Master Human Resources: Mark James, SVP at Honeywell

Master Human Resources: Mark James, SVP at Honeywell


>>Mark James is Honeywell’s Senior Vice President of Human Resources and Communications. A position he was appointed to in November 2007. Honeywell is a $38 billion diversified technology and manufacturing company serving customers in aerospace, automation control, automotive, and chemistry industries. A member of Honeywell senior leadership team, Mark is responsible for leading global human resource strategy and programs for the company’s 135,000 employees in more than 100 countries. This includes organization and talent development, staffing, learning, compensation and benefits, labor and employee relations, HR services, and the Six Sigma training organization. Our campus students are in an operational excellence course this semester. His role also includes leading the company’s procurement, communications, and aviation constants. Prior to this position, Mark was a Vice President of Human Resources and Communications at Honeywell Aerospace, a position he held since 2004, leading HR strategies for the $12 billion business and it’s more than 40,000 employees. Mark joined Honeywell in February 2000 as Director of Human Resources for Federal Manufacturing and Technologies in Kansas City, and was promoted in 2001 to Vice President of Human Resources for Aerospace Electronics Systems in Phoenix. Prior to Honeywell, Mark held a variety of HR positions at Iomega, JM Family Enterprises, a Toyota distributor, AT&T, and Lockheed Martin. He holds a master’s degree from the University of Utah in Public Administration with an emphasis in HR, and a business administration degree and personnel and industrial relations from Utah State University. Mark is a designated senior professional and human resources, a certified compensation professional, a certified benefits professional, and he’s a certified Six Sigma leadership black belt. On a personal note, let me just say Mark plays really an incredible role with our MS HR program here at Utah State. He seems to make time in his busy schedule every year to come spend a day with us and give us an window of HR at really a truly world class level. This is a great group of students we got here, MS HR students and MBA students. They’re all excited. Look out there. Mark, welcome.>>Thanks. So what I’ll do is talk to you for awhile and then we’ll open it up for question and answer. So you’ll want to start thinking of your questions because there comes a point in this where I’ll say here’s the participating part, and that’s where you want to ask questions. I’m coming off the flu that everybody has been getting. I’m not contagious anymore. I just have some of the lingering aftereffects of it. But those of you wondering how to get cured from the flu. I’m not sure if it’ll work for everybody but I’ll tell you what I did. I mean, most people what do you? You maybe get some chicken noodle soup to feel a little better and you watch some National Geographic show where the cute, fuzzy little animals hug each other and that sort of thing. My remedy was to eat all of the multi-colored popsicles that were my daughter’s in the freezer. Then I watched all of Season 1 and part of Season 2 of The Walking Dead, and that helped me recover. Also those of you who are sports fans, I understand it was a tough night down in Las Cruces with the Aggies losing. So if it makes you feel any better, I was down south of here. I’ve got a son that attends school here and one down at BYU, and I believe I may have some responsibility for that last minute win St. Mary’s had over the Cougars. Those of you not familiar with it, BYU thought they hit the winning shot with 2.5 seconds left to go. St. Mary’s threw the ball inbounds and the guy took an off-balance, half court shot and made it with zero time on the clock. The place was totally dead quiet, all the air went out of it, and the referees spent two minutes watching the video to see if he got the shot off and then they ruled he did. The reason I may have contributed to that is, if someone was following me secretly with a camera, they would’ve seen me conspiring with the St. Mary’s team because I was staying at the Marriott and I went in to work out in the fitness center before the game and four of the St. Mary’s players came in. So they are watching me work out and one of the starters came over and he said, so they’re watching this old guy workout really hard and sweating a lot, and he goes, “Dogg, you’re really working it. Give me five.” So I’m giving them high five, the St. Mary’s team, and then the day after their win, I had breakfast with all of them unintentionally. I just went down to have the buffet breakfast and it was nobody but me and them. So I may have contributed to that BYU loss. See? I made a few of you happy. A few of you could care less, but the rest of your like, yeah, that’s good. We’ll take it. Some of you may have heard this before but those of you in Human Resources and even those of you are not, you’re like what is that? What do you do exactly? I have a hard time explaining that to my parents. I’ve been doing this for 25 years and they come from a different generation and they had a different view of what HR was. It wasn’t HR, it was personnel. So they’d asked me what I do and I’d start trying to explain to them. Organizational development, restructuring and footprint consolidation, all this different stuff and their eyes glaze over. So finally I just go look, hiring and firing people. Oh, okay. Then my father says, this is true. I’m not making this up. My father says, you know, I’m shocked, how much money they pay you for what you do. He goes, whatever you do don’t screw it up. My mother says, no, that’s not it honey. She said, the reason he’s got the job he does is because they’ve discovered he’s such a nice boy. Then my son who happens to be the one that’s freshmen here when he was about 10 years old, what happens is I went up traveling about 30, 40 percent of the time. I visit different facilities and go all around the world and sometimes it’s to some strange places and do some customer visits, and some visits in our facilities to kick the tires and see how things are going. That was too hard to explain to my kids. What do you do there? Why are you going there? What do you do? So I just quit explaining it. So my 10-year-old son who’s now a college student, when he was 10, he comes up to me with two of his little buddies and when I just gotten home from a trip and he said, “Dad, we know what you do.” I said, “You do, what do I do?” He said, “You’re with the CIA.” I said, “I hate to disappoint you but I’m not with the CIA.” They all looked at each other and he looks back at me and says, “Yeah. We knew you’d say that.” Then to make matters worse, you remember when they got Osama bin Laden. So I happen to be on a business trip and I called home because I wondered if the family had heard the news that got. My son answers the phone and he’s like, yeah, we’re watching it on TV. They got Osama, and he goes, “Hey. Dad, where are you?” I said, I had thought about it to that point and I said, “I’m about 250 miles from where they got him.” He goes, “Oh, yeah. Sure you are.” So with that, what I was asked to talk about is a little bit about what’s up at Honeywell, what are some of the business strategies, and how does human resources play into that? So to start with, I’m going to talk to you a little bit about Honeywell first because most of you have heard of the company name, a lot of you don’t know what they do though. We’re one of the largest companies that people aren’t sure what they do. The most they can usually think of are thermostat on the wall and we are the original inventor of the thermostat away to be able to control your heating and cooling which didn’t exist before a guy named Mark Honeywell invented it. That we’re still, I have to be careful how I say this, no lawyers in the audience from our company but we’re still a very significant player in the world market when it comes to thermostats and that’s one-third of one percent of our revenue. Just to give you an idea of what the company does. There is nothing we do that’s more than one percent of our revenue. We’re one of the most diversified companies on the planet. There’s nothing that can sink us, no individual event, no competitor totally wiping out our product, it would have just a small dance in what we do. Now, by the same token, we’re not going to have a huge upswing off one product like when Apple comes out with some woo it goes. I also was around when Apple almost collapsed and disappeared, so things can happen fast when you’re when you’re in just one area or one or two products. Honeywell is 38 billion in revenue. We have about a 140,000 employees, headquartered in New Jersey. 85,000 of our employees are outside the United States and 55,000 are inside. So the majority of our employees are in other countries, we’re in well over 100 countries. What we do we divide it into four big segments. One is aerospace and the way I would explain it as if any of you get on an airplane of any size including the little tiny single cedars up to the large commercial ones made by anyone, anywhere in the world, there’s a better chance than not that there’s Honeywell product all over that aircraft. That’s the way I’m allowed to say it in terms of our presence in aerospace. We do a lot. We do just about everything but the seats that you sit in and the metal airframe. So the engines and all the avionic components that us. We’re the people that invented things like ground proximity warning systems that tell pilots you need to pull up or you need to turn, we invented those. The little black boxes they look for when an aircraft crashes, we invented those, that that’s us. The space program, everything NASA has ever put into orbit with a person on board, our avionics are controls to get them up get them back. We’ve never caused a mission failure of NASA in their entire history. Those of you that we have a significant part of its military. So the cockpits in jet fighters, cockpits in tanks for that matter. A variety of other things including those of you who may be war buffs when when they shoot a missile or a rocket, the kind that can go up and around hills and around corners and then go through a particular window frame. One company in the world makes that happen no matter whose name is on the missile and that’s Honeywell. We don’t use GPS has nothing to do with satellites and it cannot be jammed. There’s no way to jam it. All I can tell you is, it has to do with physics and the shape of the earth and something that we came across that nobody else has figured out. So that’s a little bit about our aerospace business. We also have a chemicals business. You probably are all wearing our product right now. You just don’t know it. The majority of clothing that gets sold into the US and into a lot of other countries they dip it in a chemical to make it a little tougher, a little more resilient and that chemical is a Honeywell product. If you used a blister pack to get some medication this morning, that was probably a Honeywell blister pack that you used to do that. If you get oil and gas anywhere in the world, anywhere even the countries you have to look upon the map. There’s about a three in four chance that it was our technology that turned that into gas and oil. So we’re a significant player in the chemical industry, bulletproof armor and gear when we had the conflict going a few years ago and people said “Hey, we don’t have good enough armor over in Iraq, we want the good stuff”, the good stuff was the Honeywell product, is what they were referring to. So that’s a little bit about our chemicals business. We’re also in the automotive sector. Automotive is generally a low margin business and they’re just tough on suppliers. Anybody that’s had any experience in that knows. It’s just a tough industry. We’ve found a great niche in there where we have a technology advantage and so we make a good margin on something in the automotive industry. The way I can say that is, if you have a turbocharger on your vehicle anywhere in the world and particularly in Europe, there is a better chance than not that it’s a Honeywell turbocharger usually under the brand name of Garrett. This year worldwide all vehicles sold, 50 percent that had a turbocharger, it was a Honeywell turbocharger. We won a half of all the global order’s worldwide. We also sell breaks, Benedict’s breaks and there are few other brands that go on cars, trains, automobiles. Then, we have our automation and control solutions business which is actually our biggest business. That’s where the thermostats reside even though we still sell a lot of them and it’s not a big part of our portfolio. There we have a variety of products, personal protective equipment that firefighters wear and other folks clothing that won’t melt and protective gear and respirators. We’re number one in the world right now on personal protective equipment. We weren’t even in the business five years ago. We’ve done some strategic acquisitions left 3M way in the dust along with all the other players. We’ve got twice the presence of 3M now in just a few short years. Other things gas detection. How do you determine if there’s some gas leaking into a building or a mine? We’re number one in the world and gas detection. We’ve got controls to run factories and of course buildings like you’re in, residential, commercial buildings, we still do a lot of that, environmental combustion and control, some of the flyers you see at refineries, and things like that, were in that business. We’re number two in the world in hand held scanning and mobility. The UPS drivers, they’ve got the little handheld device. Those are ours. We just won that contract in the last year which moves us into the number two position coming up fast on Motorola beating them the vast majority of time in the last couple of years. We weren’t even in that business five years ago. We’re now the number two player. So we’ve got some significant businesses at Honeywell but it’s thousands of different things, were number eight in the US in patents for example. A lot of people still don’t know what Honeywell does, I remember checking out of a hotel in Romania and the guy helping me out with the bags says, “Ooh, Honeywell, you make honey and it’s very good”, I said no. This was the same place by the way where there were gunshots all night around the hotel, I’m in this nice Marriott and you here boom boom all night long around the hotel, I think a war or a crime zone or what? So I asked him about what were all the gunshots and they said “Ooh, that was that was just our employees”, every every night they go out and all the stray dogs that run around, they shoot all the stray dogs to keep away from guest. You never know what you’re going to get. But that’s a little bit about Honeywell. I’ll talk to you about two of our big areas of focus and I’ll talk for a while about that and then I’m going to open it for questions. It doesn’t have to be about the things I was talking about, it can be about anything that you want to hear about. So the first would be we say we want to have great positions in good industries. It doesn’t make a lot of sense if you’re in a bad industry, you just don’t make money. What are examples of bad industries, being an airline. Have you noticed they don’t make money? If you notice that they have huge assets they have big unions to contend with and they don’t make money. Their margins are super thin. They’re usually losing money consolidating, going bankrupt, not a good industry. Automobiles, I don’t know has Detroit struggled any, same kind of thing. They wind up paying high wages, locked in by their unions, and they just struggled to sell automobiles because any enhancement or anything they put it raises the price of the vehicle, people don’t want to pay more for the vehicle. They find themselves struggling to compete with, especially with certain foreign automakers. So tough industry. My boss before he went back to school to finish his degree he decided he’d be a fisherman. So him and a buddy bought a boat and they went out there off the coast in New England and tried to catch fish because it looked easy and fun and make a zillion dollars and he said he’s never worked so hard and his life and receive so little. It was a horrible experience, not a good industry to be in. Too many people think gee you got to get into this. Now, I’m going to say some things that might not be politically correct but it’s true solar energy, wind energy. That was the next best thing when I was a student 30 years ago. It was huge. It’s been 30 years. Where is it? Not a good industry to be in. It still can’t make money without government subsidies. So every time there’s a tightening in the government, everybody starts dropping their stuff. So it sounds great, and it sounds green, but it’s never taken off. It’s going to continue to struggle, it’s just not going to be a good industry. So it can’t be like the popular thing, it’s got to be a good industry where you can make money. If it’s not a good industry, because I mentioned we’re in automotive, we’re in aviation, we have awesome margins in both businesses. Why? Because we have better technology than all of our peers do, and we have a competitive prize. Where else are they going to turn? They can pay more for a lower quality product from somebody else, or they can buy it from us. Our number one customer complaint about us is that our stuff cost too much. We’ll take that complaint. Because you can charge what the market will bear. But it’s where we operate in those industries. So we spend a lot of time organically thinking about it, or turbocharger businesses awesome. Nobody has a better turbocharger, and they can’t beat us on price either. So we continue to maintain a competitive advantage there, and be able to make money on that. When it comes to some of the other things I mentioned, that you probably never think about, gas detection. Who thinks about that? Well, we did. I mentioned we weren’t even in the business, and we realize it’s a high margin product, and there only small companies in the space. So when we come in as a big company, it’s a little bit like if you’re the Yankees versus the Toledo Mud Hens or whatever. You might have a great Toledo Mud Hen team that year, but if you’re going to say, okay, we want to take your staff, your players, and your coaches, and have them start up a new team, who would you bet on? The Yankees or the Mud Hens? Both the players and the coaching staff, who’s going to probably put together a better new team? Kind of a no brainer. That’s what happens when we enter a space with a bunch of small companies in it. They don’t have the same systems or processes. They haven’t been able to have the luxury. I guess if you want to call it, that of spending the time to figure out things. They don’t have the same cash firepower. So when it comes to acquisitions, we’ve done 75 of them in the last 10 years for a total of $10 billion. We’ve also divested 40 businesses for a total of five billion. So we’ve moved a lot of stuff in and out of the portfolio. In the last five years, and even in the last three years, when you measure us on total shareholder return, TSR, versus our peers, and our peers are companies like GM, 3GE, 3M, Dunha, Rockwell, we’re number one out of our 15 pairs. We just looked at that measurement, its why it’s stuck in my head. A lot of it has to do with our organic growth, with the systems and processes we put in place to have great positions and good industries, little things no one thinks of. Like there’s a lot of money and valves in aerospace. Valves, something that opens and closes. There’s a lot of money there. But yet for the larger aircraft, there’s not a lot of money in it, because they’ve driven the price point down so low. So we look for things people don’t think of. Like I said gas detection, who thinks of that? Personal protective equipment, other than 3M, there’s like 30 companies around the world that make personal protective equipment that ranges from boots, to turn out gear, who thinks of that? When we did our first acquisition, people were going,” What are you guys doing? You’re going into the clothing business? Honeywell clothing? What are you doing?” But what we discovered is it’s a high margin product. They pay a lot of stuff for that, and there’s an incredible devotion. If you’re in a fire department, you get totally attached to the brand of your turnout gear, because you’re depending on it, your betting your life on your turnout gear. When you’ve got something you like, you do not want to switch brands because it’s 20 percent cheaper, you want that brand. So when we realize that, and the margins that are there, and who the other players were, we realize it’s a space that we can go into, and we bought up and we did three or four acquisitions, and then we could quickly roll that up with our processes, the way we were able to take cost out of those businesses, because we already have all the centralized administrative stuff, and we have to add anybody. We can swallow a 500 million or a billion company, without adding anything, into our overhead. So that let’s us go in and be a real player in the space, and then we have all the sales markets throughout the world from our other products. We’ve already got relationships with customers, with other products. Now when we go to them, no matter what it is, whether there are aero company, automotive, oil and gas company, any kind of other industrial company, we’d go to him and say, “Hey, did you know we’re number one in the world and personal protective equipment? How about we cut a deal with you for your entire organization, whether you’re Shell Oil, or whoever, instead let’s know your individual sites, buy their own eye wear and hearing stuff, why not buy it all from us and we’ll give you a great deal?” So you can see how we’ve got a much better sales channel than the other people, and that lets us do that. When it comes to MNA, most companies are bad at MNA, and it’s been that way forever. As a matter of fact, watch what happens to a company’s stock when they announce an acquisition. What happens is 90 percent of the time? Stock drops down. Why is it dropdown?>>Fear.>>Fear of what?>>[inaudible].>>Fear that you just wasted the money, and that they took on something that’s not going to produce the returns, and that they paid too much for it. That’s why in most of the big acquisitions that have been done, that you read about a case study, it didn’t work very well. They’ll say, “Oh, culture was the issue, and all this other stuff.” It doesn’t work out very well. When we look at what we’ve done over the last 20 years, our current CEO Dave Cote, he’s been there 10 years. Before him, we looked at our 10 years worth of acquisitions on nothing but a pure financial basis. In other words, how much money did you pay for it? And how much money have you made from it? Ignoring whatever happened in the economy. Was the economy good or bad? Or did something else happen? Just look at the money. What did you put in? What did you get out? In terms of being successful, in that 10 to 20 year ago period, you know what percent of our acquisitions were financially successful? I’ll give you a hint. We meet the average. We met the average. The average acquisition success rate is? Any guesses?>>Ten, five.>>10, five. You see you guys are even more critical, maybe I built it. It’s usually between 15 and 25 percent are successful, and that’s where we were. We were like in the low twenties. So we looked at just like everybody else. We’d go out and decide, we need to add something strategic to our portfolio. Look at this, this business would be awesome. If we bought it, we’d have all these energies with them, and we could cross sell stuff, and then you get into a bidding war for the business with everybody else. You really want to win it, because you’ve fallen in love with it now. So then you buy it, and then you don’t do that great of a job integrating it, and then you don’t get out of it, what you thought. You end up overpaying for it. That’s what companies do three out of four times, and that’s why stock price drops when they do acquisition. You can read what the analysts have been saying about us for at least the last five years. Honeywell is a proven acquire. Because when you look at zero to 10 years, what we’ve bought, those 75 that I mentioned, including having a recession and a half stuck in there, our financial success rate, high 80 percent. So that’s the difference. Now what happened? Wow, did we just get lucky? The last 10 years were better than the prior 10? Or why hasn’t everybody else figured out how to be successful acquiring? It’s a few things. Number one, it’s my topic, great positions and good industries. We don’t chase businesses that are not in good industries. We’re not going to buy something with a low margin, and say, “Oh, we can turn that around,” because you know what? 90 percent time you can’t turn that around. So we are careful about what we pick. The things I mentioned, personal protective equipment, gas detection, handheld scanning and mobility, they’re not things that come top of mind, what you want to acquire. What are people thinking of? By Google, get something in medical, that’s the trend of the future. Get something in water, everybody needs water. You know what, both those are important trends, medical, aging workers, aging population, the world needing clean water. The problem is, nobody that’s done an acquisition there has been successful if you notice. Everybody struggled with it. How come? Because it’s a darling of an acquisition, and everybody way overpays to get the space. We’ve looked at both those spaces, it’s not worth it. Everybody that would end up being successful, none of them have been able to turn a profit in those areas, even though it is a big macro trend. So you can’t just get caught up in all that stuff. Instead, we look for things that we would call subtier acquisition, things people don’t think about, but yet everybody needs to have, people need to use and have. Look at profitable businesses. So the first is what we pick. Second is, we don’t wait till the bankers call us and say, “Hey, this these guys want to sell this business. Do you guys want to bid on it?” That’s how you get into a bidding war, and you end up overpaying for it. At any point in time including right now, we’re looking at over 200 companies for purchase, big ones and small ones. We’re always doing what we call milk runs, we’re always out there talking to people well before we are there for sale. Companies held by private individuals, held by private equity, held by big corporations, we are always looking at everything and everybody, and doing regular reviews on is this something we want to buy? Is the time right? So a lot of times we get a chance to be the exclusive better on something, because we’ve built a relationship with them. Then when the time’s right, we ask them if they want to sell, if they’ll give us an exclusive shot at making it worthwhile, and most time they will. So we’ve gotten pretty smart about how we build our pipeline, if you will. The other thing is, when we figure out what we’re going to pay for it. We don’t count sales synergies. A sales synergy is where you have an existing business with an existing customer base, and you’re thinking, if I could just buy this business and their products, not only can we get the sales they’ve got go on, but we can take their products over into these relationships and sell them as well. That’s absolutely the right approach, that’s what you want to do. The mistake is to say, we can sell a $100 million into here by doing that. Then you count that on getting that a $100 million into what you’re willing to pay for the property, that’s what most companies do. That’s how they wind up overpaying for stuff, because they rarely realize the synergies because the people that are stalking the kill here, gets so excited about wanting to buy it, that the sales synergies tend to go up and up, Oh, we can get even more. Then, you build that into your pricing, and you wind up overpaying for it. Okay, we look at the sales synergies and we absolutely plan to get them, but you can’t count any of it in the valuation model that you’re doing when you’re looking at it. So we walk away from a lot of stuff. We don’t really care because we’ll walk away from 30 deals before we actually do one, where most companies don’t do that. They get so wrapped up trying to get that one deal, and after there people have spent six or eight months full-time chasing it, they want to do it, and they feel like a failure if they don’t get it. They’ll do and sell almost anything to get you to bid the price up and buy it. So some of it’s just that kind of an approach. Then the last part and maybe the most important. If you’re going to buy a business at Honeywell, you’ve got to sit down with my boss, the CEO, and Chairman, and with our CFO, and myself, and our head of business development and strategy, and you get to sit down with them a year before you want to buy it. You get to sit down six months. You get 90 days, 60 days, 30 days when you buy it. Not done, 30 days after, 60, 90, 180, 360. We do a ton of reviews even on the smaller deals. Now, what behavior do you think that drives? I don’t know any other company that does that. But what it drives is, imagine yourself responsible for the acquisition, and now you’re going to have a meeting with a guy four levels up from you, that runs the company and controls your career, and you’re going to sit down with him and tell him all about the deal, and what you’re doing. Guess what? He’s going to think at 10 or 15 things that you didn’t think of. Well, did you check on this? Well, what about that? Well, why don’t you guys look at this? Well, what about this part of their business? What about this customer contract? He’s going to ask you all stuff. So you’re like, how embarrassing, I didn’t know the answers to a lot of it. So what do you do? You double down, you go back, and you take his little checklists because you’re going to see him again in 30 days. Guess what he’s going to ask you about? Did you do this? Did you do that? Did you do that? So guess what? You do all that. Now, what else do you think about? What’s it going to ask next too? So you think of eight other things that you wouldn’t have thought of otherwise. But you’re thinking, Well, what’s it going to ask us about? We don’t want to get him. So now, you do these 15, and you do these eight, and you go in and you have the meeting. Guess what happens? Yeah, he thinks of five or 10 more. So you’re back again. Now, who do you think is going to do the better job on doing an acquisition and an integration? Somebody that holds one, maybe two meetings to find out what the business is about, and maybe they hold one after, and you just hope that people working on it, do a great job. Or do you have people who do and work on all the deals, and see all the deals, drill on you with 200 things that you wouldn’t have done otherwise? So is it any wonder that we’ve been so successful in our acquisitions? Why we’ve done such a good job integrating and we don’t have the cultural issues, and we integrate companies that don’t match our culture all the time? Mom and pop places, and it’s like welcome to big Honeywell. We are at the board, you will be assimilated or were not at all, let’s hold hands, we’ll take the best from each others cultures. I’ve lived through that. At some other companies, it never works. It doesn’t work. As a matter of fact, when you hear a company say, “We’re going to buy this other company and we’re going to merge our stuff together in a joint union, and will take the best from both cultures.” There is not an example that anywhere ever. When you read about it in an article, talk to the people that live through it, and they’ll tell you it’s not true. What was published an article, doesn’t work. I’ve been through it twice. It doesn’t work. You have to have a dominant culture. You have to, or the company just struggles. When I worked for Iomega, who at one point owned 90 percent market share in removable storage drives, was the dominant player in that. Now, what are they? Now, there’s still zip drives believe it or not, which is good, but they’ve got about 50 employees from the original 6,000. We were purchased up and disappeared into nowhere. Well, when I went to Iomega, there were three distinct cultures. There were the legacy Iomega people that started in the garage, they’re now Ogden, and had been with the company for 15 years that it existed. Then, there were a bunch of people from Hewlett-Packard that had come in. Hewlett-Packard is a very soft culture, very paternalistic, very relationship-oriented, that sort of a thing. Have a hard time making difficult decisions, if they’re going to anger people. But it’s a great place if you’re an employee, because it’s really employee-oriented. Then, the other third of the population came from GE, which is a very top and bottom line. It’s all about the money, drive hard, make things happen, make quick decisions bias for action. Sometimes you roll over the top of the customers. Sometimes you roll over the top of your employees, those sort of things, very different cultures. I sat there and watched for almost two years, arguments between the three cultures, about how you should run your factory, how you should treat your customers, how you should price your products. Everyone convinced that they’re right and nobody able to agree on anything. It was a huge struggle until one culture finally took over by basically firing just about everybody from the other two cultures, and then things started to work really well. There were other reasons why Iomega didn’t make their turn, that they made some strategic mistakes. I got out while they were still almost a $2 billion business, but I could see there were some issues coming, and that’s when I left them to join Honeywell. But the point being is, I talked to you a little bit about organic growth, great positions and good industries, and then how we do our acquisition. The second topic, and then I’ll open it up to questions, is what we call a focus on high-growth regions. What that means is we think there are certain countries that we’ve wanted to target, because we and most of our competitors undersell currently into those countries. We think there’s either a lot of money there, a lot of people there or a large rising middle-class. So we’ve identified certain countries. Now, some of them we’ve been working on for 10 years, China, for example. We were one of the first companies into China, and we were one of the worst performing companies in China as of about eight years ago and beyond. Now, the local Chinese press publishes articles on us on a regular basis saying, we’re one of the few foreign companies that gets how to operate in China. That happen, that didn’t happen naturally, that happened through us building up a lot of local talent, and the way we approach it. We’ve done the same thing in India. We have 10,000 employees in China. We have 12,000 in India. We’re employer of choice in the Bangalore area, which is known for its IT. We have 7,000 engineers, software engineers there. We have no trouble attracting or retaining people because we got there early and did it right. But we didn’t do such a great job in a lot of the other countries. So we’ve focused on certain countries, countries like Vietnam, hardly you may thinks about it. Huge population, huge. It’s maybe a little country physically, but you could roll about 35 or 40 of our states into it, and just to match their population. Fourth largest country in the world and in population, Indonesia. You guys probably don’t even know what is on a map, most of you. They have got a huge population. By the way, it’s not third world when you go there. When you go to their cities, they look as good or better than Chicago or Los Angeles or whatever. We have too many sales in there. We haven’t really worked that too hard. Like a lot of countries, they’ve had their issues, but that’s when we focus on. The Middle East, may not be a lot of people. Certainly, always a lot of contention, that there is a lot of money there. You have no idea how much money they’ve made from oil and gas. In a lot of the countries that they are the ones you think up for oil and gas providers, they provide free homes to their citizens. Their homes, if I use you tough figures, their homes would be probably about $400,000 on average. If it was here, big, nice homes. It’s free to all their citizens. Everything here pales next to what they have in Shanghai. It’s not people out in rice paddies working. I mean, it looks like you’re in Disneyland. There freeways are lined with blue neon lights going along and just crazy buildings. You’ll look everywhere, you’ll probably see 100 cranes, the large cranes up. Is there maybe one in Salt Lake City right now, I mean it’s just incredible. I was in Disney Salt Lake, I knew as a reference point for you, so I used it. But there are a lot of people that are buying a lot of stuff, and they don’t want cheap stuff either. They expect the very best of everything. You know what? They’re not going to buy stuff if you ship it from here. A lot of people say, “We need to protect our jobs in America.” What that really means is, we want all our stuff really cheap, we’ll bad mouth Walmart, but we’ll shop there. We want our stuff really cheap, and we want all the jobs to stay here in America, and that way we can export things to other countries, but we’re not going to import anything, because that would compete with our jobs. Okay, guess how people feel in Germany or in Japan or in India or in China. Exact same way, it doesn’t work because as soon as you take that approach, guess what? Your competitors do. They go there. The fact you’re not going to go there, they go there. All of a sudden, you start losing customers, and they’re killing you on price and margin, and it’s too late. Because now if you say, “I guess we should have done something.” Well, now, you’re 15 years behind the rest of them, and it’s going to take you forever to catch up, and you’re not going to get your customers back very easy. It’s just not that easy. So really is a global world, and that’s why we focus on someone like China, but it’s a communist government. I mean, it wasn’t that long ago, you couldn’t own a business. It was illegal. What happened? Well, they don’t like the word capitalism and they don’t use it but it’s probably the biggest capitalist country on the planet. You go over there and you go into a little shop or a little store because you want to shop for something, you’ll be lucky to make it in the door before you have a sales person literally on your arm, trying to sell you stuff, cut a deal, negotiate things. They’ll chase you out of the store trying to sell you stuff. How’s your retail experience here? When you go into one of the stores, you’re lucky to find somebody that works there, they don’t know anything, they bad mouth their employer with a ringing up on the cash register, I mean it’s just some striking differences. But the reason we’re confident putting things into China is there’s no way the government is going to seize everybody’s stuff. There’s way too much foreign investment in there now, way too many companies in there. There are way too many Chinese that have made a ton of money by being an entrepreneur. They have more entrepreneurs than we do. They’ve made a ton of money. How do you think that would go over if the government tried to seize all the businesses? It’d be a mass revolt, its not going to happen. Here’s another thing for you to think about. Countries where we have lots of business in, we’ve put facilities in them, do we go to war with them? Have you noticed that, we don’t. Where do we go to war? Places we don’t have a whole lot. Think about that a minute. It’s not just the US. Every country is like that. You think we’re going to go to war with France over something no matter how much we disagree or with the UK? It’s not going to happen. Why? we’ve got stuff in each other’s locations. We’ve got valuable stuff. So it actually if you want world peace, you want globalization, you want people putting stuff in each others’. The Chinese are going to buy a port and everybody wants to protest here in the US. What are they going to do? Pick up the port and move it to Shanghai? You actually want to have the cross investment. The cross business. We feel comfortable putting stuff in China because we’re not going to lose our assets. There’s not going to be a Venezuela seize your stuff. Thanks for showing, thanks for building the refinery. Now we know how to run it will go ahead and nationalize it and take it over from you. That’s not going to happen in China. They couldn’t. They’d have too big of a revolt on their hands. Russia? Could happen there. So we look at that a little differently but it’s a big economy and we’ve got 700 employees there. We will put engineers there, we will put sales guys there, we will put factories there. When you have both people in the Russian government, at the top of the government and you have CEOs of Russian companies tell you, don’t do a deal here unless you involve the government, make sure they’re in on everything and they say you can’t trust our legal system. You know there’s an issue there, right? Those of you too back on the China thing about intellectual property, we’re careful about what we put there. We got a big defense business. We’ve got stuff that site are protected. We can’t and won’t put there. They’d love to have a lot of our technology. We’re still 15 to 20 years ahead of them, when it comes to a lot of the aviation stuff and a lot of the military stuff. So we’re careful about what we put there and you got to watch your intellectual property. When you put something there, if it was the Colonel’s chicken, we’d put the chicken bones and the chicken and the bucket’s there. We’d keep the secret sauce somewhere else. So we’re careful about that, but you got to be there to play. Those of you who think all those Chinese have no ethics, they steal your stuff. Back up a 100 years ago, who was accused the most of intellectual property theft of any nation in the world?>>USA.>>USA. That’s right. The patents and the ideas were being done in Europe and then they are being knocked off here in America. We were just really good at putting things into action and making them work. If you look at press clippings all the accusations where America’s has an inadequate legal system and they’re knocking off everybody’s property. But now that we’re on top of the world with this big economy, we are, how dare you do something like that. But what’s happening in China is they’re knock-off stuff and then they get, first it’s cheap, and then don’t worry about it. But then they get better and better at knocking things off. It’s incredible what gets knocked off now. Your cheap Rolex watches and everything else. Then they get as good or better than some of the original people making it, and then they start making their own stuff which is already happening. Then guess what happens to the people, the Chinese entrepreneur that started out in his garage knocking off stuff and now he’s inventing things. Guess what starts happening to him? People start knocking off his stuff so what does he say? We need some enforcement around here and that’s what you’re getting. You’re getting Chinese companies gone. We need some enforcement around here. I mean it’s not about good people and bad people. It’s more about just where an economy’s at and where is our middle-class and what’s happening there. So we’re careful about different countries. Brazil is a focus for us. When I was a student, Brazil was going to be the next great economy in the world. As a matter of fact it was going to be the next great economy in the world at least three times now, including right now. The same things happen every time. Where it starts to really taking off and starts really going and then it implodes and they have a currency devaluation, and they are setback 10 or 15 years. My boss when he was with GE and ran the appliance division, he left GE because he didn’t get the Jack Welch job but when he was running it, he bought a big facility down in Brazil when it was the next best thing. A week later, it was worth one tenth what they had paid for it because of a currency devaluation. Never got the money back, ever. So we’re careful about putting brick and mortar down there, we’re careful about buying things but we’ll flood the country with sales people, we’ll put IT people there and engineering people because we want to sell into that market place. Country most people don’t think of, Turkey. It’s probably the one country where Europe and the Middle East and Russia and the stands intersect. So they’re not quite European with all those restrictive labor laws. They’re not quite Middle East and it’s a great place to do business and a lot of companies haven’t discovered it yet. So those are areas we focus on. What does that mean for HR? Well, how are you going to get started in there? How do you know what you’re doing? You’re going to send in a bunch of experts? That’s what most companies do. Do you know what an expert costs? Should it take someone from the US and send them to the Middle East or take someone for me India and bring them to the US, doesn’t matter which way you are going. You know what the cost of that is? On average it’s 3.5 times the person’s salary. So if your strategy is just, we’re just going to do experts, we’re going to send people on international assignments, you’ll be paying 3.5 times for every person that you do. So you can see why people want to hire locals. Pay onetime not 3.5 times. When it comes to experts because we do bench marking on expert benefits, we know that if you equalize it on how many employees do you have, and how many experts do you have, that our competitors use three times the experts we do. So we figured something out. When I sit in China and we do a business review and I look around the table, every face but one is Chinese. When I go to India and I look around the table, we have 40 sales and business leaders in there. Every face but maybe one is someone from India. So we found away through HR to be able to get the local talent and groom them the way we want to. I’m not going to share everything that we do but a couple example is, we use analytics to figure things out. We use data not people’s feelings, and emotion, and experience. So for example, when we would hire people out of Harvard, MIT, Yale or out of McKinsey largely to come into our business development group to be business strategists. So you’re hiring this really bright people. We started to notice that over an eight year period they would either come in to this corporate group and kind of do work in there and then go into one of the businesses. When they went in one of the businesses, they’d either get fired, or quit in disgust, or they’d be a superstar and there was nobody in between. We noticed this pattern. It was about 50-50. So what do you do with that? You can have arguments and discussions about why that is, but instead we actually use six sigma tools and statistics to take a look at it and break it down. Well here’s 50 things we can think of that could influence why someone’s successful or not on a job. Let’s run the statistical analysis on all these people and see if we can find any correlations any common threads. So out of those 50 variables, no correlation on 49 of them or a very weak one. Looking at things like who was their boss? What sorts of ratings so they got before coming there? Things in their background and they had very little correlation. But there was one item that was a perfect correlation on. Had they ever had a blue collar job. Those who had were wildly successful at our company. Those who hadn’t, they grew up in a wealthy family in Boston, went to Ivy League schools. Maybe they had a job that their uncle gave them. Running around with the sales people or something. Those are the people that were failing. They were coming from the same places, the same kind of backgrounds. The people who’d had military experience, where someone’s yelling at you give me a 100 more, get up at four in the morning, do this, do that. You’re nothing, that sort of thing, sorry if anybody is in the military, but that kind of an experience, working blue collar, assembly line, digging a ditch, work in construction, being a waitress. Anything like that they had done, they were successful. If that was missing from the background, they always failed. Well, why is that. Well, we are technology in a manufacturing company, we are a real practical company. We don’t care who you are, what your background is. We care what you can get done. So when those guys would get out in the business that were had had something in their background like that, grew up on a farm or whatever, and they were told we need a business strategy for the set of products and how we’re going to take market share from a competitor we need your brain. Oh and by the way, we need you to actually come out and do some sales calls with us, and we need you to dig in and figure out what this problem is here as well. Some real hands-on stuff. Oh, I don’t do that. Hey, I didn’t go to 10 years of school and graduate from Harvard, top my class to do that stuff, and everybody in the business right away is like, thanks but we don’t need your help. They want to tell you where to dig the ditches but they’re not going to get in and get a shovel and help. That’s why they were imploding. While the people that had those other experiences, they’re like, yeah the jobs mostly strategic but I got no problem getting a shovel and getting down in here and helping you dig the first ditch and showing you how it’s done. The way I look at it is, I get paid a lot of money. But if my boss came down and said, hey the budget;s tight and we’ve cut out the janitorial staff. So at the end of the day can you carry your garbage can out night. There’s some people that would go. I’m not carrying my, I’m not the garbage man, I have 20 years as an executive but not at our company. You just go, yeah sure no problem. But we only came across that discovery by looking at it statistically. We have something else we just came across this year in China. Most people have horrendously high turnover in China, 30, 40 50 percent. We experienced that up until a couple years ago. Our turnover now is more in the 10 to 12 percent range. Ten thousand employees, we’ve discovered something that other people haven’t. We did it the same way that I just described, where we used statistical process and we analyzed the people who laughed and the people who stayed, and their backgrounds, and at what point in their career they were deciding to leave, and at what point in their career with us we’re deciding to leave. We found something amazing. We found a certain break point, where if we could get them to that point we didn’t lose anybody. We were losing everybody in a two-year period, 80 percent of all of our turnover. So now that we knew that, we knew something about how to treat people once we got them to a certain number of years, and we knew when to double down on our retention programs, on career discussions with them, on enhanced succession planning and that’s made all the difference. Because we found out statistically when those critical years were. Our competitors are still experiencing 30-35 percent turnover. So that’s just an example of some of the things we focus on when it comes to high-growth regions. How do you get the talent there, how do you keep the talent there, how do you grow your business there? At this point I’ll open it up to whatever questions you have or whatever else you’d like to hear about.>>What is the meaning of [inaudible]>>All of these does, because it’s like exciting. I started out by, okay do I do finance or HR. I was good at finance but liked the people part, so I went that direction. Then I spent a lot of time learning the depth of everything. How do you design a compensation system, what are the best practices and staffing, how do you do labor negotiations, what’s good and what’s bad. I spent a lot of time being enthused about that, and then you reach a point in your career where that’ll get you so far, but you’ll never be in senior management or if you are you won’t last very long. If you don’t understand what’s going on in the business. Where do you make money, where do you lose money, what do customers say about us. Most employees don’t know what their own customers say about them because management doesn’t share it with them, or they don’t go on customer visits. So I started to get more and more interested in the business and what is it we make, how does it work, do you make all your money upfront, or is it more of a razor razor-blade, where you sell the initial product below cost like printers for example, and make all the money on the ink. Isn’t that outrageous? But we have business models like that too. But just understanding how all that stuff works, and then getting global exposure. The first time I left the United States and went somewhere. I’ve been to 86 countries now, I know because I had to list them out for this little Clarence thing but, 86 countries, I’ve seen all the wonders of the world except for one. All that from what I’ve met as close as we are with leaders of countries. Some of them elected, some of them dictators. CEOs of just about every major company on the planet. I mean that’s the stuff that’s exciting, because I’m a kid from North Logan Utah, I never thought I was going to leave the state. So that’s just exciting, to be able to do stuff like that. You can tell I love Honeywell because of the diversity of what we do. That’s great. If you go into a single industry business and you’re going to go up and down with that industry too regardless of what’s going on in the economy. If you go into banking, I remember everybody especially at certain schools in the state of Utah were running to the Bank of America. How that workout? A lot of people ran to Hewlett-Packard, how’s that worked out? I mean it’s just as tougher, when you’re in single industry and after a while you can learn it and okay I got it. Where I’m always learning something about products we have, our different business models, or the way things operate around the globe too. If you gave me a country that I haven’t been to, and you said ”tell me about that country.” If I could ask three or four questions of local area, I can probably tell you about 80 percent of that country. How things work there, and how can I do that? It’s because I know the meaning of life no. It’s just because I’ve been in so many countries and had chances to how things work, ask people questions, and learn about culture, what impact does religion have in those countries, how does the government work. That I know enough about the neighbors surrounding that country. I’m pretty good at guessing what would fly there and what wouldn’t. So stuff like that to me is exciting, because it’s just this exposure to the people of the world that I wouldn’t have ever had otherwise. So that’s what gets me going. Yes.>>I am just talking about, how diversified Honeywell is. Then you mentioned like auto industry and air lines and how risky that can be. I’m wondering does Honeywell have a rule [inaudible] I want to stop investing and to pull out of something.>>No we just wing it. Just to keep it exciting. No we actually do. It’s actually something we’ve trade marked this last year. We have a process. I can only share so much of it but, it’s basically I guess I could say the name since it’s trademarked, it’s called the demise curve analysis. In general it’s a way to look at businesses and the industries there in, and the performance of that business over time, and what the future looks like and how competitors are doing and then make a decision about, is this something we should sell now while it’s still worth something, because we don’t believe we can make it better or we think it’s going to go like this. Or is this something that we’re just not doing a good job executing in it, and we had a wrong strategy and we need to invest money turning this thing around. Or is it something we harvest, which means don’t put any money into it. Don’t back fill any jobs, no matter who leaves and just keep making good money off it until it disappears, because there’s not really a sale value there. Most companies aren’t very good at what I just said even though it’s like well duh. Most companies aren’t good at that. What they all do, is they try to turn every business around that’s struggling. Or they try to sell anything that isn’t going very well. We’ve picked up some awesome deals and you’re filming me, so I am not going to tell you which ones specifically, but we’ve picked up some. Some of the companies I mentioned to you earlier that we acquired, were sold to us because they were struggling with them. They didn’t think it was a good business, and they thought they got a great price when they sold it to us, and some of their CEOs call ours on a regular basis and say ”you cheated me,” because we’ve done so well with it. We have a very — just like the other things I’ve talked about, most of what we do at Honeywell it’s very data-oriented and analytical and not that we try take the emotion out of stuff of people getting emotionally attached to things, and that way you make the right decisions of where should you invest? Where should you not invest? Where and when should you sell something? So we have some businesses that we know we’re going to sell, no one else knows we’re going to sell them, but we’re busy informally getting some suitors and to doing what we need do to turn those businesses around to make them more profitable so it’s worth to us to sell them. So yeah and most companies weighing it but we have a process. Yes.>>I was just wondering with you analyzing so many different countries. The BRICS seem to not be able to get it as well at this time as we thought or just even a year or two ago. What I was wondering is China is the superstar economy right now, its growth is exponential, and it seems to be unstoppable. But at the same time, there’s a lot of uncertainty in that country. You have a lot of situations that are for example, like with them only having one child per family and things like that that are going to come to fruition here really quick. You have the Bo Xilai case which poses the question as to how much corruption is in the country and what is the population? As a whole organ, I would want to do about that and when are they going to start reacting towards that right now. It seems to be that they haven’t had too many awful growing pains, but when are those going to really start to show? So is there any worries for their future that [inaudible]?>>There certainly are some of the things that you’ve listed. I’ll say a couple things though from, I’ve probably been there 45 times now and I would say I wouldn’t bet against the Chinese being able to sort things out, I wouldn’t bet against them. They’ve proved incredibly successful at everything they’ve undertaken, and they are so hungry and driven, and they’re out working and out educating our folks in a big way. So I wouldn’t bet against them. But some of the things they do worry about, they’ve got a whole bunch of people and people come in from they call it their western part. But actually hardly anybody lives in most of China, most of it is uninhabitable. What they call the West, would look to you like the central East. But they’ve got that’s where all years really poor people still are and they come into the cities to work, they come in as migrants, and they have different ethnic groups. There are people in China that look middle eastern and they’ve always, their families have been there a long time because of the Turks and others that came up pushed up that way. So they have different ethnicities that have clashes with each other that you start to see more and more now in the news media. So they’ve got their own race problems that are pretty significant. They’ve got their own rich and poor problems. They have bunch of millionaires running around. There are entrepreneurs that have really hit it big and then they have a bunch of people going where’s ours. Whatever issues we have here in the US along those lines, there’s a magnified a 100 fold just because of the volume of people they have. So they’re always worried about unrest. That’s why they do take a lot of measures to try to control people from breaking out and they struggle with how much do we control, what they do on the Internet, and how they communicate versus having a revolt on our hands. But yet if we just open it all up wide, we’re going to have in their view all the ills of the West will come in. By the way, most people in other countries think America is one of the most dangerous countries on the planet. Do you know why that is?>>Yes.>>That has to do with guns but to do something else, movies. American movies are still king and everybody watches American movies everywhere even if they don’t speak English. One of the most American movies about car chases, guns, mafia, stuff like that. By the way, that’s their impression of America. They think it’s an incredibly dangerous place. I get asked all the time if I worry about drive-by shootings constantly no matter where I’m at. So they worry about their social unrest. That’s why how they’ve approached unions is a little different. It’s a requirement that everyone have a union. The Walmart got in trouble for being resistant there. Now, there are things you can do legitimately to get at the back of the line instead of the front of the line, but the communist party officials are rewarded based on how many goals they accomplish, and one of their goals is that every company has a union. Guess who the head of the unions are and where we have them in our Chinese locations. Guess who the labor leader is?>>Head of HR.>>We get to the point the labor leader there. So the HR person runs the union, which is great. Chinese government did that on purpose because they think people need a voice, they need someone to talk to, but they don’t want the contentious labor unions that you get in Western Europe or in the United States. So that’s their way of trying to figure out, okay, here’s how we’re going to balance East with West and how we’re going to handle that. So they do, they worry a lot about that, issues with migrants, the rich and the poor, they get pressure on human rights and they don’t like people telling them what to do and not to do. They’re dealing with a lot of stuff but I wouldn’t bet against them, I really wouldn’t. When they decide they’re going to do something, they’ve proved pretty adept at being able to do it. The BRIC, it’s like what I was talking about, but you have also the four places and then indeed, we’ve bet heavily on India and China, not so much on Russia and Brazil for some of the reasons that I had articulated. Even though we’re trying to sell everything we can and all four of them, we’re flooding them with sales folks. But they’re in different situations and India, by the way, just a general observation, every country that has a corruption problem is what you would consider a third and second world country. Think about it a minute. There are no exceptions. It’s not just about which are rich countries and which are poor countries, and who has what businesses, it’s driven by whether they’ve got a handle on their corruption. Now every country has some level of corruption and it’s still, but there’s a wide-scale there and if you think about it, every country with a corruption problem has had trouble getting into the first-world tear. There won’t be exceptions to that and they know it, and we talked to them a lot about that as well. Until a country fixes there corruption problem, they won’t be able to get on top, that’s part of the issue in Brazil. It’s part of the issue in India actually. But the other thing that’s interesting I’ve noticed is if you go back to the years of colonialization, everywhere the British went, they seem to have done pretty well since then. Everywhere the French, or the Spanish, or the Dutch colonized, not so much. Is that interesting? What’s the difference? What did the British have that the other three didn’t?>>The law system.>>Their law system, their legal system. That’s what they brought in that the others didn’t. All right. Wow. India wouldn’t be where it was if they hadn’t had the British in there. So whatever you want to say about it, how about the US, we did okay too. By the way, those of you who don’t believe my globalization speech, who was the big industrial giant a 120 years ago? Who was the biggest economy in the world?>>Britain.>>Britain? What happened? They’re still a big economy, but what are they like number eight, or nine, or something like that. What happened? Well think about it this way, how many British companies put their manufacturing operations in the United States? Can you name one? Can anybody name one? Hundred years ago, here’s this upstart and a bunch of Americans that have been on their own for 100 years stealing all of our property. We’re not going to put anything over there. We’ll try to tax different groups, we’ll try to export stuff to everybody, but we’re not going to move our work there, put our people out of work and move our work there, and they didn’t do it. What happened? So is there a lesson in there for us when we were looking at things like this? Yes.>>Yeah. Looking at the life-cycle of various countries, China, US, to Europe, and you see China trying to make little changes and their lenience to try to avoid some of the pitfalls they fell into and here in the US try to avoid the pitfall of where Europe is gone. We have states typically in Midwest, Wisconsin, Indiana, Ohio, Michigan, passing right to work. Recently, the Governor of Florida saying stuff about trying to court Honeywell. So I’m interested in a Honeywell’s perception and take on the states passing right to works as far as acquisitions organic growth, and then whether you think that will be able to lead those states in the country into a guess more capitalism and it avoids on the pitfalls that you’ve seen.>>Yeah. Well Honeywell by the way, is that we have we do have unions. We’re under 10 percent of our workforce though, it’s a smaller portion. We haven’t lost a union campaign for over 20 years. We fight about three of them a year. Campaign is where the majority of employees have signed up to have a union already. They’ve signed the cards, and we find out about it and we get a month or two to go in and talk them out of it. We’ve always been able to talk them out of it, because we’d rather deal directly with our employees and not with some third party who doesn’t have your best interests at heart. So we were as active as certain other companies at trying to stay non-union. We just think it gives us more flexibility. When we decide where we’re going to put product lines or what we’re going to acquire, what we’re going to buy, if you’re a customer, do you want us to put it somewhere where you’re going to get good quality products at a reasonable price and you can count on getting the product when you need it at that price? Or would you like us to put it somewhere that you’re really fond of or sometimes we might not be able to get it to you and we’re going to have to keep raising the price every year because we’re having workforce disruption? It’s a business issue, it’s not a GI like a union or GI don’t, it’s do you have a reliable workforce, and can you make affordable products too? So your specific question though you got me off on the union thing.>>So I mean unions obviously a big part of it but looking at those states that have tried to get more right to work you see that.>>Maybe it does make a difference but it doesn’t. I mean I don’t know, if we put stuff into Indiana, are we going to sell a lot of cockpits and chemicals and things like that? Probably not. Certainly, we’d rather have laws that are more favorable to us. We do tend not put stuff in countries that have oppressive laws. I think it’s fair to say, and you mentioned Western Europe, but you’re crazy if you want to put a factory in France, especially if you have ever tried to do anything there. Quick example, if you have a factory there that loses, and I’m going to exaggerate this, but you lose 100 percent of your money every year in this factory. So you want to reduce the work force or you want to close it down. If you’ve put it in the same legal entity as a factory where you make money, even if it’s just a little bit of money, you’re not going to be able to close it down. I didn’t even say you can just pay money, you can’t. You can’t close it down no matter how much money you’re losing because the government view is it’s management’s fault. You have bad management, you haven’t given them world-class equipment, you’re not giving them the best customers to work with. It’s nothing about gee, maybe the factory at a change, and get more effective, and people have to work a little harder, and I don’t know, maybe we could work more than 36 hours a week. If you work people more than that, you pay fines to the government, not just over time. So she crazy to put a factory into there and most companies try to get out. Well, there are other places that are far more business friendly. I’m not talking about coming in and doing child labor or underpaying people. If you do stuff like that, you’re going to be found out anyway and people won’t work for you. They’ll go work for somebody else who’s paying more money. So we pay good wages. We lift up the economies that we’re in, and the people that are in it and that work for us. But we’re thoughtful about where we put things. It’s not just about the cost, although that’s a factor unless you want to be out of business in five or 10 years, you got to beat your competitor on price, and if they’re there, you better be there. But it’s other things. Can you count on the workforce to deliver? Are they out on strike every other day? Anybody with a business in Italy this last year, you’ve had a strike every week and it has nothing to do with your company. They’re protesting government austerity measures. “Oh, sorry. We’re not working for four hours. Shutdown the factory. We’re going to go protest government austerity.” Stuff like that happens. You want to add a bunch of stuff in there? Probably not. Not if it was your money. So we do take things like that into consideration.>>You’re optimistic about the US with the way the direction?>>The US is still the world’s largest economy and it’s not going to disappear overnight. Even if the Chinese overtake us, we’re still going to be the world’s second largest economy. It’s going to be a big deal. The Chinese want to sell stuff here. Everybody wants to sell stuff to the US. We’re one of the few countries where you still have a net desire to migrate in. When you ask people, you want to come in or out and you look at the actual flow, not too many people are leaving the US, maybe an actor that gets all angry and moves to France or something. But other than that, everybody’s trying to get in not out. So there are always going to be a lot of sales here and significant work here. The other thing to think about in globalization, it’s not fun to close US factory. It’s not fun to tell people they don’t have a job anymore, especially if they’ve worked hard, it’s not fun. If you don’t do it, you will be out of business and none of the rest of your people will have jobs. So you got to do it. But think about this a minute. Think of all the businesses that have left America. Remember when we were at the Typic textile manufacturer? Now there’s hardly anybody left who does textiles. What about the big horse and buggy market? Look at all the thousands of skilled people in that. What happened? Where did they go? Oh, the jobs left and they were unemployed, and everybody’s been unemployed ever since. It’s not true. It’s simply not true. Are there more Americans working today than they were 100 years ago? Yes, both in total numbers and in percentage. More Americans working, do they make more money than they did even on a currency adjusted basis? Yeah. Do we have more of middle-class now than we did 100 years ago? Absolutely. How can that be when all these jobs left America? Manufacturing has moved out. How can that be? You know why? Because it’s hard to explain somebody hard to see. But what happens is Americans are creative, inventive, good entrepreneurs, we figure out how to make things work. We’ve wound up with better jobs as a result. Sure, you can worry about a lot of the service and retail, and lower end jobs, those are going to increase health care. But yet somehow, America has continue to be better off than they were as time moves on. What if we had taken the approach of no jobs leave America and we protect the horse and buggy whip industry and that people making the carriages? Don’t let them put those automobiles out there, put the price so high in an auto that no one can buy it, and we’ll keep it out to protect all these jobs. Where would America be right now if we take in that approach?>>[inaudible].>>So you got to step back, and look at things, and get out of the emotion of stuff and realize it’s a global planet, it’s not going to go away. There’s no way to reverse that trend to somehow just pull in and think you’re going be okay, you won’t be. Most companies right now, their biggest competitor in the next five or 10 years, they don’t even know their name right now. There’s a good chance it’s going to be a Chinese company because there’s one thing that you don’t have right now even with China’s growth, a global Chinese based company. There’s a few struggling now trying to figure it out. But they’re struggling with that, even the ones that are dominating in China, but they’re going to figure it out. So a lot of companies now that are the big dog and they think their competitors are some European or another US company, in five years, they’re going to find themselves with a problem with somebody with better products and lower prices coming out of somewhere like there.>>Offer new things by going back to the oppositions, how often do you keep the original name because personal protective equipment, that’s an established like this brand, or do you find this brand [inaudible] you’re switching it or I’m I keeping it?>>It’s a good question. For those of you who couldn’t hear is, when we buy some company and they have a brand, how do we decide whether to keep the brand, or lose the brand, or change the brand? Again, a lot of companies make a mistake here. They just do it all one way or the other. They either just make it all theirs, put the new name on, or they always keep whatever the brand is that they’ve bought. That’s a mistake. You have to look at it on an individual basis, and that’s what we do. We actually go out, I guess you’d call it market research, but we go out and we ask questions like, would you buy a boot, compare the quality of these boots, how do you see them between certain brands? We’ll name a couple other competitor brands, and some of our brands, and then a boot by Honeywell, and then we see how that fares. It’s very interesting because sometimes people attribute quality and value to the Honeywell product and even though it doesn’t exist and we’ve listed it, they’ll rank it as number one or two. When they’re asked why, they’ll say, “Oh, we’re assuming it’s going to be a really quality product.” Other times they’re like, “Honeywell in this? We wouldn’t but, okay.” So that tells us what we need to do, whether we keep the brand or not. If we keep the brand, we’ll usually say something like Benedict’s by Honeywell. That sort of thing. So we still get the Honeywell in there. The gas and oil processing, most people don’t know it’s us, don’t know it’s Honeywell because it goes under another, we kept a brand name there, it’s UOP by Honeywell. So we make that as an individual decision and we try to be smart about it. Everybody claims there’s brand value but sometimes there’s not. For example the shoe business, some of them kept the same name because in Australia for example, it’s all over brand and its most popular brand of boot in the entire country. So we kept it all over by Honeywell. In other locations, we’ve changed the name to ours because we realized the brand really didn’t test that well. Yes.>>You talked about, as a business strategy for Honeywell, minimizing emotion in business decisions but HR tends to be people-people and emotions is mainly tied in with that. So how do you balance the strategy of minimizing emotion? How do you reconcile that issue with HR?>>Well, at our company, they wouldn’t say our HR people-people. I see some of the people that know laughing. But we’re more if it was football, we’re three yards in the cloud of dust, it’s a full contact sport at Honeywell. HR is a full contact sport. So a lot of people say, “Oh I went in HR because I love people and I want to work with people.” Well, I got news for you. Unless you’re going to spend your entire career in staffing and even then you get beat up for cycle times and not finding people fast enough and that sort of thing, that’s where you get to be the good news person. Here’s a job, here’s more money, but other than that, almost everything in HR is not a positive. It’s you got to top grade people, we got some performance issues and behavioral issues, we’ve got to change the culture, that means getting people to do something different, something they don’t want to do, and they’re going to refuse to do either aggressively or passively, which means you’re going to have to have tough conversations with people and arguments and somebody might get fired, or have career impact. You’re going to have to move factories, you’re going to have to do reductions in force, you’re going to have to deal with people that think they should be paid a whole lot more money than they’re paid, you have to deal with people who claim discrimination of which 90 percent of them there’s no merit to it at all, it’s just somebody not performing well and the bosses are on them, and so now they’re going to claim some issue and you are going to be in the middle of that. Then when you don’t agree with them completely, they’re going to take you to court and talk about what a horrible person you are, and how you mishandled it. So you go into it thinking, I’m going to be a people person and I’m really good counseling my friends. But companies don’t hire people to do that, they don’t. They hire you to help grow the top and bottom line of the business. There’s no law that says you have to have an HR department at all. That’s why you’ll see ineffective HR groups get outsourced. We’ll just hire this company to provide these HR services, or we’re going to bring over the finance guy to run it, or we’re going to bring up business leader over to run it. Why did they do that? Because they’re so dissatisfied with their current HR function. They’re not adding value, they are just cost and overhead. So you want to be able to add value to what’s happening. Yes?>>I want the same line, where do you see HR going? In the next 15-20 years, what do you think HR professionals are going to have to know and just where do you see HR going?>>Okay. The different HR is there’s a wide continuum here. When I start out at the bottom end of the continuum, and some of you are probably there now, or that’s where you maybe, or that’s where you may want to be, and that’s fine. But if you’re working at a small company, in baseball terms, you’d be single a ball. Then you’re going to struggle to come up with best practices. People are going to use consultants a lot if you can get the money. You’re not going to have a lot of systems, and process, and know-how, and you’ll either build a good relationship or you won’t with people. There’s really a struggle with a lack of respect at the company that you’re at. They view you as a back-office overhead function. Just get me my check on time and don’t mess up my paperwork. You’re not going to become the vice president of a Fortune 100 company. From there, that would be like going from single a to the big leagues and playing shortstop for the Yankees, that’s not going to happen. Okay. So if you’re somewhere in the middle, then you’re in what I call the Sherm group. I’m not dissing Sherm here. I was in Sherm, and I got my SPA chart. It’s all good go. It’s all good, but they still spend a lot of their time talking about, ”We need to be a strategic player at the table. We need to be valued”. Seriously, I have never heard anybody at Honeywell ever say that. Because we’ve been at the table for 25 years. We’re the number one choice of headhunters, ask the big ones, Russell Reynolds, Heidrick & Struggles, Korn Ferry, ask him who the top three companies are to get HR people from? I already know because the heads of those companies have told me, we’re in the top three for all of them and our position’s even moved up over the last few years. So you got to work for a Fortune 100 company. You played big league ball, everybody’s interested in you, the mid-sized, the little ones, everybody will hire you because you have that brand, even if it wasn’t that great of a company. You have that brand, you’ve played in the big leagues. But you’re not going to go from the bottom or the middle and work your way up into it unless you do it early career. That’s just how it works, that some companies they don’t value HR, they never will, the CEO doesn’t, he might say things like, ”People are our greatest assets”, which usually is a tip off that they really don’t value it that much by the way. That range is all the way up to you help us grow the top and bottom line. I made early on acquisitions. You know what happens at most companies? You know what happened at the other companies I worked at? I found out about an acquisition after they bought it, just like everybody else. Then they told us we needed to go in and sort some things out and integrate it. Well, now I know about them way ahead of time and I get a vote. I’ve scuttled certain acquisitions because of some of the things that we found in there. So all HR is not equal, it’s not. There are some places where they’re going to be 50 years from now, still struggling to have a voice at the table, and then there are other places where you do have a voice at the table and now you’re just expected to get in there and perform. Doesn’t mean everything’s perfect or it’s fun every day or that sort of thing. But the skills to be in what I’d call that mid segment moving up in the big segment, you got to be able to do numbers or you won’t go far in the future HR. The reason why? Is it would be like saying, ”We want you to go over and run a big operation in Russia, but don’t bother to learn a lick of how to speak Russian. Don’t even try, make them talk to you in English, no matter who they are”. How’s that going to go over? That’s the same thing you do if you’re a touchy-feely HR person and you go in to sell something to the general manager, you’re doing the same thing. I refuse to learn your language. I have no interest in your language. I only have my expertise, and you should just do it because I tell you it’s a good thing to do. It is not going to work if you can’t justify what you’re doing based on the numbers. I know some people don’t like numbers, but you got to get interested. Some people don’t like the products our company makes. Its tennis shoes or whatever, ”How boring?” Well, maybe you should sit on the front row and tour the factory, and watch them build the things and ask questions, and it gets interesting. You can make every product or service interesting if you learn more about it. You can sit in a class and I’m not picking on the people at the back. You can sit in a class at the back like I did as a freshman and think, ”This is the most incredibly boring thing. This professor needs to retire. This is horrible. I’m bored out of my mind”. You can be like that. That’s exactly the experience you’re going to have. Or you can do like I did after I did a little growing up and I sat up here, and I asked questions, no matter how boring the topic was, and everything became a little more exciting. Everything became a little more interesting. That’s what you’ve got to do in HR. You’ve got to be interested in how your company makes money. You’ve got to be able to understand that. Know where they make money, know where they lose money. You’ve got to understand enough, but take the financial course for non-financial people. You’ve got to understand the balance sheet, the income statement. When you do something, where does that expense go? What does it impact? Where does it go? Are you got to understand? Are you going to get outsourced? Or you’re going to get limited in your career? Because they’ll feel like you’re not adding value, you’re just being touchy-feely. When you tell them you want to take people to go through some really important training that will build morale. The question might be, ”Okay, how much is that going to cost me to take the people out for a day and have a month fiddling with this training? By the way, how does that training help us grow our top and bottom line? Show me. Because no, I’m not going to do the training”. ”Oh, you don’t understand. It would be good for morale, everyone will be happier. But then they’re not going to do it”. If they do it, you’re at a place that’s never going to be on top of their game, you’re not. They’re never going to be on top of their game. They’re going to be getting beaten by the companies who are looking at it differently. So you got to be interested in products and services, understand how they make money, understand your competitors, be financially oriented, be able to use numbers to sell everything that you do to talk about, how do you know the program was successful? How many hits did you have on the website? How does that compare with hits on other websites? How does that compare with a year ago? I mean, use numbers and use facts to tell what you’re doing, and then you have to be global. You can get away with it if you’re in a few industries like if you’re going to work for a hospital system or you just have to worry about a domestic market, or there’s few things like that are. But most things are global now. I’m not even sure those things are always going to just stay domestic. So the more you can learn about what’s happening in the world, how other cultures work, how do you get something done in other cultures, the better off you’ll be. You need to be results-oriented, because otherwise, what happens is you just get trapped in a low paying job or you get outsourced at some point. You really got to add value. Yes.>>From a HR perspective, what do you see the biggest challenges facing Honeywell right now and what do you see 10 years from now?>>Maybe I can talk about things I talked about, which is how do we stay on top of our game as a business? I mean, I told you we’re number one out of our 15 pairs on total shareholder returns. So how do we stay on top? They’ve noticed, by the way, they’ve noticed, and they’re not just going to go, ”Oh wow, Honeywell, they’re impressive”. No, they’re going to try to figure out how to beat us at every turn, and they are going to get more aggressive. So what can I do to make sure we continue to win? Well, I run procurement for the company. We buy $21 billion worth of stuff. I got to be aggressive on material cost and on people cost. We use things like e-auctions. Do you even know what those are? See, you don’t. It’s a huge competitive advantage because most of our competitors aren’t using it either. How it works? We’ve been doing this for a couple years and by the way, we were the only HR group that I know that’s doing this.>>How it works, is no matter how good your relationship was with someone or no matter how good of a negotiator they are, I guarantee, I will beat you in any auction. You can take the best negotiator you have, and let him talk to the supplier, and I guarantee, I will get a better price, and the same quality by using any auction. Well, how it works is, it’s a little bit of tapping into human nature, but how it works is we say here’s what we want, so here’s the product or the service, and here’s the performance, the quality we expect. Okay, here’s 10 of you, that want to be our supplier. That’s terrific. We’re going to hold any auction. That means you all log onto your computers, in your little headquarters, and we are going to have a two-hour eAuction. What you can see on your screen, is you can see your bid, and you can see where the top bid is. But you can’t see the other folks. We can see all of them. We see all of them at the starting line with their opening bids, what we’ve been able to negotiate in person. Then you run it for two hours, and you see the most incredible behavior. Some people almost never, does the one who you’ve negotiated lowest, wind up as the lowest bidder? Even though people are short, I’ve known them for 20 years, and there sure they’ve got them to the lowest prize. Some companies will just stick with their price, and find themselves out of the running. Others dramatically drop instantly trying to be in the number one position, they’ll dramatically drop, and others do that dink dink dink dink dink the whole time they just keep coming down on the price, and others try to hold out. But I’ll tell you something happens in those final two minutes, and I think it’s video gaming, I think it’s human nature. I’m not sure what it is, but it’s like they put a lot of effort into this thing, into winning it, and in the last two minutes somebody passes them for the low price, and they don’t know by how far either, it just says you’re not in first. So now, they want to win this thing, and people on average will drop 25 percent beyond what you’ve negotiated them. Quick example, big company that provides HR services for a lot of companies, they dropped their price 80 percent in our eAuction. I met them at a conference, and I said, “Hey, how did you guys enjoy the eAuction experience?” “We hated it. That was miserable.” Why did you drop your price down so much? “Because we wanted Honeywell’s business, the volume. We’re going to make just a little bit now.” I go, but you’re charging my peers 80 percent more? They said, yeah it’s going to be 90 percent now for them, because we’ve still got to preserve our margins. That is literally what happened. So it’s a huge competitive advantage to be able to do this, and it’s just incredible to watch how it happens, and you can set the time wherever you want, and the real kicker, you don’t have to pick the low bidder. So if we decide somebody else is still better quality, we’ve driven down the price, and we’ll pick them. So we’re saving an incredible amount of money, and it helps our margin. By the way, I make in my HR people do it. The first time I did it, they all told me how unique and special HR is, and you can’t really bid our stuff that way. It’s about people, and the quality of the vendors are different, and I made imbedded anyway, and it was the example I just gave you, as a matter of fact 80 percent down. Now, everybody’s a believer. We auction everything. But that’s just an example of how you can make a difference in what your company is doing, and other people haven’t caught onto it. Even if they hear me tell the story, most of them won’t do it because they believe their stuff is too unique or too special to be able to do that way. But anyway, okay.>>One last question.>>How has Honeywell been able to take their HR program into the big leagues from that sure area into where you guys are right now.>>I wish I could say well, I did that. But it was done by predecessors. When I joined the company, that’s one of the reasons I joined them. Is I knew two things, I knew they had a diverse portfolio, and I was coming from a place that didn’t, and I was there for the rapid rise, and the rapid decline kind of a thing, and I didn’t like that too much. So I thought I want to be at a Global Fortune 100 diverse company, and the second reason why is even back 13 years ago, and I had known this for 20 years. That I knew they were the employer of choice for head hunters. How it went was if you can survive three to five years at Honeywell, every company in the world will be interested in hiring you. Not only the brand of HR, but the fact you get multi-industry experience. So they feel like if you did well on these couple industries, you can do well on ours. Well, if you’re a single industry person, and you put in 20 years there, good luck. Try and get a good job in another industry when you have to or when you want to, they won’t trust that you can do it, because they think you only know about this one thing. So now I got excited and forget the question.>>How you guys got to the big leagues.>>Honestly, it gets to that rough and tumble full contact sport. It has a lot to do with what we call our MRR or management resource review. It’s how do you assess your leaders, and how do you do succession planning. How do you plan who’s ready for the next job, and get them ready. So three times a year, we sit down, this happens throughout the whole organization, but at the top level our CEO and myself, he spends a total of three weeks a year doing nothing, but talking about our talent. If you met him, he is not a warm and fuzzy guy. He would never say people are our greatest talents, and it’s all about our employees. He would never say that. He’s from New England for Pete’s sake, he’s not going to give you a hug. But I’ve never seen anybody that knows how to develop talent better than he does. Because he really cares about it, and both of us personally sit down with all the leadership one and two layers down, and review up to three layers down every single person that works for him. What they do well what they do not do well. Have you told them they don’t do that well? Show me where you’ve told them in the review that’s what they don’t do well. What jobs are they ready for? How are you going to backfill every job on your team, if someone gets hit by a truck? Is that real? Are they ready now or they’re one to two years out? If there are one or two years out, what do you need to do to get them ready now? We’ll talk about this again in four months to see if you’ve done what you said you would to get them ready now. That’s what gave HR credibility, because you know what? That sounds bad, I got to think of a nice way to say it. No matter how powerful you are, Honeywell or what your job is, you got to go through HR at Honeywell, because it doesn’t work very well if you’re delivering great results but you elbow everybody in the mouth to do it including the HR person you don’t value. Guess what happens three times a year when that HR person sits down with the big shots and talks about how you’re doing? Guess what they say about you? You elbow people in the mouth. Guess what, you’re going to get fixed or you are going to leave. Now, all of a sudden they make the connection. HR matters here, my career, it has a huge impact. As a matter of fact, I’m not going to get the next job, no matter how much my boss loves me, if the HR person doesn’t also agree. So it actually gives us significant power, and a seat at the table. Now, we have to be good, we have to earn it, we have to be right, in our assessment on people doesn’t work very good if you’re wrong a few times in a row. So we got to be good, but the seat’s already there because of the belief, and how important the talent is. Does it matter? I know we’re a little over but maybe this is the thing to end on. This has been repeated over and over again but about two and a half years ago, the CEO of our Aerospace Group, which contributes the most to our bottom line, and the CFO of that group resigned at the same time, right when analysts were questioning whether we had weakness in our aerospace group. When that happens at most companies, what happens to their stock price, sinks like a rock because they think the CEO and the CFO know something’s wrong. They know there’s something about to hit, and you get killed, okay? I got a call from both of them on the same day, saying they were leaving, the one didn’t know the other one was going anywhere. I had 24 hours to try to talk him out of it, before their new companies were going to announce them in 48 hours. I tried to talk him out of it with side-by-side spreadsheets, why it is a better deal to stay with us, blah blah blah. Couldn’t get either of them to change their mind. So in the next 24 hours we backfilled them, and announced it. We backfilled the people that we used to backfill those people, and we backfilled the third layer down in less than 24 hours. Only one person had to take a quick helicopter flight because everything else had been wired. We had no idea either guy was leaving, but because of this process we do, we go through the drill three times a year. What if they leave unexpectedly? Who do you put in? You should put in this person. I don’t know him that well. Well, we need to find a way now for you to get to know him, so that you would agree to put him in the event that happens. Most companies don’t do that. So that stuff is what gives HR that credibility. Where we’re at, it really is. It really does start with the top down. If you work at a place where the CEO doesn’t look at talent that way, they just say really nice things, and give you the beanbag chairs, and free Eminem’s and stuff like that, but they’re not looking at talent that way, you’re not going to be valued as a function. So I think about where you’re going to work, and you can’t listen to the recruiter, they’re just going to tell you how awesome their company is. You got to look hard at the company. What are their financials look like? What are their markets look like, do you want to do single industry? How sure are you it’s going to be great? I spent a day at Google. Everybody thinks they want to work at Google. Anybody know where 99.99 percent of the revenue comes from?>>Advertising.>>Advertising. Nothing would ever go wrong with advertising, would it? No company would ever say gee maybe we’re not getting a bang for the buck out of the money we’re spending on the advertising or somebody leap frogs, your technology, and your cast where you start switching or advertising to somebody else. I saw as great as they are doing, and as fun as it is, and they’re slippery slides, and people sleeping during the day while we’re all walking past and all this stuff. As fun as it is, they are relying on one thing. It might be great, but that’s why when you look at the Fortune 100 list from 10 years ago, it doesn’t look the same. From 50 years ago, what, half the companies aren’t even around anymore? So you just want to be thoughtful about what does this company do? How good are they at doing it? How does the CEO really view things? Do they do all their senior hiring from outside the company? What does it say about your chances for promotion there? For our top 700 executive jobs, four years in a row, we’ve hired internally 86 percent in up. What does that say about people’s chances to get promoted at Honeywell? If you go to a company with really low turnover, and they brag about it, get ready to not be promoted. You won’t be. Nothing ever comes open. You’re going to work with poor performers, and nobody will do anything about. No, I’m not saying go to a company with really high turnover, they got other problems. But what you really think about those things as you try to figure out what do you want to be a part of? So I know we’re over, I’ll go ahead and end on that.

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