Leadership Rising at L&H Industrial

Transcription

1 Leadership Rising at L&H Industrial How BST leadership tools are supporting one company s aggressive growth strategy Rebecca Nigel It s changed the way we do business... instead of firefighting, we re managing. -Mike Wandler President 2004 BST. All rights reserved. March/April 2004 Perspectives in Behavioral Performance Improvement 7

2 L L&H Industrial had a very good year in In just 12 months, the privately-held industry service company increased sales and production capacity by 25%, reduced turnover by nearly 50%, and realized significant cultural improvements along the way. While none of these results were surprising to L&H leaders the team was already following an aggressive plan for growth and market share it used a surprising new tool to support its efforts: behavior-based leadership development. Enlisting help from BST, the same company it had worked with two years earlier to implement a behavior-based safety process, L&H Industrial used behavioral tools to enhance its leadership. It s changed the way we do business, says L&H president Mike Wandler. Crediting the behavioral initiative with helping the company leverage its unique strengths through tremendous organizational change, Wandler says the leadership team is now using behavioral principles to manage key business functions. Instead of firefighting, we re managing. Instead of people walking in with complaints, we re being proactive. Founded in 1964 by Wandler s father Leon, L&H Industrial is a service company that specializes in aftermarket manufacture and rebuild for heavy industry equipment used in oilfield drilling, mining, and railroads. L&H employs a total of 180 people, including 150 in Gillette, Wyoming, 20 in Rock Springs, Wyoming, and 10 in Tucson, Arizona. The company has also begun a global expansion with the purchase of Pylon Gears Pty. Ltd. in Johannesburg, South Africa, and a partnership with Hofmann Engineering in Perth, Australia. Sales for L&H topped $25 million in The Plan for Growth From its beginnings as a small family-run business, L&H has successfully competed in a very tough industry. Providing service for equipment repairs means that the shop runs 24/7 and that engineers are often sent to inspect equipment in the field. Fluctuations in the price of oil and metals also mean that the local economy, where L&H customers are traditionally based, is prone to extremes. People have tried this before and gone bankrupt, says Jeff Wandler, vice president and sales manager and brother of Mike Wandler. The second generation of owners, which includes Mike Wandler, Jeff Wandler, chief financial officer Jim Clikeman, and manager Joe Drefchinski, took over in The new owners immediately began to focus on growing the business in order to maintain long-term viability. While the company was still growing at a steady clip and reasonably profitable, exposure to the volatility in the local market as well as internal inefficiencies, created a drag on profitability and presented a potential threat to long-term survival. Strategic growth, the owners decided, would provide stability and profitability for years to come. The company s plan for growth would include expanding the manufacturing business (which represented only 5% of sales in 2000), establishing an international presence in the market, and building a world class infrastructure to support that. This change, according to Jeff Wandler, would require a significant shift in the company culture. We were a reactive company. We wanted to take charge of our destiny. The company s owners identified five key areas to develop in order to achieve the next level of performance: sales, profitability, safety, quality, and human resources. Any tools to achieve these objectives, however, would need to improve company functioning without compromising the company s considerable strengths. According to Mike Wandler, the company built its reputation on producing product that was as good, or better, than original equipment manufacturer (OEM) parts. To do that, it relied on employees who were independent thinkers. The company s challenge in growing as it wanted to was maintaining that creative thinking while aligning the activities of employees. The individualism is a real strength of the company, we wanted to keep that. But the administrative part needed to be calibrated. Among the first areas to focus on would be safety. The Safety Foundation Safety would play an important part in achieving L&H s desired status as a world-class organization. Customers often demanded high safety performance as a condition of doing business. In addition, strong safety supported the company s value of providing a high quality of life for employees and their families. Safety was also difficult, says Jeff Wandler. Like a lot of other local companies, Our thinking was that safety was luck. Relying on compliance measures and safety meetings, the company s safety numbers were still too high for the company s vision of becoming a world-class organization. So in 2000, the company started looking for new ways to approach EHS performance. In 2001, L&H Industrial decided to implement BST s Behavioral Accident Prevention Process (BAPP ) system across the Gillette and Rock Springs sites 170 employees. With the help of a BST consultant, L&H launched a BAPP effort which they named OUR Process for Organization Utilizing Resources. The process is administered by a steering team made up of shop employees who focus on capturing data on the frequency Industry Focus Welding & Machine John Hidley BST Co-Founder Scott Stricoff BST President 8 Perspectives in Behavioral Performance Improvement March/April 2004

3 of identified safe behaviors and engaging their peers in discussions about safe and at-risk behaviors. Company leaders also conduct observations on the floor (both Mike Wandler and Jeff Wandler started out as laborers in the company and worked their way up). Employees then use the observation data in action plans aimed at removing barriers to safe work. For L&H management, an important aspect of the behavior-based approach was the process s proactive, non-punitive emphasis on reducing risks. According to production manager Luke Richter, having defined safe behaviors that were measured without taking names took the emphasis off of the employee and put it onto the whole system in which the work was done. In addition, Richter notes, the employee engagement of the behavior-based approach allowed the company to build on, rather than discourage, the entrepreneurial spirit the company was founded on, People open up easier and they tell us where the opportunities to improve are. It s a tool for communication. Within 16 months of starting the safety process, the company realized a 63% improvement from baseline performance, including a significant reduction in Workers Compensation premium rates and the first 12-month period in the 38-year history of the company without a lost time accident. Jeff Wandler says that the behavioral approach also changed the company s outlook, BST changed our culture to think we re in control of safety. That s helped us change our thinking in a lot of things. We don t have to wait around for the price of oil to get better. We can actually do something about it. Mike Wandler President Jeff Wandler Vice President, Sales Manager Expanding Behavioral Tools The success in safety was compelling enough to L&H leaders that they considered new ways to use the same behavioral principles. After an initial consideration of doing quality, the leaders realized that they had an even greater opportunity: strengthening the company s leadership itself. The largest area of concern, says Mike Wandler, was successfully leading change in the organization. An initial assessment of the company s leaders showed that, while in many ways effective, leaders were inadvertently slowing needed change through seemingly small actions they weren t even aware of. Specific instances that the assessment identified included leader s dominating the conversation, not looking at the other person s perspective, or voicing agreement during a meeting but not supporting the decision afterward. In addition, many managers were tasked with jobs for which they weren t well equipped. Says Wandler, We had a bad history of not following through with change and we needed to fix it. Behavior-Based Leadership Development Enlisting help from BST co-founder John Hidley and president Scott Stricoff, L&H embarked on a behavior-based leadership development effort focused on helping company owners improve their ability to drive change in the organization. This approach would center on tying the company s mission, vision, and values to concrete behaviors that individual leaders would commit to working on and would include mechanisms for regularly measuring the effectiveness of behavior change. Ultimately the goal was two-fold: to coach the leaders on how to become more effective themselves and to develop the leaders as coaches to their reports in the organization. BST changed our culture to think we re in control of safety. That changed our thinking on a lot of things. We don t have to wait around for the price of oil to get better. We can actually do something about it. Jeff Wandler, Vice President While the basic principles of behavior-based leadership development are the same as those used in safety, the tools would be somewhat different. Individual leaders have different areas of strengths and opportunity, which means they would develop their own list of behaviors to work on. In addition, each leader influenced different business functions in different ways, meaning that data gathering and intervention would take one-onone coaching. In order to gain a benchmark, the first step was to evaluate the level of current leadership functioning by measuring its effects in the organization itself. The company used BST s Organizational Functioning Survey to measure characteristics influenced by leadership behavior and predictive of successful performance outcomes. The company leaders then launched the new effort with a workshop focused on identifying specific leadership challenges as well as strategies for achieving actions consistent with the company s objectives. Afterward, Hidley and Stricoff worked individually with leaders to observe them at work and develop the basis of a coaching system. Their job was to look for things that we did during the meetings that negatively impacted the results, says Mike Wandler. They would make us aware of them during the oneon-one coaching and gain agreement on what will be done to change that behavior. The leaders continued to be coached over a period of months in a combination of s, phone calls, and face-toface sessions with their coach. As the leaders gained insight into their own behaviors and how those impacted the organization s culture L&H leaders learned how to use the March/April 2004 Perspectives in Behavioral Performance Improvement 9

4 same coaching principles with the people who reported to them. According to Mike Wandler, learning to become coaches themselves, and to do regular coaching with reports in the organization, was a challenge for many of the leaders. A manager might fear that he doesn t need my coaching or want it. But the reality is that everyone wants to talk to their boss and understand what s expected of them. Wandler, who now coaches eight managers once a week, says that as coaching became a standard practice, he found that he and his employees frequently caught issues before they became problems. I ve learned how to communicate better with my employees. I ve learned more about the employees. We ve become a lot tighter of a team. The First Test: Job Scheduling The first test of the leadership alignment process would be in supporting the implementation of the company s new job scheduling software, VISUAL Manufacturing TM. Because of the highly-custom nature of L&H s work, which averages 900 individual jobs a month, managing sales orders, resources, and work loads is a complex task that relies on finely-tuned calibration among various levels. In the nearly 40 years that the company was in business, this task was handled manually by shop supervisors who would schedule jobs and allocate resources as they came in. Quoting delivery estimates to customers, according to Wandler, was guesswork. There wasn t any data to give them a calculated answer. Implementing a comprehensive, and reliable, job scheduling system, was critical to the company s growth strategy. With the company s expanding customer base came a need for precise delivery estimates and more control of company resources. In addition, an expanding international business meant both that the company could no longer send engineers out to every client site to inspect equipment, and that delays in delivering product could translate into cancelled orders at the cost of hundreds of thousands of dollars. The new software s potential benefits were enormous: it could provide detailed on-demand information about any job the company had contracted and would ultimately streamline work processes. However, these benefits could only be realized if everyone, from the sales representative who sold the work to the employee who completed it, used the system. This was no small task for a company built on do-it-yourself individualism. We had to coordinate 180 people who affect whether the data is accurate or not, says Mike Wandler. The real kicker was that until everyone conformed, no one received any benefit. Starting in February of 2003, L&H made successful implementation of the job scheduling software the focus of their coaching sessions with reports. First, each leader worked with his reports to identify critical ways that that person influenced the use of the software, and then defined what those things would look like behaviorally. For one person that would be doing regular audits of how jobs were being set up in the software. For another it might be explaining the benefits of the new scheduling system to customers. These behaviors were then used as discussion points in weekly coaching sessions. For the behavioral coaching process to work, however, leaders needed to do more than discuss each employee s critical behaviors; they had to help the employee remove the barriers to performing those behaviors. According to Mike Wandler, having individually defined behaviors and weekly time to discuss specific instances and problems as they arose, helped to deflate what once seemed an insurmountable obstacle. We had time to talk about their issues, and to give advice on how to help them do things. continued on next page Industry Focus Welding & Machine Jim Clikeman Chief Financial Officer Luke Richter Production Manager 10 Perspectives in Behavioral Performance Improvement March/April 2004

5 Over several months, the software gradually became a fully functioning part of the company s business processes. Pointing to the ability to produce accurate job estimates to within days rather than months the company declared victory in the software launch in August By the end of the year, the impact of the scheduling software alone helped account for a 17% increase in sales without added staff. Wandler says they expect to see the same rate of return from the software in Before, it was basically a data collection point. Now it is a scheduling and forecasting tool we can use to manage the business. Transforming Operations In addition to supporting the implementation of the scheduling software, L&H leaders are using coaching to focus on all aspects of business functioning. For L&H chief financial officer Jim Clikeman, who coaches the company s controller, and managers of materials and information technology, the behavioral coaching approach has helped to connect different functions more closely to the business. Before we might tell people [about organizational objectives] but not really involve them. Through the coaching, Clikeman says he has been able to help people see their importance to the organization. If our computer system is down all the time it impacts profitability. If we re not buying materials and having them here to work on when they need them, that impacts profitability. Richter, who oversees the production, welding, and machining shops, uses the principles is in his interactions with shop supervisors. Initially working with each supervisor to put together an action plan with specific behaviors that impacted the company s goals, Richter now meets with each one at least once a month to review progress and discuss issues as they come up. Richter says that these discussions play a part in both meeting company objectives and in employee development. I want it to be a team. This is L&H, not just a weld shop or a machine shop. All our goals are the same. Improving Sales Perhaps most dramatically, L&H has used behavior-based leadership coaching to support the development and effectiveness of its sales function. Jeff Wandler was already using coaching methods with the eight sales employees he manages before the leadership development training. However, Wandler says that the behavioral tools added a team development dimension to his coaching sessions. Before we would have left it up to the employee and considered that they re going to do what we re going to do. The problem, he says, is that they weren t enhancing skills. As in many organizations, L&H sales representatives were often isolated when it came to problem solving or knowing what direction to take. Jeff Wandler says that the behavioral coaching principles taught him to focus on individual development. Building on his philosophy of selling value instead of prices, Wandler worked with each salesman to identify specific goals that they would use in weekly one-on-one discussions. In addition, Wandler received coaching himself on his interactions with employees. For several months, Hidley sat in on coaching sessions and meetings to watch Wandler work. After these sessions, Hidley provided both success and guidance feedback on Wandler s performance. Wandler says he learned to give feedback to employees from him personally, rather than providing generalized feedback from the company, and to make a list of discussion points ahead of time. In addition, Wandler says that coaching helped him recognize in himself both areas where he was strong (empathy, trustworthiness, good rapport) and areas where he needed to develop (delegating tasks). [Hidley] didn t tell me this but I realized it was arrogance. It was thinking that no one can do it the way I want it. But he showed me that I need to delegate and to let people make mistakes. As a result, Wandler says he has a more productive, effective and happier sales force. Now if I miss my Now we have leaders people want to follow Mike Wandler, President meeting they actually come looking for me. They almost insist on it, Says Wandler. BST has helped me to build a world-class sales organization. Realigning a Business To date, L&H Industrial s aggressive growth strategy, supported by the leadership development efforts, have yielded impressive returns. In addition to a successful roll-out of the VISUAL Manufacturing software, the company increased its sales by $5 million, reduced turnover from a high of 56% in 2001 to just over 30%, and improved employee-management relations. Wandler credits the leadership alignment with making these changes possible, It s taught us how to go through the process of getting agreement on change. The real benefit is that instead of doing half changes that take forever to actually happen from three to six years to get a change we can now do it in six months. The company hasn t forgotten its initial interest in quality. With a firmer leadership foundation, the company owners are now poised to take on behavior-based quality performance. According to Mike Wandler the company now has a way to align the organization quickly as business needs change. Everyone knows what their part is and has an opportunity to voice an opinion. Perhaps most important, Wandler notes, is the change in the management team itself, Now we have leaders people want to follow. P BPI March/April 2004 Perspectives in Behavioral Performance Improvement 11