Honeywell Culture Drives for Leadership

By : Jim Pinto,
San Diego, CA.
USA

With annual revenue of about $30B and current market-cap of about $ 32B, Honeywell is arguably the largest US-based automation company. Here's an updated (Sept. 2006) view of the corporate culture.

This article was published by:

Automation.com, September 2006

With annual revenue of about $30B and current market-cap of about $ 32B, Honeywell is arguably the largest US-based automation company. The company operates with four segments: Aerospace, Automation & Control Solutions, Specialty Materials, and Transportation Systems. Here’s an updated view of the corporate culture.

Background

Just a few years ago, my overview of Honeywell’s corporate culture and business started with reference to the merger of Honeywell and Allied Signal in 1999 and the famously failed GE acquisition in 2000 – Jack Welch’s last hurrah, which fizzled into his final goodbye.

With good leadership and stable management, Honeywell continues not only to survive, but thrive. It’s interesting to note that, 6 years after the aborted merger, a comparison of stock prices shows that Honeywell value has gained about 20% over what would have amounted to a GE stock-swap.

Today Honeywell stands on its own, with little to no talk about divisions and segments being bought out or sold off. In fact, Honeywell has been a significant acquirer recently, with numerous acquisitions in the Automation and Control Solutions (ACS) business, not to mention the significant addition of UOP to their Specialty Materials business.

All this is just part of the 120 year history of an industrial leader that has clearly stood the challenges of time. Few could have imagined that the old, stodgy Minneapolis-based manufacturer of thermostats, dampers and flappers would turn into a $30B business with 116,000+ employees operating in 100+ countries.

Top management gets the Segments in Sync

The resurgence of today’s Honeywell starts at the top with CEO David Cote, who joined Honeywell in July, 2002, handpicked by Allied Signal’s Larry Bossidy when the company had settled down after the GE merger was cancelled. Dave Cote has clearly turned the company around in the 4 years since his arrival; the consensus of knowledgeable financial analysts is "a strong forward-looking outlook."

Getting 116,000+ employees moving in the same direction, adopting the same values and behaviors and working like one cohesive team, takes time and leadership. Building a new, fresh culture in a broad mix of corporate divisions takes drive and coordination, mixing in the cultural aspects that are unique to each business and driving new attitudes into every aspect of the total business. Dave Cote has personally spent a lot of time and energy cultivating key initiatives throughout the entire corporation, and has remained laser-focused on getting diverse segments to work in sync.

The concept of the "Honeywell Corporate Culture" was executed by a strong leadership team – Dave Cote, Honeywell ACS president Roger Fradin, president of Process Solutions Jack Bolick, and key leaders of all other segments and divisions. Together they have provided consistent leadership across the corporation, driving to one common culture. Together they are creating a unique customer-centric culture, with Honeywell's best traits, and a splash of GE.

Allied Signal brought financial and process disciplines, and strategic planning. Honeywell brought an innovative, engineering culture that thrives on customer results. During its exploratory involvement, the GE influence brought organizational strength and Six Sigma commitment. The new Honeywell has now emerged with its own special identity and culture.

Core Elements Corporate Culture

Here are the six core elements of the Honeywell corporate culture:

People: Honeywell's people are its greatest assets. They recognize themselves as a global team of individuals, proud to be associated with Honeywell's heritage as an automation pioneer, with a common commitment to uphold that tradition. They take great pride in working among the best in the business, learning from each other, and delivering as a team.
Integrity: When challenged with tough business decisions, Honeywell does not tolerate anything but the highest levels of integrity, for themselves and for all those around them.
Customer-centric management: A lean, results-oriented culture that puts customers first. Managers are expected to spend at least 50% of their time with customers, or customer-facing employees.
Global Operations: Honeywell people are all part of a global company that operates in 100+ countries, respecting diversity, but sharing common values and vision.
Metrics & Vision: Honeywell (each Division) has a set of metrics by which business performance is measured. This becomes part of the incentive plan, which ties back to the vision of the business. These metrics and vision are on display at all Honeywell locations throughout the world, reminding every employee that they are all headed towards a common goal.
Quality Policy: Right the first time, every time - in all aspects of the business. Tools like Six Sigma and the Honeywell Operating System (similar in approach to the Toyota Production System) help achieve that goal.

Focus on Key Initiatives

Honeywell is focused on five key initiatives: Growth, Productivity, Cash, People and the "Enablers". There are two enablers: Six Sigma and Digital Works (corporate-wide digital initiatives to increase productivity and information flow).

The growth initiative has four pillars:

Each individual must do a superb job every day, focusing on customers to provide quality, delivery, value and technology.
Building a superior Sales & Marketing organization.
Expanding globally.
Creating a set of robust, funded technology roadmaps for new products and services.

Behaviors encouraged

Honeywell encourages its employees to focus on a set of 12 behaviors, part of the corporate-wide culture, helping people to grow personally and professionally.

Growth & Customer Focus
Leadership Impact
Getting Results
Making People Better
Championing Change & Six Sigma
Fostering Teamwork & Diversity
Global Mindset
Intelligent Risk Taking
Self-Awareness/Learning
Effective Communication
Integrative Thinking
Technical or Functional Excellence

Automation & Control Solutions

The automation segments (including home & building automation, process automation) report to Roger Fradin, President & CEO of Automation & Control Solutions (ACS).

Roger Fradin insists that putting customers at the center of day-to-day discussions is a top priority. Honeywell has been around for 120 years; you don't survive for that length of time unless you put significant value around your customer relationships. Roger Fradin believes that customer responsiveness, cutting-edge technology, plus outstanding sales & marketing will drive growth for ACS. He is confident about continued business prospects and has no doubt that the customer-centric culture will drive results.

Process Solutions

Our own interest is "industrial automation" which at Honeywell is the Process Solutions division, part of ACS. After a period of uncertainty and a rapid succession of division presidents, Jack Bolick was appointed President of Process Solutions has now been responsible for this division for four years.

Jack Bolick joined Honeywell about 9 years ago; he was at Johnson Matthey Electronics when it was acquired by Allied Signal. He's just the kind of leader that makes things happen and gets results. He believes that his people should be able to count on him and his leadership team to state clearly what they want to do, and then do what they say.

Jack Bolick has demonstrated results: When he took on the Process Solutions leadership, revenue was $1.65B; at the end of 2005 it was a $2B business. With double digit growth of orders and revenue reported in Q2 2006, Process Solutions is expected to be $2.4B by 2008. Clearly Jack Bolick has been successful in his task of growing the business profitability.

Process Solutions plays an integral part of Honeywell, within the Automation & Controls business. It continues to demonstrate strong growth, margins and cash flow. The corporation continues to invest in this business through acquisitions and R&D. Jack Bolick is proud to proclaim that their story and performance are solid and improving quarter over quarter.

Honeywell is accelerating the rate at which they share technology innovations between the business groups. Their advancements in wireless technology are an excellent example of this. They have wireless technology and products across multiple businesses and are actively sharing that technology to help develop industry specific solutions and standards.

Within the Process Solutions division, there are 5 initiatives to support growth:

Taking care of the installed base.
Expanding within key regions.
Expanding within key vertical markets.
Enabling knowledge transfer through differentiated sensors (for example wireless and corrosion).
Expanding services through process domain knowledge.

Jack Bolick has much to be proud about as an executive of the Honeywell corporation and running the Process Solutions business. Honeywell has fully rebounded from the recent past, and is again growing with renewed customer and industry confidence and earning its rightful place as a leader in the process automation industry.

Good results

A new and focused Honeywell has emerged from the turbulence of five years ago. The company now shares common corporate vision, goals, ethics and initiatives. But each business also has some distinct cultural differences. Even within ACS there is a distinct cultural difference between various Honeywell divisions such as Process Solutions and say Sensing & Control (the old Micro Switch), or the Security businesses within ACS. This probably reflects the differences in the businesses, customers and markets served plus the legacy/history of the individual business units.

Long-term Honeywellers who have worked in various Honeywell divisions feel that Honeywell had retained many of its strengths – specifically the unswerving demand for integrity and attention to customers. And the new Honeywell does indeed have a refreshing, more open culture, with a lot more results orientation and recognition for those who get results.

It seems that 120 years of history allows for a few bumps and bruises along the way. But it's clear that the new Honeywell has healed, and the company now has the strength and determination to move forward, and to maintain and even expand its industry leadership.