Internal Communications Article

(Note: Names and certain facts have been changed to protect client confidentiality.)

Integrity: What It Means to IBC

Integrity and business ethics occupy much of today’s news.  Unfortunately, the news is mostly bad.  Corporations often pay lip service to the concept of integrity while behaving in ways that belie their words. 

At IBC, actions match words.

Integrity from the Inception
IBC’s commitment to integrity started with its founders, even before the company was established.  The five individuals who set up IBC in 1984 believed in one another and trusted one another.  “We came to that position because we dealt with each other, with our customers, our financial backers, and our community with integrity,” says Nick Timponi, Chairman, CEO, and a Founder of IBC.  “Integrity is the foundation upon which trust is based and without the trust of each other – we had no chance.” 

Timponi continues: “People often ask, ‘How do I know this isn’t just more corporate mumbo-jumbo?  Is IBC really different from any other corporation?’

“Well, in this regard there is a statistic that exists that I believe confirms it.  Of the Venture Capital backed firms (IBC is one) that were founded in the 1980’s, I know of no other where the initial group of founders is still in place.  Statistically, IBC is an anomaly.  Five founders started IBC – five founders work for the company today, 19 years later. 

“Can you imagine the glue that has kept five diverse individuals together for that long?  I can,” Timponi concludes.  “Honesty, integrity and trust.”

Today, integrity is one of IBC’s core values and part of the five competencies in the High-Achiever model.  The company’s leaders take integrity and “doing the right thing” seriously.  Every week, the Operating Committee spends a good half hour discussing and reaffirming its commitment to integrity.

Walking the Talk
“Integrity is not a separate consideration,” says Betty Bronson, President of IBC.  “It is the foundation of what we do.  We take all the traits that are included in the word ‘integrity’ – being upright, being honest and sincere – and we apply them to our day-to-day actions.”

To Bronson, that includes delivering results and meeting the expectations of employees, customers, and shareholders.  She is clear on what the expectations are on top managers:

“Customers want us to grow our business and do more for them.  If we let them down, they expect us to tell them honestly what went wrong, and to fix it.         

“Employees need belief in management.  We need to tell employees what we’re doing and why.  And if it’s a bad message we have to be complete in our explanation.  Sometimes we have to make tough decisions, but it’s always in the best interests of the business.  Ultimately, what’s good for business is good for employees."

Integrity and Wall Street
The desire to satisfy Wall Street has been blamed for many of corporate America’s misdeeds.  Brian Lockhart, Chief Financial Officer of IBC, steers clear of feeding the Wall Street hype machine.

“In the financing of the company, integrity goes to how you deal with the outside world and with being a public company,” he says.  “We don’t create hype or unreasonable expectations that drive up stock prices.”  Companies that do that could finance themselves a lot more cheaply, but they “always end up paying the piper,” notes Lockhart.

When the Securities and Exchange Commission recently introduced Regulation FD, requiring companies to disclose information to professional stock analysts and the general public at the same time, IBC didn’t blink.  Unlike a large number of public companies, IBC was never selective with disclosure.

“We didn’t change our behavior at all,” says Lockhart.  “We tell it like it is.  We’re very open with analysts.  So over the long term they get to know us better, they trust us better, and they believe in our integrity.”

Integrity also leads IBC to be conservative and accurate in the balances it reports.  As Lockhart puts it: “Accounting is an inexact science and there’s a lot of room for subjectivity.  We try to be objective so we don’t get surprised by unforeseen holes in our financial statements.”

In the long run, building credibility with analysts helps create underlying value in the stock price.  The result is that IBC stock has fared better than that of most of its comparables during the last two to three years. 

Integrity at work
To Wade Peters, Vice President of Organizational Development of IBC, integrity is non-negotiable.  “When we hire, we use an integrity template.  We want people to know that integrity is important in our culture.  It’s beyond just ‘not cheating,’ it includes being honest in interpersonal relationships.” 

Manager-subordinate relationships are a good case in point.  A manager who gives honest feedback and meets issues head-on shows integrity.  Whereas one who lets problems slide and hopes they’ll go away, or avoids confrontation for fear of hurt feelings, is just not acting with integrity.

Peters gives another example: sometimes, one person complains about another to a third party, setting up a “triangle.”  Instead, the person who has the issue should do the right thing and talk directly to the second person. 

The High-Achiever model, with “Integrity” at its heart, helps communicate corporate values to a workforce scattered over 26 sites in 12 countries.  It tells employees and managers around the world what behaviors are expected of them as a High-Achiever.

Though IBC is geographically spread out, it is of a size “where you get good visibility into people and how they behave,” observes Bronson.  “People who move forward at the expense of others get flushed out.  When we find an instance of breach of integrity, we deal with it seriously.”

IBC’s toll-free ethics hotline (800-555-1234) enables employees to report ethics violations directly to the Chief Counsel – anonymously.  It reassures employees that though they may be thousands of miles away, help from top management in handling an ethics problem is just a phone call away.

IBC employees come in contact with people outside the company, too – customers and suppliers, for example.  How should they interact with someone who doesn’t share IBC’s values? 

Local business customs vary from place to place.  Guidelines for employees, however, don’t.  “We support individuals and their goals,” says Bronson.  “Employees have the freedom to negotiate with others if laws are not being broken.  People do things to build relationships, and we don’t discourage normal business activities.  We do discourage things that look like they benefit the individual but not the company.”

Winning through integrity
Like IBC, many world-class companies place a high value on integrity.  General Electric counts it as the first of its three traditions and requires it of every one of its 315,000 employees.  “Uncompromising integrity” is one of Motorola’s two key beliefs.  And at AT&T, all employees – including the board of directors – are held to “the highest standards of integrity.”

And also like IBC, they know that behaving with integrity is, quite simply, the best way to conduct business.  It enhances the company’s reputation, attracts talented people, and serves as a template for making business decisions. 

Betty Bronson sums up the role of integrity at IBC: “We have to be honest and sincere in everything we do.  That’s our core.  That’s how we win.”

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Internal Communications Article

(Note: Names and certain facts have been changed to protect client confidentiality.)

Daily Data Board Leads to Profits

Mounted on a wall outside the entrance to the cleanroom in the MTI Packaging plant in Milwaukee is a bulletin board.  You notice it as you enter the room or as you walk through the plant to the conference rooms and offices.  You can’t miss it.

And then you notice something else about the board: it draws people like a magnet.

Welcome to Packaging’s “Daily Data” board.

The DD board was created in 2003 when Brian Loftus, one of our founders and the Vice President of Process Efficiency, helped Packaging hone its Lean Manufacturing tools.  “Demand for some of our products had pushed lead times out to the point where we risked disappointing customers,” notes Dennis Cenholt, Vice President and General Manager of the Packaging Business Unit. 

The concept behind the board’s creation was straightforward: Collect data from the manufacturing lines, and apply the data to eliminate problems and improve efficiency.

Data tells the story
The Milwaukee plant makes the Pac-TITE^® family of liners on four production lines.  Each line has a bag machine, tester, and a folder or inflation equipment.  In 2003, the plant produced over 1.2 million Pac-TITE liners.  (MES uses the liners to transport its advanced deposition chemicals.)

The “data” on the board are metrics that report on the output of each line.  Here’s how the data make their way from the lines to the board:

Each line is usually run by four operators in shifts of ten to twelve hours.  Every hour, the operators keep sheets that show:

• Saleable or good liners first time off (“first pass yield”),
• Percent uptime by line, and
• Throughput, or average good liners per hour.

At the end of every shift, one of the operators fills out a formula sheet, performs three math equations, and in less than five minutes has the numbers for the above three metrics for his or her line.  The numbers are immediately posted as charts on the DD board.

The board is updated seven days a week, fifty-two weeks a year.  At the end of every week the charts are taken down and compiled into a summary of that week’s averages for each shift.  The summaries are then sent to Paul Nee, Manufacturing Director; Jerry Belkin, Manufacturing Engineering Director; Peter Thorson, Vice President of Operations; and Pamela Mead, Operations Director, who use them to identify trends and set priorities.

Every morning at 9:05, managers and lead personnel from Manufacturing and Manufacturing Engineering meet in front of the board.  Reading the data on the board, they identify areas where operations or equipment could be improved. 

One result of this scrutiny: In February 2004, line operators set a record of 115 good liners per hour, up from an average of 65 per hour.  Management recognized the achievement and handed out rewards to the employees responsible for it.

The main impact
Rob DiFranco, Best Practices Facilitator, stops by the board twice a day and compares results to goals.  Each metric has a goal for the upcoming three months, based on historical data for the past three months.  Wherever DiFranco sees a metric that achieves goal, he places a coveted gold star on it.  

“The board builds awareness and allows people to be involved and make an impact on their job,” he says.

Which brings us to the most important effect of the board on the organization.  For the first time, employees have a clear and objective look into their manufacturing efficiencies.  The people at the lines have instant feedback into how their actions affect production.  They see themselves making a difference.  This knowledge invigorates and motivates.  It gets personal.

Says John Owens, Manufacturing Technician: “The board has created a friendly competition between the different production shifts.” 

The board makes the efforts toward process improvement visible to the entire organization.  Dennis Cenholt and Peter Thorson often leave Post-it notes on the board commenting on a job well done.

Jerry Belkin takes pride in the team’s work.  “I am very impressed with the ownership our Operations group have taken to strive for the results on the DD Board.  I have never worked with a group so enthusiastic about stretching to over-achieve current goals.  I am very proud to be associated with them,” he says.

So how do we explain the success of this ordinary-looking, 4- by 2.5-foot cork board?

Dennis Cenholt gives us the answer: “This board is a very, very good example of A-Player behavior put into practice by an entire team of A-Players.  When I look at the board, the focus on improving asset utilization jumps right off the pages at me.

“Through this work, the team has shortened lead times as liner volume has continued to grow, enabling us to meet customer expectations and needs.  That has an impact on current and future revenues.  The team has used a big toolbox to achieve this – using the teachings from KBM, lean manufacturing, their own experiences, benchmarking – and making sure the people who know most about the job at hand are making decisions and driving improvements.

“It's great stuff.”

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