Flyin’ a family business with Radio Flyer

May 1, 2014, 3:45 PM UTC
The world's largest wagon -- 27 feet long -- outside Radio Flyer headquarters
Courtesy: Radio Flyer

25 Best Small Companies to Work For rank: 13
Headquarters: Chicago
U.S. Employees: 60
Perk: Headquarters were recently awarded LEED platinum status, thanks to skylights, onsite bike storage, and preferred parking for low-emission cars.

American nostalgia and baby-boomer memories of youth are partly the secrets to Radio Flyer’s success. But the iconic company has changed a lot since 1997, when Robert Pasin became CEO of the company founded by his grandfather, an Italian immigrant and expert craftsman, in 1917. Eighty years in, Radio Flyer was still mainly in the business of steel-stamped and wooden wagons and had grown out of touch with consumers craving plastic Big Wheels for their kids. Pasin has since diversified the product line (think scooters, tricycles, and Ziggles, which kids propel by wiggling). Today two-thirds of its manufacturing is done in China, where the company has 30 full-time employees.

Pasin also redesigned the culture to ensure that employee enthusiasm matched the affinity customers feel for the brand. “Everyone” has a story about Radio Flyer, according to the CEO (a.k.a. chief wagon officer). “All of these stories are about the best parts of childhood: imagination, adventure,” says Pasin. “All the rest of our strategy had to flow from that, in terms of what kind of people, what we do — all of it.” And employees have raved, landing Radio Flyer on Fortune and Great Place to Work’s list of Best Small and Medium-Size Companies for the past two years.

In one big shift, Pasin focused on hiring a “creative core” of industrial designers and mechanical engineers to strengthen product development. All employees must spell out five goals per year, which are discussed in a team setting. The goals process, he says, allows for more accountability and transparency as Radio Flyer zips ahead to meet growth targets. Over the next 20 years, “we feel like that whole world of outdoor active play is fair game for us,” Pasin says.

While headcount has grown 20% since 2005, hiring for the perfect fit matters most. In a business this size, “there’s not a place to hide,” Pasin explains. Job candidates must pass a rigorous, 10-step selection process that includes a writing assignment about three personal successes and one failure, listing five references (prior managers, preferably), and sitting down for a conversation with Pasin himself.

Radio Flyer now relies, too, on a college internship program as a pipeline for young, creative talent. This year 15 interns will work at headquarters, with the chance of earning a full-time position. The company has hired 12 former interns over the years, including Mary Kate Venturini, a Notre Dame grad who, in five years, worked her way up to senior graphic designer. Her job responsibilities range from getting babies to smile at product photo shoots to fashioning Radio Flyer looks on Instagram. Outside of work she is ever the brand ambassador as well, often using one of three wagons she owns to cart groceries home.

This story is from the May 19, 2014 issue of Fortune.