Hillenbrand Case Study
Culture of Top Talent Improves Company's Stock Performance 125% in 4 Years
Hillenbrand Industries was languishing in the 1990s, with the stock performing below the S&P 500. Dave Robertson, Vice President Administration (including Human Resources) told CEO Gus Hillenbrand, “Our dismal stock performance is because we have too many people but not enough talent.” Familiar with Topgrading from his HR contacts, Robertson initiated a meeting with Brad Smart to discuss a roll-out, which took place from 2000 to 2004.
Initially, Topgrading Professionals assessed and coached the top 150 leaders of the organization and Individual Development Plans (IDPs) were created for all. Leaders who were deemed A Players and others implementing their IDP and showing A Potenial, stayed, and leaders who failed to achieve their accountabilities and who did not develop toward A Player status left – usually of their own volition.
Topgrading Workshops were conducted to train all managers, who then implemented Topgrading for their teams. Within a year the top team was 100% A Players.
Assessments of external candidates for hire and internal candidates for promotion led to Fred Rockwood being named CEO of Hillenbrand, Ken Camp being named CEO of Batesville, and Ernest Wasser being named CEO of Hill-Rom. Rockwood said, “The infusion of A Players in key roles proves the adage that As attract As. Topgrading should start at the top and work down, and that way the A Players attract A Players and it cascades down.”
"Hillenbrand has been transformed with Topgrading. The shareholders were served by Topgrading faster rather than slower."
- Fred Rockwood, CEO (Retired)
Human Resources is Key to Topgrading Success
Steve McMillan was recruited to be Vice President Human Resources in 2000, and he greatly improved all of Hillenbrand's HR systems. McMillan said, “It was imperative to build a talent culture, and with the company making large acquisitions, HR needed to have a bench of A Players to infuse those companies with our talent culture.”
By the end of the third year of Topgrading, chronic low performers had left, dozens of A Players were hired, and the top four layers of the company had 90% A Players.
“Topgrading is never a finished project," says Rockwood. "It has to be a way of life and it’s part of our culture, to be sure we constantly grow and develop people to be A Players.”
John Dickey, Vice President Human Resources for Batesville (division) said, “Topgrading makes HR stand out as an extremely valuable contributor to company success. However, the CEO has to be viewed as the driver of the performance standards that Topgrading requires. If the CEO delegates Topgrading to HR, the peers of HR might want to cut corners, which would kill the A Player performance standards. Fortunately, our division CEOs and corporate CEO have our backs in HR so that when we hold the performance bar high, everyone knows they can’t go around us to lower it.”
During the four-year Topgrading roll-out at Hillenbrand, the company's stock price increased 125%. The improved talent and culture positioned the company for future strategic reorganization.