How HR Helped Weyerhaeuser's Extreme Makeover
Bradsbaw, Allan, Human Resource Planning
Weyerhaeuser is a proud sponsor of ABC television's hit show, Extreme Makeover/Home Edition." Every week Weyerhaeuser's products go into creating a new home for a richly deserving family. This weekly miracle is one of the most uplifting moments on television. Ironically, the deserving families on the show are not the only ones in need of a major renewal. Our company--Weyerhaeuser--needed one too.
This is the story of how HR played an instrumental role in the extreme makeover of one of our key businesses. Weyerhaeuser is a $21 billion company, and the business is the residential wood products division, a $7 billion component.
Taking it to the "iLevel"
For many years the residential wood products industry seemed immune to the significant changes driven by technology and consolidation experienced by other industries, and we were able to get along with business as usual. In 1997, that began to change, and the changes started with our customers.
In 1997 the top 100 builders accounted for 18 percent of all housing constructed in North America. By 2005 that percentage increased to 37 percent, a doubling of market share. The growth of larger builders helped fuel the US real estate boom because of new, faster ways to build homes. These new approaches also brought dramatic changes in expectations for construction suppliers. Larger builders wanted to exploit their size and scale to create far more efficient ways to build houses, while addressing the challenges of a shortage of skilled labor. We needed to help them do that, so we both could enjoy the results of greater productivity and efficiency. Builders got what they went after, and we accompanied them every step of the way. They achieved significant improvements: The time required to frame a house dropped from three weeks to just five days for the most efficient builders. They increased their use of prefabricated wall sections, roofs, and floors delivered directly to the foundation site, ready to install. All of this required us to do things very differently.
Fortunately we were able to get ahead of this change. Weyerhaeuser acquired the Trus Joist Company and its industry-leading whole house design software. We completed strategic acquisitions of a number of other companies that positioned us as the largest engineered wood supplier, the largest supplier of lumber, and the second largest oriented strand board supplier. We developed one of the largest wood products distribution networks in North America and ran a homebuilding subsidiary, which in 2005 constructed 5,000 new homes.
Our company's strategy was to target large builders with a set of experiences that make their jobs easier, delivered through a network of big dealers and distributors. We did this by creating the "iLevel" brand. This new brand consolidated five product-line businesses into one new business. The goal was to increase the percentage of iLevel product that went into the construction of every new home built in North America. The result: In the first year, 2006, we grew product penetration by 5 percent. This was the single biggest jump in a decade.
The recent, well-documented slowdown in the housing industry has underscored the significance of our making this transformation before the downturn began. In 2007 we are in a huge cyclical downturn in the housing market, so overall product volume and earnings are down. But we are increasing our share in this market--extraordinarily difficult to do--and when the market rebounds, we will be positioned to make more money than we historically would have expected. And, we are much better positioned to weather the decline than many of our competitors.
Five critical success factors enabled us to make this transformation happen as quickly as it did, and HR played a role in each of these. The five factors were:
1. The new organization was designed around the needs of our customers. …