Lubrizol Revisited 2 years later

Page Key Points Summarised

Two years after great success, this page tells a different Lubrizol Story in part two:

* a bombshell happens

* a new reality has to be dealt with

* you will learn how the previous successes helped

The Lubrizol Story: Part Two that follows is largely based on an independent review carried out by David Pollitt, Editor of the 'Training and Management Development and Methods' for Bradford University and some feedback from Samantha Arnold, Head of HR; and Tony Strong, General Manager, Lubrizol and Dennis Martin founder of MDS (Motivational Development Services).

The Bombshell of Closure

Author: David Pollitt

Category: Case study

Abstract

Purpose: Follows up on a previous article, The Lubrizol Story, that examined the part played by an off-site week-long training and organizational development initiative in helping the Lubrizol chemical company’s UK plant to transform its culture and boost efficiency. Reveals that, despite the considerable improvements achieved, the parent company decided to close the plant.

Explains the reasons for, and consequences of, the decision.


Design: Presents information gathered from Dennis Martin, the organizational-development consultant; Samantha Arnold, HR Function Head; and Tony Strong, General Manager who were the initiators and champions of the turn-around.

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Findings: Highlights the effects of the closure decision on the employees and managers. Details in particular how the change initiative made the employees more resilient – and more employable elsewhere. Praises the way in which the parent company communicated the decision to close the plant.


Value: Provides the “inside” story of a culture-change initiative which, despite achieving considerable successes, failed in its ultimate aim of saving a company.


Practical implications: Furnishes valuable lessons for anyone involved in managing employees, particularly during difficult organizational circumstances.


Keywords: Company failure, organizational culture, organizational change, chemical industry, Lubrizol


An article in the last edition of 'Training and Management Development Methods' described how the Lubrizol chemical company’s UK plant staged an off-site week-long training and organizational development initiative that helped the plant to transform its culture, improve its efficiency and stave off the threat of closure. As the article was in production, workers at the Bromborough, Wirral, plant were given the bombshell news that the parent company, Lubrizol Corporation, of Wickliffe, Ohio, USA, had decided that it could no longer keep the plant open. Editor David Pollitt takes up the story…

Lubrizol Bromborough, a fluid-technology company concentrating on high-performance chemicals and services for transportation and industry, and a market leader in speciality additives for lubricants, fuels, coatings, inks, metalworking fluids and personal-care additives, had been scaled down from 270 employees to 140 during the 1990s. Declines in volumes were not equally matched by reductions in overheads. Corporate head office viewed the plant as a high-cost provider, and its location was seen as a disadvantage compared with other manufacturing sites in Europe.


With the help of Huddersfield-based consultant Dennis Martin of Motivational Development Services (MDS), Lubrizol developed a strategy to turn the business around by changing the culture and introducing new working practices and behaviours.

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Manufacturing teams organized themselves into key roles, where each person took responsibility for a certain area of the job to ensure the process ran smoothly.

Employees began to manage their own time, and cover the job without manager approval and without overtime as an incentive. Manufacturing teams set their own shift patterns.

An in-house survey carried out in June 2004 showed that 93 per cent of employees were taking responsibility for their own development, and 90 per cent enjoyed the flexibility of their role.

Finished-product manufacturing time was reduced by between 10 and 30 per cent because of increased flexibility and greater team working. Some £40,000 of savings were identified through continuous-improvement ideas.

Operating costs were cut significantly. The US headquarters began to perceive the Bromborough plant positively.


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Eighteen months after completion of the training

Samantha Arnold and Tony Strong confirm that eighteen months after completion of the training initiative, productivity and profit continued to improve.

Absence fell to an all-time low of below 1.5 per cent, inventory was reduced by more than 50 per cent, and there was an impressive 200 per cent increase in new business contacts, more than 40 per cent of which were converted into orders.

The training initiative won a UK National Training Award, while the plant as a whole won a Chemical Industry Association award and reported improved relationships with the UK Health and Safety Executive and the Environment Agency.

Employees at the plant began to tackle the handful of weaknesses that remained. A new, paperless, appraisee-driven 360-degree feedback process was introduced after the need to improve ways of giving and receiving feedback within teams and reassure workers about the fairness of workloads was recognized.

Samantha Arnold, the head of human resources, and Tony Strong, General Manager, who had done so much to push through the training initiative, spent a significant amount of time away from Bromborough to help Lubrizol with new acquisitions.

A bombshell is dropped

In January 2005, 21 months after the radical changes at Bromborough were introduced, the Lubrizol Corporation formally announced that it would close the plant, with the loss of all jobs, by the end of 2006.

The reasons given were:

  • overcapacity in the industry;
  • the need to restructure financially after acquisition growth;
  • the high cost of upgrading Bromborough compared to other sites;
  • the location of the plant;
  • the small scale of the Bromborough operation compared to others in Europe; and
  • the Lubrizol Corporation’s strategy of focusing production on two major geographic hubs in Europe and the USA.


“The communication process for this decision was exemplary,” said Tony Strong, General Manager. “It helped to maintain trust and inclusiveness, especially in the early part of the process.”


Effects ON the culture

The closure decision came as a surprise given the positive feedback the plant had received. Some employees, therefore, inevitably lost trust in the company and its formal leaders. Some were sceptical and questioning of the major changes made.

“Among the strong emotional responses were feelings of betrayal, loss and mourning, anger, bitterness and of being used by the company,” said Samantha Arnold, HR Function Head.


“The legal procedure regarding redundancies forced some reversion to traditional communications and ‘them and us’ positions,” she continued.

“Teams at the plant, including the leadership team, began to fragment, especially as the personal impact of closure became clear and generated short-termism and self-centred thinking.

Extrinsic factors, especially money, became more dominant. A ‘victim’ mentality became apparent, but despite all this, employees’ pride in their work helped to ensure that performance levels were maintained.”

Effects OF the culture

She continued: “The culture change induced by the training had given the employees greater business awareness and so helped them to understand the reasons for the decision to close the plant.

Moreover, having recently experienced a major change initiative, the employees were arguably more prepared for the huge change that closure of the plant would bring.

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“The employees were certainly more employable because of the improved skill sets and interpersonal skills they had gained. And, having lived through one major change, we believe they have more confidence in entering the job market.

They may, however, struggle in a ‘traditional’ organization, having become accustomed to enjoying a great deal of autonomy at Lubrizol.


“Despite losing their jobs, the employees continue to display pride, respect for the business and maturity regarding the needs of the business.

There have been no acts of sabotage. Indeed, employees are showing a high level of flexibility to accommodate the closure plan.”

Employees, to their credit, had realised that 'juggling' stuff is a life-skill and essential in dealing with complex adaptive systems.

Lessons learned about people and their potential

MDS OD consultant Dennis Martin outlined what the Bromborough experience had taught about people and their potential. “Deming was right when he said that our prevailing system of management has destroyed our people.

People’s potential is unlimited. Organizations should beware the Pygmalion effect – the self-fulfilling prophecy that people will live up to, or down to, what they perceive to be expected of them – or use it well and have high expectations of oneself and others.


“When people have ownership, understand the situation, want to achieve, believe and have the opportunity to act and learn from feedback, they can do anything.

We nearly always underestimate what people can and will do when it makes sense to them to do it – and, because of learned limiting beliefs and previous conditioning, so do the people themselves. People always have choice and ultimately they will exercise it.


“The Bromborough employees found it easiest to change their way of carrying out tasks and technical things.

They found that change as it affects relationships and interpersonal competence is much more difficult.

This was shown most vividly over, for example, charges that some people in the self-managed teams were not pulling their weight, and over the giving and receiving of honest feedback face-to-face".


As Samantha Arnold put it, “Organizations must not underestimate people’s level of intellect by basing the assessment on their historic job role or title.

Given the correct information, employees are capable of making complex decisions that affect the future of the business. It is possible to change behaviours".


Dennis Martin continues, “Managers frequently demonstrate more resistance to change, and less capacity for change, than other employees.

Organizational culture is an emergent phenomenon and is ‘bottom-up’ driven. Fundamentally, it exists at the cellular level.


“A traditional organizational paradigm would suggest the need for a detailed implementation plan or blueprint. We had no such blueprint. If we had tried to use one, the radical changes achieved, and their benefits, would not have been realized.

Our past is not our potential and sometimes we have to risk stepping outside the box.


“Senior managers can be myopic, unbalanced (for example, driven only by left-brain metrics, even if those metrics are suspect) and macho (for example, making decisions based on ego and emotion).

If significant cultural change is going to get ‘screwed up’, it will most likely be senior managers who do it, usually because they will not trust enough.


“It is a common perception among senior managers that they give up most in terms of power. This is difficult and challenging for them to change, because they have spent a career building up that (perceived) power base.

We cannot assume that managers have the skills effectively to coach and mentor their staff – soft skills are the most difficult to develop".


Tony Strong adds, “It is critical that key stakeholders are informed of progress. Do not assume that they know. Where practicable, involve them.

Significant and self-sustaining culture change cannot be an experiment – it must be ‘for real’.

Lessons learned about making assumptions

Dennis Martin continued: “What starts out as ‘impossible’ can quickly become possible when (often unspoken) assumptions – such as ‘this plant cannot run without overtime’ – are made explicit, challenged and reframed.


“Do not assume that you have ‘cracked it’ (even if you have) – in fact, try not to assume anything. If you do, you are probably wrong.

The assumption that you can control radical change in incremental steps is invalid, as is the assumption that managers control things (especially people). Mistakes can lead to better things and, in that sense, are never bad.

Culture change never stops changing".

Lessons learned by those driving the change initiative

Samantha Arnold, Tony Strong and Dennis Martin said that they and the people driving the change initiative had learned some vital lessons, including:

  • to trust their intuition to “do the right thing” and to trust each other;

  • that no one person is smarter than all of the people together, and that organizations should therefore use collective brain power;

  • that high support-high challenge works;

  • that the people leading the change initiative had to “behave” the change process and that words alone will not work;

  • that when the people leading the change process believed strongly enough – for example, to trust people to achieve radical change – perceived risks ceased to be inhibitors;

  • that people’s capacity to respond to the unpredictable, and their ability to work with ambiguity, was greater than expected;

  • that people were likely to revert to tradition sometimes, and that mutual support and sound mentoring can help to prevent and overcome this;

  • to welcome surprises and to be comfortable with the uncomfortable;

  • that individuals travel the change curve at different paces and not always in the same direction at the same time.

Changing culture is almost the epitome of a complex adaptive system, requiring great open-mindedness; flexibility; willingness to think 'the impossible' and resilience. 

A lot of 'juggling', and fun, may be involved.

Questions and answers

Samantha Arnold, Tony Strong and Dennis Martin outlined a number of questions and answers from their Lubrizol experience.


Q1: If we had known about the closure bombshell two years ago, would we still have done what we did? Why?

Yes – because, as subsequent events proved, a lot can change in two years.

Also, employees improved their skills, competencies and CVs. Most had more to market, realized personal growth and potential from the process, learned a lot and were able to manage the closure without personal-victim or limiting-beliefs damage.


Q2: In light of the Lubrizol Corporation’s decision to close the Bromborough plant, was it all worth it? Why?

Yes – because employees benefited as above, a lot was achieved, people realized more of their potential and boosted their self-esteem and self-image and it was fun.

There are no regrets, all our employees made the organization as lean and viable as possible – this was not a half measure.

Had we not been this radical, we would have always wondered if we should have done more.


Q3: Why were the radical changes made, and subsequent beneficial results, not enough to secure the plant’s future?

Without exception, the reasons for the plant’s closure were outside the control of the local people and/or were a legacy of history.

The reasons given by the Lubrizol Corporation were: overcapacity in the industry; the need to restructure financially after acquisition growth; the costs of upgrading; location; the scale of the local operation; and an operational strategy to focus production on two major geographic hubs.


Q4: Did the changes we made, and how they were made, contribute to the plant’s demise? Why?

No, quite the opposite.

The plant survived for four years because of the changes made and, as outlined above, all the reasons for closure were outside the plant’s control.


Q5: Did we lead people through traumatic change just to get the company some short term profit? Did we “exploit” people?

We had no indication of the plant’s demise at the time of change.

In fact, the site had the full support of the key stakeholders. Staff clearly felt disappointed at the news to close the site.

However, we believe that, in the main, they trusted the process and did not believe anyone had any inside information.

People were not exploited – quite the reverse, they were given opportunities to develop and run their own business. In return, they were generously compensated for their increased flexibility.


Q6: If we were doing it all over again, what would we do differently? Why?

We would do a lot more mentoring, shadowing and development for facilitators and do it a lot earlier, to support them more effectively in their own learning and experience curves so that they could better help people to help themselves.


We would have a monthly function-head leadership-team development programme, with one-to-one and group mentoring on culture development, teamwork and the leadership of self-managed teams.

This would help leaders to play a more active role in helping employees to learn and apply the new culture paradigms.


We would have a scheduled programme of learning sessions for all colleagues on, for example, decision making, interpersonal relationships, use of control data and metrics, giving and receiving feedback, how to play fair in self-managed teams (and what to do if some people do not).

Also, we would have more team “look in the mirror” sessions to equip employees more fully with the new skills and mental models to fulfil the “management” bit of self-managed teams and prevent any reversion to “business as usual” and reliance on old management.


We would have stronger mentoring and facilitation on continuous improvement and feedback (such as 360-degree appraisals) to get these two key elements integrated into how we do business more quickly, with faster and bigger payoffs for employees and the company.


We would have had stronger support and leadership from the function-head team for the site when Samantha Arnold and Tony Strong were pulled away to help with acquisitions.

This would have ensured that championing the new culture and providing “stickability” and reassurance were more dispersed among the formal leaders with visible ownership.

This would also have minimized any perception by employees that the originators of the changes had “lost interest” or “moved on”.


We would hand over the planning and implementation of review days to colleagues and facilitators, to overcome any possibility of loss of ownership by employees and to boost intrinsic motivation through recognition of achievements and initiatives on future goals.


We would carry out more frequent culture-scan surveys to provide data for validation and learning.


And finally, we would apply a change mentality to our original change criteria to ensure that we stayed ahead of business and other needs and changes.

In other words, we would be proactive in ensuring that our change strategy did not become static and therefore invalid.

Key learning points for thought:

Dennis Martin offers the following advice to senior managers from the Lubrizol success:

  • Do not do significant culture change TO or FOR people, do it WITH people – share situations, data, options, disappointments, opportunities and successes.

  • Communicate transparently, authentically and as early as possible.

  • Do not try to “cross all the Ts and dot all the Is” – leave space and the opportunity for people to contribute, influence and realize the benefits of ownership, including growing their potential, and the discomfort that can accompany this. Provide more mentoring support.

  • Do not seek or expect absolute clarity or predictability. Do not wait until you are 100 per cent sure before action, but do involve others in this process.

  • Take some risks together.

  • “Sacrifice control on the altar of trust” (of people and yourself).

  • Do not rely on what worked in periods of slow or no change. Be prepared to think “out of the box”.

  • Keep asking: “What if we do the opposite of what we are thinking of doing?”

  • Be comfortable with the uncomfortable.

  • Encourage leadership from everyone and offer lots of support, conviction and “stickability”.

  • As Ghandi said: “Be the change you want to see.”

  • Make your behaviour the role model and champion of the change process.

  • Learn continuously and treat all situations and outcomes as feedback from which to learn. Do not fear “failure”. There is no such thing, only results and feedback.

  • Expect success – and surprises - use positive self-fulfilling prophecies.

  • Apply “systems” thinking – a reductionist approach is unlikely to be effective when dealing with the complex adaptive systems inevitable in significant culture change.

  • Do not rely on extrinsic motivators, especially not money or fear.

  • Do recognize, support and use the immensely more powerful intrinsic motivators such as encouragement, opportunities, affirmation, responsibility, recognition, initiative, interesting work and achievement.

  • Beware of limiting myths, such as change takes a long time, people do not like change or change is difficult.

  • Learn to Juggle, both physically (good exercise) and mentally (helps retain sanity and generates creativity)

  • Trust the process and the people and yourself.


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PAGE SUMMARY

Two years after great success, this page tells us a different Lubrizol Story in part two:

* a bombshell happened

* a new reality had to be dealt with

* we learned how the previous successes helped and hindered

We've covered a lot of ground on this page and I just want to THANK YOU for visiting my web site and reading this page.  Your attention is much appreciated.

I hope you found the page as worthwhile and interesting reading it as I did writing it.

Kindest regards,

Dennis