Walking into insulation firm Rockwool a decade ago was like walking into a 1950s-manufacturing environment, recalls HR director Wayne Gwilym. Attitudes and beliefs were out of date. There were no proper policies and procedures. There wasn't a proper union agreement yet the unions were effectively running the business. Workers were negative and demotivated. Absence was running at 7%.
Fast-forward 10 years and the 270 employees in the Danish-quoted company's UK factory in Bridgend, South Wales (there are 400 in the UK business in total) are helping to transform the business. They have embraced change, become empowered, are using tools such as e-learning and one in 10 of the factory workforce is now female. Absence has plunged to 1% - a remarkably low figure for a heavy industry workplace.
Gwilym is rightly proud of the transformation. "The fundamental values were there but so much needed to change," he says. "We have managed to achieve that change without throwing people away, by engaging them on the journey. The fact we won their hearts and minds is a source of future strength."
He describes the original situation as one of chaos, in which no one knew how things should be done correctly. "The workforce had extremely good terms and conditions but when I went to speak to people they were completely demotivated and disengaged," he says. "There was no balance between engagement and accountability and their employment rights. The old adage was that a Rockwool employee would do something if they were told to but not if they were not told."
The solution to the malaise was to develop employment policies collaboratively, with managers, employees and HR professionals all working together to agree the way forward and its implementation. A joint working forum was established and it continues today.
There is an irony in the fact that Gwilym has created stability and sustainability out of chaos. The product on which Rockwool has built its success itself results from chaos. Stone wool is a natural rock fibre with exceptional fire protection and insulation properties. It was discovered in 1900 when scientists on the Hawaiian volcano Kilauea found a strange wool-like material hanging in trees. The first member of the founding Kahler family, Gustav, brought the principle to Denmark and set up Rockwool's first factory near Copenhagen in 1937, refining a process that would imitate nature in the creation of rock fibre.
Over the next 70 years the company built factories in Russia, Spain, France and Croatia and acquired plants in locations including Hungary, Malaysia, Canada, Germany and Roermond in the Netherlands - the world's largest stone wool factory. It now has production in 14 countries and is represented in more than 30. In 1995 Rockwool International A/S was introduced to the Copenhagen Stock Exchange and so began the transition of the group from a traditional, family-based company to a modern, efficient organisation with a focus on shareholder value.
The current chairman is the great grandson of Gustav and the Kahler family play an active role in the group. The Rockwool Foundation, a globally recognised charitable trust that researches social trends and sponsors social entrepreneurship in developing countries, owns the largest tranche of shares.
Gwilym says the family's values of honesty and integrity are crucial. "This group has been practising CSR for 50 years - it is a core founding principle of the way we do business. The group has a fundamental decency and for me that is tremendously important," he says.
This decency, combined with the opportunity to effect change, has kept Gwilym in the business longer than originally planned when he joined in 2001. Confessing he was "too wild for university", he started his working life on the shop floor, before moving into personnel in the 1980s. A desire to bring up his son in a rural location resulted in a move to West Wales, where he worked for the now defunct clothing business Dewhirst - a major supplier to Marks and Spencer. Come 2000, he was spending all his life in a plane.
"The strategy (at Dewhirst) had always been to stay in UK manufacturing but then we had to compete on price. Having closed my third factory I thought it was not what I came into this line of work to do. The workforce was so wonderful at that factory it broke my heart."
He joined Rockwool with the view to spending a couple of years on the site, doing a Masters and then starting a consultancy. But, as he says: "It got under my skin."
Not that everything has been plain sailing recently. Gwilym makes no secret of the fact that the past three years have been turbulent for the business. In May 2007 Rockwool decided to invest heavily in its UK site, which first opened in 1979. It started to build a third production line, doubling capacity at the plant, and Gwilym began building up the organisation ready to reflect this new capacity. By the time the line was built some 18 months later, the market had declined. With the recession full-blown, Rockwool's client base in the construction industry was suffering badly. "Overall there was a huge impact on the market," explains Gwilym. "We found ourselves with greater capacity and fewer sales, leading to a prolonged period of uncertainty."
Overcapacity in the factory had to be addressed and the sales and marketing function were reviewed. In October 2008 Gwilym made 90 people redundant, having recruited the same number earlier that year in readiness for the new line. Crucially, the 90 who left were not the same people who had joined.
"Given where we were, it went remarkably smoothly but I am not going to pretend it was not traumatic," Gwilym confesses. However, the process was made easier thanks to the fact that the redundancy policy had been jointly agreed by the joint working forum, so everyone had a stake in it. Length of service was disregarded in favour of the value employees would bring. Performance was measured using a performance review tool that the working group had agreed. This looked at behavioural factors, team orientation and willingness to learn as well as skills and absence rates/disciplinary records.
"Transparency helped," says Gwilym. "It was a bit tricky because there were two people on the consultation committee who knew they would lose their jobs as their records were not great. But we were looking long-term to invest significant money in retaining a workforce that would sustain us in the future. People say it was a huge turning point for us."
Two year later and the market is still tough and fear of redundancy is still a factor. But Gwilym says the business has made great strides forward. "Two months ago we re-wrote the working agreement in a few days because, although we believe we will soon be short of capacity, at the moment we still have too much. We asked employees how they would feel about getting paid days off now but owing them back to us as shifts later in the year. Everyone said yes."
In the short term the challenge is to keep employees motivated and believing in future success. If 2008/2009 was about managing crises (both in terms of growth and contraction) and the rest of 2009 was about reshaping the organisation, 2010 has been about looking at skills and coming up with more innovative ways of doing things.
Gwilym says he has never been a big believer in traditional HR practices, such as training needs analysis. "I just don't think it works," he says emphatically. Instead, he prefers to empower individuals and has encouraged people to drive their own learning and invested in 360-degree events.
In the former, there has been considerable success in health and safety, with an e-learning initiative resulting in staff gaining an internal qualification. The feedback tool, delivered electronically and face-to-face, is based around the organisation's values of honesty, reliability, responsibility, dedication and efficiency (although these are just about to be changed to include entrepreneurship and passion instead of efficiency and reliability).
This empowerment has helped the business meet tough 2010 targets. With a wide product range (as well as stone wool, the company is in ceiling tiles, panels and energy efficiency) and sales down, the factory was one of the least efficient in the group last year. Eight months later it is now the most efficient, says Gwilym. This has been achieved through giving people stretching targets and establishing a cost-cutting project. "We told the factory that, regardless of what we sell, they need to save 'x' million pounds of costs in 2010, which sounded impossible," he explains.
A steering group comprising the managing director, finance director and Gwilym was established and a finance project manager was allocated with an operations project manager to set up sub-teams. "It has absolutely stormed ahead," he says. "Initially people in the group couldn't believe what we were achieving. They sent people to see us and said what was clear was that everyone got it; everyone understood what they had to do. Ideas came from the factory floor." In September 16 family members came over to see the results.
Longer-term, the recession has helped the company focus on a new strategy. "I don't see the market coming to our rescue but that doesn't diminish our optimism because we believe we will grow anyway as we have imaginative solutions to problems. By 2015 we will have evolved from a lean and efficient insulation supplier and manufacturer to the most trusted energy efficiency adviser in the UK market. We're already there in other European markets to a greater or lesser extent."
To achieve this Rockwool has had to refresh its thinking and look at ways of appealing directly to householders and utility companies. "It brings us into the area of knowledge management. We need to grow areas of the organisation that are going to be quite different. It is enormously exciting," Gwilym explains.
The introduction of the new line last year has also enabled Gwilym to achieve something he has always wanted to - greater diversity. "When I first joined I was shown round the factory, having come from Morocco and Turkey where lots of women worked in factories, and I said to myself: 'This is a place full of Welsh, working-class, middle-aged men'. This is not going to be easy to change. "
When building a new line was first mooted, Gwilym said there would be 100 new jobs and that "these would be 100 jobs for women".
He launched a recruitment drive to help tip the balance, using Rockwool's first female operator, Leanne, as the face of the campaign. "We ran ladies nights and used short assessment centres around group problem solving, which showed ladies could bring a collaborative approach others couldn't."
Today there are 20 female operatives so "absolute numbers are not impressive but it is nearly one in 10 and a good starting point. We did a lot of training around diversity. Our health and safety guy was a cynic and is now an evangelist. We now see more people collaborating to solve simple shopfloor problems".
Gwilym, part of the UK management team, structures his own team around business partners. He himself ran one of the firm's businesses for a year. "Why am I business-focused? It reminds me of when BB King was asked the secret of his unique guitar style," he says. "He said he couldn't play chords. I am not a particularly good administrator and can't do bureaucracy. I am a change manager and business partner," he adds.
It's a no brainer, he adds. "I wholeheartedly believe that unless you are feeling the pulse of the market you cannot be a true leader of an HR function. Unless you are clear about the interests of future clients you are only ever going to play catch up. By definition you will then be a subordinate function because you are just responding to a request from a director that may or may not be right. I have a legitimate stake in finding the answer for myself. I believe in HR as a leadership function not a support function."
Over the next five years Rockwool will become a truly global business, with significant turnover coming from Asia and North America. With encouraging noises from the Government, in particular environment minister Chris Huhne, with regards the value of improving energy efficiency in housing stock, Gwilym is optimistic that Rockwool's people are now in the right place to deliver that growth. "I cannot hide the fact that we have had a hell of a turbulent three years, with people losing their jobs," he admits. "Whether everyone believes in my rose-tinted view I don't know, but we invest a lot in feedback and it appears that our people really believe where we are now."
