It’s more pressure. When you’re in another C-suite position, you dispense advice and sometimes the CEO takes it. But even when he or she does take your advice, Ball says you walk away knowing it was their decision. It’s eye-opening to be on the other side of the desk and know you have the responsibility to make the ultimate decisions. And Ball is still not used to it.
“I don’t know (that) you ever get used to it because, again, I wake up every morning understanding that there’s 1,800 employees who have families that depend upon their jobs in some way shape or form,” he says.
Business changes on a dime and companies that are here today are gone tomorrow. CEOs know they provide jobs that support college education, mortgage payments and retirement and they want to make sure that’s around long after their tenure.
“You have to take that sort of stuff seriously, and so, I’ll always have that weight, I think, on my shoulders,” he says.
A new direction
To turn around the company, Ball and his team used the strategic planning process to take a hard look at operations and what corrective actions were required.
“We went through that process of basically re-evaluating all our businesses and saying, ‘What do we need to be doing differently, and is there a different focus? Where are we making our money? How do we structure this going forward?’” Ball says.
The team determined Koppers needed to steer the ship in a different direction — the decisions and how they made decisions would be prioritized around building wood treatment chemicals and wood treatment technologies as the core competency.
With that came a need to curtail capacity, shut facilities down and sell businesses, Ball says. Three years later, Koppers shut down or sold 11 businesses or operating facilities, which was about a quarter of the total.
As Koppers started down that path, the aluminum market, in particular, worsened, so it cut deeper than the original plan and shut down an additional facility. While those decisions were difficult because people were put out of work, Ball says they focused on plants that had been under-invested or weren’t in key strategic locations.
“When you’re running a global capacity of let’s just say 55 percent utilization, and it’s in a market that is contracting and not growing, it doesn’t take a genius to figure out that you’ve got too much capacity and you got to figure out how to shut down and take out a bunch of fixed costs,” he says.
The company also had to manage the risk around crude oil prices, which meant reworking contracts to help mitigate the exposure on an ongoing basis.
One advantage during this process, Ball says, was the person running the carbon material and chemical business came from outside. He didn’t have baggage or sacred cows, so he challenged his team to put everything on the table.
Ball told him, “You have to build a plan that can get us to this level of profitability, this level of return on capital and you need to put a plausible plan in front of me that gets us there. If you can’t do that, then we’re selling this business.
“The pressure was on them to try and deliver something that they felt was reasonable, realistic and that they could execute on, or else they knew that the business was going to be moved,” he says. “When you’re under that sort of pressure, if you will, to come up with the plan, it put a special added emphasis on the importance of the work that they were doing.”
To their credit, they came up with something different than anything Koppers had ever done, which has worked well three years later, Ball says.
Transparency and trust
Ball also added transparency throughout this process and tied benefits back to performance.
The discretionary 401(k) contribution he cancelled was revamped into a performance-based plan. In down years, the formula won’t pay as much, but in good years, they have a chance to earn more.
Koppers added back an employee stock purchase program, which became more market-based, provided additional flexibility and perks, and increased communication and training around safety.
“So, a whole of host of different things that we’ve done to try and show people that, ‘Look, we’re invested with you, and you’re the ones who drive our success.’ Everybody says that, right; every employer says that, but we’re going to back that up through our actions,” Ball says. “And so, here’s what we’re willing to do, if you’re willing to take your part on taking accountability for the actions you need to do.”
