In Part 4 of our Back From the Brink series featuring HM Manufacturing. We’ve learned that surviving theft and dishonesty is challenging enough, but it’s not the end of the story. Whenever this happens to a business they need to go through the process of rebuilding. In HM’s case it meant starting from scratch. Nicole shares her philosophy on company culture and what it’s taking to keep HM Manufacturing strong.
Dan: Let’s talk a little bit about employees a little bit about company culture because I don’t want to forget that. You pointed out company culture has changed. So talk about the changes that happened. What it used to be to what you created and what it is today.
Nicole: I’m a big proponent of being open. I’ll have meetings and let everybody know what our metrics are, what we’re supposed to ship out for this week or this month, and did we not hit our goal. Because I think it’s super important for the employees to know if they’re not hitting their marks or if we over-projected or under-projected. I think it’s good for them to have a marker; it gives them an incentive. So, having that and also having the lines of communication open; my door’s always open for them. If they have a question, if they have a concern, if they have an issue, I want to be able to know about it so that we can address it together.
I’ve had plenty of guys come into my office and say, “I don’t think I want to work here anymore.” I go, “Why, what happened? Let’s do a rundown.” They feel they are overworked or stressed out, or so and so isn’t working as hard as they are working. I take this seriously. I know that if I back up here we can’t make our sales goal or our shipping goal, our invoice goal or whatever the case may be. It’s great to be able to sit them down and get them to regroup mentally; because I think that they put a lot of pressure on themselves as well. I try to get them to just chill out, relax, it’ll be okay. Some people are going to be a little less aggressive than others but we’re all a team. So if this shipment isn’t shipping fast enough, then you’re more than welcome to talk to your supervisor and see if you can go help him throughout the day, because if it bottlenecks at any given point in the shop, it’s a problem.
Back in the day it was, “It’s not my job.” That was the biggest headache. I remember one of the guys being like it’s not my job, I’m a CNC programmer, I don’t need to go shipping, it’s not my job. I was so sick and tired of hearing that, that I decided for an entire week that I was going to go out in the shipping bench and I was going to help ship and flange and put in set screws or whatever the case may be. The minute I did that, I never again heard that it’s not my job. People understood that we’re all in this together, that no one is really above anything. If as the president and CEO I’m going out and shipping, you have no right to say it’s not your job.
Changing that company culture and getting everybody to work as a team and not as a solo individual where they get all the credit, that’s been a work in progress but that’s been good. I have a young team and they adapt to the company culture.
Dan: What other steps have you taken? Because I can’t believe that just going out and doing shipping for a couple days necessarily completely changed the tides. I’m sure that started it. What else do you do that kind of helps reinforce this new culture that you’re trying to implement?
Nicole: I’m out in the shop. I do my tours daily. I’m out there a lot and ask them questions. If they don’t work well together, I pretty much forced them to work together and have that conversation. I’m not going to deal with someone that’s not going to be part of the team. I fired people if they didn’t want to work as a team member because that’s a cancer to me and one bad apple will completely shift everything.
So I think letting them see how serious I am about being a team, working together, having those open lines of communication, also me getting my hands dirty and letting people go that aren’t going to be team players.
Dan: So I have a question for you here because I’m actually dealing with this with another client. I think I know how you’re going to answer it but I want it in your words, not mine. You have a bad apple, but technically, they’re a good performer. What do you do?
Nicole: I’ll sit them down, I’ll write them up. If it continues, they do get suspended. If it continues again, I’ve already gotten a replacement in the wings. I can’t have it. I’ve let people go. My dad, it irks him, but I’m very fortunate because I’m a part of an education foundation for the TMA, Technology Manufacturing Association. Through being a part of associations and network I have been very lucky to get to a lot of these high schools that have manufacturing programs, and these kids are coming out NIM certified and ready to go. Being able to have these kids come out of high school and also give them internships and apprenticeship programs, I’m not really hurting for help. That makes it very easy for me to replace them and I know not everybody gets that. They’re not as lucky and they don’t have that network of young kids coming out or that want to be in manufacturing that we do.
Dan: I think if you follow similar steps because one of the companies I’m thinking of is an engineering firm. You can’t get them out of high school, but you can get them out of college if you have a relationship with several colleges that have an engineering program.
Nicole: You give them internships. You feel them out. You see how it works and you can offer them a job at the end or at apprenticeship program, they can come work during the week or whatever it may be. That’s what I’ve been doing. That’s something that I just brought on the beginning of 2018 because I was having issues where I had a prima donna. We thought he was the greatest gift to manufacturing but didn’t want to work well and had a bad attitude. He started to stir the pot with everybody else saying, “Oh, I got a raise, this is how much I’m making.” That’s a no for me. That’s an absolute dismissal, you’re fired because that just creates anarchy.
Dan: Good. So hindsight being 20/20, now here we are in 2018, looking back on your career with the company and everything that’s changed since 2007, 2008, knowing what you know now, what would you tell somebody else who might find themselves in a similar pickle at some point? How do they prevent, whether it’s embezzlement or shell companies or whatever illicit things are going on behind the scenes. How would you tell them to look for those things or what they would need to implement to prevent that from happening?
Nicole: I know this is so bad because we were talking about the micromanaging and not to do it ,right? But if you’re starting to sense that something’s wrong, you need to start investigating it, and just take it like step by step with what’s missing, what’s changed, what is really the issues at hand me. For me, it was to ask a lot of questions. I’m very intuitive, and observe everything. I know everybody gets in their routine and we’re so busy, but it’s super important. And to also have meetings with your managers, make sure that everyone’s in line if metrics aren’t being met. There’s a reason why we have performance indicators. We have to be able to hold them accountable. Here, everybody is accountable. If you’re missing your mark, we need to talk about it, we need to figure that out.
I think just having the updated systems where you can really start tracking, and watching your scrap, and just being present. If you hear something, take it for what it is and realize that that’s your intuition talking. I’m very big on my gut and work a lot on my instincts too, but I think that’s a very big thing is to be very present and hit it, like nip it in the bud right away.
Dan: You had mentioned that your dad was kind of head in the sand on it. Do you think or did he say he kind of was thinking something was going on but just in denial about it? Because you kind of hinted that that might be the case.
Nicole: Yeah, that I thought it was in denial. I think it was in denial of we’re losing business but I want to keep this afloat and he didn’t want to lose any people because if we end up getting more customers, I’m going to need help.
Dan: And maybe even a little fear it sounds.
Nicole: I think so. You’ve had this business since 79 and I mean your biggest nightmare is pretty much like hitting you in the face. I also think that having someone come in from an outside perspective.
Nicole: Maybe you hire an outside consultant. When I came in it was like an outside consultant because I had no knowledge about the manufacturing aspect of anything. I came in and asking a ton of questions. When I got different responses for every different procedure, I knew something was amiss. So I think that helps because my dad was just going to go through the same gambit, oh, it’s the monotony, it’s the same thing, it’s every day. You lose track of really what’s going on out there.
Dan: Would you also relate some of that to being what I call ‘the smartest guy in the room.’ Typically the business owner thinks, “I know everything about this business. I know everything that’s going on. I should know all this.” So it’s partially denial, it’s partially thinking, well, I got to be the guy that is on top of everything.
Nicole: Right. That’s not good either. There’s a reason you have other people in their divisions is to kind of give you the checks and balances. Like I don’t know everything that’s going on but I know the main portions of it and I have to trust and verify that it’s getting done at the end of the day. I’m going to know if it’s not getting done at the end of the day because I’m going to get an email or a phone call from a very angry customer being like, what happened. I think it’s important. I’m not going to know everything. I’m not a machinist even though I have the credentials that say I’m a machinist. But I know just enough about everything to be lethal and I think that’s good too. And I’m still very curious and I’m constantly watching on the cameras and on the ERP system what’s all going on.
Dan: I think that curiosity is important because that’s why I find a lot of business owners, they’re too, I don’t know if it’s too trusting because they want to let go or if it’s too trusting because they’re so busy with other stuff that’s just like if somebody else handles that, take care of that.
Nicole: And it could be both.
Dan: I find a lot of people don’t ask enough questions. So it’s good to hear that that’s a big part of your approach.
Nicole Wolter: I love asking questions. Yeah, see. You learn a lot.
Dan: You do. I tell people, I go in playing the part of resident idiot. I pretend I know nothing and in many cases, I don’t know your business, so I do have limited knowledge of what’s going on. That allows me to ask different questions than somebody who thinks they know your business.
Nicole: Yeah. Well I think for me to be lethal, because I’m not like your typical looking manufacturer. So it’s so fun to like sit in on these meetings. Even in the beginning when I first showed up here at HM, I did play stupid, and I still play stupid because I’d like to see how people are going to react to it. I’d like to see what kind of lines they’re going to feed me and then knock them dead with what I know. I think that’s a good thing because you can really get a sense of who people are. I love to read. I read a lot of books and I have read enough about body language and I watched that and it’s interesting. It’s like I was saying earlier, I’m very observant. So I watch how people interact and their body language and how things go. So when I’m out there and I see someone scurry, I know that they weren’t working.
Dan: Where’s HM manufacturing going? So where are you at roughly for sales now, where do you think you’re going to be or where do you see yourself?
Nicole: Well, we went from like $80,000 in sales and near bankruptcy to essentially $three million in revenue. It’s been a great journey. I’m excited of what’s to come. I was sharing with you earlier than I would be at IMTS all next week.
Dan: And IMTS is what?
Nicole: International Manufacturing Technology Show. It’s here in Chicago and it’s an entire week and they are expecting almost 400,000 in attendance. So it’s exciting. Everyone that’s a machine builder will be there so that’ll be exciting. So what’s for us? Well, we’re ISO certified, we just got certified to the new standard last month. We’re going now for our AS9100 Rev D for aerospace. That will be exciting to take on some of the more heavy duty aerospace companies. We invest in technology and our machines. Since 2016, we’ve added three new machines, so we’re getting a new machine every year. So this year at IMTS, there’s the goal to purchase two new machines. They’re not going to be replacement machines, they’re going to be additions. So that’s exciting because we’re growing, our capacity is filling up and we’re getting new clients.
We got six new clients just this week. That’s unheard of. It’s exciting to see the journey and the process and adding to our capabilities we now can do 5-axis milling telling you, like I said earlier, being able to go from start to finish is an assembly gearbox, where before we were only doing one or two or three products. Now our product line has expanded.
Dan: And how many products again?
Nicole: So we’ve assembly, pulleys, gears, shivs, blinds. We’ve got eight now.
Dan: Going forward, do you see yourself continuing to grow organically or are you eventually going to look at the acquisition route?
Nicole: Nope, nope, nope. I don’t want to be bought out. I’m not anywhere near that.
Dan: Do you want to buy other people out?
Nicole: I do. That would be the nice goal is to try to figure out what next avenue I’d like to head into. The goal for me though in the next three years is to take on a product line and kind of have a subsidiary to HM Manufacturing. My dad engineered a quick change over system and so I’d like to get that to market. So we purchased a machine last year to start prototyping. So now my dad, now that he’s somewhat taking a bit of a backseat, he’s now back into his engineering fixturing and tooling. So, I’d like to get that to market by next year and really make something of that. So not just have HM Manufacturing as pulleys, gears spline, shivs, power transmission components, but now also be able to offer a product line of quick change over systems.
Dan: That is excellent! Nicole, thank you for sharing your experiences with us
Nicole: Thank you, Dan..
We ended the interview with a plant tour and I was able to see the work going on. HM is back to investing in their business and their people. No doubt they are back on track for growth. In part 5 of this series I will break down what business owners need to do in order to avoid very costly mistakes that could damage your reputation and destroy your profitability.