Dustan E. McCoy wasn’t sure what the future looked like when the global recession began to tighten its grip on Brunswick Corp. Demand for recreational boats in the United States was plummeting, ultimately dropping from 300,000 units a year to slightly less than 140,000 units a year.
“We were faced with several obstacles in ensuring that the company was going to move through in a healthy way and secondly, that we were going to be prepared to flourish in the future, no matter what the economy brought us as we came out,” says McCoy, the 15,290-employee company’s chairman and CEO.
“In terms of how we identified the problem, for myself and our entire management team, it was quite obvious as we went through the meltdown in mid to late 2008 that demand for our marine products and ultimately for the products that come through our fitness business and the services we provide folks at our bowling centers would come under pressure.
“The first thing one has to do in these situations is say, ‘We have an issue.’ Identifying the issue is perhaps the easiest and the hardest part of the job that a management team goes through at a time like this.”
McCoy says the easy part is standing up and saying, ‘Hey, we’re in a recession. Things are going to be right.’
“It’s much harder to say we have a broad issue that is going to require us to go through dramatic change and have our business and our organization look, act and feel differently when we come out of the issue,” McCoy says. “In my judgment, the first thing one has to do is have a conversation with oneself at 2 a.m. in the dark and be really honest that there is an issue and we’re going to have to work our way through it. The first thing is to identify the problem and then describe it in a way that the entire organization can both see and understand.”
McCoy had seen the news. He had read the papers. He saw demand for Brunswick products dropping like a rock. It was time for him to act and help his company find a way to ride out the storm.
Identify the problem
When the recession began, many companies faced a similar problem. They didn’t know what the bottom was going to look like. Sales kept dropping, companies were laying off people and factories were closing everywhere. At times, it literally seemed like the sky was falling.
“There are just so many things to deal with that we’re not going to be able to deal with them all,” McCoy says. “Here’s what I always tell myself: What’s important is what’s important. Make a decision about what the real issue is and the solutions to that issue, though they may be hard and require difficult actions, they are also apparent once one describes the problem very concisely.
“In our case, the situation was that the country was clearly going into a recession. Demand for our product in the marine business was going to suffer. There would be pressure on our dealer network, and we had to have a solution that would get us through it and have us come out the other side better positioned than when we went in.”
It was a tall order, but McCoy couldn’t afford to close his eyes and hope it would all go away.
“Issues never get better with time,” McCoy says. “Difficult decisions don’t go away with time nor do they get easier to make. Stepping up both to the problem and a set of solutions quickly, concisely and in a way that can be easily communicated is very important.”
When you talk to your people about drastic steps that you are pondering, keep it simple and do what you can to leave little room for misinterpretation.
“It’s incumbent upon the management team to describe simple direct actions that have to be taken,” McCoy says. “They can’t be complicated. They have to be understandable. Every employee in the company must feel and see the actions that have to be taken and they must make sense and be understandable.”
McCoy identified three things that Brunswick needed to focus on. In addition to helping the dealer network survive and positioning the company to emerge from the recession stronger than it was when the downturn began, he also wanted to find a way to generate cash.
“We have to generate and conserve cash,” McCoy says. “Our view was that those in our industry that did not have cash when the dust settled were not going to be in existence.”
These areas of emphasis were not arrived at through a democratic vote of McCoy’s leadership team.
“The CEO has to understand that his or her name is the one on the door and ultimately, the success or failure of the organization lies at the foot of the CEO,” McCoy says. “It’s the CEO’s job. The first thing the CEO has to have everyone understand is that we are going to work together, we are going to move through this and if we get to a point where we’re unable to reach a conclusion or make decisions together, I’ll have to make it because we have to keep moving.”
McCoy didn’t make the decisions unilaterally. There were discussions, but there was also a blunt introduction to what needed to be done and a clear understanding of who was in charge.
“Here’s the way I described it to my teammates,” McCoy says. “If you don’t lay awake at night worrying about what we have to go get done, I don’t want you here. But if you can’t pull the trigger, you can’t be here. We all looked each other in the eye and said, ‘OK, let’s go. We have to get this done.’”
There needs to be complete trust among your team if you’re going to get through difficult times.
“The management team has to trust and respect all of the others on the team and believe that each of the others is executing the plan that we’ve all agreed upon and that there are no hidden agendas,” McCoy says. “No one is holding back. We all have to go get it done. Trust and faith in team members permits an organization to execute well a list of priorities that everyone has agreed upon.”
If you don’t have that level of trust, you don’t have a very good team.
“The most important role the CEO has is building that team and understanding if there is a person on the team who won’t act that way, they won’t be a good team member and it will be harmful to the functioning of the organization.”
Move to a decision
When you’re not sure what the bottom looks like in an economic tailspin, you can’t waste time trying to project it.
“Chasing the stock price and the market, in our view, was exactly what we did not want to do,” McCoy says. “I think it’s fair to say that as you look at our stock price, at one time we were around $2, not one of our senior managers in this company ever obsessed about that because we had the confidence we were doing the right thing.”
Your best approach is to come up with a worst-case scenario and make your plans based off of that.
“Don’t sugarcoat it in your own mind,” McCoy says. “Make sure you’ve made the hard decisions early. Don’t deceive oneself about how bad it can be. Assume it’s going to be very bad and then begin to make your decisions. Once you’ve done that, work your plan every day, measure your plan every day and communicate your plan throughout the organization consistently and constantly and communicate results consistently and constantly.”
If you have people who can’t support what you and your team believes needs to be done, you need to take them out of play.
“We did make human resource decisions and if there were members of our organization who just were not up to the change we were going to have to go through, then they needed to leave the organization,” McCoy says. “Because notwithstanding their best intentions, they would not be an enabler. They would be a roadblock to what we needed to get done.”
Find a way to survive
The cuts Brunswick had to make were drastic, to say the least. The company had 27,000 employees when the recession began. It has just over 15,000 employees today.
“We’ve taken about $450 million in fixed costs out of the company since 2007,” McCoy says. “We closed more than half our boat plants. We had four engine plants and when we’re done (in 2011), we’ll be down to three engine plants. All that had a dramatic impact on our cost structure.”
It also had a dramatic impact on the people who lost their jobs.
“We made life difficult for a medium-sized city in America,” McCoy says. “There is no way in the world to sugarcoat that or make it easier.”
When it comes to tough decisions like that, you shouldn’t even be trying to sugarcoat what you’re doing.
“The decisions need to be made quickly, openly and with great honesty,” McCoy says. “They need to be communicated fairly and in a way that no employee whose job is terminated is made to feel that they as a human being lost their job because of what they have done. It’s driven by the economy and the need for the company to take action in response.
“I can’t stress the need for openness, consistency and fairness enough. There can’t be exceptions one way or the other. You can’t bend over to get rid of some fellow employee and you can’t bend over to save a fellow employee. You’ve got to keep going down the middle of the road and doing what needs to be done.”
You’ve got to show compassion for the people you’re letting go. But you also have a responsibility to the people who are staying put.
“The decisions have to be made to keep the enterprise alive,” McCoy says. “As long as senior management is communicating with the entire organization and the entire organization understands that every decision is being made to protect the enterprise and to be as fair and passionate and equalizing as a management team can be, our experience here was the organization moved right through and performed magnificently.”
In 2011, the company showed signs of bouncing back. The stock price made it past $27 at one point and business is beginning to pick up again. Net sales, which dropped from $4.7 billion in 2008 to $2.8 billion in 2009 climbed back up to $3.4 billion in 2010.
One of the keys to getting through an event like a recession is constant assessment.
“It’s constant communication amongst the senior team and with the entire organization,” McCoy says. “So that constant tracking, communicating and discussion builds momentum and success begins to breed success and as a result, everyone begins to develop a clearer understanding of the precise path forward.”
How to reach: Brunswick Corp., (847) 735-4700 or www.brunswick.com
The McCoy File
Born: Grayson, Ky.
Education: Bachelor of science degree in political science, Eastern Kentucky University; law degree, Salmon P. Chase College of Law, Northern Kentucky University
Who has been the most influential person in your life?
I genuinely have had the great fortune to work for a successive series of leaders in my entire career where I didn’t always agree with their leadership style or their strategy, but I respected them as leaders. I attempted to copy the things I really like that they did and made sure I didn’t do the things I didn’t like. For me, it was an amalgamation. It goes back to my first-grade teacher, my Little League coach, I could walk you through five hours of a whole string of people and tell you what I learned from each.
McCoy on employee surveys: Employees have to believe that any response to a survey is completely anonymous. We work hard to make sure employees feel that. Secondly, at the management level, as these surveys are rolled out, it’s important for the managers all the way through the organization and the people that they manage, that they all understand the surveys are important. If there are issues we need to address, this is a great way for us to see them. So by stressing anonymity and importance and, No. 3, having a belief throughout the organization that actions will be taken based on survey results, it all comes together to encourage employees to be open and honest and do the work it takes on the survey.
