Case Studies

Flexible Materials: From divestment threat to 12% return on capital

Challenge

Flexible Materials, part of a large global packaging manufacturer, was flagging, with contributing revenue at less than 10 percent.

Unless the company could rise above the cost of capital, its parent company would divest.

Solution

A new CEO with extensive experience in the steel industry was hired to radically recalibrate and offer his vision. He spotted a virulent culture problem: the company had a unionized workforce but was functioning in a counter-union, “boss-centered” way, inhibiting the voices of employees who were closest to the issues and would speak up if given the opportunity.

This CEO determined it was high-time to create an employee-centered culture with employees aligned in needed results: to reduce costs rapidly and make Flexible Materials more competitive and viable.

Leadership gave all employees a challenge: take risks to make the changes they saw that needed to happen. Throw the “Hail-Mary” pass.

In addition, the CEO persuaded managers to act as if they were the entrepreneurs of a new business. After all, with their parent company eyeing them for the chopping block, they had nothing to lose.

Here are some of the “Hail-Mary” measures that Flexible Materials took to create a more employee-centered culture to drive results:

  • Moving the corporate office from a separate, showy location in North Carolina into their production plant in Kentucky where executives worked in the same building as plant workers
  • Requiring leadership to spend time engaging with workers on the line
  • Leadership also began attending safety meetings and encouraging workers to share knowledge and information 
  • Facilitating feedback sessions between all team members with an emphasis on professional and personal development for all

Result

A return to profitable status with a 12 percent return on capital.

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