Canadian HR Reporter

Strategic capability Network'S paNel of thought leaders brings decades of experience from the senior ranks of Canada's business community. eir commentary puts HR management issues into context and looks at the practical implications of proposals and policies. Canadian HR RepoRteR February 23, 2015 executive series 9 www.scnetwork.ca Join our professional community of Canadian HR & Organizational Leaders: • Connecting @ monthly events • Collaborating with peers • Challenging conventional thinking The Power of Human Capital CULTIVATING LEADERSHIP FOR 35 YEARS Great Leaders GROW www.scnetwork.ca Common sense, not magic while linamar has had spectacular suc- cess in the manufacturing sector under the leadership of ceo linda hasenfratz, there is no magic involved — just good old-fashioned common sense coupled with a deep understanding of the indus- try and its business climate. lina- mar's business model melds busi- ness discipline with entrepreneurial freedom to innovate. Discipline Manufacturing is known for disci- pline both in precision standards and standardized processes. No doubt Linamar has needed to be a proficient manufacturer with staff highly skilled in their trades, exacting processes and quality control. However, Linamar's dis- cipline beyond these technical operating aspects demonstrates overall common sense about run- ning a business that often gets lost in the conflicting demands of day- to-day operations and the expec- tations of shareholder returns. When tough times hit, Linamar had good business practices as a solid foundation: • Strong financials in terms of debt to capitalization and an accounts receivables contingency plan. • Clarity that three stakeholders mattered — customers, employ- ees, shareholders — and success- fully balancing these interests formed its scorecard. • Basic principles of continuous improvement in place. • Maintaining a highly skilled workforce. • Frank, frequent, personal com- munication about the business — for good and bad news alike. • Acquired companies required to adopt Linamar's values of re- spect, responsiveness, hard work and innovation. • Identifying business-critical de- cisions and processes that ap- ply across the company, such as capital equipment. • Clear expectations that plants and employees are to demon- strate performance and account- ably for decisions. Freedom to innovate Few manufacturing companies can sustain a freedom to innovate and move beyond entrenched processes. While similar manu- facturing companies were exiting the market, Linamar was able to rely on its deep expertise, values and understanding of the market to seek out new opportunities and new ways of meeting needs. It be- came the "go to" source for those who need a fast solution to a sticky problem. When opportunities presented themselves, its entre- preneurial culture and innovative perspective on manufacturing supported growth. A few examples: • It looked beyond difficulties for opportunities to build market share through acquisition and to acquire customers from compa- nies that did not survive. • It secured the support of its three key stakeholders for longer term strategies and investment for the future rather than just short- term rewards. • Linamar created a goal of six new implemented ideas per em- ployee per year to both reinforce continuous improvement and to stimulate innovative, entrepre- neurial ideas. • It worked to reduce bureaucracy. Plants make decisions and tailor operation of corporate programs in ways that best suit their needs. ey are held accountable for their scorecard and successful operation of the plant. • Linamar worked on identifying how it is positioned for opportu- nities in various future scenarios and used that information to de- velop new or modified business directions. In a business climate where companies are often mired in bu- reaucracy and enamoured with adopting the latest models and theories, it is refreshing to come across a business that is drawing upon good business practices and applying them in creative and in- novative ways. Karen Gorsline is SCNetwork's lead commentator on strategic capability and leads HR Initiatives, a consult- ing practice focused on facilitation and tailored HR initiatives. Toronto- based, she has taught HR planning, held senior roles in strategy and poli- cy, managed a large decentralized HR function and directed a small busi- ness. She can be reached at gorslin@ pathcom.com. Karen gorsline Strategic Capability a refreshing Ceo what is the role of the ceo in organiza- tional effectiveness? well, the ceo — the ultimate cross-over manager — is ac- countable for everything, with effective- ness being the overarching priority. at is an extraordinary expectation to rise to and only a select few have the skill, will and mental horsepower to do a decent job of it. Linda Hasenfratz, CEO of Lina- mar, demonstrated she is capable of rising to that expectation. She has applied herself to the interweav- ing practices of an effective CEO: develop a strategy and ensure the structure to support it; define the work, including the roles, then in- tegrate the work across functions; establish a talent growth system; and promote and model effective managerial leadership. It was so refreshing to hear an executive talk about looking "five, 10, 20, 50 years down the line." As a CEO of a global organization, Hasenfratz must have the capabil- ity to develop a strategy at least 10 years out. Many executives, over- whelmed by the work and lacking depth in their teams, drop down into shorter time spans — causing too many surprises by the slings and arrows of everyday fortune. Clearly, Hasenfratz has thought through Linamar's functional structure. The manufacturing facilities are the organizational spine of the company, with deci- sion-making devolved to them. Head office and all its functions are support services for the plants, which in turn accept accountabil- ity for their goals. In securing the functional structure, she clarifies the work to be done and the roles needed to execute that work. With the roles clarified, she then populates the structure with the right people. "Double-digit growth is not possible without the right peo- ple," she said. Hasenfratz has es- tablished a multi-channel talent development system at Linamar with an emphasis on management and leadership — the "Linamar Entrepreneur Advancement Pro- gram" and the "Each One Teach One" programs are examples. Next, a talent development pro- cess must include a framework of expectations for the leadership behaviours being sought. Hasenfratz certainly demon- strated the Linamar behaviours of passion, planning and follow- through execution, acumen as well as "soft" traits such as com- municating and caring. As she said, "Why would people follow you if you don't care?" e presentation was a clas- sic demonstration of the role of the CEO in organizational effectiveness. Michael Clark is director of sales and marketing at Forrest & Company in Toronto and a commentator on orga- nizational effectiveness for the Strate- gic Capability Network. Forrest is an organizational transformation firm, with more than 25 years' experience in developing the organizational and leadership capacity in organizations. Michael Clark organizational effectiveness linamar treats people right in the last year, linamar achieved above- earnings growth of more than 50 per cent and realized significant im- provement on margins. it is target- ing double-digit growth of at least 10 per cent for 2015. It's no surprise, then, to learn that Linda Hasenfratz, CEO, re- ceived the 2014 Ernst & Young's Entrepreneur of the Year Award for Manufacturing. If you look at your own organization's past and current results, would you be able to match the Linamar story? Linamar's success is built on a few fundamental principles that can be summarized under three core factors: purpose, people and process. All three are equally and consistently practised. Purpose: Linamar is always looking five, 10 and more years ahead to determine long-term opportunities and viability. e leadership team never takes their eyes off the future, unlike other corporations that just look at the next quarter. ey drive an entre- preneurial mindset and see the fu- ture marketplace as being highly competitive and a billion-dollar growth opportunity. Unlike many publicly traded companies that predominantly focus on the bottom line, Linamar embodies an inclusive, equally balanced decision-making model concerning people, shareholders and customers. Collectively, this outlook reinforces a strong sense and understanding of purpose, vi- sion and strategy. People: Linamar's people know they are appreciated and respected for being resourceful and having a strong work ethic. eir culture is central to their success where defined core values and principles are part of the way everyone accomplishes their day- to-day business versus being a list of promising words on a poster. Double-digit growth means having the right people in the right position and is non-negotiable; consequently, leadership develop- ment is an essential commitment. Primary leadership qualities are infused to develop and reinforce competent behaviours and con- sistently incorporated with all trish Maguire Leadership in action loNG-term > pg. 10 e leadership team never takes their eyes off the future, unlike other corporations that just look at the next quarter.

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