Divide and conquer Featured

9:33am EDT July 22, 2002

Mike Crane already had his hands full this year.

He was adjusting to his new role as president of Crane Plastics Siding, one of six independent businesses formed in the reorganization of Crane Plastics Co. in September 1999.

Heading the new business unit was almost like starting from scratch. He had to select a new management team; create the infrastructure of the independent company, such as its human resources and accounting functions; and patch morale among employees, who had withstood an anxious summer waiting for the changes.

On top of that, the siding company was working to open a new $20 million, high technology manufacturing facility.

Then there were the additional duties Crane faced as executive vice president of Crane Plastics Holding Co., the umbrella for the six independent businesses.

It was enough to overflow any top executive's plate, but Crane would face yet another challenge: Prices of the siding company's raw material, resin, doubled last fall -- during the same period when the business put its reorganization plan into action.

Still, the maelstrom may actually have set the new, independent company off on the right foot.

"It provided additional focus to our group," Crane says. "It would be hard to find a silver lining in that thing, but maybe that's it."

Coincidentally, his cousin, Tanny Crane, president of the holding company, describes the situation in the same way.

"I'm a silver lining person. It always makes you better," she says of the challenges that faced the siding company. "Mike's team is unparalleled in what they've been able to accomplish."

The Crane family is watching carefully now that a full year has passed since the reorganization, which decentralized the company's management structure of more than half a century. The goal: to focus more on the marketplaces and customers of each individual business unit.

"We have a vision that we could become a global enterprise," Tanny says.

But the company had become, she says, too complex to handle such an ambition. Crane Plastics' business had doubled almost every five years since its inception, growing to more than 800 employees and $150 million in revenue.

"It's almost like our siding promotion, 'Think Big,'" Mike says. "We want to grow with big ideas and big new initiatives, but in order to do that we had to get small."

Branching out and stepping back

Tanny Crane remembers well the first time the family-owned company made moves to fly outside its own nest.

It was in the late 1980s, when the company developed its first five-year plan with goals to grow the siding business, continue the core business and develop more of its own proprietary products.

"We started to view outside these four walls," Tanny says. "Dad, he'd say, 'If I can't stand on top of this building and see it, we shouldn't be involved in it.'"

Her father, Bob, who has since passed away, and Mike's father, Jim, had taken over leadership of the company from the previous generation.

By 1992, Crane Plastics acquired its first company, Compression Polymers Co. of Moosic, Pa. Within five years, four more companies were acquired, forming The Crane Group and showing the company a glimpse of its own past. The companies in that group thrive on sharing best practices while enjoying the entrepreneurial spirit of their individual management teams.

"Our managers would go to these companies, and they'd see the benefit of being small, wearing different hats, being flexible, being nimble," Tanny says. "What we saw is what our company used to be."

Crane Plastics had grown so huge that it was getting in the way of itself.

Top executives were trying to manage different products, different materials with different life cycles and different markets and customers. Employees were working in many different areas at the same time.

"One day they'd be concentrating on a key issue in siding, and the next day they'd be pulled off to TimberTech, and the next they'd be working on issues at the manufacturing company," Mike says.

Tanny, herself, felt torn.

"I'd go from one priority meeting to the next," she says.

Perhaps more significantly, frustration was growing among employees who, as Crane Plastics grew larger with more departments, found it increasingly difficult to get things done because they ran into more walls.

The alarms rang loudly when, in early 1999, Mike and Tanny hosted focus groups of employees, who told the Cranes they didn't feel they had an impact on the company's profits anymore. It was a significant message, considering the company had fostered a cash profit-sharing plan in 1969 that had since been supported by employees -- and successful as a work incentive.

"My father used to say it was the glue that held the company together," Tanny remembers.

"We felt the effect of profit sharing had been diluted," Mike says. "If you're working on a floor as part of a $150 million company, you're wondering whether your impact is going to have a direct effect on profit sharing."

The summer of anxiety

Convinced that the 50-year-old management structure was no longer serving Crane Plastics well, the five family members in the company, along with the human resources vice president and the CFO, formed a steering team to determine how dividing the company into separate units might follow the model used by the individual companies acquired as part of The Crane Group.

"They were benchmarking off each other but focusing on the marketplace," Tanny says of the companies in The Crane Group.

In June 1999, Crane management announced to employees the decision to reorganize into separate companies.

"It was a summer of anxiety," Tanny says. "They all knew we were going to be six companies. They didn't know where they were going to go."

"We thought it would be better to bring people into the process than announce the reorganization and the new positions all at once," Mike says.

Meanwhile, an early retirement plan was announced to allow the company to reduce redundancy and to give employees an opportunity to leave if they were uncomfortable with the changes. Of the approximately 60 employees who accepted, many took advantage of the "phased" option to gradually reduce their workload or work part time. These alternatives, Tanny says, gave Crane Plastics advantages because the values and skills of those employees stayed with the company.

To firm up the reorganization plan, the steering team worked with Arthur Andersen's Change Enablement practice out of Chicago from April through December 1999.

Crane Plastics Holding Co. became not just an organizational umbrella for the independent operating units -- Crane Plastics Siding, Crane Plastics Manufacturing, TimberTech Ltd., Crane Products, CPC Tooling Technologies and Crane Blending Center -- but also a resource. It has a small, lean, technical group of experts in areas such as engineering, IT and legal, and its 21 employees also focus on strategic planning and future developments in materials, technology, process engineering and leadership development.

"These people will always be looking forward," Tanny says, "looking at best practices, going to trade shows for things to bring back and share. They basically rent themselves out [to the six business units]."

Each individual company needed its own leader -- preferably, but not necessarily, promoted from within. The requirements: Each must have a demonstrated record of success, be a proven leader, focus on the bottom line and show an entrepreneurial spirit.

"We gave them the title of president, which we'd never done," Tanny says. "There had only been three presidents [in the company], and all had the last name Crane."

Because the siding company was the largest of the six, the steering team felt strongly it should be led by a Crane, so Mike was chosen. The other five presidents were promoted from within the company and ranged in longevity of service from three to 25 years. The steering team also gave each new president two or three core management team members.

"We did lay out to them what we thought their company could do, and they had to agree to it," Tanny says.

From that point on, however, each team was on its own to determine a company mission, figure out a game plan and choose employees.

"We had rounds and rounds of meetings so we didn't lose sight of the caring part of the equation," Tanny says.

To reduce employee anxiety, the steering team let workers know the status of the plan each week. When it was finalized, the company announced all the changes in a celebratory way, complete with matching T-shirts for each team to develop camaraderie.

"It was a great way to let go of the stress of the summer," Tanny says.

On their own, but not alone

Not all the stress disappeared immediately, however. Tanny and Mike both knew the reorganization would require some cautious steps with customers and employees.

After all, while the company's executives were concentrating on the logistics involved in the reorganization, they still had to keep the business running.

"We all had to make sure to keep an eye on the ball and that we were still shipping product out to our customers," Mike says.

Mike Flanagan, whose California company, Advantage Building Products Inc., sells Crane's VIPCO siding, says he was notified of the reorganization at the beginning of the year and had no concerns.

"I liked the fact that I was dealing with a small group of people," he says, noting that throughout the transition, that situation did not change.

In fact, he thinks his relationship with Crane Plastics Siding has improved since the reorganization.

"Overall, they are a much more responsive unit, at least the one unit of their six divisions that I deal with, than any other large manufacturer that I do business with," says Flanagan. "Their management staff does listen, and they will get back to you in a timely fashion."

In addition to customers, employees remain a high priority for Tanny and Mike.

"We had concerns about the basic culture," Mike says. "We wanted people to still feel they were part of this family-owned company."

Tanny made the issue part of her focus.

Even though she's no longer involved in the day-to-day operations of the six new businesses, she wants to make sure the Crane family values continue to transcend through all of them. To that end, each business carries on the tradition of sharing financials with employees, and the holding company puts out a newsletter to give them a view of the company as a whole. They've coined the phrase "The Crane Family of Companies" to reiterate the continued values.

Crane family members make sure they're visible at each of the six companies, too. Jim Crane, to whom Tanny reports, keeps what she calls a "helicopter view," looking at the entire picture.

"I'm a coach," Tanny says of her new role as president of the holding company. "My role has changed dramatically. I used to have functional departments report to me -- now I have six presidents."

Tanny has shared with all leaders in the company the book "Leading Change" by John P. Kotter and emphasizes two of its points: Continually celebrate success; and never think you're there -- meaning always work to improve.

The presidents of the companies hold monthly meetings to keep in touch.

"They've started having them on their own," Tanny points out. "They don't even invite me, which is good. They're starting to communicate on their own."

As part of the reorganization plan, the steering team decided the six companies would not share services, such as one accounting department or one human resources department.

"We had been so centralized we needed to go to the other end of the pendulum. I believe we may pivot back," she says, pointing out that already three of the businesses are sharing IT services.

Even now, evidence of improvement due to the reorganization can be found in the individual companies.

  • At the siding company, Mike has seen teamwork and communication improve.

    "I think we are more in touch with our customers and their needs from a customer service standpoint, and their interests and desires with regard to the type of products we're making," he says.

  • TimberTech has introduced three new products and grown from fewer than 40 to more than 130 employees. It also opened a new plant in Wilmington.

  • Crane Manufacturing has made many changes within its own business, creating three separate subcompanies to continue the notion of staying small. It also built a new plant in Circleville, where Tanny visited with employees, some of whom have been working with Crane for 25 or 30 years.

"I said to Jim, 'This is our vision. They feel the impact every day when they walk out of this building that they are contributing to the success of this business,'" she says.

Tanny says she sees positive results simply from talking to employees. A line employee now has a better opportunity to be a team leader, and each individual business is smaller and better organized so employees can do their work more efficiently.

She says she was particularly pleased to speak with one employee who will celebrate her 25th anniversary with the company next March.

"She said, 'Crane has given me everything in my life, and I still want to give back. What you're doing is creating a future for us,'" Tanny says.

Tanny estimates it will be at least another year before the financial results from the reorganization are measurable, and she's cautious giving her evaluation of the changes so far.

"I still wouldn't deem it a success," she says.

She plans to survey the attitudes of employees, whom she calls the "pulse of an organization," to get a read on how things are going. In addition, the presidents and the holding company will meet to evaluate progress. Among the considerations, Mike says, are how the Blending Center and CPC Tooling provide services to the other four companies, and whether speculations made during the planning stages came to fruition.

"I'm confident that it will be successful," Tanny says. "But I'm not calling it yet." How to reach: Tanny Crane, Crane Plastics Holding Co., 443-4891 or www.crane-plastics.com

Joan Slattery Wall (jwall@sbnnet.com) is associate editor of SBN Columbus.