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Searching for the bottom Featured

8:00pm EDT May 26, 2009

Jon Vrabely finds managing a business during a recession to be a lot like being trapped in an elevator that is in free fall and not knowing what floor you were on when the fall began.

“You don’t know whether you’re on the 90th floor or the ninth floor heading down,” says Vrabely, president and CEO at Huttig Building Products Inc. “So the biggest challenge is not really knowing where the bottom is.”

Vrabely thought his millwork and building products distribution company had found the bottom in mid-2007. Housing starts had fallen to the level his team had predicted and the market appeared to be stabilizing.

Unfortunately, it was just pausing before an even more severe dive. Instead of bouncing back, the housing market only got worse in the second half of 2007 and still has yet to recover, putting Vrabely and his company in a precarious state. Revenue fell from $875 million in 2007 to $671 million in 2008.

“It’s a very delicate balancing act to ensure survivability while keeping an eye on the future,” Vrabely says. “You’re trying to maintain a strategic view of the future, but you are challenged with immediate needs that need to be addressed from a financial and cost perspective.”

So what’s a leader to do? How do you keep 1,200 employees from being distracted about the potential loss of their jobs and focused on the work they were hired to do while you try to save the company?

The biggest mistake you can make is to hide in your office and say nothing. You need to lay out the facts as you see them and give your employees a sense of what is happening with the business.

“At the end of the day, I always try to communicate to our employees that not everyone will agree with the decisions that we make,” Vrabely says. “But my hope is that they at least understand why we are making those decisions as well as the impact those decisions will have on our business. Ultimately, all of our goals collectively should be to ensure that we survive this market downturn.”

Here are some of the techniques Vrabely has used to give his company hope for the future.

Be clear and decisive

Speculation is one of the biggest drivers of anxiety at a company where business is hurting. Employees worry about whether their job might be affected or if their plant might be shut down.

Huttig shut down 11 locations in 2007 and reduced its head count by 30 percent in response to the continued decline of the housing market.

Vrabely says there is no easy way to tell people they are being let go, especially during a recession when their ability to find a new job may be difficult.

But when it became clear what moves needed to be made, he did not waste much time.

“If you’ve already made the decision that an individual or location is not part of the go-forward plan, you have to be willing to pull the trigger earlier than later,” Vrabely says. “If there is any doubt, and what I mean by doubt is the decision hasn’t been made, you have to focus on the fact that you’re going to do everything you can to ensure that they survive.”

If employees are wondering whether or not they are going to be coming to work tomorrow, their focus is not going to be on the job.

“You have to provide them with hope that, ‘Guys, we can’t focus on the what if we lose our job or we can’t focus on the what if our branch gets shut down. The key is to focus on what do I need to do as an employee to ensure that I’m going to be here.”

Removing that doubt is not easy, and perhaps impossible, when employees see their colleagues and friends being let go. But when you demonstrate that you have a plan, it gets a little easier.

“You want to try to provide everybody with the opportunity that, while we are all in this together, you do control your own destiny,” Vrabely says. “If you do perform well as an individual or you can perform well as a branch, there would be no need for us to look at eliminating your position or your location.”

Be prepared

It’s critical for a leader to understand in his or her own mind what the ramifications of a decision might be before stepping into a meeting with others.

“I consistently spend time by myself thinking about the business, analyzing the business and developing my own action plan,” Vrabely says. “I never walk into a strategy meeting or even a staff meeting or a conference call with folks running our field locations without my own plan.”

Vrabely recalled the discussions, which took place heading into the 2009 budgeting process, that concerned the possible cutbacks in employee perks and benefits.

“We collectively put together a list of potential cost-cutting activities, pulled the management team together and went through this list one by one quantifying what the savings might be as well as the impact that those cost-saving activities would have on every employee in the organization,” Vrabely says. “As we went through that list, the pushback from certain individuals on the team around certain items became personal.”

He says he does not open the meeting with a deep explanation of his position on these topics because he wants to hear what others think. Sometimes, that feedback gets heated.

“What I don’t want to do is lay out my plan and then ask for feedback,” Vrabely says. “That tends to stifle communication and feedback. Even if you foster a very open environment where you encourage people to challenge your thought process and even if you do not view yourself differently, one of the things I’ve learned from being the CEO compared to the COO is that other people do view you differently.”

Vrabely simply presents a topic for discussion and asks others what they think.

“I solicit input on a very consistent basis and I think throughout most of the organization, employees are pretty comfortable providing me with their feedback and with their thoughts,” Vrabely says. “I always try to be cognizant of taking in their opinions and feedback prior to making any decisions. As a leader, I think it’s critical that you don’t isolate yourself, even in tough times, and think you’re the only person who has all the answers about what needs to be done. You have to be willing to allow people to challenge your thought process.”

Vrabely says he began to realize that the group would be unable to reach a decision regarding the possible cutbacks on its own.

“The buck stops here,” Vrabely says. “I am willing to make whatever decisions are necessary to ensure our survivability. I walked out of that meeting with a very clear understanding that I needed to return to my office and do my job, which was to make the decisions. I think once I made those decisions, the way in which I communicated them not only to my team but to their teams made all the difference in the way people perceived the decisions.”

Vrabely and his executive team met with general managers and told them what was happening. He documented each decision, explained why each decision was being made and what impact it would have on the company’s profitability.

The effort to explain the process showed employees that there was thought given to the moves.

“People get very nervous when they feel decisions are being made in a vacuum and just being announced without any logic or communication or explanation behind the decisions,” Vrabely says.

“It comes back to my fundamental rule that I understand not every decision I make is going to be popular. There are going to be people who are going to disagree with the decisions I make. That is their right. At the end of the day, all I can ask is that they understand the thought process I went through to make the decision. The only way you get that level of understanding is through openness.”

Stay focused

Despite your best efforts, very few leaders will accomplish everything on their checklist on a regular basis, especially when you’re managing in tough times.

“It is literally an issue of prioritizing my workload, prioritizing the strategic decisions that need to be made and then literally filling in with the day-to-day operational duties I have,” Vrabely says. “So depending on what day of the week it is and what’s coming at me over the course of the next month, you just block the time off, dig in and get it done.”

Vrabely equates the process to a juggling act consisting of beach balls, volleyballs, softballs and golf balls.

“The key is to ensure we do not let any beach balls or volleyballs hit the ground,” Vrabely says. “Occasionally in this environment, if a softball or a golf ball hits the ground, chances are it’s going to bounce back up. We just have to make sure the key aspects of the business do not deteriorate in this environment.”

You need to find ways to keep the big picture in sight during those particularly difficult times.

“The only way I rationalize in my own mind the fact that I may be eliminating positions and putting employees out on the street seeking new employment is that I still have 1,200 people that are employed and I’m still supporting 1,200 families,” Vrabely says.

You need to find ways to celebrate the small victories that your company sees and use those victories to boost employee confidence going forward.

“I probably do it more than anything through my personality and just through my face-to-face and phone communications with people within the organization,” Vrabely says. “I was walking through our corporate office, and this goes back to shortly after we made the announcement on many of the contingencies that we pulled in 2008. I had a director-level staff person within our organization pull me aside and say to me, ‘How can you be so upbeat? How come you are smiling and joking around with people?’ My response to that individual was, ‘What is the alternative? Would you prefer me to be walking through the office, with my head down, not talking to people, not being upbeat, not smiling?’

“At the end of the day, this is a very important endeavor that we are all embarking on. But it is still business, and it’s still work, and it’s still a job. We have to consistently keep it in perspective that, yes, this is the most important thing we do because it’s how we support our families. But at the end of the day, that’s what it’s really all about.”

How to reach: Huttig Building Products Inc., (800) 325-4466 or www.huttig.com