ANALYSIS: Corporate Case Study - Parker brings parts together toengineer a new image

Dramatic changes to both its business strategy and its slogan - from "Parker Makes Parts

Dramatic changes to both its business strategy and its slogan - from "Parker Makes Parts

to "Anything Possible

- required Parker Hannifin to develop a well-oiled comms machine.

When Lorrie Paul Crum was looking for a new job in late 1998, she knew she wanted to stay in Ohio, but wasn't quite sure where that could take her career-wise. She was working for Rubbermaid at the time, but was in the job market because of the company's planned move to Illinois, following a merger.

Then Parker Hannifin, a longtime Cleveland industrial mainstay, approached Crum. Looking at Parker from the outside at the time, Crum recalls thinking, "I cannot imagine a more boring company to work for."

That was then. Today, Crum's professional life is anything but boring.

As VP of corporate communications at Parker Hannifin, she's overseen a three-and-a-half-year transformation of the company's communications function, designed to support and tell the story of its changing business strategy.

Parker wants to be known as more than a heartland old-economy company - after all, it makes everything from the paraphernalia that controls rides at Universal Studios to parts for the international space station.

Long known for its engineering culture, Parker wasn't very communicative with the press or the markets. Its decentralized management style made it difficult to find out exactly which part of Parker was working on what project, recalls one veteran journalist. Even the company's old slogan, "Parker Makes Parts

was seen as boring and undescriptive.

To create a new image, Parker first had to redefine itself. To do that, it coined the phrase, "Motion and control

to describe what it does. It's pegged the worldwide motion and control market at roughly $50 billion.

But with sales of $6 billion, Parker has only a small slice, and wants more. CEO Don Washkewicz has set ambitious goals: He wants 10% annual compound sales growth and a 20% market share.

Or as Crum puts it, "Parker is a $6 billion company disguised as a $2 billion company. We want to be a $10 billion company that dresses like a $15 billion company.

As a result, Parker has been on an acquisition and cost-cutting tear.

Crum's department has been telling this new story, first to employees, next to the trade press, and most recently to investors and the world at large.

"There was not much total selling of Parker going on before,

Crum recalls.

"The corporate message was not unified, it was reactive.

That too has changed.

Today, Parker is using the slogan "Anything Possible

to tell its employees and its customers what the company is about. That message is being carried in a wide range of communications, and is even evident in the headquarters' lobby.

Once a stodgy display of various Parker-made parts, the lobby now includes a miniature musical water fountain and a model dinosaur controlled by Parker products. "That lobby was a dead zone,

Crum recalls. Redoing it in 2000 cost $50,000, but Crum and Parker senior management thought it was key to showing the new spirit of Parker.

Crum targeted the employees first because she knew they would be the ones who ultimately sold the company's image to the world at large. "I've been on a two-year persuasion tour internally,

she jokes.

Unifying communications efforts

Parker divisions had been accustomed to handling their own communications.

That continues to some extent today, with about 40 people reporting to various division heads rather than to Crum. But Crum has sat down with employees to discuss the advantages of unifying messages and creating such things as standard looks for Parker communication pieces. She showed employees examples of what other industrial powerhouses such as Emerson and ITT had done once they developed unified messages. She also gave them examples from the consumer-goods world, touting such companies as Nike.

Crum held exercises for employees to put them in customers' shoes, and see Parker from that perspective. "We were teaching people to go from being inside-out to outside-in,

she says.

Crum used a redesigned company newsletter (On the Move), websites, and a quarterly video program called OnTV to sell employees on the new Parker.

OnTV is a 10-minute program done "purely to inspire people,

Crum says.

Each show contains an executive interview and two stories showing Parker technology in action. The first show a year and a half ago included a trip through Universal Studios showing Parker products at work. Other segments have featured a Chicago girl using a portable kidney dialysis machine that includes a tiny Parker valve. General managers of various Parker facilities show the program during quarterly meetings with employees.

The newsletter, published every other month, is stressing new Parker business wins that include systems rather than one part or another. "We're trying to sell more total Parker to customers,

Crum explains. The newsletter wants employees to think more of the entire company and how its various divisions interact. It's supplemented by e-mails as company news warrants.

Targeting the trades

As Parker's 45,000 employees in 46 countries began getting the message, Crum turned her attention to the trade world. Parker divisions often exhibited at trade shows separately. "We went as 12 different companies, all with separate booths. They all said 'Well, that's a little company,'

Crum recalls.

Now, Parker creates one Parker presence at shows to emphasize the range of products the company makes.

On another trade front, Parker's communications, marketing, and IT departments have collaborated to push the company's e-business capabilities, hoping to encourage its 8,600 distributors worldwide wide to use PHconnect, Parker's e-business site. A demo CD was created to show how it works and why it makes sense.

In 2001, Crum hired Cleveland-based Edward Howard & Co. to help take Parker's message to the outside world. The firm went after horizontal trade publications, and helped Parker craft its messages, says Pat Gallagher, SVP with Howard.

In the investment world, Crum's PR research found that analysts thought of Parker as a machinery maker akin to John Deere or Caterpillar. "It's just not the accurate description of the company anymore,

she says.

Analyst meetings were held to describe the new Parker, and a special investors' website, PHstock.com, was set up to make it easier for analysts and investors to get key information.

With Enron overshadowing the stock market, Parker has tried to be transparent on accounting issues. The company routinely posts orders online so analysts and investors can see trends in company business. While it's made 55 acquisitions in the past 10 years, it has used conservative accounting practices to handle them, and makes a point of telling that to a Wall Street worried about acquisition accounting that hides potential problems.

Last December, it even allowed a Wall Street Journal reporter into one of its facilities to look at how that plant was trying to boost business in the recession to avoid layoffs. The frank discussion of employee concerns in that article might have frightened some corporate comms folks, but Crum feels working with the Journal was the right decision in a climate where companies' stock is routinely drubbed if it appears they're trying to duck tough questions.

The next mission for the 15-person corporate communications team is to support Parker CEO Don Washkewicz's Win Strategy, a new campaign detailing for employees, distributors, and investors where Parker is headed.

Parker's business has been hit by the recession. It reported net income of $52.4 million in the quarter ended March 31, a 40% drop from the $88.1 million in the same period last year. It's been trying to cut inventories and become more efficient, laying the groundwork for improved margins once business picks up. That's the message Crum will push going forward.

A booklet describing the Win Strategy is being translated into 14 languages so employees around the globe can see it - and better understand it - in their native tongues. The decision to translate it elated European employees who had been burdened trying to comprehend Americanisms from headquarters in the past.

The company intends to keep a scorecard to measure its progress. "Once we have some wins under our belt, we will report that as we see progress,

Crum vows.

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