised by those critical of the organization’s financial practices.

austin humanitarian award
Bill Austin receives Humanitarian Achievement Award.

In a reprieve from the recent negative attention being thrust towards the company, Starkey CEO Bill Austin was presented with the Humanitarian Achievement Award on September 26th at the prestigious fifth annual South-South Awards in New York. The award gala event is held during the United Nations General Assembly to honor achievements in global sustainable development.

 

 

October 19, 2015 Update: Starkey files motion asking Hennepin County District Court to dismiss wrongful termination lawsuit filed by Keith Guggenberger.