Honeywell’s CEO on How He Avoided Layoffs

Reprint: R1306A

When Cote arrived at Honeywell, in 2002, the company had gone through three CEOs in four years. It had repeatedly missed earnings, and it had environmental liabilities that had never been dealt with. Virtually no pipeline of new products existed, because managers had been disinvesting to boost profits. Over the next five years he worked to fix many of those problems, and by the end of 2007 the company’s credibility had been reestablished with investors and its share price had more than doubled. Then the recession hit.

Cote’s view was that any restructuring Honeywell did in response should be what was best for business efficiency and profitability over the long term—not solely a reaction to the recession—and should have no impact on the company’s ability to outperform in recovery. The leadership team settled on furloughs, and this is the story of how they worked.