It was October 2009, and the severest economic environment Frey had seen in his 40-plus-year career had slashed Universal Trailer Corp.’s annual revenue from about $400 million to about $200 million and forced him to gradually cut his staff by half, which finally leveled off with 1,175 employees. Still, in the depth of the recession, the manufacturer stayed true to its commitment to growth and made an acquisition.
UTC bought Wells Cargo Inc., the nation’s original cargo manufacturer, which happened to have headquarters in Elkhart, Ind., home of one of the highest unemployment rates in the country.
Frey knew his employees would ask: “How can you go make an acquisition when we’ve reduced employees and the size of the company?”
His answer: “We’re not going to lose sight of our long-term goals, our vision, creating competitive advantage and a better, stronger company for the future — for our employees and our customers — just because we are in difficult times. But we are going to adjust to those difficult times.”
You have to be realistic and make changes to your business as the environment dictates. While facing difficult times, you can’t abandon the building blocks and goals that drive your organization.
“When an organization faces a severe downturn, it’s pretty easy to drift away from those fundamentals and forget about them,” says Frey, president and CEO. “The first thing that we should all remember as leaders is, in a downturn, don’t forget what you’re trying to do and don’t forget what your strategy is.”
Here is how Frey led UTC out of the deepest part of the recession while keeping the manufacturer’s mission, vision and strategy in front of the entire company.
Stay on track
It’s important to keep the building blocks of your business visible so you don’t drift from them as you make decisions on surviving the down times. You do that by constantly revisiting the goals you’ve set.
“Although it’s hard — and I fall short of it at times — (you need) to make those a living part of your process — your management, leadership process,” Frey says.
To make those building blocks a priority at UTC, every month, Frey gathers his chief financial officer, chief operating officer and the top three leaders of each business unit for an operations review. Depending on the topic at hand, others are brought into the conversation based on their specific insight or to broaden the spectrum of thought. But the important aspect is that the meetings are regularly scheduled to keep a continuous pulse on how close the company is to reaching its goals.
“We review, ‘OK, how do these things that we’re doing, these initiatives, relate to our strategy?’” Frey says. “We try to discuss it on a regular basis and to measure ourselves against how we’ve progressed toward our goals.”
For example, UTC has a five-year plan titled Vision 2x. While already the largest specialty trailer manufacturer in North America, the company wants to be twice the size of its nearest competitor. In order to reach that goal, UTC has to capture market share —hence the reason to acquire Wells Cargo. So as the group of company leaders sits down every month, a portion of their conversation is dedicated to thorough analysis of where UTC stands in the market.
“We, in each segment, every month, measure what’s our trailing, 12-month market share for our business units,” Frey says. “If we’re trying to gain market share, what is the strategy? Why should we gain market share? Part of our strategy or competitive advantage we call ‘why us.’ We discuss: What are the things that we’re doing to create brand trust that causes the customer, the end user of our product, to prefer to buy from us rather than our competitors? What competitive advantage did we create, and how much better have we gotten? What are we doing to improve our products and processes so that the value of our product is better?”
Then the company leaders go through what initiatives drive competitive advantage.
“Is it a product development initiative, is it a cost-reduction initiative, is it a service initiative that we’re going to pursue, and how well are we doing on that initiative?” he says.
The conversation should be in-depth about the processes or initiatives you’ve undertaken to move toward your goal and whether or not they’re actually working. You need to set criteria and ask specific questions that will allow you to measure your progression.
UTC reviews the top two or three initiatives in each operating unit. And though the criteria will be specific to your business and industry, Frey uses vehicle registrations to measure market share.
By doing a regular, thorough analysis, you breathe life into your strategy and vision. It allows you to determine where you’ve faltered and what corrective action needs to take place to get back on track as well as whether the adjustments you’ve made to counteract the economy and down market are helping your business stabilize.
“By keeping those building blocks alive and part of your discussion on a regular, ongoing basis, it keeps us from drifting away from them,” Frey says. “Most of us, in the fray of day-to-day battle, drift from the adherence of these fundamentals and lose discipline. We end up doing lots of stuff but not all of the critical initiatives that drive us toward our vision.”
Communicate the building blocks
The understanding of your building blocks can’t only be fresh in your mind and the minds of your top management team.
Twice a year, Frey meets with about 50 employees whom he considers key managers, and about every other year, he speaks to all of his employees about strategy. Those are specific meetings that speak to the company’s goals. But as the leader of the company, the mission, vision and strategy must be conveyed by you as well as your managers on a regular basis. And there needs to be an even greater emphasis on communication during difficult times.
“Communication needs to be heightened,” Frey says. “When you go through each step in an action, you have to stop and talk to people about why you’re doing it.”
In this recent recession, maybe you had to cut budgets and lay off employees. Those hard decisions were probably made in an effort to strengthen the company in the long run. Still, those choices affect employees in every level of the business. You need to explain why the decisions took place and how those decisions position the company to meet its goals.
“It’s not only painful and a very unhappy and unpleasant experience for the people who lost their jobs because of the economic pressure we’ve been through, but it’s also a trauma of sorts for the managers who have to manage through that and the people who are still with the organization,” Frey says. “You have to make sure that you continue to communicate with those people, as well, so we all know why we’re taking the steps that we’re taking and what the long-term goals and visions are — where we’re getting to, why we’re taking these steps, and why we’re going to move forward and be better off in the longer term as an organization.”
Explaining the “why” aspect of the latest decisions, along with the company’s future steps, helps employees realize how the organization can be successful and the role they play in progressing toward those goals.
The key to getting your message across is reaching out to employees with multiple forms of communication and through multiple levels of management.
Frey recently held a webinar, which allowed employees to submit questions in an open forum to him, the CFO and the COO about how the company is doing financially and what direction the manufacturer is headed.
“The best way to communicate to employees is face to face in conversation, where they have the chance to ask you questions,” Frey says. “We as leaders should do that as much as we possibly can. The president isn’t the only person that communicates with people. Part of my responsibility, or any president’s responsibility, is to have an organization of leaders who likewise communicate and are honest and forthright people who are going to express the values you want expressed and treat people the way you want them treated, [and] that includes communication.”
When it comes to communicating messages as important as your company’s mission, vision and strategy, you need to make sure all of your employees are hearing the same information.
Frey doesn’t tell his managers word for word what to say and in what format. But when he’s asking them to communicate important topics, he makes suggestions on what should be included in the conversation.
“I do talk to our leaders and ask them in certain important communications to script themselves, and I counsel them on that script,” he says. “By script, I don’t mean tell them exactly what to say. Say it in your own way, but let’s be sure you’re incorporating these elements of the message so that the message that the whole company is trying to communicate gets across to your team the same way it gets across to other teams in the organization.”
Frey has spent more than a quarter of a century leading businesses, but he still remembers his roots as an operating and manufacturing guy. He spends nearly 5 percent of his time visiting UTC locations, during which he gauges whether the corporation is on track, reinforces messages and tries to understand how well employees understand the company’s mission, vision and strategy.
“It starts really with people’s reactions,” Frey says. “One develops a feel over years and years, and I can feel the tempo of a plant, I can understand how productivity is working and not working. I try as often as I can, in the office as well as on the production floor, to feel what that productivity is and talk to people about how they’re doing.
“Then I try to understand the processes. Most of the time I do spend at a business, unfortunately, gets wrapped up in meetings. But I try to spend time understanding a process or two and how it’s developing, particularly one of the critical initiatives that that business unit is working on.”
Observation of the environment and direct communication with those doing the work allow you to gain firsthand knowledge of whether your message is being correctly relayed throughout the entire organization. Your direct communication with employees also allows them to feel that you’re interested in them and assures them that all levels of leadership are on the same page.
Once the announcement was made that UTC would acquire Wells Cargo, Frey made a presentation at every company site that first week. It required him to travel to eight states.
With the assistance of the COO, the CFO and the former owner of Wells Cargo, he explained why they were making the acquisition, what it meant, what they were doing and how it was going to be put together within the company.
The acquisition allowed UTC to realize $4 million to $5 million in synergies and add a strong brand as its sixth company.
When UTC returned to a quarter of profitability this year, Frey sent a companywide e-mail with a photo of fireworks and asked employees to celebrate for the afternoon. The manufacturer expects to be profitable this year and anticipates continued growth and a stronger 2011. And, of course, the company plans to take more market share by sticking to its mission, vision and strategy.
“The building blocks of a winning organization are a pretty simple process understood by most experienced leaders,” Frey says. “But it’s pretty easy to drift away from those core fundamentals — what you’re trying to do — during difficult times. One of the most important things in leadership through downturns — it’s important all the time, but it becomes more important in a downturn — is to continue to keep in the forefront of your leadership and management the building blocks of a winning organization and what you’re about.”
How to reach: Universal Trailer Corp., (513) 671-3880 or www.universaltrailer.com