Last year, Dave Wathen was facing the same issue that a lot of business leaders have faced during the recent economic downturn.
In a nutshell, what was OK a couple of years ago wasn’t OK anymore.
Wathen’s company, TriMas Corp., wasn’t playing fast and loose with its money. But like a lot of businesses around the country, it had loosened its belt a few notches over the years, spooning a few extra helpings of debt onto its plate.
Soon after the full force of the economic downturn hit TriMas in early 2009, Wathen quickly realized that even a few extra pounds of debt and a few extra discretionary expenditures could pose a health hazard for the company.
But with 10 business units located around the world, playing to a large degree by their own rules, it wasn’t as simple as sending out a memo from corporate headquarters. Wathen, TriMas’ president and CEO, had to refashion the company’s approach to business.
“The biggest challenge we had was converting the way we operate to put an equal intensity on cash as we have on earnings,” Wathen says of the $1.02 billion provider of engineered and applied products. “Basically, TriMas had been run as a holding company with a group of businesses; now we needed to convert ourselves to an operating company. We had to convert from a holding company mentality and culture, metrics and processes, to behaving like an operating company, which has a different set of processes.”
Wathen and his leadership team needed to build a plan, cascade it and create buy-in throughout all of the organization’s units.Build a plan
In order to convert TriMas’ culture and strategy into those of an operating company, Wathen and his leadership team needed to first define what an operating company is and how an operating company should behave.
He didn’t want to take away all the autonomy of the company’s business units, but he wanted to govern all of the units with a uniform set of values, processes and expectations. He wanted the head of each unit to know the dimensions of the field on which he or she was playing and where the out-of-bounds lines are.
“Most of my career, I had a title that sounded something like ‘division president,’” Wathen says. “And I think back on what were the best times for me in that kind of a role. They were really when I understood exactly what was expected of me, I understood exactly what freedoms I had and what constraints there were and what I needed to go to the corporation for. I’ve seen good leadership and not so good leadership, and I’ve tried to apply the good principles to this company.”
To get all of the business units together on a common set of guiding principles, a leader needs to not just set the ground rules but he also needs to find ways to ensure that those rules are enforced.
For Wathen, it started with developing a clear strategic planning process a process with built-in means for him to keep his finger on the pulse of each business unit.
“I’ve told everyone that I want to be involved in what the projects are,” he says. “Every area should have six to 10 major programs and that’s it. I want to agree on what those areas are and that they’re consistent with what TriMas’ vision is.”
Wathen and his leadership team developed a companywide focus on the vision by condensing the company’s vision down to a several-sentence statement, then putting the statement in front of every person in each business unit through cascading communication.
“I’m a big believer in consistency, so we have one vision statement: ‘We provide engineered and applied products that customers in growing markets need and value, and we build and run agile businesses that provide high returns on capital,’” Wathen says.
“What that says is that we’re a technical products company. We try to build things that are a little hard to build and design, things that maybe our customers can’t get from other companies. That implies that we’re not in a commodity-based business and that we’re trying to run a very agile business. It implies that our businesses know what their marching orders are, what I want to be involved in and what I don’t want to be involved in.”
Wathen wants his company’s business units to focus on six primary business drivers: revenue, earnings, how cash is employed, productivity, growth programs and people. The company’s leadership reviews each unit based on those six drivers quarterly. The unit’s performance in the six categories gives TriMas’ leadership a good idea of whether the vision and operating company mentality is taking root.
There is also a responsibility on the part of upper management to make sure that business units, departments and employees have the tools to improve in the measurable categories. Even in the face of a recession, when you have to adapt to compensate for dwindling coffers and a sluggish marketplace, you still need to make investments in your company, both in terms of time and money. Otherwise, you can damage your future ability to grow, your collective morale and your culture.
“There is the recession response, which is to cut everything,” Wathen says. “That’s the easy response. Of course, you have to do some of that; you have to size for what is going on in the marketplace. But if you cut everything, you’ve damaged yourself so much for the future that you’re not going to have new products, you’re not going to be growing and training, you’re not going to be doing the things you need to do for the long haul. That is one of the truly difficult judgment calls that a leader has to make: the short term versus the long term.”
You can also engage employees particularly at the management level by putting a part of the company in their hands. Wathen says that if employees buy in to the company in a real way and are allowed to reap the financial benefits in a direct way, they’ll be more inclined to see the bigger picture and realize why your vision makes sense for the long term.
“It’s having a strategy and operating reviews, and then having incentive systems that tie it all together,” he says. “Ideally, anyone who is making decisions that matter, I want some stock in their hands. There are a bunch of ways to do that, like options and grants, but the real issue is that you are putting stock in their hands so they are part of the total and can reap the benefit over the long haul of you improving the company and the market recognizing that. Something like that ties everybody together.”Stay on message
If you’re changing the way your company does business, your employees need to buy in at or near the outset in order for the transition to be successful. But that’s not the only place where a transition can get off track.
You need to get employees to buy in, but you also need to keep them on board once they’ve bought in. That means your communication can’t stop with the initial rollout. You need to repeat your vision in some form at every opportunity with your employees.
Wathen says it boils down to one word: consistency.
“Consistency is the primary requirement of communications like these,” he says. “I have an operating map with strategic goals, and I take it with me every place I go. I used it in S hanghai recently. I use it with outsiders. I use it when I do presentations to stockholders and debt-holders. I make myself get to each of our business units regularly and continue to share the message. That’s the key to the whole thing: reinforcing what matters over and over.”
In any time of change or uncertainty, you want your communication to be frequent, precise, concise and answer the ever-present question that employees have, “How does it affect me?”
“It’s total honesty and transparency,” Wathen says. “‘Here is what we’re doing; here is how it affects you.’ I always approach it with the idea of what everyone is going to go home and tell their spouses about my message. That’s the test question. If they can relay the message to their spouse and the spouse understands it, my message was probably clear. You don’t want ambiguity. There is psychology in this. Every person in tough times might view the worst. So you need to tell them exactly what it is and what the message means to them.”
You need to paint a picture of where you are taking the company and the reasoning behind the plans you and your leadership team have put in place. But if the situation isn’t entirely rosy, if there are going to be bumps in the road and hardships to endure in the journey to realizing your vision, you need to be frank about that.
“You have to remain transparent about the way you have to operate,” Wathen says. “What I’ve told our people over and over is that we’re still in a recession, and you have to hunker down and manage costs way tighter than what feels good. You have to do a few things for the future and be careful about it. We still have a lot of facilities running four-day workweeks. It’s not something that anybody wants to do, but it’s a choice we made to keep more people around for when things get better.”Make an example
When you’re driving any type of change, you need to leverage the wins you achieve as much as possible. They might not be the most profound, foundation-sculpting victories your company will ever achieve, but they still matter.
By promoting small victories throughout your organization, you’re solidifying the idea that the vision will work, and it will pay off for everyone in the end.
“You sort of brag about what somebody else has done, and you do it from the top,” Wathen says. “For example, one of our businesses early last year bought a batch of equipment from a bankrupt competitor at a bargain price. Everybody in the company has now heard that story, along with a request that they try and find the same kind of deal. So you give examples and see who else in the company might have some similar ideas.
“That is one of the ways you reinforce things in a diverse company. You have folks doing some great things, having some good ideas, and there is a lot to be said about copying those ideas. Plus, it makes you feel good if you’re the person whose ideas are being copied.”
Moving forward, TriMas has the operational structure that Wathen and his leadership team want. The company has a strategic plan for each business, and the board is on the same page with the leadership team. Up next for the company, Wathen wants to develop a process to find talent and match the right people to the right jobs. He calls it a “people planning process.”
Change management is an ever-evolving process that you need to constantly monitor. You have to make sure that everyone in the organization remains tuned in to your vision, but you also have to make sure that you’re going back and revisiting your vision, and leave the door open for revisions as needed.
“Once a year, you step back and think about your key strategies, what are the projects you’re going to do,” Wathen says. “You don’t have to constantly redesign the business, but you stick to the basic things you’re going to manage, and those go to the top of the list. There are probably a lot of other things you’d like to do, but those don’t make the list right now.
“It’s easy to say you’re going to keep it simple, but you have to employ some tactics to make it happen.”
How to reach: TriMas Corp., (248) 631-5450 or www.trimascorp.com