Randall Dearth knows that people are what make a business successful. That’s why his employees were the first priority on his list when Lanxess Corp. spun off from Bayer Corp. in 2003. Deciding to focus more on life sciences and high-performance materials, Bayer divested most of their chemical operations and some of their material science operations. Lanxess Corp. formed in 2004 as a new, independent entity of Bayer, which meant change had to occur.
“The first thing we had to deal with, and I had to especially deal with here in the U.S., was our people,” says Dearth, president and CEO of Lanxess Corp. “We had a lot of people that were very nervous about leaving Bayer. They didn’t want to go to this new company. So a lot of that was, ‘How do we deal with the people issues, how do we deal with making sure they feel comfortable in this new company but also make sure they had a future?’”
Dearth knew it would take a strong effort and a lot of communication to assure employees that Lanxess, a specialty chemicals company, was going to come out of this situation better than ever and that each employee would play a big part.
Communicate to employees
Having to start fresh with a new location, building and a new company direction, it was important for Dearth to make employees feel welcome.
“I came in with a very strong belief that we needed to set up policies for our employees so they can truly be a part of this new company,” Dearth says. “Our facility here in Pittsburgh went into a brand-new building where the walls were up but nothing else. We worked with our employees in designing the building and asked them what it is they wanted. They wanted a fitness center; they got a fitness center. I wanted to hear from each and every employee. We did a lot of communication, town-hall meetings and round-table meetings to really hear what their concerns were and to make it clear that as a new company, we had a future and we had a lot going for us in terms of our products and our positioning.”
Lanxess Corp. employs nearly 14,500 people globally, with about 1,000 employees here in the U.S. As Lanxess was finding its feet in the first few months, Dearth focused a lot of his time on communicating the company’s goals, vision and direction.
“Originally, we did a tremendous amount of town-hall meetings,” Dearth says. “Every month for the first year, we would get together in a town-hall forum and allow for questioning, talk about our vision, talk about our businesses and educate people about our challenges.”
Many companies discuss their goals, direction and successes in a town-hall forum or at a hotel meeting, but Dearth knew that those meetings alone wouldn’t be enough to communicate what he wanted the company to become.
“We did that not only in town-hall meetings, but then I took them to small groups of 10 to 20 employees where I would specifically ask them their concerns, their issues and what we could do differently,” he says.
In order to give employees an easy and constant way to remember company goals and vision, Dearth created what they call Formula X — a simple guide to help employees stay focused and maintain four basic principles: Seek solutions, not problems; keep it simple; take ownership; think new, and act fast.
“Formula X was how we wanted to run our businesses and how we want our employees to act,” Dearth says. “We’ve got to be quick. I expect from our employees great ideas. I challenge them in small round tables and I ask them what ideas they have that would make things even better, and we try to live these things through.”
As Lanxess started to come together and grow as a company, Dearth says that having a vision and communicating that vision constantly were the keys to making the company successful.
“You need to set a vision,” Dearth says. “Employees look at leadership to say where are we going? Is this really where I want to be? It is imperative that the CEO very clearly sets out, ‘This is the direction, these are the goals we are looking for, and this is what it’s going to look like once we get there,’ and they have to make that clear. Secondly, a good CEO needs to allow his employees the entrepreneurial freedom to do things on their own. Allow them to make mistakes but to also make themselves better. A CEO should encourage entrepreneurial spirit. Also explain cost-effectiveness. As a smaller chemical company, we didn’t have the big, deep pockets of a big multinational company like Bayer, so we had to instill in our employees how we spend our money, what we invest in and how we invested. You have to give a financial sense of the company to your employees.”
Putting a plan in motion
Getting your employees on board with your new company is step one in driving change. Once a company has the support of its employees, they begin forming ideas and plans. It is critical that those plans and ideas be implemented and put into effect throughout the company in order for them to take hold and be successful.
“Because we are a global German company, the tone is going to be set at the very top of our board,” Dearth says. “It is up to me and my management team to take that tone and that vision and where we are going and put it into terms that our employees can understand. I have senior manager and operating committee meetings frequently and talk to members of staff constantly. Anything that might appear as a problem or pushback is handled promptly and discussed. You have to use the tools you give employees. You have to be entrepreneurial, be focused, be quick, and that will allow employees to contribute what they can.”
Change in a company can create a lot of uneasiness among employees. Whether it is good or bad, change can be scary and CEOs and business owners must keep that in mind when implementing plans to move forward. Dearth says that communication and visibility are key things a CEO must do.
“No. 1 is to always communicate, communicate, communicate,” he says. “The worst thing a CEO can do in a period of change is to hibernate. You need to be out in front of the employees, be in front of stakeholders and communicate what’s going on. You have to be very visionary. If you’re bringing in change, you need to be able to make a very compelling case of what change looks like and why change is necessary. Change management also is accountability. As you change your culture and change the way you do things, every single employee is responsible for doing what they can within their responsibilities to make that happen. You will be held accountable, you will be compensated on that, and you will be disciplined on that.”
Build a brand
Another important aspect of change is developing the company brand. Never an easy task, a company’s brand is everything that a company stands for. It will tell employees, shareholders and customers what the company does, what it stands for and where it’s going in the future.
“The challenge we had globally, especially in the U.S., was how do you brand this new company?” Dearth says. “Everybody knows Bayer, but Lanxess, what’s a Lanxess? How do you spell it? How do you pronounce it? We had to spend a lot of time very early on creating a brand for not only our employees but also our customers, our communities and our shareholders. As a publicly traded company, albeit in Europe, shareholders need to know, ‘What is this company, and should I be investing in it?’
“I went out everywhere. I went to trade associations. I’m a member of the American Chemistry Council. … I wanted our local politicians and other companies here in Pittsburgh to know who Lanxess was. I gave tons of presentations and did tons of interviews, and I’m very active on nonprofit boards. I do all of that to let people know who we are.
“When you are creating a new entity, it is critical that you have a strong brand that distinguishes you from where you were and defines who you are and where you are going. To establish your brand, you need to align yourself with it and make sure that it is a consistent and very visible part of everything you do.”
Once a company is established and things are looking up, it is easy to let focus slip away. However, staying focused on goals, monitoring change and being prepared are very important to staying in a growing position.
“Maintaining momentum is very important,” Dearth says. “When we became a new company, employees were obviously excited about building a new company. How do you maintain that excitement when you’re not buying things and perhaps divesting things as we had to do? That was a challenge. The 2009 economy, that says it all right there. We lost 35 percent of our business overnight. How do you very, very quickly react to that? Not knowing how long that crisis was going to last, I had to get my management team in place, and we had to inform employees. This crisis has had a severe impact on Lanxess and things had to change. We had to change our benefits structure a little bit, and we had to take some bonuses away and a few other things, because we weren’t sure how long this was going to be.”
When companies start to grow, they can be faced with challenges at any time. It is critical that companies have programs or teams in place to handle or prepare for those challenges. Without these precautions, a company will only dig themselves into a bigger hole.
“As a chemical company, or as any company, you are constantly going to be faced with challenges and the CEO is responsible for making sure you’re prepared for crises,” Dearth says. “You have to have teams in place and make sure that everybody’s aware of the direction you’re going to fix the problem. Employees are the first thing you should look at. You need to make sure you have well-trained people in the right positions and that they are ready to take on growth and are in the right frame of mind. The CEO has control over that. If you don’t have the right people in the right places, then make changes. Make it so it works. If people aren’t on board with these things, you’re going to flounder. They need to understand why we are buying this, why we are bringing it in, what our growth strategy is and what the goal is for making it happen. You have to make sure that nobody gets too comfortable. When you work for a big company, sometimes it’s easy to get comfortable, because you’re in such a big company sometimes you’re hidden. I know pretty much everybody in this building. I know what their skill sets are. I know what their challenges are. I want to make sure that people are ready to go and focused on the right things.”
How to reach: Lanxess Corp., (800) 526-9377 or www.lanxess.us
The Dearth file
President and CEO
Born: Warren, Ohio
Education: Bachelor’s degree in chemistry, Hiram College; master’s degree in polymer science and engineering from Case Western Reserve University, Cleveland
What are traits of a good leader?
A focus on results, an ability to network, staying true to who you are. Treat people with respect and understanding. Diversify your experiences. Take a chance. Try something new. Surround yourself with great people.
What’s the most important thing a leader has to do?
Dearth on company culture: Last September, Lanxess was a corporate sponsor of a Pittsburgh Penguins preseason game, and Dearth immediately thought of his employees.
“By being a corporate sponsor, we received tickets to the game. We could have given those tickets all to customers or donated them, but I thought it would be a better idea to give each employee two tickets and they could bring their spouse, their significant other, or their kid or friend. I think 80 percent of our employees here in Pittsburgh came to the game, and we had T-shirts made for them and their guests, and we celebrated Lanxess, and we celebrated Pittsburgh, and the employees are still excited about that.
“Culture is extremely important. Fun is also important to culture. When employees come into work, yes we have work to do, yes we have our challenges, but I want them to also see a sense of fulfillment and fun that makes them feel like this is truly the place that I want to be. The CEO plays a big part of that.”