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How Jeffry Quinn used his heart to get Solutia out of bankruptcy Featured

7:01pm EDT November 30, 2011
How Jeffry Quinn used his heart to get Solutia out of bankruptcy

Jeffry Quinn had to stop the bleeding at Solutia Inc. When he took over as the company’s CEO seven years ago, it seemed like the best thing he could do at that moment. Solutia was a company that was in a lot of trouble.

“I became CEO just a few months after the company filed for Chapter 11 reorganization,” Quinn says. “We had a failing business that was beset by a number of problems. Some not of our making, but some of our making. So it was a transformation that had to occur rapidly in order to create a future for the company.”

Much of the difficulty that the company was experiencing could be tied back to the split from Monsanto in 1997.

“The company got spun off,” says Quinn, who is now chairman and president in addition to CEO. “It was loaded up with all these legacy liabilities. It was not given some of the businesses that arguably might even be viewed as chemical business that were defined as agricultural businesses and stayed with Monsanto.”

So Solutia, a performance material and specialty chemical business, had lost some of the businesses it needed and was tied to a number of businesses it did not. The result was turmoil.

“We had a significant series of issues that related to businesses that we had not been in for decades,” Quinn says. “Businesses that weren’t even part of the company at the time it was spun off from Monsanto in 1997. It was pretty obvious that was the biggest source of many of the company’s difficulties. What was not as obvious were the performance issues relating to the businesses that we were running. There was more potential to be realized from those businesses than we had created.”

Quinn was under a lot of pressure. He arrived at Solutia in January 2003 as a senior vice president and general counsel. Six months later, he was chief restructuring officer, helping to prepare the company for bankruptcy. Less than a year after that, he was CEO.

“I was the first officer-level person that had not worked at Monsanto before the spinoff,” Quinn says. “When I started in 2003, no one would have thought a little over a year later, I would become CEO of the company. It wasn’t the Solutia way.”

But it was the reality that Quinn faced.

“It’s kind of like a doctor in the ER triaging a patient,” Quinn says. “You get the patient stabilized first and then you can figure out what the cause is.”

Stop the bleeding

Quinn looked at the situation at Solutia and began to cut away at expenses. It had to be done before the company could talk about a recovery.

“We had to do things relating to benefits,” Quinn says. “We had to do things relating to our pension plan. We had to do a lot of things that were not very pleasant at all, but they were necessary in order to put the company on better financial footing.”

As each cut was made, Quinn made a point to clearly explain to people what was being cut and why.

“It was direct, candid conversations to really talk to employees through global video town-hall meetings, through visits to our plants, to discussions with the leadership team,” Quinn says. “It was just dealing with people in a candid and open manner. ‘Here’s the facts, here’s where we are, and here’s what we need to do.’ The process of making these decisions, the decisions weren’t difficult analytically. The decisions were difficult emotionally.

“For example, we had a pension plan that was significantly underfunded and we made the decision to freeze benefit accruals under that plan. What I told employees at that time was that freezing the plan was what was necessary in order to save the plan.”

Quinn was surprised to find employees were actually pretty receptive to his message, despite the gloom.

“We had gone through a period here at Solutia where many of the employees saw the issues and saw the problems and perhaps felt like the organization had not dealt with the problems directly and proactively,” Quinn says. “So the employee population was very receptive to, ‘Here’s the problem, here’s what we’re going to do, and here’s how we’re going to take aggressive action.’”

When you have big cuts that need to be made, you’ll probably find it easier to earn support if your employees feel like there’s a reason for the action and a bigger goal in which that action is contributing toward achieving.

Quinn didn’t want the recovery at Solutia to be about hitting a number.

“We had a vision of what this company could be and everything we did from day one was focused on that vision of what Solutia could become,” Quinn says. “We couldn’t have gotten employee buy-in if it was all about slashing and cutting to a certain number. It had to be about fulfilling an ultimate vision.”

Create a sense of purpose

Quinn didn’t learn how to create a vision in college. And you won’t find the perfect vision for your company in this story or in any other business magazine or at any industry forums, trade shows or leadership conferences.

“You have to develop these from the heart,” Quinn says. “They have to be things that you truly believe in and truly want your organization to believe in. You have to be willing to pattern yourself that way and pattern your organization that way. You can’t just give lip service to something like this. You have to be candid and realistic with yourself and be able to look in the mirror to ask the difficult question: Is the organization living up to your expectations in that regard?”

Quinn sat down one evening shortly after becoming CEO and wrote down 10 statements that he felt Solutia needed to stand for. The list included such things as, ‘Be good stewards of our business,’ ‘Set high expectations for ourselves and our colleagues’ and ‘Give our people opportunities to make a difference.’

“These weren’t written by a consultant, they weren’t written by good communication people or the HR organization,” Quinn says. “They were written by me.”

The key to this list was what Quinn did with it. He put together a team that he called the Solutia Transformation And Revitalization Team, also known as START. It was a group of about 80 people from across all parts of the business. Quinn’s tenets would be the foundation for this team.

“It was not necessarily hierarchal in terms of organization level,” Quinn says of the team. “But it was certainly comprised of the influencers, the people who had internal credibility and people who had positions in HR and other functions that were very visible. We wanted the people who could really go out and tell the story to our own employees.”

You can develop the best plan in the world. But if it doesn’t involve your people or if you don’t let them play a large role in how your plan is carried out, it won’t do you any good.

This kind of inclusion was not a priority at Solutia before Quinn arrived.

“I thought a situation had developed where there were two or three people at the top of the organization and everyone else was at the second tier,” Quinn says. “I didn’t want the mentality of people looking around the room and saying, ‘What are those guys going to do about this?’ I wanted it to be more inclusive. I wanted to create a greater expanded accountability where our employees and our management team felt like, ‘Hey, I’m accountable for what happens here. I can make a difference. I’m involved and I’m part of the team.’”

It’s that type of feeling and not just clever clichés that you need in order to earn support for a vision.

“There’s nothing you can do in a four-sentence vision statement or mission statement that will get employees excited,” Quinn says. “You need some statement of the ultimate destination. But the way you build excitement is through communication and dialogue around that statement. What does it mean? How are we going to do it? What does it mean for me? If it was as simple as writing a catchy four- or five-line vision statement, the communication people would be running the world. It’s kind of a statement of who we are, but it’s also a statement of who we strive to be.”

Manage your team

Of course, as Quinn was working to develop this purposeful and inclusive organization at Solutia, he was also working through bankruptcy and the challenges that presented on a daily basis. He did his best to keep things separate.

“I felt like I had two jobs for those four years,” Quinn says. “One was running the company and the other was running the bankruptcy process. We tried to keep those separate.”

Quinn says going through bankruptcy isn’t what many people think it is.

“It’s not really your creditors you’re dealing with,” Quinn says. “It’s new money investors and all the hedge funds that flood into your capital structure and buy up all your capital structure bringing new money investment into it with the anticipation of making incredible profits from the process. So the bankruptcy became a battle between warring hedge funds located in New York a few blocks apart.”

This battle was important, but there was nothing most employees could do about it. So Quinn encouraged the START team to continue focusing on building a purpose-driven organization and turned his own attention to his management team, where he felt more change was needed in pursuit of the vision.

“You make your own observations,” Quinn says. “You know just from being involved, unless you’re very withdrawn and detached, you know when the team is hitting on all cylinders.”

Quinn looked at his management team and he still believed there was a problem with how it interacted with employees. The team was not being the standard bearer for his vision that he wanted it to be. So he made changes.

Some people were pretty unhappy at not being deemed worthy of being leaders at Solutia anymore. But Quinn felt strongly that he owed it to his employees to make the changes. They were the ones who had shown such loyalty to him because they believed the tough decisions he had made were in pursuit of a better future for Solutia. So he owed it to them to find leaders who were a better fit for the plan.

“The thing I would say is not to be complacent,” Quinn says. “Making changes is difficult, and it’s easy to fall into a trap of not wanting to create disruption. We were falling short of where I wanted us to be in terms of communication, collaboration and information flow. That candid dialogue is so important. I thought in some areas, we had fallen into too much of the manage the message, manage the information and manipulate and control as opposed to the transparency that I like.”

Quinn wanted to show his people that their commitment to him and the trust they had shown in him both to deal with the bankruptcy process and guide them through the development of a new vision had been worth it.

“What helped was keeping employees focused on the vision of where we were going and keeping employees focused on the fact that as difficult as this was, we were going to make those difficult decisions in order to create a future for the company,” Quinn says.

It’s not done yet, but Solutia is out of bankruptcy and the company had a gross profit of $608 million in 2010 with revenue of $1.95 billion. Instead of 23 businesses, the company is now comprised of three businesses. The leaner business model and slimmer portfolio brought EBITDA from a 4 percent margin in 2003 to better than a 25 percent margin in 2010.

Quinn says the key to turning your company around and being the leader it needs is not the depth of the cuts you make or the clever sound bites you write into your speeches. It’s getting people to believe in you and believe in what you stand for.

“The challenge is not to be constrained by some of the conventional wisdom of organizational structure,” Quinn says. “Who are those people who can influence your organization? Who can be your ambassadors? Who will truly buy in to what you’re trying to create and be advocates for that within the organization?”

How to reach: Solutia Inc., (314) 674-1000 or www.solutia.com

The Quinn File

Born: Sturgis, Ky.

Education: Bachelor of science degree, mining engineering; juris doctorate, University of Kentucky. I always joke that I’m a reformed lawyer.

What was your very first job and what did the experience teach you?

I wrote a column about high school sports. I also I worked in underground coal mines and put myself through school. All my experiences taught me that everything is hard work. Any job, whether it’s being a world-famous sports columnist or being a CEO or being an engineer or working day to day in a manufacturing plant, it’s hard work.

Who has been the biggest influence on you?

My dad was in the mining business, and he did not have the opportunity to go to college, but he rose up to become vice president of operations for a significant company in the mining business. He did that through hard work. But my dad was one that was especially known for being concerned about his employees. He wasn’t a guy who tried to get by on bluster and bluff and rhetoric like a stereotypical person in the coal industry would at that time.

If you could talk to just one person, who would it be and why?

That’s a very easy question for me. I have an 18-year-old daughter, Grace, who is a special needs kid. Grace is functional to some degree and she verbal approximates and you can communicate with her. But really the opportunity to sit down with her and talk with her like you would a typical kid is probably what I would wish, to see what’s really going on in her mind.