Jan Anne Schelling (Royal IHC): 'We Need to Strengthen Our Workforce'

Jan Anne Schelling is beaming at the slipway. This is the pride of IHC: The shipyard on the Nieuwe Maas in the Stormpolder in Krimpen aan den IJssel, the Netherlands. ‘It is the largest covered slipway in Europe,’ says Schelling. Two ships are currently being built there, both Beagles. ‘Our showpiece. They are trailing suction hopper dredgers. Semi-standard models, relatively small but extremely strong and packed with technology.’ The first one will launch from the slipway this spring, and the second one will follow a few months later. Schelling points to the ships. ‘This is what this company is all about – craftsmanship.’ That term is bound to come up again.

You started as CHRO of Royal IHC in the fall of 2018. At the time, did you have an inkling that there was a crisis around the corner?
‘No. It came as a surprise to me, anyway. That is to say – I had read the 2017 financial report and, in all honesty, it was not very convincing. I also talked about that with the Supervisory Board in the spring of 2018. They convinced me that better times were coming. The attitude boiled down to 'We have a good growth strategy, we are going to work it out.' When I actually took up my position in October 2018, the troubles were already more visible.’

So you hit the jackpot then.
‘You could say that. To begin with, my assignment was to make progress in the areas of innovation and internationalization. The company needed a boost in leadership. It was interesting. At the beginning of 2019, that assignment was completely scrapped. We fell into a serious crisis and suddenly found ourselves in survival mode. Can we keep our funding in check? Can we survive? By the end of 2019, we were nearing bankruptcy. In early 2020, we were rescued by the government and a foundation with three major clients as shareholders, because they felt that this company should not be lost. We are called a “structural shipyard”, a core company for the Dutch and international maritime industry. That has been our salvation.’

You describe it now in a few sentences. It must have been a hectic time, with a major round of layoffs, the divestment of non-essential business units, a CEO who was sidelined...
‘Yes, it was definitely hectic. An interim manager, Gerben Eggink, was appointed fairly quickly. I had a good, open conversation with him right at the start. We also discussed my role. I told him that if he was going to be making drastic cuts, I was not his man. I did not believe in that, as it was simply not an option in this company. The work we excel at is complex and requires craftsmanship. That is the core, and that core was already a bit rocky because of some past decisions.’

What do you mean by that?
‘Well, in 2016 and 2017 they had drastic reorganizations here. In my opinion, a couple of wrong decisions were made in the process. The management at the time wanted to transform IHC into a company that did the product development and the outfitting of the ships, but they were planning on outsourcing everything in between, to Poland, for example.
This meant that a lot of essential knowledge and know-how disappeared from the company – hundreds of specialized jobs disappeared. IHC was a Swiss watch whose essential cogs had been removed, which happens to be the very heart of the company. We have paid the price for that in recent years.’

Your plea to the interim CEO is obvious: Focus.
‘Yes, but do not make drastic cuts in every corner. Make clear decisions. Do not interfere with the engineering, the craftsmanship, the execution, the professionals “on the slipway”. That is the core of the company, and it is the core of my message. Make cuts elsewhere, for example in the staff, the management. We had too many staff, including in my own HR team.
Fortunately, Mr. Eggink and I quickly agreed. We came up with a new organizational model, simplified things, focused on the client. I also said: “If you want to make progress in terms of culture, we have to open up all top positions to everyone.” He was slightly hesitant about that at first as he thought it would take too much time, but in the end he did trust me on that.’

How did it help?
‘It helped in many ways. By opening up the top positions, we were able to have many valuable conversations about the direction of the company. In the end, 80 people applied for those positions. I had a nice surprise from one talented lad, who sent me an email saying: “I am well aware I am not yet qualified for these positions, but I would still like to talk to you about the company and my ambitions.” I liked that.
We made some very surprising appointments and we managed to appoint a number of women to top positions in this male stronghold. I am very pleased about that.’

How has the transformation affected the culture of the company?
‘I think it has had a positive impact. Suddenly there was a return to thinking in terms of opportunities, which is a huge step forward. You have to realize that there was a lot of pain, sadness and trauma within the company due to the previous reorganizations in 2016 and 2017. Many colleagues had been laid off. Uncertainty reigned.’

And then the coronavirus came along...
‘That cut right through it. We were in the middle of lockdown when we started our exit interviews. Yet we still managed to speak to everyone face to face, both the people who had to leave and the people who we kept on. Due to the measures in place and our diligence concerning the interviews, it was a huge logistical operation. Colleagues found it a tense time. They did not know why they were coming to the office or what they were going to be told. I think they appreciated the fact that we took the time for them, and for the people who stayed. We trained the managers to conduct good-news meetings as well.’

What are you proud of?
‘That we ended last year with a small plus, while we had been making losses for years previously. That was a fantastic step. But what was even more amazing was that we were able to retain our craftsmanship and even expand it. We decided that we needed to identify where the gaps are in this area and started bridging them again. We therefore hired part of our flexible shell – people we need in this company. That involved a real mind shift.
We were fairly analytical during the transition. A colleague of mine came up with a new HR formula: 1=3 and 3=1. It means that if you have one craftsman, there have to be at least two others who can complement and support that craftsman: A star player needs two backup players. It also works the other way around, 3=1: As an employee, you excel at a certain skill. Fine, you are the star player. But what are the other two skills in which you could serve more as a backup? We want to enhance the entire workforce in this way.’

In this branch of industry, people are traditionally employed for a long time. The employee population is often relatively senior in age. How do you deal with that?
‘Each year, at least three or four people here celebrate their 50^th anniversary. They went to the shipyard with their dads when they were 14 or 15, and started out here as apprentices themselves. These employees have now been welders or pipefitters for 50 years. Make no mistake: They are highly skilled employees who have done a many jobs and completed loads of projects for us.’

I can imagine that 40 hours on the slipway is pretty exhausting for anyone over the age of 60...
‘Yes, welding in a strange position is fine when you are 35, but by the time you are over 60 it becomes more of a challenge. Our collective labor agreement puts an increasing focus on older employees and how they can work towards their retirement in a good, healthy way. That is an important issue for IHC, which we want to actively respond to. We have also concluded a generation pact, under which employees work 80%, keep 90% of their salary and 100% of their pension. It is pretty decent. We are also having discussions with older employees about whether they can help train young people. That is also important when it comes to maintaining craftsmanship.’

You might not have said it at the time, but it sounds like it was also quite a fun time...
‘Yes, it was. It was a tough as well as an inspiring time in which we reinvented ourselves, we learned a lot and we opened up a lot. We asked ourselves again: What is our purpose in life?’

And have you found the answer to that question?
‘We are here to improve the maritime industry. Our mentality has shifted. We do not just supply ships – we actually supply operational efficiency. For the Belgian dredging company DEME, we built the largest cutter suction dredger in the world, the Spartacus. Truly state of the art, but also a extremely complex and expensive vessel. The Spartacus almost made us go bankrupt; it almost became our downfall. It was a real headache.
The ship was commissioned last year and is now working off the coast of Alexandria. And the Belgians have been incredibly enthusiastic about it, because the ship is so much more efficient than other ships. That is when it hit us. What have we actually sold? We have sold a ship – and a "problem ship" at that. We should not have put so much emphasis on the price of the ship, but on its innovative nature. If we had clarified that we were selling operational excellence, the yield for us would have been so much higher. And so we made a nice mind shift – another form of transformation. We will approach it differently in the future.’

You are very experienced in transformation management. If I were to give you carte blanche to transform whatever you wanted... What is your ambition? What would you like to achieve in terms of staff and workforce?
‘I would very much want to advocate a four-day working week, but spread over a fully continuous seven-day operational process. We really need to start considering this in the Netherlands. Our competitors in Korea and China simply work seven days a week. That means they have two extra days of business per week, which is a substantial advantage for them.
Scandinavian countries in particular have shown that they can work just as efficiently, if not more efficiently, with a four-day week. You need to work smartly together. I do not think you even need to scale down much in salary level, especially since we could become much more productive. I would also like to make a plea for a firmer Dutch or European industrial policy, which gives the manufacturing industry an important position. We should not just develop apps – someone also needs to make the phone. We can continue to play a key role in the Netherlands and Europe in terms of the development, engineering and construction of ships and equipment.’

What has been an important lesson from the past few years, which could help other executives as well?
‘In fact, the key has been to listen. We listened carefully to the 80 people who applied for our top positions, which was a very enjoyable and informative experience. The majority of the people who applied had prepared extremely well and had written elaborate business plans. That is the main lesson I have learned: You do not have to think of everything yourself. On the contrary, have the guts to be open to new ideas and perspectives. We have so much knowledge and experience at all levels of the company. In the boardroom, people are too keen to think they have to come up with all the ideas themselves.’