Gordon Hunter expected that a few minor problems might arise in Littelfuse Inc.’s effort to move its headquarters in 2008 from a manufacturing facility in Des Plaines to a high-rise near O’Hare International Airport in Chicago.
He got a lot more than he bargained for when the global economy went into a recession that fall.
The corporate headquarters relocation was a small part of a larger effort to restructure the footprint of the 6,000-employee company, which develops components used in a variety of electrical, industrial and automotive products.
The goal was to transform Littelfuse into a business that would be more responsive to customers and more efficient with respect to its expenses. The whole effort was quite necessary, but it was also quite a lot of work.
“It’s a major financial cost and time distraction for salespeople to work with customers on qualifying a different plant where the product is made,” says Hunter, the company’s chairman, president and CEO. “It means the salesperson is not hunting for new business. It’s a cost to the company.”
Hunter felt strongly that the restructuring was essential to the company’s future and something that needed to go forward, even with the recession that was creating a lot of doubt and uncertainty about the future.
“Keeping our team on track with all of those big structural changes while cutting expenses and managing the business in the short term was fairly challenging,” Hunter says.
He and his leadership team decided the best course of action was to attack the restructuring initiative head on with a boldness that let employees know decisively that the company’s plan for the future had not changed.
“I think everybody looks back and says, ‘Wow, that was a tough couple of years,’” Hunter says. “We spent so much time with our heads down trying to juggle so many things, and we didn’t have a lot of time to reflect on it. But when we look back, we say, ‘We really got through a lot.’”
Build a plan
It’s largely the continuing convergence of technology in Asia that led Littelfuse to move out of its manufacturing facility in Des Plaines and transition from 16 small plants around the world to six large plants that are more strategically located.
“A plant in Ireland can’t have the same cost structure being on the other side of the world from its customers,” Hunter says. “The customers have moved to China. The competitors are in China. The cost structure is a Chinese cost structure. We need for business reasons to do this rather than to just close the business down.”
On paper, it would have been easy to close plants in Europe and open new ones in Asia. But when you have an 85-year-old company that has a rich heritage and culture of hard work and high integrity, you’ve got to do it with respect.
“People are very straightforward, incredibly honest, very engineering-focused, very incremental and very data-driven,” Hunter says. “All of this is a great foundation on which to go through restructuring.”
Hunter felt that if he approached the big changes the right way with trust and respect, his employees would be willing to follow him through a lot.
“Get people to know very early and with a lot of lead time,” Hunter says. “There’s nothing worse than being told, ‘Well, you’ve heard some rumors. We’re going to close the plant. It’s going to happen next month.’ You tell people, ‘Look, 18 months from now, this plant will close, and it will impact some of your jobs. In that time, we want to work with you and we want to help you. We want your help.’”
Hunter knew that some plants would need to be closed and others relocated to get the company to where he and the board of directors wanted it to be. But he needed to work collaboratively with his leadership team to reach informed conclusions.
So before he even brought up the idea of closing plants with his employees, he met with his executive team in hopes of developing a sensible and fact-based plan that they would buy in to.
“If you’re a new CEO and you haven’t got a good team around you, I’d spend your time developing a good team before you go off and try to do dramatic things like restructuring,” Hunter says.
If you’ve got a good team in place, put team members to work. Each person should have expertise in a certain aspect of how your business operates. Lay out the situation you’re looking at and what information you need team members to provide.
“Get your team together and figure out what’s the data that you need,” Hunter says. “What data do we not have today that we need for comparison? What modeling do we need to be doing to back this up with real data?”
Rely on your leaders for expertise in their area, but ask them to bring a broader view to the discussion as well.
“I expect at this level for people to be able to wear two hats,” Hunter says. “Be the expert in their own functional area of the world but also be able to understand the corporate strategy, understand the goals of the company and be able to participate across any discussion on something as important as restructuring the company and moving plants.”
Create a sense of urgency so that people understand that just because you’re talking strategy, it doesn’t mean there are no deadlines.
“It requires a lot of communication,” Hunter says. “A lot of explaining to people that if we don’t set the path for ourselves, someone else will. Our competitors will. So there’s a lot of communication involved.”
Do what is right
It’s likely that you have your own ideas in mind for the best way to proceed with changes such as plant restructuring. But you have to be ready to accept that sometimes your team won’t agree with you.
“You have to be prepared to say I’m going to do something that wasn’t my idea,” Hunter says. “I’m going to be prepared to listen to that and say, ‘Well, that’s not what I would have done, but I’m prepared to go along with your idea on this.’”
Think about your role with the company and where you think you are at in your tenure with that company.
“If I just arrived here and I’m 40 years old, I might have a different view about what we should be doing over the next five years,” Hunter says. “But when the company is in this enviable position of being very healthy and we’ve done a lot together, it’s sort of time to have the next generation be more vocal about the future.”
Hunter quickly adds that he has no immediate plans to go anywhere away from Littelfuse. But his point is that you can’t just think of yourself when you’re making important decisions for your company.
“It’s being prepared to say to people, ‘You’re a great guy. I’d like you to be with the company 10 years from now in a bigger role,’” Hunter says.
As much as you appreciate your people and the need to treat them with respect, you just have to keep in mind the company that you, your team and your employees are all a part of and why it needs to always take priority.
“If you don’t do what’s right for the business, there won’t be a business,” Hunter says. “The business has been very successful for 85 years. We’ve got to protect it and grow it for the future. The world is much more global and things that worked 20 years ago don’t work today.”
In addition to keeping the company’s best interests in mind, you need to make sure that you and your team are all on the same page once the decision has been made.
“It’s like running a play in a game,” Hunter says. “You need a team to all be coordinated. Some may not think it’s the right play at the right time. But you need them at some stage to say, ‘I’ll commit to go along with it.’”
When it comes down to actually making the decision, don’t expect that everyone is going to be happy about it. That will be the case no matter how up front and honest you’ve been about the moves before they are officially announced.
“There is going to be some resistance,” Hunter says. “It’s making sure we’ve thought it through to the best of our ability before we make the announcement, making it clear that we’ve really given it a lot of thought and that there is a rationale for doing it.”
Talk to people
Throughout the process of transforming Littelfuse, Hunter made sure he was visible to his people, even the ones who live and work far away from the Chicago headquarters.
“People like to see the CEO come to their location,” Hunter says. “Most of the senior management does reside here in Chicago, but they are very open to spending time and listening to people in China or the Philippines or Mexico or Europe. Getting out personally to those places is very important and that’s a critical part of my job.”
Have a plan when you head out to distant locations to meet with people from all levels of the organization, not just the top management.
“A lot of the time, I’m listening to people present what they’ve been working on, the outcome of a project, and that requires time,” Hunter says. “It requires going to plants and talking to people at different levels. It could be junior people in the customer service organization in the Philippines showing how they have really improved going about how they do their work.”
When you have a situation where plants are closing or people are being relocated, do what you can to help them through the situation. If that means there isn’t a place for them at your company any longer, help them land on their feet somewhere else.
“Help people with basic things like interview skills, writing a resume or helping them get contacts with other companies,” Hunter says. “There are a lot of things for people who have not moved jobs in their career that they need some basic help with. It’s being able to help get people over their bad news and work with them and communicate with them. Demonstrate that you’re not going to cut corners and you’re going to be respectful.”
One of the best ways to show respect is to just be truthful.
“In many cases for us, the plants were sort of technology specific,” Hunter says. “There weren’t as many degrees of freedom. The idea of closing Ireland, it was a special technology. That business with that technology just would not survive with that cost structure. So it was very specific to be able to explain it.”
As Hunter looks at Littelfuse today, he sees a company that is in a much better position to compete. Net sales increased from $430 million in 2009 to $665 million in 2011. But the strategic planning is ongoing and will be a key to maintaining the company’s success.
“It’s setting the right things we want to work on, putting the right people on the teams to work on it and giving them good direction,” Hunter says. “Good things happen if you have the right people.” <<
How to reach: Littelfuse Inc., (773) 628-1000 or
www.littelfuse.com
Takeaways:
Get a solid plan in place.
Make the best decision for the business.
Be visible to your people.
The Hunter File
Gordon Hunter
Chairman, president and CEO
Littelfuse Inc.
Born: Newcastle, England
Education: Electrical engineering degree, University of Liverpool; MBA, London Business School. Part of that time in my MBA, I studied at Helsinki School of Economics (Aalto University School of Business) in Finland where I lived for four years.
What did you think of the way England handled hosting the Summer Olympics?
I got quite captivated watching the opening of the Paralympics. It seems to have really engaged people. People realize that people who have handicaps in the past may just not have been openly recognized and made visible.
They are really being brought to the front. It’s quite tremendous. That’s even more important because the momentum of the Olympics, it became a bit of a show. But what they are doing now with the Paralympics, I’m really impressed.
Who has been the most influential on your life?
I certainly look at several of our board members as being people that I go to for counsel and have a lot of respect for. This company had a very good board before I came to the company. I do think that’s a critical part of having a successful company.
Whom would you like to meet and why?
Probably Nelson Mandela. I did go to South Africa two years ago and spent some time there. What he has done in his life is quite remarkable.
