Iowa Fittings develops strategic direction

by Bob Tvrdik, CIRAS

In less than 5 years Iowa Fittings had reached a turning point that awaits many successful entrepreneurs. The company's viability was threatened by a lack of formal business practices common in rapidly growing, start-up businesses. Employee morale and retention had begun to decline because of ad hoc human resources administration. The two owners' stress levels were beginning to affect their personal lives.

This small, family-owned company has learned the value of strategic planning, thanks to the efforts of CIRAS/MTC.

Iowa Fittings is a 20-employee steel fabrication company in southwest Iowa. The company manufactures welded pipe fittings for use in fire protection, mechanical piping, and other process piping systems. Its customers include other manufacturers, supply houses, and construction contractors. Since the company was started by its owners in 1989, all administration had been performed by company president Debbie Pierce and her husband Terry.

Both owners could see that problems were beginning to develop. Both were certainly aware of their stress levels. Company president Debbie Pierce: "Our system of compensating employees wasn't working ... and employee morale suffered." She confided these issues to the ISU-CIRAS/MTC agent, but was reluctant to initiate action. "We were very resistant to someone coming in and telling us how to run our business." Their methods had been successful in the past, and they had difficulty understanding that the growth of their company and its very success compelled them to modify the methods that had served them well.

With an outside viewpoint, the Iowa MTC agent could see the company's pressing need to take a more long term perspective. The agent persuaded Debbie that the company was in a crisis situation and that the owners needed to take the time to do some legitimate strategic planning.

The first step in providing assistance was to have the two owners, Debbie and Terry Pierce, complete a QuickView (QV) Manufacturing Assessment Questionnaire. When the results of the QV were received, a strategic planning session was scheduled at an off-site location. The session included the two owners, the plant foreman, two strategic planning specialists from Iowa State University CIRAS/MTC, Verl Anders and Jim Black, and Bob Tvrdik, ISU-CIRAS/MTC field agent. The agenda for the day included a SWOT analysis (strengths, weaknesses, opportunities and threats) and concluded with the development of a work plan.

This small, family-owned company has learned the value of strategic planning, thanks to the efforts of CIRAS/MTC. The results of the strategic planning session included a plan of action with a list of objectives and targeted dates for implementation. The most immediate need identified was to restructure administrative duties and to create a Human Resources (HR) program. Soon after, Iowa Fittings hired a new HR administrator.

The new HR person worked closely with the MTC agent

developing a new HR policy manual,
writing job descriptions,
improving attendance/disciplinary procedures and documentation,
developing and implementing an employee performance appraisal system.

Debbie Pierce recalls, "As a result of the strategic planning sessions, Terry and I wrote a compensation plan with the following objective:

This compensation plan will attract, retain, and motivate individuals who will make a commitment to work, are motivated to learn new skills andfurther develop existing skills, and will work to achieve the goals of Iowa Fittings Co. by continuous improvement of the quality of their work effort. Compensation will be determined based upon thefollowing three criteria: employee performance, internalfairness, and external and internal economic conditions.

"Implementing the written compensation plan and communicating the plan to the employees has been one of the most successful results of our strategic planning sessions. Employees now clearly understand what is expected from them to move up the pay scale. The occasional request we now receive is usually valid."

As a result of the strategic planning session and implementation of the HR program, the company owners are able to focus on broader company issues, such as additional planning and marketing, and are only faced with those personnel issues and decisions that cannot be resolved by the plant foreman or HR administrator. Most personnel issues are dealt with according to the written policies and procedures. The owners now have more time for critical managerial functions. The company is better able to compete and retain workers in a tightening labor market.

The owners are extremely pleased with the results of the strategic planning session and the HR pro gram, completed initially in 1995. They have conducted planning sessions led by ISU-CIRAS/MTC annually since then. "What we learned about the strategic planning process was that the CIRAS/MTC specialists were facilitators of a process that we could use to resolve problems and perform long-range planning on our own." These sessions are helping the company to focus on its future and on the intermediate to longrange steps needed to continue the growth of their business. "The fiscal year-end in 1996 was our best ever in terms of net income, and we attribute much of the increase in profitability to the strategic planning process."