"Credible hope" in difficult times

By Rick Willett, president and COO, NewPage Corp.

In the current market environment, it has been increasingly difficult for our leaders to motivate and inspire our employees for the future while simultaneously announcing short term decisions that may be very unpopular regarding pay, headcount reductions, or manufacturing downtime.  

Every situation is different, the culture at each of our facilities is a bit unique and this requires sensitivity to history. Still, we are finding a few key principles to provide “credible hope” to employees that things are going to get better, while still providing the “level setting” on why certain decisions need to be made in the short term. In every communication with our employees in this environment, our leadership team is attempting to include 4 key themes:

1)    Acknowledge today’s tough reality with specific examples and data. It is increasingly important for a leader to demonstrate that they are “in touch” with how bad things really are. We’re finding that it is increasingly important to show more transparency to performance data, not less. While it may be tempting to try to put a positive spin on company results or to talk in generalities, to be credible we can have more impact by starting with the bad news first and using specific data and examples employees can recognize.
2)    Over-communicate short term actions / Be increasingly transparent on short-term decision making. Rumors are always paralyzing to an organization, but even more so in a tough environment. We’re finding we can reduce rumors of “impending announcements” when employees can trust that on a very regular basis, they are getting a steady flow of information on short-term decisions. Even on relatively minor decisions that we might not have communicated broadly in the past, we are now ensuring employees feel as though they are getting information “real time” and no decisions have been made that they will not be informed of.  
3)    Use historical data to explain cycles. . . things will get better, the open question is when. As a cyclical business, this may be easier for us than others, but we can point to data since 1970 to five recessions where our demand has fallen by more than 15 percent, but recovered back to the prior peak within 18 months (1973, 1981, 1991, 1996, 2002).  Additionally, we are finding that anecdotal examples (e.g. specific customers, products) can be even more tangible for employees.
4)    Over-communicate investment decisions that will have a longer-term benefit. What we are seeing provides the most “hope” for our employees has been our commitment to continue to invest for the future. While we have significantly cut capital expenditures, we are still making some important investments. Salaries and hiring are frozen, but we are still doing on-campus recruiting and training for 20-plus new engineers. Employees are greatly energized when reminded that our leadership team has enough confidence in the future to still be making investments that may not pay off for several years.

In all of our presentations and “town hall” updates, we are attempting to ensure that our communications incorporate all four of these themes.  However, we are also finding it valuable to use all points in every interaction, including hallways conversations.   Below is an illustrative example of a conversation I had with an employee today in the hallway:

Customer service employee “Linda”:   “Rick, how are things going for the company?”

“Well, pretty rough.  (1) Just when you think things can’t get worse, it does. Our order rates have dropped again by 8% in January vs. December. I was speaking with Williams-Sonoma last week and they have decided to cut back again on catalog circulation this spring.  (2) This is one of the reasons why we had to keep a paper machine in Escanaba down for another few days last week. . . as you know, we need to make these tough decisions on capacity curtailment on a day-to-day basis.  

(3) However, in our discussion the head of marketing for WS reminded me that in the last downturn in 2001, he took circulation down by 25%, only to increase it by 30% in 2002 as their customers started ordering again. He had no idea how long this downturn was going to last, but wanted to make sure we would have enough available capacity to meet his needs when it does come back. I assured him that all of our hard work on our cost structure and the actions we are taking in the short term has us well positioned to meet his needs for paper when his demand increases.”

“You know Linda, this conversation is similar to most conversations with our customers. . . they do not know yet when the economy is going to get better,  but they are still confident it will and want to be sure we’ll be ready.    (4) One opportunity we are seeing that this downcycle is giving us is on recruiting new engineers.   I just met with some our new hires last week and I couldn’t be more excited about the talent level I met. I think our commitment to hire for the future is giving us a big advantage over our competition as we are able to attract some really top-notch people to add to our team.

I know that things are rough right now, and we are making really tough day-to-day decisions, but I am confident that we’re going to be OK during the downcycle, and are going to come out the other side even stronger than we went in. Thanks for asking.”