Rules of engagement Featured

8:00pm EDT May 26, 2008

Mike Keebaugh says growth should be the top priority for any company or any business leader.

If you’re not growing, you’re well on your way toward personal and professional stagnation.

“It’s very important for the organization to be a growing company,” says Keebaugh, president of Garland-based Raytheon Intelligence and Information Systems, a $2.7 billion unit of Raytheon Co. “Your stakeholders and shareholders expect it, and your employees deserve it. There are two models for how you get promoted. One is your boss dies. The other one is that you grow as a company and create more opportunity and get promoted into that. I don’t subscribe to the former.”

Keebaugh challenged Raytheon IIS’ 9,000 employees to new growth targets when he became president in 2002. As he saw it, the business wasn’t growing as much as he thought it could be. The company had a solid reputation with its legacy customers — those being the intelligence community and the Department of Defense. The long-standing customers were regularly sending Raytheon business, but, most of the time, that was because Raytheon was the only company that could supply what they needed. But Raytheon was beginning to see more competition in some of its niche areas.

Keebaugh wanted the company to aim for high single-digit growth, ratcheting it up from about 5 percent a year to about 9 percent. But the only way to do it was to sell the employees on the idea first.

Engage employees

From Keebaugh’s first day on the job, he began discussing the new growth targets with employees.

“We had to explain to everybody, ‘This is why it’s important that we change our mode,’” Keebaugh says. “‘We can go on and on in our legacy business, but the markets in that legacy and sole-source (in which Raytheon is the only source for a certain product) are not going to grow to the level we want to grow as a company, and here is our strategy for accomplishing this.’ There was an education part to it.”

Reaching all of the employees was challenging because Keebaugh has associates spread across 14 different locations. But he made a point of personally visiting each location — and continues to do so once a year — in what’s called a road show.

“We discuss, ‘Here is our strategy; here’s what we need to do to implement the strategy,’” Keebaugh says. “We talk about the markets in addition to our strategy. Then we follow that up with a question-and-answer period.”

Also, quarterly, he holds a town-hall teleconference that reports on performance for the past quarter, and then branches into topics of general interest to all employees. Each employee can view the town hall on his or her desktop computer and can e-mail questions directly to the host of the session, who poses them to Keebaugh.

The company also uses a newsletter and an internal Web site that is updated daily with company news and information, all in an effort to keep in touch with employees and to make sure the dialogue can flow both ways.

“The idea is to get this down and personalized so that their goals and objectives are totally aligned with where the business is headed,” Keebaugh says.

Reporting back on how the company is doing is key to keeping employees engaged and focused.

“They take pride in the fact that they are contributing to that, when we report back to them here’s how we did,” Keebaugh says. “We do a lot that personalizes it with specific projects and recognizing individual performance.”

All nonunion employees participate in profit-sharing, and the company also has a bonus system, which further ensures that employees are truly invested in the company’s growth, Keebaugh says.

“They have some skin in the game,” he says.

Match talent to the challenge

Squeezing a few percentage points of growth out of the company meant that there needed to be some changes, both in the current employee mindset as well as the type of person that was recruited in the future.

A growth culture and mindset didn’t exist within his business at Raytheon, so Keebaugh turned to other businesses in the company that had the culture he wanted to emulate and asked for their help. He also hired outside consultants to infuse fresh ideas.

“We had to develop the processes that were best practices,” Keebaugh says. “We had to get the discipline so that we pursue the opportunities in a structured way to take advantage of the lessons learned not only from what we’ve learned from our pursuits but other businesses in Raytheon.”

He also hired retirees from some of Raytheon’s key customers to come in to the company and help them look for opportunities. The new hires had inside knowledge of the customers’ future directions and also what problems the customers had that were constant pains that Raytheon could perhaps solve.

“These are people who had been essentially systems engineers and program managers of our customer set, who understood not only what the customer’s current problems were but what the hot buttons and focus areas for the future are,” Keebaugh says. “Then, we could tailor our solutions to where the customer was headed and be able to show them a path forward.”

The other challenge was making sure there were enough talented recruits to fill openings created by growth. Raytheon developed an executive liaison program that pairs executives with particular colleges and universities. The executives spend time on campus in social settings, speaking in classes, representing the company at job fairs and keeping an eye out for the next recruits. Keebaugh himself is the executive liaison to Penn State University, his alma mater. The company has about 50 relationships with schools, particularly with those that are strong in engineering and supply chain management.

“Our business recruited slightly under 200 college people last year,” Keebaugh says. “We also recruit at the experienced level.”

To recruit more senior leaders, Raytheon encourages its employees to refer friends and family for jobs at Raytheon. Employees are paid a bonus if the person they recommend is hired.

“If you are working here, you know the kind of people we want to bring on board,” Keebaugh says. “That pays off.”

The success rate is higher for referrals than for people who just send in an application off the street.

You also have to make sure pay rates are keeping up with the local competition, something Raytheon does at a local level.

“The thing you have to make sure with surveys is that they are local,” Keebaugh says. “Recruiting for California is different than recruiting for Dallas, Texas.”

To attract the best available talent, the company also uses a flexible work schedule, including an option at some sites for employees to work what’s called a 9/80, which means they work nine hours a day for nine days, and take off on the 10th day, which is every other Friday.

Grow your talent

To be a high-growth company, you can never stand still. You always have to be getting better, and that includes improving not just your bottom line but your people, as well.

“One of the things we have as a best practice is our human resources review process,” Keebaugh says. “It’s sitting down with individuals and frankly discussing performance as well as developing needs. If there are areas where an individual is not performing, what can we collectively do about it?”

No matter how senior, all of Keebaugh’s employees are expected to continue to learn throughout their tenure. One way he’s incorporated that philosophy into the company is by creating core competencies for every job in IIS.

“Every one of our career paths, we define competency models at the various levels of the organization,” Keebaugh says. “That is defined and documented. The supervisor and the individual sit down and look at the next step for them, where their interests are and what the development needs are for gaining those competencies. There is a lot of work done on career planning.”

Ethics is a particular point of emphasis, as growth won’t matter unless it’s done properly.

Every employee is required to complete ethics courses. The training is not just a one-time affair but an ongoing way of life for employees to make sure they understand the importance of ethical conduct and that they have concrete examples of what ethical conduct looks like. Some classes are computer-based and others are held in classrooms.

“We do it with examples of cases, so you see practical examples of things like conflicts of interest and things like that,” Keebaugh says. “It’s very important to us, so we train, and we continually monitor against this.”

Keebaugh says companies that don’t have ethical practices won’t grow because customers can’t count on them. Ethics are also vital to creating a staff that you can trust to do good work.

“It all comes down to surrounding yourself with the best talent you can find,” Keebaugh says. “Trust is an important part of it. It is also important that you have a culture where, I won’t say you welcome bad news, but you are open to the bad news. The worst thing you can do is not solve problems when they come up, and think, ‘Well, they will go away.’ They don’t go away. The earlier you can address problems, the less it’s going to cost you, and the more successful you will be. ... The worst decision is no decision.”

HOW TO REACH: Raytheon Intelligence and Information Systems, www.raytheon.com