MAYFIELD HEIGHTS, Ohio—Tom Williams, Parker Hannifin Corp. chairman and CEO, wants to build on the 100-year-old company's culture to create a sense of ownership among employees, as well as grow profits. The different goals are encompassed in the company's Win Strategy, a wide-ranging strategy designed to drive Parker into the future.
Mayfield Heights-based Parker Hannifin is a motion and control technologies company that serves a variety of industries, from aerospace to flow and process control. The Win Strategy, which first started in 2001, was designed to help this large, decentralized company bring its best practices together. But when Williams became the company's CEO in early 2015, he knew it was time for an update.
The first goal of the new Win Strategy, which was rolled out September 2015, focuses on engaging employees and focuses on safety, entrepreneurial spirit and high-performance teams and leaders. Williams said it's about "creating owners" at the company.
"Owners think differently than employees," Williams said. "And so what we're trying to do is create an ownership culture where people think and act like an owner, as owners know a couple of basic properties. They know how the customers are doing, they know whether they're making money or not, and they know how their team members—their employees—are doing."
The next component of the Win Strategy focuses on customers. This was part of the original strategy, but Williams said the company chose to put a focus on the holistic approach of customer experience for the new version.
The last two goals of the Win Strategy are dependent on the success of the first two, as they have to do with profitable growth and financial performance. For example, one of the strategies Parker lists under its goal of profitable growth is market-driven innovation, which depends on those customer relationships. It's not innovation that starts on the factory floor or in a meeting room, but is sparked by customer need.
One of the new strategies Parker has been deploying in terms of its financial performance has been "simplification," which Williams compares to decluttering a house.
For the company, this means examining product lines, organization structure and bureaucratic processes for opportunities to make the company "faster and nimbler," Williams said. It also means consolidating divisions with common end markets or similar technologies. The company has gone from about 115 divisions when the new strategy started to about 100 now.
But a plan is nothing without goals.
Of note to shareholders would be the company's goal of growing 1.5 percent more than the industrial production market—and that's just through organic growth, not through acquisitions. Williams said that instead of setting a goal of growing 5 percent or 10 percent as a company, shareholders were interested in a "dynamic" goal that measured the company against the market as a whole.
Another important growth goal is the one focused on organic year-over-year growth in division net earnings. Right now, that goal is set at 8 percent, Williams said. That forces divisions to focus on margins, as well as top-line growth.
Shortly after Williams started, the country went into an industrial recession, which made growth difficult, but also gave the Win Strategy a stronger backdrop.