One-Page Company Game Plan
Every December Gregg Foster of Elyria Foundry incorporates ideas from around the company and posts a list of goals to guide and motivate its work force over the next 12 months
Elyria Foundry was losing $3 million a year on revenues of $4 million when Gregg Foster took a deep breath and purchased it, 10 years ago. "We were a totally reactive company -- we were defensive, commercially, just begging for work and taking anything we could," he recalls. But once the company got back on track, he says, "it made sense to start committing ourselves to goals."
Over the past 5 years goal setting has emerged as a key component in the continuing regeneration of the Elyria, Ohio, producer of large-scale metal castings. Each year, management presents the entire company with a list of goals that will shape the next 12 months for everyone there.
Foster introduced written goals after he'd initiated difficult changes, including going eyeball-to-eyeball with the union, which eventually voted to decertify itself from Elyria. As his initiatives began paying off, Foster resolved to bring the work force up to speed. The company was doing well, and he wanted everyone involved in its continuing success. At companywide meetings he outlined the staff's achievements: increasing revenues and profits, a new bonus pool, new customers, and improvements in attendance and scrap reduction.
"I started the goals as an excuse to measure our performance for the annual meeting," says Foster, "and that's still why we do it. I wanted to be able to put up on the overhead projector a list that would light competitive fires."
The challenge was to devise a document that was meaningful -- not trite or, just as bad, navely wishful. "The problem with strategic plans," adds Foster, "is that they're usually so ethereal that they don't make sense." Still, the first time he tried to come up with a game plan, he made a common mistake -- he developed the agenda completely on his own. "This was 1987. There weren't that many goals, but we didn't hit any of them." His managers were quick to point out his mistake. "They told me, Well, you wrote these by yourself. Why don't you ask us for ideas?"
So the following year the five managers (in sales, finance, production, administration, and engineering) each submitted 5 to 10 goals, which Foster synthesized into a single list. That was the beginning of an annual practice that has endured. In November those managers consider the suggestions they've gathered from their departments, and at December's annual meeting of all 290 employees, Foster grades the previous year's performance, goal by goal, and explains what the company will be shooting for in the next year. Each year's targets cover a broad range of issues -- from 401(k)-retirement-program participation to applying for ISO 9000 certification (a quality standard required to do business with certain European customers).
What makes a goal good enough to appear on Elyria's single-page summary? It has to be measurable and specific. "This isn't the whole package of corrections we could make," he emphasizes. "There are a hundred things in the office and in the shop that are equally important. Take safety: 10 things we do every day could dominate this list. But to make us a better company, and so everybody understands we're not one-dimensional, we want goals that hit a variety of people, and we throw out some things for which we already have comprehensive programs."
Elyria is now a profitable $29-million venture, and last year Inc. named Foster the Turnaround Entrepreneur of the Year. "Goals have given us something to dig our teeth into," he says. "They're specific, but they also create a picture of how we want to be. They give us things to talk about."
Gregg Foster details the rationale of effective goal setting:* * *
Put the most critical goal up front.
We surveyed our customers, and the number one reason they did business with Elyria Foundry was delivery. Last year 100% on-time delivery was at the top of our list, too, and we hit 73% overall and 90% or better for our top accounts. The numbers were off target in part because customers ordered items that their computers told them they needed four weeks earlier -- which makes our delivery automatically late. We almost never screw up, but our delivery performance is never going to be 100% as long as we measure ourselves against that standard. This year we'll track delivery by two dates: the customer's request date and, for our own information, the date we delivered product given our lead time.
Include important specifics even if they affect only a few people.
These were goals last year, too, and we made some changes during 1992. We hired a new receptionist and put in a second switchboard. It had been embarrassing; people would call and say, Doesn't anyone work there? Last year our stated goal was to answer all calls on the first ring, but the new receptionist pointed out that if we aimed for no more than two rings, she could put one caller on hold politely and get on to the next. You wouldn't think that a set of business goals could be influenced by a newly hired receptionist, but that's what those goals are for.
Repeat goals of ongoing importance.
Attendance is such a big issue. We always need to talk about how much money it saves us, how much better the company is because we have people who are here every day. Same thing with participation in the 401(k). We have a higher participation by far than even the bank that manages our fund, and that allows us to have a very steep matching program. Those items fall under "advertising." Our company has some extraordinary traits, and we don't want to de-emphasize them by taking them off the list. To have 99% attendance and 99% participation in the 401(k) is unbelievable in our industry.
As for being debt free, we aren't today debt free. We go through periods when we need to borrow money for taxes or whatever, but we hover around zero. By keeping that on our list we give people confidence that we're not on the edge. Many people who work here have peers who have suffered missed payrolls or seen layoffs. We are assuring them that Elyria is a financially responsible company that wants to be here forever.* * *
Amplify goals that were attained last year.
We had talked for three or four years about starting an education program, and once we got it on this list, in 1991, it was hard to hide from it. We started an adult-education program, and now there are 65 people enrolled in our own school here on-site. Last year we aimed to decrease illiteracy by 50%, and we did. So this year we're expanding the program and opening it up to employees' spouses.
Let the list cover a broad range of ambitions.
We do list goals that seem unrelated, because reaching them will make us a better company. Many people say, This isn't a comprehensive list, and why is "Take every customer call" on the same list as "ISO certification"? Well, those are both serious, fixable concerns for us, and we can measure our progress as we work on them. I didn't know if we should even call these business goals: they're specific, ongoing improvements from all levels of the company, and at year's end we can reconcile them. It's not brilliant, but it works.
Let the language and presentation stay simple.
We try to make sure we never get so sophisticated or so cool that people don't know where we're going. We're not that intellectual about this business. I know I'm not. I have to work on really understandable levels, or I get all screwed up about what I should be doing. And we're all above suspicion if everyone understands what's going on.
Use the goal-setting discipline to set fiscal priorities.
Capital projects here are done on a pay-as-you-go plan. We won't take on debt to do them. We use cash flow. When a project is next in line, and we have the resources, it gets done. So everyone's always vying for the top spot.
We continually review and analyze the potential payback of the projects on people's wish lists. This is the most intense process in our goal setting. It's like playing a rugby game. In the end we have a plan to guide us. If somebody wants us to head in a different direction, I just say, If you want to call a meeting and have everyone reprioritize things, if you want to go to battle over this one little project, go ahead. The list may change, but not without our consciously thinking it through. It keeps us on track.