How does a declining company regain strong footing in the marketplace as a high performance organization?
"Successful enterprise turnarounds in tough market conditions have both a business side and a very human face," says Ian Sadler, president of Miller Centrifugal Casting (MCC). He shares his insights and the strategies that took U.S.-based MCC from $8 million in revenues in 2003 to more than $22 million by 2008. Transformed inside and out, and under new ownership, MCC is on a global track.
As a large North America producer of steel mill rings and sleeves, many of our products are used for building and rebuilding infrastructure. Science tells us that structural supports are the essential building blocks for solid infrastructure development, but have we ever applied that concept to our businesses? In a philosophical sense they, too, have structural supports that are sometimes in need of repair or replacement.
At MCC, we set out on a journey to rebuild the organization in 2003, giving special attention to five key structural supports -- workforce morale, employee satisfaction through a revamped compensation program, eliminating waste (our version of going lean), quality and customers.
Support 1 -- Workforce Morale
Workforce morale was top of the list. A complex issue to address, it is intricately linked to emotions, attitudes and confidence and loyalty levels. Simply put, rebuilding morale demands a human approach. Instead of looking at MCC's workforce in terms of numbers and output, we began responding to our workforce as individual human beings. In fact, our management team developed a philosophy that employees were to be treated as valued customers; and it became management's job to walk the talk of the Platinum Rule, foster honest communication, spend face time on the plant floor and equip workforce members with decision making power. Slowly, with a couple years' consistent effort, trust (which we discovered is the key ingredient to rebuilding morale) began to take hold.
MCC and ESW At-a-glance
Based in Cecil, Penn.
Based in Tenneck, Austria
Produces Steel Mill Sleeves, Rings and Large Gear Blanks
Produces Rolls for the Steel Industry (Hot Rolling Mills for Flat-Rolled Products)
Formerly owned by Birchmere Capital LP of Wexford, Penn., and Wilder-Deem of New York, N.Y. (2002-2009)
Support 2 -- Increased Employee Satisfaction through Gain Sharing
Evidence abounds that pay for performance works (when employees can directly influence their pay levels through behavioral modification), and this proved to be true at MCC. Working with a consultant, we implemented a gain sharing program in early 2005 that was designed with a full slate of checks and balances. The program has significantly benefited the company and its employees. Within four years, MCC's annual revenues increased by 162%, and we attribute much of that success to our pay-for-performance system.
Today, MCC has a high commitment, high performance workforce; and our gain sharing program serves as our top scorecard. A critical component to keeping motivation strong, MCC has weekly meetings with employees to keep them informed about progress and scorecard status; and we make it a point to celebrate successes.
Workforce team members adjust their behavior according to company priorities such as safety, quality and productivity, in order to collectively improve gain sharing outcomes on a month-to-month basis.
As people often are naturally competitive, we found the gain sharing program encouraged a teamwork approach, enabling MCC's members to focus on "upping the bar" and improving output. How can we do better? How can we do more? These are the types of questions our employees ask themselves.
Support 3 -- Going Lean by Eliminating Waste -- 'How We Do Things Here'
MCC's transformation process also demanded that we look hard for waste in every arena of business operations. Moving forward on a platform of trust, our team set its sights on eliminating waste companywide, with the well communicated end goal of working smarter, not harder.
Catalyst Connection (www.catalystconnection.org) was very instrumental in guiding MCC through a lean manufacturing initiative that made sense for our company, even addressing very specific internal operations.
We hired a controller, for instance, who improved MCC's IT and information management systems. Of significant benefit to the company was shifting from a standard cost system to an actual cost system that equipped us to measure the performance and efficiency of every job.
Support 4 -- Quality
Quality is a core structural support for any manufacturing business, and as part of MCC's turnaround we strategically invested in equipment and technology that would have a direct quality impact. Equipment upgrades, a portable coordinate measurement machine for close tolerance production and a raw materials analyzer are just a few examples.
This month, MCC gained its ISO 9001 certification. The continued quest for quality has literally become embedded in our workforce culture since quality goals are communicated (ongoing and effectively) and also impact gain sharing outcomes.
Support 5 -- Customers
True. Customers can be a central structural support to business success, but in reality the support is bi-directional. The degree to which a company strengthens its internal structural supports directly influences how well it can serve as a solid support for customers.
Part of MCC's multi-year transformation involved embracing change lead by (confirmed) customer needs and wants. By taking the time to sit and talk with customers - and really "listening" -- MCC gained direction and insight on how it needed to evolve to forge stronger customer relationships. Alleviating customer pain was the goal.
Thoughts and Tips for a Turnaround Journey
Orchestrating a business turnaround is a process that takes integrated strategies, teamwork, time and unfailing commitment As a believer in sharing ideas and continuous leadership improvement, it was helpful for me to get involved with Vistage (www.vistage.com), a group of CEOs that meets monthly to focus on leadership development.
Thinking through this turnaround journey, what surprised me most is how much people really are influenced by whom they see as the leader - and that even in the midst of tough circumstances they are willing to commit and make sacrifices if a leader's vision is compelling enough. That said, leaders must be sure their vision is the right one.
Would I have done anything differently? Yes -- more quickly letting go of staff (whether management or employees) who are unable to buy-in and embrace change. Sometimes employees appear to be onboard for change when in reality they may be hindering progress. Leaders need to keep their eyes and ears open to identify and release them for the sake of business survival.
On the Horizon for MCC: Going Global, Remaining Competitive
MCC was very recently purchased by Eisenwerk Sulzau-Werfen (ESW), representing a logical part of the consolidation process at work within the entire steel industry. As a global export leader, ESW exports 90% of its roll production (MCC, only 10% of goods.) Although we will continue operating independently with separate product lines, the companies will work together on overseas markets for MCC.
Looking ahead, a new and exciting journey begins -- integration of our cultures, technologies and best practices. With almost 250 years behind its name, ESW, teaming with MCC's leadership, will blaze new trails for long-term sustainability.
Ian Sadler is President of Miller Centrifugal Casting Co. Miller Centrifugal Casting Company (MCC) has specialized in designing, casting and finishing high grade, centrifugally cast ferrous and non-ferrous products for over 40 years. http://www.millercentrifugal.com/index.html