Laurence Mawhinney’s recession story is all too-familiar. His company took it on the chin, losing 25 percent of its workforce in the U.S. and forcing those who remained to do more with much less.
“Our team was experiencing enormous change in a very short time frame, and we had stopped investing in our people as part of our cost-cutting,” says Mawhinney, the president of Fisher & Paykel Appliances North America — which is the regional wing of New Zealand-based appliance manufacturer Fisher & Paykel.
“It was necessary at the time but very damaging to the morale of our team. And all of this is going on while the macro picture is pretty ugly out there. The general feeling among people wasn’t very positive.”
The challenge for Mawhinney was to turn around the mindset of the 200 employees in Fisher & Paykel’s North American footprint.
“We’ve had to refocus our team, help people become positive and forward-looking,” he says. “We’ve started to reinvest heavily in our team, and that has really helped to grow our business. It has helped reset our people’s minds to a positive state and realize that the company is focused on the future, focused on helping them and growing the business.”
But Mawhinney’s investment wasn’t just monetary. He and his team committed countless hours strategizing, communicating and promoting the culture.
Mawhinney and his team aimed their leadership agenda at one overarching goal: to strengthen the culture of their company, restore employee confidence, then harness the power of a newly motivated workforce to propel their region of Fisher & Paykel into the next chapter of its history.
“Once we realized that the way forward was pretty clear and we had more blue sky than dark clouds, that is when we saw that we really needed to change, to focus our culture and reinvest in our people,” Mawhinney says. “We needed to convince them that the company was on track and this was going to be a good place to work both now and in the future.”
Get the message
Nothing much has changed in terms of values over the years: Honesty is still the best policy.
When Mawhinney started to see evidence that the recession was loosening its grip, he didn’t try to minimize the damage that it had done to the business. In his communication with his people, he acknowledged the severity of the crisis, the extent to which it had damaged morale throughout Fisher & Paykel’s North American region and the distance that everyone would have to cover on the road back.
As the calendar progressed through 2010, Mawhinney kept employees updated on the financial state of the organization and gave them a clear picture of what areas of the company were performing well and not performing well.
“You have to be very honest, you show them your bottom line, you show them the areas that aren’t performing, and then you show them how to turn it around,” Mawhinney says.
“People are very understanding. It was a very difficult climate, so it’s not like people were driving home, listening to the radio and hearing good business news. It was all very negative. Everyone understood that and took a mature approach to realization of what we had to do to turn the business around.”
Mawhinney realized that the reassurance he could offer to his people was minimal at first. Once the economy started to show some signs of improvement, nobody knew if the improvement would be major or minor, fleeting or sustainable.
In addition to keeping employees in the know, the most important action you can take in that type of situation is to give employees a voice. You can’t simply mandate that they follow your prescribed plan of attack. You have to allow them to question the status and stability of the company and put your future plans under the microscope.
Though you may want everyone to completely buy in to your plans and fight the recession as a united front, each person has to come to his or her own conclusions about the situation.
It’s your company, but it’s their livelihood.
“What we did was centered very much on getting individuals together and listening to them, hearing what their concerns were and addressing the group from the perspective of really trying to understand what they’re going through, then presenting them with a strong business plan that we worked to develop together and using that as the way forward,” Mawhinney says.
“That was really a key to turning around the morale and the individual mindset throughout the company from a negative one to a very positive one.”
Crisis communication is usually about treading water. Employees simply want to know whether the ship is sinking — igniting the boilers and plotting a direction is of less importance until your people are confident that the company’s future is stable.
“At first, your communication will be along the lines of, ‘When do we stop making cuts? When can people stop worrying about whether they’ll have a job in the future?’ They want to know what steps you are taking to provide stability and eventually perform a turnaround,” Mawhinney says. “In our case, our people wanted reassurance that the company wasn’t just taking away and cutting to save.
Once the economy leveled off and we were able to stabilize the business, we started to demonstrate our commitment to the future. We were able to reinvest in our people and show them some wins, which was really critical.”
Grab some wins
A long-held truism in baseball is that pennants aren’t won in April, but they can be lost. The same can hold true when facing a turnaround or recovery in the business world.
You won’t slingshot your company to new heights of profitability and success in the initial weeks and months on the rebound, but the initial wins you do get, however small, are crucial for building the momentum that you will need to ride later.
Without those early wins to galvanize your company and build employee confidence, your recovery plan can stumble out of the gate and you’ll find yourself behind from the get-go.
As Fisher & Paykel started to rebound in the North American marketplace, Mawhinney made it a point to emphasize early wins to his people and demonstrate the importance of small victories at the outset.
“We started to be very successful with our outdoor products that we sell,” he says. “We were able to pick up market share in our outdoor division, which was very profitable for us, and it made for a nice improvement to our bottom line.
“Another big win was when we started to bring individuals together for retraining exercises, our cultural reinforcement and cultural understanding. They’re sessions that we have been running for over a year now.”
In the training sessions, Mawhinney and the leadership team placed the recession and recovery in a historical context. The real victory was in showing employees the staying power of the company. In more than seven decades, Fisher & Paykel had weathered numerous recessions and downturns and had overcome it all to develop into an industry leader.
“We sat down as a group and talked about the culture of the company,” Mawhinney says. “We talked about the history of the company, how the culture evolved due to that history and where we have come from. This company is over 70 years old, and we have been through similar cycles before.
“We used that history to draw analogies to where we are, what we have been through and how we’ve bounced back. That history, and the resilience of the culture, was very useful as far as getting people to understand that what we were going through was a cyclical event. It wasn’t a singular catastrophic event. We had been through this before.”
Early wins improved employee confidence in the future of the organization, which in turn strengthened their belief in the guiding cultural principles of the Fisher & Paykel organization — which is essential to any rebound or turnaround. Without a strong culture, your business isn’t healthy, regardless of the economic climate. Without a strong culture in a down economy, your business could face an existential threat.
“The culture has to be in everything you do,” Mawhinney says. “Everyone needs to be included at every level of your business. It’s important that your team understands that your culture can be a competitive advantage. In today’s environment, that can make the difference.”
Reinforce your culture
Mawhinney added momentum to the initial wins by continuing to link them back to the cultural principles of the organization on a daily basis. If employees can see how their daily tasks help advance the culture, and advance the success of the business overall, it can serve as an important motivational tool.
It’s something Mawhinney demonstrated by involving people in the strategic planning process.
By giving employees a view of, and input into, the strategic planning that was aimed at pulling Fisher & Paykel out of the recession, Mawhinney and his leadership team were able to give employees a sense of the steps management was taking to improve the company’s outlook, and how each person’s job affected the company’s ability to realize its goals.
“We had to develop a new strategy for a difficult time, and everyone was involved in that strategic planning,” he says. “The core values are clearly defined throughout the organization, and our teams have integrated those core values into everyday processes so that they are transparent to all.
“It includes defining the culture and defining a plan to implement the culture, which is really key in terms of stabilizing during difficult times and having that strong culture that can really carry you through.”
Mawhinney’s emphasis on promoting initial wins and on strengthening the culture has had the desired effect. Fisher & Paykel is exiting the recession with a renewed focus on the future. The company has begun making new hires and reinvesting in its existing workforce and has rebounded financially. The company’s North American operations generated $124 million in revenue during 2011.
“Maintaining a culture is really a function of having a strong training culture, as well as mixing the old with the new,” Mawhinney says. “What we found through these pretty challenging times is that the experienced and longer-term employees have really helped the new hires that we have made.
“Our new employees need to understand that our culture is different from what you might normally experience in a U.S.-based company, and it really helps us.
“We believe that you need to have an open culture. That is what I think we really have. It’s a culture where you can feel free to speak your mind and that if you have ideas, put them out there. If we can’t use them, we’ll at least consider them for later.
“It’s critical that employees feel a sense of ownership in what they do. Encouraging an open and creative culture will really help your business, and as the leader, you have to walk the talk if you want that type of culture.” <<
How to reach: Fisher & Paykel Appliances North America, (888) 936-7872 or www.fisherpaykel.com
The Mawhinney file
Born: Stratford, New Zealand
First job: I worked for Television New Zealand before joining Fisher & Paykel, where I’ve worked for 21 years. I’ve worked in the U.S. since 1997.
What is the best business lesson you’ve learned?
Innovation is great, but the bigger question is whether it solves a problem. You need to ask what your problems are, and respond to that. I’m looking for the people around me to offer solutions when they encounter a problem.
What traits or skills are essential for a business leader?
You must have a creative spark, and have the ability to incubate new ideas. That means you have to demonstrate the kind of leadership that allows you to develop a creative culture in your organization. Also, you have to help employees see that what they do each day really matters to the company.
What is your definition of success?
Achieving positive results for retailers and shareholders, which will continue to allow us to invest in the future growth of the business.