True believer Featured

7:28am EDT April 27, 2006
When Al Hansen took over EMS Technologies in 2001, one of his managers told him to cut his losses and sell the company. Instead, Hansen cut that manager — and three others — who didn’t believe in the company, and he developed a plan to turn EMS around.

It wasn’t going to be an easy process, and Hansen’s initial reaction was disappointment. The company had nothing going for it. Clients were threatening to sue, employees were looking for new jobs and growth seemed improbable.

“The company was in pretty bad shape,” says Hansen, president and CEO. “I referred to it as a target-rich environment, and what I mean by that is there were lots and lots of things that needed to be done at EMS Technologies to make it a survivable company, a company with a future.”

To secure EMS’ future, Hansen had to create a better corporate culture, mend strained relationships with clients and find a way to grow.

Gaining employees’ trust
The first step toward making sure that EMS Technologies, a designer and manufacturer of wireless, satellite and defense solutions, had a future was to convince the employees that it did. The company had just gone through two major layoffs, and morale was low.

His first day on the job, Hansen walked around the office to get a feel for his new employees. His disappointment only deepened when he discovered that teamwork was not in their vocabulary, and very few even knew the vision of the company. The root of those problems turned out to be the four managers Hansen ultimately fired because they didn’t have faith in the company.

“If you don’t have a person who believes in what they are doing and believes in the company, you are not going to be a success,” says Hansen.

With the right management in place, Hansen then had to develop a vision for the company.

“Our vision needs to be under nine words, because people have a hard time remembering the vision,” says Hansen. “I don’t want a long dissertation. I want something that people can easily remember.”

Hansen and his managers did better than nine words. EMS Technologies’ vision — Achieve global leadership through innovative technology — is a mere six words.

It is easy to remember not only because it is short, but because all employees can buy into it. The vision is simple and broad enough that it makes sense to employees, no matter what sector of the company they are in, and they can relate to it and feel like they are a part of making it a reality.

Next, Hansen needed to change the work environment so that it would promote teamwork and a more family-like atmosphere. In order to rid the company of grumbling and gossip, Hansen did his best to weaken rumors by informing all 1,400 employees about everything going on within the company.

“One hundred percent of rumors are not right, but they get everybody upset, so I worked extremely hard to bring open communication to the company,” says Hansen.

Quarterly meetings encouraged employees to ask questions. A company newspaper was started so that employees could see in writing the things that were happening. And Hansen made an effort to meet with all new employees to make sure that they really understood the company’s vision and knew where it was headed.

Then he brought together all employees and told them he wanted them to help rebuild EMS Technologies. After all, they knew more about the company than he did.

“CEOs think they know what is going on, but the people doing the job know what is going on,” says Hansen, who assembled a random group of 12 to 15 employees — everyone from janitors to engineers — to evaluate his performance.

The group was a way for Hansen to hear how his employees felt about the job he was doing. The company’s CFO was convinced that the employees would just complain that they wanted more pay and better benefits, but that was not the case.

The unanimous suggestion they offered was to give them the right tools to do their jobs. They had old, outdated equipment that wasn’t much use when they were trying to come up with new, innovative technology. They were embarrassed to bring clients into the office because the conference room was too small and had mismatched, stained furniture.

“The company’s philosophy was not to buy new equipment but to buy old equipment,” says Hansen. “If that happens, that means your competitors have an advantage because they have new equipment.”

Although Hansen began making improvements immediately, including replacing the conference room furniture, adding videoconferencing and audiovisual equipment, and providing more employees with laptops so they could work remotely, his first grade from the employee group was a C. That provided him with the motivation to do a better job.

“I don’t know how many CEOs would have the guts to do that, because you certainly allow yourself to be criticized,” says Hansen. “I think it’s great that you can put a group of people together, and they can stand up in front of the CEO and tell him that he’s not doing his job right without a fear of losing their jobs. That’s meant more to me than anything — to have my employees trust me that much and help me with the management. That sort of an environment you can’t buy. You have to build it.”

The culture-building starts by taking care of one another and being more family-like, says Hansen. As an example, the company’s HR director told Hansen that an employee was on extended medical leave and about to lose medical coverage. The director didn’t want to set a precedent by extending her coverage, so he asked Hansen for his opinion.

Hansen told him, “I’m not going to tell you what to do, but the question I want you to ask yourself is, ‘Is EMS a company with a heart?’” The next day, the HR director extended the woman’s medical coverage.

“That showed that the company was concerned about its employees,” says Hansen. “That spread like wildfire throughout the company.”

Another way Hansen creates a family-like environment is by spending time with the actual families of his employees. He holds family picnics and gives out 20 college scholarships to employees’ children each year. All employees — not just management — vote on who receives scholarships, giving them a chance to get to know their co-workers and helping them be more comfortable working together as a team.

Other ways Hansen encouraged employees to get to know each other better was by making the holiday party all-inclusive (it previously was only for management) and starting a company-subsidized social club that provides opportunities for employees to spend time together outside of work at baseball games, white-water rafting trips and other events.

Although all of those things were important in improving morale and team-building, Hansen thought it was also important for employees to share in the success of the company, so he doubled the company’s 401(k) contribution.

“We made the largest contributions to the retirement program in the history of the company on a continual basis,” says Hansen. “People have expectations, whether it is to put their kids through school, buy a house or a car. It’s the managers’ role to help people meet those. We are focused in that area.”

Hansen’s efforts to improve EMS’ corporate culture have paid off. From 2000 to 2005, employee turnover dropped from 27 percent to 10 percent; for engineering employees, it dropped from 27 percent to 3 percent.

And when you have happy employees, you are much more likely to have happy clients.

Thinking outside the box
Having happy employees was a step in the right direction, but Hansen needed to do something more drastic to keep clients who were angry with the service they had received from taking their business elsewhere.

Hansen tried to smooth things over by meeting with clients face-to-face. He told them that he knew things had been bad and that they had every right to be angry, but if they stuck through this tough time, it would get better. And then he gave them a timeline of his recovery plan, so that they would know when to expect changes.

Although owning up to your company’s mistakes is a tough thing to do, Hansen gained his clients’ respect, and the majority stuck with him.

One of those clients had even threatened to sue EMS in the past. A year later, the leader of that company came to the EMS office to discuss a new project and couldn’t believe his eyes. He said it was like being in a different company, and that was when Hansen knew he was succeeding in the transformation.

But even though the company was back on the right track, that didn’t mean that Hansen could take a break. His vision centered around innovative technology, and without innovation, EMS would not grow. It needed a strong engineering infrastructure to support innovation, money to put into R&D and a work environment that inspires innovation.

In the past five years, EMS has put close to $70 million into engineering infrastructure to make sure that the engineers have all of the tools and equipment they need to do their jobs. Hansen created an innovative work atmosphere by challenging his engineers to think of themselves like inventors. Their task was to come up with new inventions, and then he would help them secure a patent.

When a patent is approved, the company holds a luncheon in the inventor’s honor, and he or she is given a plaque in the EMS Hall of Fame. By having the entire company honor and celebrate the engineers’ inventions, they are motivated to keep coming up with new innovative ideas.

However, the benefits of innovation don’t always outweigh the costs.

“Technology for technology’s sake is not a business,” says Hansen. “You have to structure your company toward the business end of it. Each company submits its R&D efforts for the year, and then I review it to make sure the technology that we are pursuing is beneficial to the company and also we get the highest return from that R&D dollar.”

Hansen is still growing the company and putting it back on the path to profitability, and a dollar not spent on R&D is a dollar that the company gains in profit. And just because someone has an innovative idea doesn’t mean it will work out.

Sometimes the market just isn’t ready for it. That was the case with the Space & Technology/Montreal division of EMS. For the three years that the division was in business, it never made money.

“The technology was before its time,” says Hansen. “This technology will be successful five years down the road. I thought it was going to come about a lot sooner. When I realized the technology was still a long way off and that the company was losing money and I couldn’t sustain it, I decided to sell it.”

Hansen’s biggest regret is that he didn’t sell that company sooner. And although innovation is a risky business, it can also be quite profitable. Hansen experienced that firsthand about five years ago when he invested $2 million in high-speed data at a time when the company was low on cash.

“It was more than likely the best $2 million I’ve ever spent,” says Hansen. “because we have now become the world’s leader in developing and selling high-speed data, voice and video to aircraft and ground units.”

Today, everyone from CNN reporters to the president uses EMS Technologies’ products. And Hansen’s story of how he turned around the company is used by the Army to train new generals on transformation.

Hansen’s disappointment has transformed into joy, and the company that was once destined for bankruptcy now has a promising future as it posted 2005 revenue of $310 million, up from $246.5 million in 2004.

“The company is doing just fabulous,” he says. “Whatever we are doing seems to be working.”

HOW TO REACH: EMS Technologies, (770) 263-9200 or www.ems-t.com