A consistent and relentless focus on executing against a business model which includes three essential parts – portfolio, internal processes and culture – has been fundamental to the impressive financial performance of technology-driven industrial company Honeywell, according to its Pacific country HR director, Caroline Bosch.
The total shareowner return over the past five years alone for this Fortune 100 has been 187 per cent (versus an average of 105 per cent for the S&P 500).
Its stock has risen some 200 per cent over the past 13 years, while sales have doubled to more than US$40 billion ($56 billion) and its market value has ballooned from US$20 billion ($28 billion) to US$80 billion ($112 billion).
“We spend a lot of time making sure that we are right in the middle of global macro-trends – such as energy efficiency, clean energy generation, safety and security, customer productivity, globalisation and expanding global wealth per capita,” said Bosch.
Honeywell operates in three business sectors: aerospace and avionics (which comprise 39 per cent of sales), automation and control solutions (36 per cent) and performance materials and technologies (25 per cent).
“Our diversity of opportunities, great positions in good industries and differentiated technologies have enabled Honeywell to grow faster than our peers, regardless of the external economic circumstances or business environment,” said Bosch.
“It’s important that managers get out in front of their people and walk the floor”
Competition for good talent in Honeywell’s employment market is strong, and the business employs a number of strategies to help develop and retain its best people.
“Internally, we look at what talent we have, we share this among the leadership team and determine who we might be able to move from one business to another.
“So rather than lose them externally, we share them across our different businesses – and this is done on both a local and international level,” said Bosch, whose team meet with people managers every quarter to discuss their talent.
Honeywell also has a number of programs for talent and development, including its “Management Resource Review” (MRR), which focuses on growing employees, training and succession planning, and is conducted in each state for each business, then by country, region and globally; as well as “Honeywell Performance and Development” (HPD, an online performance evaluation tool), which helps the business and employees understand, track, measure and rate performance.
Communication plays an important role in engaging employees at every level, and Bosch explained that business leaders hold town halls every quarter as well as branch meetings each quarter and in each key location (Honeywell operates across 37 locations in Australia).
“So there are a number of ways in which we stay in touch with employees, and we think it’s important that managers get out in front of their people and walk the floor,” she said.
“The leadership team is certainly visible, and as many of them have ‘grown up’ through the ranks, they know a lot of people and are out there telling stories about the business.”
“We’ve got a big team in the US who are constantly looking at opportunities and organisations to buy”
Honeywell conducts a survey called Positive Employee Relations (PER) once a year to track what employees think of the working environment, culture and a host of other workplace factors, and a separate survey to ascertain how managers rate similar factors.
The gaps between points across the two surveys are then measured as a basis for addressing potential points of difference and nipping other potential issues in the bud, according to Bosch, who said there has been an increase of 2.71 per cent in employee favourability, year on year, in the PER survey.
Honeywell also conducts a “voice of the customer” (VOC) survey every year, which HR sends out to line managers to gather feedback on HR’s performance.
This measures managers’ overall satisfaction with HR and a number of other measures (there has been a year-on-year improvement of 4 per cent in the Pacific), and this is then benchmarked on a regional and global level.
This VOC survey helps guide HR in its efforts and initiatives to help support line managers, and HR then communicates its priorities off the back of this, back to line managers transparently with a view to continuous improvement.
“We spend a lot of time making sure that we are right in the middle of global macro-trends”
Honeywell also has a growth strategy through acquisition both locally and internationally. More than 80 acquisitions have added in excess of US$12 billion ($17 billion) in revenue to Honeywell over the past 13 years, and it has committed to US$10 billion ($14.2 billion) in acquisitions through the end of 2018.
Recently, Honeywell also announced the acquisition of Elster for approximately $5.1 billion to expand its business in the global gas industry, and Bosch said this will add more quality engineers to its ranks locally.
At the same time, the business is keenly focused on divestitures to help evolve its business model, and Honeywell has raised some US$7 billion ($9.9 billion) through around 60 divestitures since 2002.
“We’ve got a big team in the US who are constantly looking at opportunities and organisations to buy. And when we do divest, they have been a really interesting experience for the team to work on,” said Bosch.
New product introductions are also critical to the business’s growth strategy, according to Bosch, and Honeywell has more than 100 new product introductions in the pipeline globally and continues to invest heavily in research and development.
For the full interview with Bosch and story on how Honeywell is succeeding in a challenging market, see the current issue of Inside HR magazine. Photo: Scott Ehler