Rod Hershberger is helping PGT Industries bounce back from budget cuts and layoffs by emphasizing company culture Featured

7:00pm EDT November 25, 2010

The first quarter century was good to Rod Hershberger and PGT Industries Inc.

From the company’s 1980 co-founding by Hershberger until several years ago, the custom window and door manufacturer had never experienced a round of layoffs and was able to guarantee 40-hour workweeks for all of its employees. In 2006, the company peaked with annual sales of $372 million.

Then the housing market started to crumble, and the entire economy followed shortly thereafter. By the end of 2008, the entire country was headed into a major recession. Sales started drying up for PGT Industries, plummeting to $166 million in 2009. It forced Hershberger and his leadership team to make some tough decisions.

“We were able to guarantee 40 hours and no layoffs for everyone, but when the housing starts dropped by 90 percent, we had to change that policy,” says Hershberger, the president and CEO. “That policy was one of the strong pillars that our employees believed in, that there was going to be a lot of job security, and that changed. It was very difficult to make sure that we could continue to be a profitable company that could give our employees a lot of autonomy and freedom.”

Over the span of several years ending in November 2009, PGT Industries slashed its work force by half — from 2,600 to 1,300. Approximately 1,000 of the jobs were cut through layoffs, the remainder through other forms of attrition. The deep cuts threatened to eat away at the culture that Hershberger had worked nearly 30 years to develop and maintain.

“I’m not naive enough to think everything is going to stay the same as it was 30 years ago or even five years ago,” Hershberger says. “But there is a base culture of teamwork that we have to maintain, and we had to make decisions with the underlying theme that our culture can’t be damaged even though we’re going against the things that our culture tends to represent.”

Through it all, Hershberger needed to address the problem that so many business leaders have had to address over the past two years: how to deliver potentially morale-destroying news to your company and how to pick your company back up and dust it off before too much time has passed.

Bear the burden

Hershberger has a common saying regarding communication: “Anyone can tell good news, but there is only one or two of us — mainly me — who can spread bad news,” he says.

If you have to take your company through a round of layoffs or cutbacks of any kind, the message needs to come directly from you. You can’t rely on cascading messages or written communication when the culture of your company and morale of your employees might be at stake.

The key, Hershberger says, is to put a human face on what can seem like a callous, impersonal act. When PGT needed to conduct a round of layoffs, Hershberger and his team notified those who were being let go early in the morning, then, within hours, he started dealing with the news of the layoffs by meeting with departments in smaller groups, allowing a chance for dialogue with remaining employees on the company’s future.

“If it comes time to give bad news, you need to get people together in small groups, tell them what is going on and why it’s going on, and let them ask questions,” Hershberger says. “That is our style. We don’t try to hide behind anything. We tell everyone what is going on and then ask for suggestions.”

Don’t head into the dialogue with employees in a defensive posture. You will have explaining to do, but you will also find employees who recognize that you just made an agonizing decision under a great deal of pressure. If you can connect with employees on that type of emotional level, it can help accelerate your company’s recovery.

“The first time that we had a reduction in force, I’m not sure if it was harder on the leadership of the company or the employees involved,” Hershberger says. “Traditionally, you’d think employees got the worst of it, but it was amazing to me over the next week after we had that first reduction, we had a lot of employees calling and checking on the health of the leadership. Every leader here feels like it happened yesterday, and our employees understood that as well as anyone, because we’re not a very big community. You have to plainly state the situation because it is what it is, but you make sure you show people that it’s not their fault.”

There is no way to communicate cutbacks in a way that is going to leave company morale unscathed. But you can cushion the blow to some degree by keeping employees in the know regarding the company’s performance. It’s particularly true if you’ve had a round of layoffs and cutbacks and are anticipating the possibility of more. When there is uncertainty swirling around your company, the worst place for anyone to be is in the dark.

Employees will often see the signs of cutbacks coming, and you need to put the speculation to rest by either confirming or denying what your employees suspect.

“At times, our employees might have known a reduction is coming maybe even before we did,” Hershberger says. “They know how busy they are, how many orders are coming in, what type of business is out there. We’ve actually had employees come to us and say that they want to get the reduction over with sooner rather than later, because it will mean more hours for whoever remains.

“But it’s still hard, and you still need to remain extremely visible to everyone, walking the floor, walking through departments, talking to everyone and not hiding behind anything. You need to continue to be very candid about what you see and why you see it that way, how decisions are made, and then continue asking for input.”

Move forward

In the days and weeks following a round of cuts, along with giving employees an explanation about the state of the company and why the cuts were made, you also need to start mapping out a vision for your future.

You need to acknowledge that cuts have affected your work force and remain sensitive to that fact. But you also need to begin prodding the company along and not allow for a long period of dwelling on negative news.

Hershberger emphasizes strategic planning at PGT Industries and gets employees in every level and department involved in the planning process. Even though a strategic plan is mostly a document constructed by upper management and for upper management, you still need to have employees throughout the company involved. In addition to giving you ground-level insight, they can help you streamline the concepts to a form that can be easily communicated throughout the company.

Employees might not concern themselves with the inner workings of your strategic plan, but they do need to see what you’re planning in bullet-point form. Hershberger and his leadership team whittle their plan down to a number of basic drivers that will power the company — usually between three and eight in a given year.

“Strategic plans are often fairly complex documents, but if we don’t walk out of our strategic planning phase with one page that clearly defines where we want to go, something that we can clearly communicate, then we have failed in our strategic planning. Everyone needs to know the three, five, seven drivers that we are going to measure ourselves against.”

Even though you want to recover quickly and completely after a period of cuts, you need to make sure that you aren’t trying to rally your employees around too many drivers. There are only so many factors that your company can classify as a priority. In your strategic planning process, you need to ensure that you are zeroing in on what is truly important for your company moving forward.

“There is a number of drivers that are going to be too many, but I’m not sure I can give a specific number,” Hershberger says. “But you can’t achieve if you can’t focus. If we have 20 things that we put on paper and say, ‘This is what we want to accomplish strategically,’ we’re not going to accomplish 20 things. So you have to figure out which things are strategic, which things are tactical and how you assign everything out. That’s why we try to stay between three and eight drivers.”

During the economic downturn, many of Hershberger’s drivers focused more on the short-term goals instead of long-range goals.

“In the old days, we had actual financial numbers focusing on where we wanted to be in sales and how we would get there,” he says. “During the downturn, we’re probably focused more on the shorter term, measuring by product development and introductions into the market. We look at some of our leadership development classes taken by some of our leaders. We also believe that we’re a customer-intimate company, so we have some measurements on that. Some are more objective; some are based on customer feedback.”

Keep the momentum going

Your initial efforts can go a long way toward stabilizing your company after a period of cutbacks and upheaval. But once the situation has stabilized, you can’t allow yourself to become too comfortable. Your culture is still reliant on your employees’ willingness to carry it forward, so you must continue to strengthen their confidence in the company.

Hershberger continues to walk the halls and conduct meetings with employees at PGT Industries. His aim is to keep the dialogue of the past few years alive, in order to continue to solicit input on where the company is headed.

“You don’t do one-on-one communication just because you decided to do it today,” he says. “It’s a process that you have to believe in strongly, and you make it a point to listen to those employees who are vocal. Sometimes, they’re going to be negative and vocal, but you still make it a point to listen to those people. In public meetings and in private, you walk the floors, you seek them out. What you’re really doing is sending a message that I, as the leader, am going to listen to everyone who talks. I’m going to make it easy for you to talk to me. And those aren’t the kind of relationships you develop overnight. It’s something you have to cultivate over time.”

Keeping your culture strong is one of the most effective ways a company can weather adversity. But the behavior that helps strengthen and sustain a culture needs to remain a constant, whether the economic sky is fair or ominous.

“The best bulletproofing advice I can give is don’t let your culture change,” Hershberger says. “If things aren’t going well, it doesn’t mean you spend less time talking to people, walking the floors or less time caring. You have to do the same things when times are good as you do when times are difficult. Open communication is the way you build a high trust level within an organization.”

How to reach: PGT Industries Inc., (800) 282-6019 or