May 2010

A New Deal

Redefining EVP helps drive performance at Molex

By Jennifer S. Arapoff

For more than 70 years, Molex Incorporated has been successfully engineering and manufacturing electronic connectors and related components. Though Molex is now a public company, the founding family still maintains a strong presence — a factor that has contributed to Molex’s reputation for quality.

But the landscape of the electronics industry has altered in recent years. Competition for talent has turned fierce. Innovation has become lightning quick, and globalization has required more coordination and integration across regions. Molex recognized the need for change.

Chief Executive Officer Martin Slark says he knew the company had to reengage employees and boost its performance to maintain a leadership position in the industry. Good employee performance needed to become even better throughout the company.

“We turned to longtime partner Towers Watson (Watson Wyatt at the time) for help,” says Slark. “They helped us see that we needed to entirely revamp our employee value proposition before we did anything else.” An employee value proposition (EVP) is an employer’s promise of what the employee can expect from the employer and an explanation of what the employer expects in return.

“Once we had done that, we could consider how to adjust multiple levers — such as compensation, performance management and communication — in order to meet our goal of being a consistently high-performing organization,” says Slark.

First, look within

As a first step to improving performance, the company conducted a series of focus groups and team meetings to gather employee perspectives on what it means to work for Molex.

“Some of our long-service employees could articulate what it meant to work for Molex,” says Dianna Sparacino, vice president of global compensation, benefits and talent management. “But it wasn’t the same message across the board. And many of our newer workers couldn’t really express it.”

In addition, there simply were fewer long-service employees than in the past. “We looked at our demographics and found that a good portion of our employees had fewer than five years with the company,” says Susan Armitage, director of employee communication. “With the varying levels of experience came many different frames of reference.”

According to Ana Rodriguez, senior vice president of global human resources, the employee perspectives had been affected by some difficult transitions. “The tech bubble had burst, and the industry was consolidating and losing big players. Then the global economic crisis took hold. Molex experienced benefit and salary reductions, pay freezes and headcount reductions. It was a rough time in many ways.”

Another wrinkle: Before the economic crisis, Molex had gone through a restructuring to sharpen its customer focus and improve company performance. The company moved its manufacturing, HR, information technology, finance and other corporate processes from a decentralized, regional model to a centralized system organized by product division. Optimizing the global structure required changes to job titles, reporting relationships and rewards — adding to employee concerns and risking a further dilution of the EVP.

“We began our work with the global grading of job titles, roles and responsibilities to support Molex’s transition away from regional silos,” says Sandra Prestine, Towers Watson senior compensation consultant. “Once the global framework was in place, we were able to design a more consistent, global approach to compensation, which included base pay, annual incentives and sales incentives. Through these efforts, Molex reinforced the new EVP and pay-for-performance message.”

Towers Watson also helped Molex revisit its performance management process. “This wasn’t reinventing the wheel entirely,” says Ilene Gochman, Towers Watson senior consultant. “The company simply had to refocus its strategy on the importance of setting clear objectives, measuring accurately and differentiating performance. We did that by modifying the performance management process and through additional training, communication and technology.”

Communication solidifies brand

Armitage notes that Molex needed to manage the challenges of employees reporting to supervisors in different geographies and time zones. “Communicating one employer brand meant having all employees understand the corporate mission and values and, more important, how they personally were connected to them.”

So Molex developed a new employer brand, including standardized graphics and colors for consistent use across the globe.

“The strategy we developed for Molex included new messages regarding the EVP and ensured time for training and ‘precommunication’ with HR and leaders,” says Kathy Walgamuth, Towers Watson senior communication consultant. “We revised the communication strategy to ensure alignment and clear messaging.”

Defining success

So far, the EVP project and related modifications have been worth the effort. Rodriguez says solid research was a critical success factor. “Towers Watson’s benchmarking and frameworks for action plans were invaluable. With our consultants’ help, we learned to understand what ‘employee engagement’ and ‘employee value proposition’ really mean. It was a new language to us, and they helped us become fluent.”

Of course, there’s more to do. “The jury’s still out on some aspects of our EVP work,” acknowledges Slark. “But the depths of the downturn are behind us, and our comeback has been excellent. We believe some portion of that success is due to the fact that our employees better understand their roles and how they relate to the company’s objectives.”