Communicate change
Once Hensler had his strategic plan done, he had to roll it o
ut
to employees.
Changes shouldn’t come as a surprise to your people if you’ve done a good job communicating the company’s goals. If your goal is growth like Horsehead’s, a new acquisition or plan to diversify the company shouldn’t be a shock.
“You have to set the context for where you want the company to go and then explain the changes along the way in the overall context of where you want to go,” says Hensler, who heads more than 1,000 employees.
Basically, the key to updating employees on new developments is explaining how the changes move the company closer to its overall objective.
“When we decided to move in the direction of diversifying the business, we communicated that to employees, explained why this makes sense and how it fits in strategically with what we’re doing,” he says. “That’s very important to not only communicate that to our existing employees but also the employees of the company that we just acquired and also communicating it to the outside world.”
Employees and investors need to be hearing the same information. And it doesn’t hurt to communicate with them from multiple angles, such as newsletters, e-mails, informal and formal meetings.
After Horsehead closed on the INMETCO acquisition at the end of 2009, it followed up with investors through a presentation at a Raymond James conference. The conference allowed for a public forum and open dialogue. The company also invited analysts who cover the marketplace to INMETCO for a presentation, a tour of the facility and an explanation as to how the acquisition fit in Horsehead’s long-term plan.
Hensler says the important factor in times of change, especially ones in a depressed economy, is that you, the leader of the company, are visible and you’re communicating a consistent message. That also extends to employees. Your employees need and want to be informed that you’re making the right changes so that they have confidence in your decisions and the business plans.
“Most employees understand that when you’re in a down economy companies have to do something,” Hensler says. “They want to understand that what you’re doing is the right thing. Are you doing it effectively enough so that the company is going to get through it?”
Chances are you’ve made reductions in staff, pay or budgets in recent years. Horsehead reduced staff, idled facilities and cut costs like most companies. You have to present those changes in a context of how and why those decisions were made and what that means for the strength of the company and the path for growth moving forward.
“Unfortunately, in situations like this, some people lose their job temporarily or permanently and the real question is, for the people who remain with the company, do they feel like you’ve done enough to secure their jobs going forward,” Hensler says.
You can ease qualms by being visible. That may mean scheduling more time in the field talking directly with employees.
“We have multiple plants and multiple locations, so it’s difficult to be out there all the time,” Hensler says. “What I try to do is get around to each of our plants on a regular basis, meet with not only the managers of the plants but also get out and try to meet some of the people on the shop floor. We try to do that in social settings as well as formal settings. It’s important to do as much of that as possible, particularly when you’re in a downturn situation.”
Horsehead’s growth process is ongoing.
The company’s revenue dropped the last two years, largely due to the fluctuations of zinc prices from $2 per pound in 2007 to below 50 cents per pound in 2008. To combat the price drop, Horsehead bought a put option on its production that generated $100 million in cash. That financial boost allowed the company to implement its growth strategies last year, which included two acquisitions, and end 2009 with no debt and positive cash flow. Net sales were $216.5 million in 2009 and revenue is projected to reach mid-$300 million for 2010.
But in recent months, Hensler has needed to do less convincing that the decisions made at the top were the right ones. The two acquisitions in 2009 allowed Horsehead to return its idled facilities to full capacity by the end of the year. And since acquiring INMETCO, nickel prices have risen.
“As you go through a recession, employees need to understand that you’re reacting in the right way,” he says. “They’re concerned about the long-term survival of the company.”
How to reach: Horsehead Holding Corp., (800) 648-8897 or www.horsehead.net
