In 1992, just after graduating from HBS, I became President of Union Corrugating Company, my family’s metal roofing manufacturing business. The $9mm revenue company was in a severe state of decline, facing operational red ink, the loss of a customer accounting for 25% of sales, outdated equipment, demoralized employees, and poor customer relationships, all in the context of selling commodity products to a declining customer base.
Over the course of 14 years, my employees and I transformed Union Corrugating Company into an industry leader with over $110mm in revenue, producing valued added quality products for a desirable customer base and garnering well above average profits through superb service.
What were some of the key steps along the road of transformation for Union Corrugating Company?
Listening to learn: We constantly sought feedback from customers, employees, and sometimes suppliers. In the beginning, the questions were to just understand what customers wanted, what competitors were doing, and what employees were thinking. To get feedback from employees, we created a process called “Obstacles to Success”. At bi-annual company meetings, employees could write down the roadblocks they needed senior management to address so they could do their jobs better. Senior management would stand in front of the employees to review the key topics and commit to addressing the problems. It was hard to hear criticism of the job I was doing, but I learned to accept it as an opportunity to make the company better.
Strategy: It was pretty easy to figure out that it would be best to serve the part of the market in which high value-added top quality custom products are sold to a strong customer base. But, it was clear that transforming Union Corrugating would be a multi-year process; we didn’t have the organizational knowledge, reputation, or resources to move rapidly from being a low quality commodity supplier to being a high value-added quality custom products supplier.
Our strategy was more of a slow approach that built profitability, generated internal funds for investment, and instilled organizational knowledge. There was a lot of trial and error. To keep everyone moving in the same direction, we set 6 month or annual goals that moved the company in the direction of our long term goals for all senior management, plant management, and sales personnel.
People/Culture Change: The employees at Union Corrugating were demoralized in the beginning. They were used to failure. Since the company had so many problems, it was clear it would be a long time before they could be truly proud of products and services their daily efforts provided to customers.
I started by identifying things they could control and could do. These included just being honest with customers about when they would get their order as well as giving employees the authority to replace defective product and take care of customer concerns. We focused on what the company could do now and on a general vision of what kind of company we wanted to be.
Over time, we refined what kind of culture we wanted in the company – honesty, dedication, professionalism, people who take responsibility for their work, etc. In our recruiting we considered cultural fit equally with skills and experience and resisted hiring even impressive candidates who did not seem to fit our culture.
We also were able to identify people within the company who had knowledge and capabilities but were perhaps in the wrong job for their skill set. By finding the right job for capable current employees instead of letting them go for not doing their current job well, we were able to build loyalty and keep valuable knowledge within the business. Most people who didn’t fit ended up leaving on their own when they were held accountable for their work.
Communication: To make sure everyone was on the same page and marching in the same direction, we held regular company-wide meetings giving information about how the company was doing, what our goals were for the next 6 months to year, and what we needed from different types of employees to achieve those goals. It was at those same meetings that we asked for employee feedback. These were complimented by weekly senior management meetings where the key goals were emphasized in our discussions and regular visits to our manufacturing facilities, of which there were ultimately 10.
Investing in stakeholder relationships: Every decision about how to handle an employee, customer, or vendor issue was always considered based on what long term relationship we wanted to have. Keeping the long term goal in mind made it easier to “invest” in relationships by sometimes paying a claim that we didn’t feel was justified or accommodating an employee personal issue. That investment snowballed over time, creating a loyal customer and employee base and solid supplier relationships.
Overall, we knew where we wanted to go, but we had to experiment to figure out how to get there. Once the critical financial issues were addressed early on, we could focus on long term transformation and value creation.
Lauri Union is a graduate of Princeton University and HBS (’92). Prior to running Union Corrugating Company, she worked at Bain and Co. Lauri currently lives in the Boston area with her husband and 4 children. She is currently leading a strategic planning process for a local private school and is a Managing Director at White Oak Investment Partners.