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In order to convert TriMas’ culture and strategy into those of an operating company, Wathen and his leadership team needed to first define what an operating company is and how an operating company should behave.
He didn’t want to take away all the autonomy of the company’s business units, but he wanted to govern all of the units with a uniform set of values, processes and expectations. He wanted the head of each unit to know the dimensions of the field on which he or she was playing and where the out-of-bounds lines are.
“Most of my career, I had a title that sounded something like ‘division president,’” Wathen says. “And I think back on what were the best times for me in that kind of a role. They were really when I understood exactly what was expected of me, I understood exactly what freedoms I had and what constraints there were and what I needed to go to the corporation for. I’ve seen good leadership and not so good leadership, and I’ve tried to apply the good principles to this company.”
To get all of the business units together on a common set of guiding principles, a leader needs to not just set the ground rules but he also needs to find ways to ensure that those rules are enforced.
For Wathen, it started with developing a clear strategic planning process — a process with built-in means for him to keep his finger on the pulse of each business unit.
“I’ve told everyone that I want to be involved in what the projects are,” he says. “Every area should have six to 10 major programs and that’s it. I want to agree on what those areas are and that they’re consistent with what TriMas’ vision is.”
Wathen and his leadership team developed a companywide focus on the vision by condensing the company’s vision down to a several-sentence statement, then putting the statement in front of every person in each business unit through cascading communication.
“I’m a big believer in consistency, so we have one vision statement: ‘We provide engineered and applied products that customers in growing markets need and value, and we build and run agile businesses that provide high returns on capital,’” Wathen says.
“What that says is that we’re a technical products company. We try to build things that are a little hard to build and design, things that maybe our customers can’t get from other companies. That implies that we’re not in a commodity-based business and that we’re trying to run a very agile business. It implies that our businesses know what their marching orders are, what I want to be involved in and what I don’t want to be involved in.”
Wathen wants his company’s business units to focus on six primary business drivers: revenue, earnings, how cash is employed, productivity, growth programs and people. The company’s leadership reviews each unit based on those six drivers quarterly. The unit’s performance in the six categories gives TriMas’ leadership a good idea of whether the vision and operating company mentality is taking root.
There is also a responsibility on the part of upper management to make sure that business units, departments and employees have the tools to improve in the measurable categories. Even in the face of a recession, when you have to adapt to compensate for dwindling coffers and a sluggish marketplace, you still need to make investments in your company, both in terms of time and money. Otherwise, you can damage your future ability to grow, your collective morale and your culture.
“There is the recession response, which is to cut everything,” Wathen says. “That’s the easy response. Of course, you have to do some of that; you have to size for what is going on in the marketplace. But if you cut everything, you’ve damaged yourself so much for the future that you’re not going to have new products, you’re not going to be growing and training, you’re not going to be doing the things you need to do for the long haul. That is one of the truly difficult judgment calls that a leader has to make: the short term versus the long term.”
You can also engage employees — particularly at the management level — by putting a part of the company in their hands. Wathen says that if employees buy in to the company in a real way and are allowed to reap the financial benefits in a direct way, they’ll be more inclined to see the bigger picture and realize why your vision makes sense for the long term.
“It’s having a strategy and operating reviews, and then having incentive systems that tie it all together,” he says. “Ideally, anyone who is making decisions that matter, I want some stock in their hands. There are a bunch of ways to do that, like options and grants, but the real issue is that you are putting stock in their hands so they are part of the total and can reap the benefit over the long haul of you improving the company and the market recognizing that. Something like that ties everybody together.”