A New Plan

With the recession hitting Quanex’s bottom line, CFO Brent Korb took drastic measures. “I walked into our board meeting, rolled in a waste pail, and threw the budget inside.”

“At the end of the day, every employee is a salesperson for the company. If they go home and talk about how much they hate their work, we’ve hurt ourselves.” —Brent Korb | Photo: Anthony Rathbun

The goal is honesty. A simple principle, honesty is the lynchpin of the successful communication strategy at Quanex Building Products Corporation. It’s one thing to shepherd a company through the toughest economic times in its history. It’s something else entirely to carry a torch for its people. Honesty, says senior vice president of finance and CFO Brent Korb, is the talisman. Without it, employees are left in the dark. But in exchange for honesty, Korb says, people will surpass your expectations.

When Brent Korb came back to Quanex in the summer of 2008, he could not have known he’d soon be tasked with balancing the books for a company whose industry was on the verge of collapse. Having resigned only six weeks earlier, after Quanex Corporation spun off its building-products business as a publicly traded company, Korb joined David D. Petratis, the new president and CEO, and Kevin Delaney, senior vice president, general counsel, and secretary, at the helm of the newly formed, and slightly scattered, company. “If our business units made a sales call on a window manufacturer in 2008, we could have four people go and not know they all worked for Quanex,” Korb says of the disorganization.

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Facing a decentralized sales force, the first priority was to create a Quanex brand that was internally cohesive and carried weight in the building-products industry. Not long after accomplishing this, signs of market downturn in failing financial-services giants forced the new company to become even more specialized and leaner in the process. “We had our budget set in September of [2008],” says Korb, who recalls the agility with which Quanex changed gears to ride out the oncoming recession. “I walked into our board meeting in December, rolled in a waste pail, and threw the budget inside. I said, ‘That’s irrelevant.’”

Within six weeks, Quanex Building Products refocused its sights based on a belief that the housing recession would likely last more than five years. To make sure the company could weather such a time frame, Korb made some tough decisions. No longer would Quanex try to represent the entirety of the building-products industry. Instead, the company’s focus would be supporting window and door manufacturers. To that end, multiple locations were shuttered and production capacity was consolidated into facilities that would better position the company for the longer-term downturn and help Quanex capitalize on new opportunities once market demand returned. “Our focus became achieving the status of the preferred supplier in the industry,” Korb says.

Throughout the consolidation, Korb and the executive team continued to rely on the company’s legacy communications system—one that left many of Quanex’s ground operations at the mercy of local managers who may or may not have shared information on the company’s plans, and whose translation of such information was not standardized or scrutinized for accuracy. In 2009, the company saw the first rumblings of this disconnect in a strike at one of its insulating-glass-sealant and -spacer facilities. Coupled with a strike in 2012 that cost the company more than $11 million, the discontent was a cue to the executive team that although they had made it through the worst of the trough without incurring any financial debt, the company’s success would hinge on more than a strong bottom line: it would require Korb, Delaney, and Petratis to step out from behind the spreadsheets.

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“I believe, regardless of the department or location anyone works in, successful business comes down to communication,” Korb says. “We wanted to give a common understanding of what’s going on with Quanex, what we’re trying to do as an organization, and why employees should care. If you leave people in the dark, they are likely to assume the worst. At the end of the day, every employee is a salesperson for the company. If they go home and talk about how much they hate their work, we’ve hurt ourselves.”

The executives addressed the miscommunication from two fronts: information sharing and employee feedback. Bringing in a film crew, they committed to producing the Quanex “national news,” a quarterly video updating every employee from the C-suite to the factory worker on the state of the company and the decisions made to adjust its course. Tempering current media projections of a housing-market revival, Korb says the news this year has focused on educating local pockets of the organization about the national scope of Quanex’s industry and the building-products market.

Strategy to Share
“We received an e-mail after one of our town hall meetings from a general manager. An employee had come up to him and was nearly in tears. The gentleman described how powerful it was to have the opportunity to speak with us, and he felt like we were truly listening. That’s the golden nugget: that people believe you are honestly committed to listening.”—Brent Korb

“New housing has shown signs of recovery—you can read that in the papers,” Korb explains. “However, the repair and replacement market is still lagging and likely to remain flat for the next one to two years. The media may say the world is returning to normal, but for Quanex it’s not.”

Because builders typically source windows at the lower price point, Quanex doesn’t necessarily benefit from a jump in that market. When homeowners are looking for the best, highest-performing windows and doors to improve their homes, Quanex tends to do better, as it serves the higher end of the market that is concerned with performance and aesthetics.

The executives are also making an earnest effort to be accessible to employees. When anyone from the C-suite makes a facility visit, they hold “town hall” sessions with employees and skip-level meetings with the local team, typically focusing on three questions: What do you like about working for Quanex?; What’s one thing you’d do differently if you were the owner?; What can Quanex do as an organization to be safer?

Korb says the meetings have been very well received—some employees have even been moved to tears at the prospect of meeting with executive-level leadership and getting the chance to voice their opinions. “We may not always be able to act on an employee request or give them exactly what they want,” Korb says, “but if you just listen and give honest feedback, people will move mountains for you.”

Building upon that relationship, Quanex also provides the opportunity for all employees to receive a dashboard on their health, so employees and their spouses can have an annual health-assessment free of charge. It’s a mutually beneficial program for the company and for employees, some of whom have reported that the assessment saved their life.

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As Quanex continues its climb to the top of the fenestration market, it is on a path to double the company organically and through acquisitions. In early 2011, while many of its contemporaries were still in protective modes, Quanex acquired competitor Edgetech I.G., adding new technology, exposure to an additional 400 customers, an international presence in the United Kingdom and Germany, and powerful branding, sales, and marketing talent. “We figured we had hit the bottom [of the housing recession] and decided it was go time,” Korb says of the decision to acquire Edgetech. In December of 2012, Quanex made another acquisition, this time acquiring the assets of a company called Aluminite, adding vinyl window screens to their product offering.

While consolidation is still part of the business strategy, Korb says Quanex is in a much better position to communicate with its employees and orchestrate smoother transitions to carry the company forward. “When you have to make tough calls, if your workforce believes and trusts you, they’ll support you,” he says.