Bouncing back Featured

7:00pm EDT December 26, 2009

Every business experiences bad times. But what George Perry encountered was a special kind of bad. It was the kind of bad that can alter the face of an entire industry.

It was mid-2008 when the U.S. automotive industry started crumbling around Yazaki North America Inc., the North American arm of global automotive component supplier Yazaki Corp. By mid-2009, both General Motors and Chrysler had filed for bankruptcy protection, and plant shutdowns, layoffs and bankruptcy proceedings were rampant among automotive suppliers, as well.

It was more than a downturn. It was an emergency.

“I’ve been in the business a long time, and I’d never seen a crisis so severe that even our customers were unsure of their future,” says Perry, who retired last month as Yazaki North America’s president and CEO. “They couldn’t even give us guidance as to what the next quarter or year would hold.”

Revenue at Yazaki North America dropped from $3.1 billion in 2007 to $2.2 billion in 2008. The loss of income necessitated cutbacks throughout Yazaki’s continental footprint. Approximately 25 percent of salaried employees were let go through layoffs, attrition and buyouts. Many other employees were affected in some capacity through plant closures and restructuring. That was on top of a corporate restructuring that was already under way when the economic crisis hit.

“Even with our revenues down, we still had to find the cash to restructure the entire company,” Perry says. “We were already in a mode where we were completely overhauling the business system so that we could have one integrated business system. We were in the middle of all of this, which was a major undertaking, when this high level of uncertainty hit the marketplace.”

It was instability piled on top of instability. The company wasn’t sustaining just economic damage. It was sustaining damage to employee morale, which if left unchecked, can damage or destroy a company’s culture.

Perry and his leadership team had to react quickly, both to salvage Yazaki’s finances and reinforce its culture.

Involve everyone

The problem with downsizing is that what is good for your company’s coffers is most likely bad for your employees. Saving money means cutbacks, closures and layoffs. Employees generally don’t react well to any of the three.

Perry recognized that, so before he even talked to his leadership team about formulating a communication strategy, he sat down with them and formed a detailed plan for the company’s direction and explained the reasoning behind the decisions that would affect the entire company.

“Before you even talk about communication, you have to make sure you have clearly thought out the direction you’re going to go, the issues everyone will be facing and that you have all stakeholders on the same page,” Perry says. “It’s important that once you start the communication process, that everybody is aligned.”

The plan has to start at the top and work its way down. Managers at all levels of the organization need to have a say in the plan, so that each executive and manager can take a sense of ownership in the company’s future direction.

From there, corporate management can begin communicating with managers down the line and on to employees and associates on the lower rungs of the company.

“During any kind of crisis period, there are all kinds of rumors, so you can’t afford to have different and mixed messages coming from the different levels of management,” Perry says. “It’s very important that you clearly get the leadership team focused on where you’re going, how you’re going to get there, what this will mean in terms of any of the stakeholders in the company. After that, you need to make sure that you’re available, that you’re approachable, so that you can support any of the communications that go out.”

Perry started communicating the need for change via e-mail and voice mail. He left a personal message on the voice mail at every employee desk. His leadership team sent out memos outlining the need to reduce Yazaki’s structure for the sake of staying competitive. Follow-up written communication helped keep employees abreast of the plan as it progressed.

“We wanted to be sure that everyone always had more advance information if we were going to do anything in terms of concrete actions that were going to affect the work force,” Perry says.

It’s critical to keep people involved in the plan from the first steps. It’s one of the best ways to engage managers and employees and enable them to have their voices heard as the company is changing.

The bottom line is, even when you have to communicate bad news, it will make a lot more sense to your people if they feel like you have gone out of your way to explain the reasoning.

“If you get people involved in the development, they know what questions were asked during the development phase, how you arrived at the conclusion you arrived at, why you’re going where you’re going. Then, when you start the communication process, you have consistent communication throughout the organization.”

In order to stay visible and accessible, Perry uses the tried-and-true method of management by walking around. The term might be an overused business cliché, but Perry says it’s still relevant.

“It can be casual,” he says. “I eat lunch in the cafeteria every day. People can join me, or sometimes I just join a table of associates. It’s sort of an open forum. They can ask me any question they want, whenever they want. They can ask me in the cafeteria, in the hallway, in casual meetings, wherever they are. And through all of it, they’re always hearing the same message. And you can’t be afraid to answer tough questions.”

When hard times hit, your willingness or lack of willingness to candidly answer tough questions can go a long way toward either reinforcing or tearing down your culture. Your willingness to answer challenging questions — and your employees’ willingness to believe your answers — is rooted in how you conducted yourself before the crisis.

“Honesty and integrity are characteristics that are extremely important,” Perry says. “If you have built credibility within the work force, there is really no reason to be concerned about being available for answering the tough questions.”

Perry says you can’t have different policies for different situations. In your employees’ minds, either you are open and straightforward at all times or you’re not. And if you’re not, your integrity will suffer.

“You have to give the good news and the bad news,” he says. “You have to talk about where the company is going in the long term and the impact it will have on everyone. Sometimes, you’re not going to achieve what you would have liked to achieve. It all goes back to honest and open communication.

“Don’t give anyone the feeling that you’re holding back and hiding something because you’re afraid of the consequences. That’s not a position you want to put yourself or your company in. Employees sense that, react to that, and it takes away from doing the things that need to be done so that your company can survive and recover from the crisis.”

Build up your people

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To keep your messages active and circulating in a challenging time, you need advocates throughout your organization.

They’re in there somewhere. You just have to know how to find them, groom them and empower them to keep your company together.

If you can create communicators throughout your company, it’s another way to generate trust between management and employees, even when an air of uncertainty is swirling around the organization.

“Identifying them is pretty easy,” Perry says. “If you walk around your company, you’ll find them. They’re the ones who speak up, who participate. They’re the people who others cluster around. What you have to find out is, are they working on behalf of the company or against it? You need to get to know them better before you can assess that.”

A leader doesn’t have to hold an upper-management title. When you’re trying to promote a new way of thinking in your company, the leaders are the ones you highlight as people who can create buy-in from the people in their division or department.

“One of the things I’ve learned over time is that you will find leaders at every level of the organization,” Perry says. “Leaders aren’t just those who happen to have a management title. They are the ones who really help keep a company together in bad times. Having those people in place and informed can really help to offset those few naysayers who just think the sky is falling all the time. If you have people at all levels who are saying positive things, it can help to head off an undercurrent of people who are saying negative things.”

Recognition — when it is genuine and warranted — is another key factor in building a positive mindset among employees during challenging times. Every win your company achieves is something you should promote and encourage others to promote. It doesn’t matter if it is an individual accomplishment, a team goal that was met or exceeded, or something in which the entire company can share.

When employees are hearing about nothing but cutbacks and downsizing, it is good to remind them that the company is still making positive strides. But you need to be careful in how you recognize individuals and teams.

“You need to really investigate the data in terms of the person and their accomplishment,” Perry says. “What you don’t want to do is give someone credit in front of the organization, and then realize that the work was actually done by other people. So you need to make sure you do that for all high-level recognition.

“But overall, recognition is positive. It’s a way to reinforce that you’re headed in the right direction. We always make sure that we’re talking about the good things along with the bad things. We talk about some of the positive changes that have been made, some of the advancements we’ve made by going through a particular issue or crisis, even if the outcome isn’t quite what we desired. You just have to be sure that the recognition you give people is well earned and well deserved.”

Perry’s people-first approach to crisis management has helped Yazaki North America weather the storm, though the company isn’t in the clear yet. Despite signs of improvement in the U.S. economy in the last quarter of 2009, the face of the U.S. auto industry has been permanently altered. Chrysler is now connected to Italian automaker Fiat, and the post-bankruptcy GM is far more streamlined than its previous incarnation, having purged some of its well-known brands, such as Pontiac, Hummer and Saturn.

Perry says any normal amount of contingency planning couldn’t have totally prepared Yazaki or its employees for the disaster that befell their industry in the past 18 months. But it doesn’t mean that planning and preparation didn’t help Perry lead his company through the minefield.

“We’re still in a mode where the future is uncertain,” Perry says. “It’s not very clear how long the recovery will take and in what form, which means we still have to adapt. That’s why you always need to be planning. Any company that isn’t planning has a real problem. You can’t just react to whatever happens.

“In a major crisis, the bigger issue is, how do you react? How do you react in a crisis that wasn’t anticipated? Do you stay true to your values or react in a way that makes people think you’re panicking? As a leader, you need to make sure that your people know that even in a crisis mode, with very uncertain times ahead, the company is staying true to its values and is doing everything possible to care for its employees.”

How to reach: Yazaki North America Inc., (734) 983-1000 or www.yazaki-na.com