Hayes Lemmerz

The company emerged from Chapter 11 one of the strongest automotive suppliers, and Topgrading contributed to that success. Hayes Lemmerz competes in one of the toughest markets in the world; the global automotive OEM supply industry. We slug it out all over the world in head-to-head competition against the Asians, Europeans, Indians, and Latin Americans. In this tough industry with demanding customers, powerful suppliers, and relentless competition from low-cost countries, we have to have the best people to be successful. Therefore, Topgrading is a central part of our culture and the most important of our core competencies. We can’t win if we miss on people. I urge you to Topgrade so you too can get an edge on your competition. — Curtis Clawson, President, CEO, and Chairman, Hayes Lemmerz (retired in 2012)

Note: In 2012, Hayes Lemmerz was acquired by a strategic owner, Iochpe Group, parent of Maxion Wheels. Curt Clawson retired, and long-term Hayes Lemmerz executive Fred Bentley became President and CEO, Maxion Wheels.

HAYES LEMMERZ (6,746 EMPLOYEES GLOBALLY)

Industry: World’s Largest Auto/Truck Wheel Company

Highlights:

This case study almost makes it seem that Topgrading can save any company from bankruptcy.  

Chairman and CEO Curt Clawson successfully led divisions of Allied Signal, turned around American Can Company, and by using Topgrading and applying lean manufacturing principles, vault Hayes Lemmerz from Chapter 11 bankruptcy protection to one of the most successful and praised (by the auto companies).  While Curt says his Topgrading the company was essential in its success, Topgrading’s Brad Smart would add that A Player Curt Clawson was essential, too.  “For what it’s worth,” says Brad, “I doubt that anything less than a strong A Player could have pulled it off.”

 

On a personal note, Curt has several times said to Brad, “Smart, I wouldn’t approve this case study, but I’m letting you use it because you’re a friend.” Curt is a little embarrassed that he didn’t exceed the 90% A Player standard, that he let Topgrading slip a bit. But he should give himself a break—the automotive world was collapsing and the crises Hayes and other automotive suppliers were facing were hair-raising and constant for several years! Curt always puts the points on the scoreboard in business, a pattern that started when he was a basketball player on a Purdue Big Ten Championship team. Several years ago he beat Michael Jordan in a contest to see who could make the most 30-foot shots. Some might have bet on Jordan winning against an . . . um . . . aging, has-been jock. Anyway, thanks for permitting me to include this case study, Curt, which has great advice for all Topgraders!

Note that Curt is listed as “recently retired,” as a merger took place with Maxion Wheels. Fred Bentley is the new CEO of Hayes Lemmerz division of Maxion. I’ve coached Fred for years and have watched him grow into a fine A Player successor to Curt.

The Company: Hayes Lemmerz International, Inc. today is a premier automotive supplier, with #1 market share worldwide in wheels. The Company has operations in the U.S., Germany, Italy, Spain, Turkey, India, Thailand, Czech Republic, South Africa, Japan, Mexico, and Brazil. The company was a case study in the 2005 edition, and the short version was that even in a troubled industry and a troubled company, in a troubled city (Detroit), Topgrading can enable a company to survive and even flourish. But then the Big Recession hit, and as everyone knows, the automotive industry was smashed, with bailouts provided to help save some companies. Hayes Lemmerz, like all the other suppliers, didn’t receive government bailouts, and as demand for vehicles plummeted, many suppliers went out of business.

Hayes Lemmerz entered Chapter 11, but has emerged, is once again a premier supplier, and in fact has record EBITDA. Having recently talked with board members, Joint Venture Partners, and three levels of management, I cannot think of a more talented total group, with such a high level of mutual respect. And why not? In the most dire of circumstances, they figured out how to do more than just survive. That’s worth repeating: Curt and his team turned around a company with four strikes against it— location, industry, Chapter 11, and recession.

Operations around the globe have succeeded, new products have been successful, and Best Supplier Awards testify to the company serving its customers.

Topgrading Methods: If there were a Black Belt in Topgrading, Curt Clawson would have it, and he has needed it, because most of the previous executive team had to be replaced. Upon joining Hayes late in 2001 he tapped his personal Network, attracting A Players to key Business Unit president and corporate positions, hardly using search firms. Despite restructuring the company, Clawson has retained most of his A Players. It is frankly one of the most impressive Topgrading cases ever. The top team is superb, with COO and President of Global Wheel Group Fred Bentley (now President and CEO of Maxion Wheels) playing a major role in driving operations and implementing Topgrading.

Initially Topgrading professionals (I and some on my Team) assessed and coached internal managers and candidates for hire or promotion. Topgrading Workshops were held, and over time and with support from my company, Smart and Associates, the top three levels of management in the U.S. proved they could Topgrade with only occasional use of Topgrading professionals.

Tim Welcer, Vice President Human Resources, participated in the Smart & Associates Train-the-Trainer program and initially, with the support of Chris Mursau (Smart & Associates), conducted a number of Topgrading Workshops. Welcer went on to conduct well-received Topgrading Workshops all over the world, training down to the level of managers reporting to plant managers. Welcer and his team have conducted Topgrading Workshops as well as refresher training in virtually every country where Hayes has offices in order to drive the Topgrading methodology throughout the organization.

Hayes locations in many countries have taken the primary materials and translated them into local language formats. Welcer and/or members of his HR team review Topgrading summaries and coach local managers toward continuous improvement in embracing the concepts. Managers are aware that the CEO, president/COO, and/or Business Unit executives will request to review the Topgrading reports during visits to audit the process as well as use the reports to learn about the new hires before meeting them.

Welcer and others often participate in local-country interviews as they travel and time permits as an observer to calibrate the effectiveness of those team members actually conducting the tandem Topgrading Interview.

How A/B/C Player Ratings Are Made: Hayes Lemmerz senior management team conducts an annual two-day Management Resource Review (MRR). Participation consists of the CEO, COO/president, the senior leadership team, Business Unit executives, and top Human Resources staff. The group reviews every functional area, taking time to discuss each person to review (reviews are conducted on each executive, functional leaders, their direct reports, and plant managers on a global basis). The discussions are very energized and open among the entire team. This is a separate process (also known as succession planning) from the performance-management process. Information from that process is used to roll up into the MRR.

Prior to this top-level MRR meeting each Business Unit conducts a similar process with all functional areas and plant locations for all white-collar staff. Results from these lower-level reviews are used to identify talent and high-potential employees in the upper-level talent review meetings for succession planning purposes.

Topgrading Results: Talent meetings have documented a major improvement in talent (see Figure 5.1). Nine out of the top ten executives are new, and it’s an A team: 100% A Players. Among the top 77 managers, from plant manager to CEO, the percentage of A Players has skyrocketed from 38% to 89% . . . and is continuing to improve.

In 2003 talent reviews placed only 38% of managers in the A or A Potential groups. Within a year, after launching Topgrading, the executive team had 100% A Players, and the top 77 jobs in the company improved to over 80% A Players.

Annual talent reviews have shown the following results: In a 2011 talent review, hiring and promoting success was systematically measured. Because it’s appropriate for a manager to be on board for at least one year in order to categorize the person A/A Potential or Non-A, statistics were computed for 2008 and 2009 hires and promotions.

The current results: Of the 137 managers hired globally, 74% have turned out to be A/A Potentials, and of the 96 managers promoted, 85% have turned out to be A/A Potentials. Combined, managerial hiring and promoting success in recent years has been 79%.

Topgrading Hiring and Promoting Results
Pre-Topgrading (2001) 2003 2011
A/A Potential Hired 35% 94% 74% (N=137)
A/A Potential Promoted N/A N/A 85% (N=96)

Note: The table above states 2011 in the right column; however, those results are from 2008–2009.

Business Results
Losses of $211 million in 2001 were replaced by breakeven (2002) and earnings from operations of $62 million (2003). Adjusted EBITDA has shown the same trend. In recent years EBITDA has been:
2008 $157.2M
2009 $ 54.5M
2010 $154.9M
2011 $193.3M

Best Advice and Insights from Executives to Would-Be Topgraders

  1. I initially Topgraded the U.S., which was struggling, and left other parts of the world alone, because they were quite successful. In retrospect I should have Topgraded them sooner, since those A Players could have been even more successful. (Clawson)
  2. Tell people the truth. With a Topgraded company we were faced with plant closings, and by telling people the truth it showed the respect they deserved, and people performed extremely well, even when plants were to be closed. (Clawson)
  3. It may seem contradictory, but Topgrading empowers As to make decisions, and I travel constantly to drive the A Player standard. Fred, Tim, and I all travel and reinforce Topgrading while meeting employees, coaching and reviewing management, and meeting customers. (Clawson)
  4. Expect to be tested every day, from every corner of the earth. There are always credible reasons to let a chronic low performer have third and fourth chances, but any company, even a global one, will quickly understand if B performance is suddenly okay. (Bentley)
  5. Don’t cut corners. There have been times, and even I’ve been guilty, that a supposedly well-known person has been given a promotion, only to fail. Do the tandem Topgrading Interviews and oral 360 interviews with co-workers and you’ll avoid costly mistakes. (Bentley)
  6. If you’re in HR, insist on being involved in the tandem Topgrading Interview for key hires. You can become more experienced than all other leaders in the company. Don’t shirk this responsibility and you can make a big contribution to success of the company. Also, be there to coach your managers during their initial tandem Topgrading Interviews to make certain they utilize the skills and training and are calibrated to the process! (Welcer)
  7. Push back on your bosses if you see them making a talent mistake. HR generally has the reputation for going along with whatever the C-suite executives want, and not fighting for what you professionally know is right. (Welcer)