Chairman and CEO John P. McConnell looks to the future as his company reaches a milestone.
John P. McConnell is down to earth for the leader of a Fortune 1000 company. This seems to have been inherited, at least in part, from his father and company founder, the late John H. McConnell. He has an introspective manner; it's a trait confirmed by the unflinching assessments that Worthington Industries has undergone during his 13 years as CEO.
Throughout the recession and subsequent swings in the automotive, construction and oil and gas markets that affect Worthington Industries' core business, McConnell has carried on the ethical labor practices initiated by his father. These include employee profit-sharing, flexible sick leave for hourly employees and onsite employee wellness benefits.
McConnell was a toddler when his father founded the company. "I've often taken credit for the success of the company, because I was two and he was out trying to stay the hell away from me," jokes McConnell with a chuckle. As a Worthington High School student, McConnell worked odd jobs at the original Huntley Road plant. He purchased his first tennis racket with earnings from mowing the company lawn.
"It was a very nice suburban life as I grew up. I graduated high school in 1972; that's when we went public and when we started to grow a lot more. Things really changed after I went to college," he says. Celebrating the company's 60th anniversary, the chairman and chief is charting the next course for himself and for Worthington Industries. Without naming names, he expects to implement a gradual succession plan "when I think it's ready, probably someplace between two and five years."
Over a can of orange soda in the boardroom of the company's Worthington headquarters, McConnell shared insights with Columbus CEO into the volatile international markets in which Worthington Industries operates, reflecting on the company's six decades and his projections for the future.
How's business for Worthington Industries as you begin your new fiscal year?
It wrapped up pretty well. We certainly had some markets that retracted toward the end. Oil and gas, the construction market, mining, agriculture. Those parts affected two of the businesses we recently acquired. They've had some impact in steel which we've largely made up for with a very strong automotive market.
Looking back on Worthington Industries' 60 years in business and your own 40 years with the company, what highlights stand out for you?
I'd start with the founding of the company: my father having the courage to leverage his automobile and give it a whirl. Otherwise none of us would be here.
He created opportunities for his employees, like the creation of profit-sharing in 1966. It was a pretty amazing event particularly for the time frame. That's really been a focal point of how we view working with our employees. Everybody shares in the profits that they help create.
We went public in 1968-it obviously gave us a lot of extra capital to help us grow and expand. It was certainly a key event.
During my time as CEO, the company's gone through what we call our 'transformation.' It was a key event that really changed the course of the company. The transformation revitalized Worthington Industries.
I always say, success is a mighty enemy. You tend to become a little complacent over time when you've been very successful. The transformation jumpstarted the business again.
We're very metrics-driven without giving up our focus on people. We measure people's involvement and happiness, too. We do a lot of exercises to make sure people are involved and happy here.
Does profit-sharing represent that you're invested in your employees?
I think we are. They're very involved. If you don't have your employees engaged and involved, you're not going to get anything done at the end of the day. That's what we did through the transformation. I think people generally are much happier if they feel they're part of a group of Navy Seals than if they feel like they're just part of an average, plodding-along group of people.
Will you tell us more about the transformation?
The transformation involved bringing in an outside consulting firm to help us really look at ourselves….We found we could improve our productivity by over 40 percent in that first plant we assessed. That was critical.
We started this in 2008, and late in 2008 was when the recession hit. So we had a lot of information that we wouldn't have had otherwise, to know that we could affect change.
We could reduce our workforce on a permanent basis because we were 40 percent more productive. We did that on a skill-basis. We kept the best employees, and it really jumpstarted the company. It helped us get through the recession in a good way and be off and running on the other side of it. Was it a coincidence that you had timed the transformation just as the recession was about to hit?
I wish I could tell you I had perfect vision and did it just so, but it was more coincidental. It really worked out well for us.
How hard is it to make those difficult decisions?
When we talk to employees (facing layoffs), we ask, 'Do you guys understand what's going on?' and they say, 'It's a cyclical business. It's always happened to us, and you guys have treated us more fairly and respectfully than anybody else.'
You feel good about that, even though you don't feel good about the layoffs.
How far along are you in your succession planning, and can you tell us what that looks like?
I have the ability to take steps back. As chairman and CEO I can become chairman, and a non-executive chairman after that. I've got room to stay connected for quite a while; but as soon as I feel comfortable that the team's ready and they're able to run the place (we'll put the succession plan into action). We've got a great board of directors. I would still be involved in that sense. But it's a few years off.
I'm in an interesting place. One, we have a very good team right now. I'm 61, so I think about: How do we get the company to a place where new leadership is firmly in control? I think this is harder than actually running the company.
There's a line you have to find where you're in touch, but you've given them enough space to make decisions, grow, learn and exercise their judgment. It's a hard line to find sometimes.
What is the biggest lesson learned from your father that continues to guide your work?
Maintaining your integrity would be number one. If you lose that, you have a big problem. People have to believe that when you say something, that's what you mean and that's what you're going to do. It doesn't mean you can't change your mind. Again, we've got to go back to evolving. Part of that is saying, 'You know, maybe we should try it another way. Let's give it a go.' You shouldn't be afraid to do those things.
We were talking one day, and I asked him what he thought was the most important thing that we did. Was it profit sharing? Was it the salary plan, which is a program that pays people whenever they're absent? I asked which one he thought was more impactful and would drive our employees to be more productive. He said, 'Neither. It's recognition.'
Always recognizing people's efforts around you, and recognizing you can't get anything done unless you have everybody on board. Everybody likes to hear, 'You did a good job.' It feels good.
Have the keys to your company's success changed over time-what contributes to your success today?
Our philosophy, which my father put into writing in the 1970s, is really kind of a human philosophy. How do you treat other people? That's what it's really all about. That stands right at the center of what we do. We review it with each other every two or three years to make sure we all interpret it the same way.
The most important part of our company philosophy is in emphasizing to people that, while it can guide our daily lives, it's really a guide to get you through changing times without losing your way. They're not actionable steps, they're principles. They should promote change on a constant basis without fear, because you aren't going to lose your light. It's kind of like the beacon that's always there for you.
How would you describe yourself as a leader?
Someone who listens. But someone who is pretty direct when it comes time to be, concerning what I think needs done after I've heard everybody's argument. I'm willing to go with somebody else's thought and watch it for a bit.
But I never think much about leadership style. I think it's kind of overated.
What's on the horizon? Is the best yet to come for Worthington Industries?
Oh yeah. I don't think there's any question, otherwise we might as well go home.
I think we're in some tough markets, some tough times. I'm not sure what's on the wider horizon. I've never seen the world as messed up as it is today. You've got a lot of issues in Europe, you've got a lot of issues in the Middle East, and Africa's certainly got its own issues as well. And I don't see them calming. Hopefully that doesn't lead to the weight of another financial crisis and a much deeper issue. The corrections that are going on now are just that, likely.
We haven't really gotten a good economy since '08. It's been plodding, improving slightly, a lot of employment issues. If we get on a decent playing field, we'll do extremely well. We're very well positioned. Obviously, we can't fight an economy that's collapsing. We will do very well in a level-set economy.
Kitty McConnell is associate editor of Columbus CEO and is not related to John McConnell.
Worthington Industries timeline (Source: Worthington Industries):1955: John H. McConnell borrows $600 against his 1952 Oldsmobile to purchase his first load of steel. 1959: Worthington Steel's Huntley Road plant opens. 1960-67: Technology investments like a metallurgical lab and an advanced mill gave the company an edge. 1966: Worthington implements employee profit-sharing and puts all production employees on salary. 1968: The company goes public with an initial offering of 150,000 shares at $7.50 per share. 1971: The company becomes Worthington Industries with the acquisition of a pressure cylinder company. 1976: Worthington reaches $100 million in sales. 1983: Worthington Industries becomes a Fortune 500 company. Mid-'80s-early '90s: Worthington expands through joint ventures with US Steel and Armstrong World Industries. 1990s: The company is a trendsetter with its employee-wellness programs, including an on-site medical center and pharmacy and a fitness center. 1993: John P. McConnell is named vice chairman and CEO. During the '90s, the company sells many non-core businesses, refocusing on metal-related and steel-processing operations. 1996: John P. McConnell is named chairman of the board. 2000: Worthington Industries rebrands and moves to the New York Stock Exchange. 2007: Worthington Steel forms a joint steel processing venture with Serviacero Planos, with four facilities in Mexico. 2008: Founder John H. McConnell passed away in 2008. The company undergoes a consulting and reorganization process known around Worthington Industries as "the transformation." 2009: Worthington enters the alternative fuels market with the purchase of Structural Composites Industries in California. 2010: The company expands steel operations with the acquisition of Gibraltar Industries and Rome Steel Strip. 2012: Worthington enters the oil and gas equipment industry when it begins acquiring companies like Westerman, Palmer Tank and Steffes. 2013: Worthington Industries rebrands, uniting all of its companies under a new logo and slogan "One Company, One Voice." 2014-15: Worthington enters the cryogenics market and continues its international expansion with the acquisition of Aritas in Turkey; the company continues its growth in the alternative fuels market. 2015: Worthington Industries celebrates its 60th anniversary.