Part #1 – Three-Part Series
There’s a story behind this heading that contains a powerful message about Leadership. Although it happened several years ago, the lesson learned from this experience is still relevant for today’s business world.
It was the mid-1980’s and I had just accepted a new position as Managing Director of Dresser Industries, Inc., Europe, Africa and Middle East (EAME) Division with its HQ in Heidelberg, Germany. The parent company, a diversified conglomerate supplying oil field equipment and services, fuel station pumps, construction and mining equipment, etc. was located in Dallas, TX. The company had just acquired International Harvester’s (now NAVISTAR) global construction equipment business (Payline Division), positioning it as the world’s third largest supplier of construction equipment.
The mandate…”Get it done!”
Now, let me set the scene for what was to become one of the most exciting leadership experiences of my working career. My new boss was Sr. VP and a member of the Board of Directors located in Dallas, over 5,000 miles and 7 time zones away from Heidelberg. I had just returned from Dallas where I received my mandate, “consolidate all EU / UK assets into Heidelberg and set-up a fully functional autonomous division producing and selling a full range of products and services to dealers and customers in Greater Europe, Africa and Middle East countries. “Get this done quickly and profitably…” I am paraphrasing, but this is pretty much what I was told. No other measurable goals or timelines. “Just go get it done!”
What came next was all about Collaborative Leadership; vision, passion, lead by example and taking responsibility for the mission. I won’t bore you with the many side-bar stories, that in and of themselves are yet other examples of lessons learned, but I’ll jump to the sequence of events that led to “being locked in my office” and the lesson I learned about leadership.
Pressure mounting from HQ…
The initial 18 months or so involved negotiating the closing of operations, moving assets and intellectual property from France, the UK and locations in Germany to Heidelberg, assembling a core management team of diversified talent and charting the course for our mission. During this period the Division was losing money at about the rate of $1 million a month. The pressure was mounting from Dallas HQ somewhat like the inside of a powder keg watching its lighted fuse get shorter and shorter. Things were about to explode!
Now my boss was not a patient man. I frequently would get calls from him at 2 a.m. Heidelberg time ranting and raving about the Division’s poor performance and demanding more frequent reports (daily) from me. Obviously, this didn’t make for a very good nights’ sleep. This was then followed by quarterly visits by him to Heidelberg and two days of meetings with detailed reports from every department. Holding the management team together was a challenge.
This is not the end of the story. In Part #2, I’ll tell you about “The turnaround plan”, its impact on me and the team and the how it awakened me to my “Responsibility to lead”
Part #2 – Three-Part Series
As you may recall, in Part #1 I was talking about my mandate, as Managing Director, to consolidate newly acquired Company assets from various locations around Europe and the United Kingdom into a single location in Heidelberg, Germany. And, the directive from my boss, who was 5,000 miles and 7 time zones away in Dallas, Texas, was to “Just go get it done!” It was getting done, but in the process the Division was losing about $1 million a month and pressure from Dallas HQ was increasing. Read Part #2 and you’ll find out how the Division copped with the issues and losses.
The turnaround plan…
Although the next 12 months seemed like an eternity, things did begin to improve. Consolidation was complete and stability was beginning to have a positive effect on the bottom-line. We had turned the corner from losses to breaking-even. What happened next had a profound impact on my life and leadership style.
As the business began to improve so did Dallas’s expectation for even better, and, of course, faster results. As the management team began to jell, I began to depend more and more on the individual department heads. I spent more time with them on strategic matters and less time on day-to-day departmental issues. By now, we were 2+ years into the mission and even though the Division’s financial performance was improving, it was not good enough for my boss. Again, I was engaged in a constant dialogue with him and putting together proposals to improve performance. One such proposal involved an infusion of fresh capital for new and improved products, manufacturing equipment, accounting software and hardware, etc., which would result in improved productivity, lower direct and indirect labor cost, greater efficiency, increased sales and lower overhead. Combined, these would substantially improve the bottom-line. The plan was approved on the premise that it would be funded entirely from positive cash flow generated by the Division. Dallas HQ was not going to provide $1 dollar of fresh capital!
This seemed like an impossible task. The Division was barely breaking even and was not generating enough cash from operations to fund the re-sizing plan and capital expenditures contemplated. Where was the money going to come from?
Responsibility to lead...
It was my responsibility to figure this out. I began by leading a series of confidential management team meetings to determine the feasibility of raising the capital internally. After a few long days and nights of meetings the team came to the conclusion that the best way to raise capital was to sell a portion of the Division’s property to the City of Heidelberg and re-size the business consistent with the market and sales projections that was based on products that were marginally competitive. The sale would give us immediate cash for the capital improvements; fund the re-sizing and redundancy program thus satisfying the Union and fund engineering development of new and improved products. My boss supported the plan and convinced the Board to let us proceed. Great plan!
Everything was going as planned. The sale to the City of Heidelberg was completed. The capital improvements were underway and the re-sizing was announced to the employees. During this period the Union was demanding higher wages, more vacation time and fewer working hours, all of which was a way for the Union to slow-down the process and retain jobs. From the start, I stepped back from direct negotiations with the Union leaving it to the department heads to negotiate a settlement. This was a mistake. The Union viewed it as a sign of weakness by the company and me. The Union negotiations were dragging out with no settlement in sight. Tension was building, the re-sizing timeline was slipping and pressure from Dallas was coming daily.
Next, tune into Part #3 and you’ll learn how and why I got locked in my office and more importantly, the lessons learned from this experience.
Part #3 – Three-Part Series
In Part #2, I explained how the Division turned the business around from losses to profits and where I made a leadership mistake. Now, it’s time to wrap-up this story with the how and why I got locked in my office and the powerful leadership lesson I learned from the experience. Read on….
Don’t get locked in your office…
Often times I would go into the office early (6:30 a.m.) and closed my door to get some quiet time before the workday began. My office was situated on the second floor of the building facing the main entrance, (The building was constructed of thick cut stone and rooms typically had an inner and outer door.)
One morning during the Union negotiations (I remember this like it was yesterday), I arrived to my office at around 7 a.m., closed my inner door and began reading reports and preparing for one of my many calls with Dallas. When all of a sudden, I heard the outside door to my office close with a bang and then the click of a key locking the door. Before I could move, I heard people shouting and chanting outside my office windows. I jumped to the window to see what was happening only to find that the Union had organized a “wildcat strike” and union employees were carrying placards with anti-company slogans to protest the re-sizing plan. It wasn’t pretty! They were picketing the main entrance and blocking all traffic in and out of the property. The police had arrived and we were on lock-down! I moved quickly to the door to go out only to find that I had “been locked in my office”. The keys had been taken and there was no way for me to get out. I then called members of my staff, but they were not able to enter the property. I called the police and they advised me that they would send someone to get me out. Eventually, the Union allowed my administrative assistant into the office who had a spare key and was able to free me. By this time the damage was done. The local press had a field day with the whole confrontation, which didn’t make for good relations with the community and the City of Heidelberg.
The next 3-6 months were spent negotiating a new labor agreement and executing the redundancy plan while implementing the various capital improvements and launching new and improved products. By the end of 3 1/2 years the Division had been re-sized, employee confidence restored and bottom-line earnings were exceeding plan. The business was stable and after 7+ years living abroad it was time for the family and me to move back to the States….
So you ask, what’s the lesson learned here?
As I stated in my opening comments, leadership is about taking responsibility, leading by example, having the courage of your convictions to do what’s right and the passion and energy to lead. Regrettably, I took my eye off the ball (Union negotiations), I fumbled the pass (messages from my staff) and the defense recovered and scored.
In the beginning, I took the time to assemble a very good management team. Later, when I should have been more attentive and leading by example, I delegated the responsibility to others, which was seen by the Union as a sign of weakness. I should have been engaged face-to-face with the Union leading the negotiations, which may have avoided delays, disruptions, distrust and getting locked in my office. I learned some valuable lessons from this experience, which served me well later as President of Eagle Picher Minerals. Don’t get locked in your office!