Category Archives: change management

A Memorable Farewell

If you’ve been with a company long enough, there’s a pretty good chance you’ve lived through a CEO transition.

In 2011, roughly 1,178 CEOs left their posts, according to outplacement consultancy Challenger, Gray & Christmas, which tracks this sort of thing. In 2010, 1,234 CEOs said farewell.

No doubt some of the departures were due to the CEO’s inability to effectively lead. For others, it simply may have been time to truly retire. But whatever the reasons, some companies clearly do a better job of handling this kind of event than others.

Last June, Amsterdam-headquartered AkzoNobel—which Glidden Paints and a host of other coatings and specialty chemical products—announced that Ton Büchner would replace Hans Wijers sometime in 2012. Well, apparently the transition officially took place this week.

For most companies, a simple memo to employees might be enough. But not AkzoNobel. If you have roughly eight minutes to spare, check out this humorous (their word) and humanizing  (my word) farewell video starring some of AN’s employees. I’d put it in the category of a nice way of handling it.

Building the ‘Agile Enterprise’

Delivering the keynote at the 5th annual Bersin IMPACT conference, held once again at the historic and beautifully restored Vinoy Renaissance Resort in St. Petersburg, Fla., Josh Bersin told the packed room that the only way organizations can thrive in an era of unprecedented change is to embrace agility.

“Within 20 years, China will be the world’s No. 1 economy, followed by the U.S. and India,” said Bersin, founder and CEO of Bersin & Associates. “CEOs will be counting on HR’s expertise to help them expand the business in fast-growing countries like India and Brazil–and it just so happens these countries are facing a paradoxical imbalance of skills and demands.”

These nations tend to have large numbers of old and young citizens, but relatively few in the middle, he said. Even in the U.S., 47 percent of the workfore will be younger than 35 by next year, according to the U.S. Census Bureau. Research from Mercer indicates these younger workers are twice as likely to be looking for a new job as older workers, said Bersin. “So engagement is crucial,” he said.

Amid these demographic changes, the very structure of organizations is changing, said Bersin: “Thanks to the web, managers are no longer in charge of companies–customers are.” Dissatisfied customers can use the web to quickly find alternatives and tell others about their dissatisfaction–a company’s reputation can go from stellar to tattered in record time, he said.

When the Economist magazine polled CEOs for their definition of agility, they chose “rapid decision-making, high-performance culture and flexible teams,” said Bersin. But when they were asked which corporate function was contributing the most to organizational agility, HR ranked last out of 14, well behind sales, marketing and even legal.

Moving up from the bottom of the list requires HR to be a key player in helping the organization transform itself to an agile one by “implementing systems and strategies that foster expertise, collaboration and decision-making,” he said, reinventing processes such as performance management so that goals are frequently updated, “ratings” are done away with and social rewards and recognition–in which team members, not managers, decide who will be recognized for their contributions–is standard.

Agile organizations are ones that aren’t afraid to ditch old processes, even if they happened to pioneer those processes, said Bersin, citing Seagate Technology, widely credited with creating the “cascading goals” model. Seagate decided to abandon that model recently because it was “too limiting,” choosing instead to focus on the constant updating of goals, he said.

 

 

Can a Corporatewide ‘Will to Compete’ Be Measured?

I came across this interview on huffingtonpost.com I thought might be worth sharing. John Fox, founder and president of Venture Marketing, a B2B consulting firm, is interviewing Tom Fitzgerald, an expert on corporate transformation and author of the recently published Fire in the Corporate Belly

They’re talking about Fitzgerald’s premise that, after all the studies are done and digested, we still don’t really know why mergers and acquisitions fail. But Fitzgerald thinks he knows. He says it’s found by digging far deeper than any study or survey has, heretofore, been able to — into what he calls the “operating dynamic” of the acquired organization, or, as he also calls it, the “will to compete.”

What is it, exactly? You need to take a closer look, or maybe read his book, to get your arms around it. It looks to me like it extends far beyond an M&A discussion. He calls it “the ground and root cause of all corporate performance,” something that “can be great or small, positive or negative, [driving] success or stagnation or failure.” He says, in some instances, it can be great and, in those companies, “managers perform beyond anything they could be expected to do elsewhere.”

What’s interesting is that Fitzgerald and his crew have found their own way of measuring this “will to compete,” by asking managers and supervisors (it’s not designed for workers), ” in 50 different ways, for their perceptions of the organizational forces that are at work within the company, driving performance,” Fitzgerald talls Fox.

“Once detailed measures are available, the elephant becomes visible in all its parts,” he says. “Once it is visible, it can be changed and harnessed. Improving it by even 20 percent has been shown in large-scale studies to trigger profit improvements of over 40 percent.”

As I said, possibly worth a look. 

 

Data Continues to Disappoint

The news leading into Labor Day weekend hasn’t been terribly uplifting.

This morning the Department of Labor reported that no new jobs were added to the economy in August. (The consensus among economists was an increase of 60,000 jobs.) The unemployment rate, meanwhile, remained stuck at 9.1.

These disappointing numbers follow the release a day earlier of an equally bleak report from the Center for Workforce Development at Rutgers University.

The study’s authors didn’t leave a lot of room for misinterpretation. They titled their report: “Out of Work and Losing Hope: The Misery and Bleak Expectations of American Workers.” Now how’s that for a less-than-cheery title?

Among the findings: Nearly half of unemployed workers have been unemployed for more than two years; only one out of four of the Great Recession’s unemployed found full-time work; and half of new jobs were at lower pay levels.

Of the unemployed and formerly unemployed studied, 45 percent describe their financial condition as flat out “poor.” Further, 60 percent of those out of work for two years or more are pessimistic about finding a new job anytime soon.

If time permits, you might want to check out some of the verbatim comments the survey respondents offered up when they were asked what they think government should be doing and what one thing would be most helpful in getting a new job. (Maybe you’ll want to hold off until after the holiday.)

When we started the year, most expected to see better jobs data heading into this Labor Day. But apparently that was just wishful thinking.  Should I dare say: Let’s hope better days lie on the other side?

Report: Employees Getting More Suicidal

Thoughts of suicide are permeating the workplace, according to Harris, Rothenberg International, a New York-based firm that provides EAP, work/life consulting and other services to employers. Calls to HRI’s EAP counselors from employees contemplating suicide and managers concerned about suicidal employees are up 33 percent compared to the period a year ago, according to the company.

Not surprisingly, the lousy economy’s a big factor. HRI points to a recent report from the Centers for Disease Control and Prevention entitled “Impact of Business Cycles on the U.S. Suicide Rates, 1928-2007,” which notes that suicide rates rise and fall with the economy.  What’s tragic, as HRI points out, is that many people with suicidal thoughts avoid getting help and instead try and “tough it out” on their own.

Suicidal thoughts are often triggered by despair over workplace changes wrought by the economy, says HRI’s director of clinical services, Dr. Randy Martin. Many employees thought (or were led to believe) that changes were temporary, but when they realize that’s not the case, despair can set in, he says. Some employees struggle with grief over the loss of coworkers who were downsized, while others deal with enormous stress and anxiety from generational conflicts with bosses who may be younger than them.

“There has been a significant increase in employee stress and anxiety from 2010 through the year to date, and overwhelmed employees who cannot see some light at the end of the tunnel may feel powerless, hopeless, angry and disenfranchised, which can lead to self-harming thoughts and behaviors,” says Martin. “The economic crisis has become a human crisis.”

 

 

Switching from a Defined-Benefit to Defined-Contribution Plan

Siemens Corp. swapped a future $5 billion pension liability for a $259 million one-time P&L impact when it froze its pension plan and offered employees increased company-matching contributions as well as a new service-based company contribution to the 401(k) plan — the combination of which equaled the company’s contribution under the pension plan.

It didn’t reduce the company’s current-day costs — in fact, it cost more money, said Steven Seltz, vice president of compensation and benefits for US/Americas for Siemens Corp. — but it did eliminate potential liability down the road.

And it was a long road to see the plan from conception to fruition — take two years to conceive and get approvals and another year to communicate and implement the change, Seltz said.

“There was no way we could overcommunicate” the changes, he said, noting that employees received at least six written brochures, notifications or requests for action during the transition. Siemens also offered in-person and web financial-planning seminars and offered financial counseling.

They “anticipated the worst” from workers and were surprised that there was “virtually no criticism whatsoever” from employees, both union and non-union — crediting not just the equitable plan but also the communications effort that was part of the transition.

Key takeaways from the process, said Seltz and Nicholas Vollrath, manager of retirement plans and M&A, were:

* Don’t underestimate the time required to craft an effective design or to get necessary stakeholder approval.

* Don’t underestimate the time needed to define the requirements and adjust recordkeeping systems.

* Consider timing the freeze with other benefit changes or other initiatives.

* Involve a broad team to address various topics (including legal, accounting, finance, etc.)

* Make sure participants know the difference between a pension freeze and a pension termination.

* Consider whether changes impact union workers, if any.

* In communications, make sure to include the rationale for the change and be straightforward about it. Also balance the need to provide advance notice of the change with sufficient details of the change.

* Don’t avoid addressing uncomfortable topics (such as benefit reductions).

* Include non-experts on the communications team so they can help frame the message to workers who are not as knowledgeable about financial issues.

Transforming UHG

Lori Sweere, executive vice president of HR for UnitedHealth Group, opened Bersin & Associates’ IMPACT 2011 conference this morning with a compelling keynote on business transformation.

In late 2007, you may recall, UHG was coming off a well-publicized stock-option scandal that led to the departures of its CEO, COO, CHRO and CFO. At the same time, the company was facing serious integration issues following some recent acquisitions.

“It was apparent that we needed to do something differently,” said Sweere, who was appointed to the top HR post there in May 2007.

To determine what steps needed to be taken, Sweere said she talked to 2,000 managers across the country. “What I found was that the majority of managers had limited faith in human capital,” she said.

In response, Sweere helped to craft a people strategy that focused on four areas: workforce capability, employee engagement, performance culture and human capital effectiveness.

I was particularly interested in hearing what Sweere had to say about how UHG approached the fourth area, human capital effectiveness.

Part of her response pertained to structure and included moving the recruiting function back in house. At the time, 75 percent of all positions were being filled from the outside, not a number Sweere considered acceptable. She also moved talent management and recruiting into a single entity that addressed talent acquisition, talent development and mobility — or what Sweere described as the “entire lifecycle of the employee.”

Further, to elevate the competency level of the company’s HR practitioners, Sweere and her team developed a curriculum and certification for HR generalists, who were required to earn a certification within two years. If they failed to do so, she said, they wouldn’t be able to retain their HR generalist jobs.

The goal, Sweere said, was to get HR generalists to “think strategically everyday … and learn how to effectively use data in a way that influences positive change.” She added that the initiative is now being expanding to centers of expertise, such as recruiting.

Employees, Customers and HR

It’s March, and you know what that means—the start of conference season. (Indeed, next week we’ll be hosting our own event, the second annual Human Resource Executive Forum® in New York. Look for coverage here.)

Later today, the Human Capital Institute wraps up its annual summit in Atlanta. Because of a conflict, I missed last year’s event in Arizona, where the conference has typically taken place. But this year, especially with it being a bit closer to home, I was able to attend.

As usual, the agenda featured some familiar names: Environmental activist Robert Kennedy Jr., Former Secretary of Labor Elaine Chao, author Daniel Pink (who always manages to deliver at the events I’ve heard him at) and author Gary Hamel (who keynoted this morning).

Perhaps a bit less familiar, but hardly unknown, is Vineet Nayar, vice chairman and CEO of HCL Technologies and author of Employees First, Customers Second. I missed Nayar when he spoke at SHRM’s annual conference last year about the key role employees played in HCLT’s turnaround, but was able to catch his story this time around. Glad I did.

I tend to be somewhat wary of CEOs who write books before they retire (“You really have time for that?”), but Nayar is someone who is clearly passionate about the subject of human capital. He tells a compelling and convincing tale about business transformation.

Perhaps not coincidentally, Nayar told those attending that his book doesn’t include any references to HCLT’s HR leadership. (It’s about being a CEO, not an HR leader, he said.) But in this particular talk, Nayar did devote a few minutes sharing his views on the kind of role HR leaders should play in an “employee-first” company.

Responding to a question from the audience, Nayar recalled that it was initially somewhat of a challenge getting HR on board. “They needed to understand that they were my ambassadors in getting managers to understand that they were the ones who needed to motivate employees to [transform the company],” he said. But eventually, he said, they came around.

He also noted that it was necessary for HR to understand that the initiatives needed to come from the company’s business leadership, not from HR.

More often than not, when CEOs address HR groups, you typically hear them toss out words like “instrumental” and “critical” to describe HR’s part. But not here. Instead, Nayar’s assessment of HR’s role, while certainly positive, was refreshingly a bit more tempered—and perhaps more typical of what happens in the real world.

Reforms Stalled by Inadequate HR?

As we wrote on HREOnline™  a few months ago, an ambitious federal hiring-reform initiative wouldn’t be an easy task, requiring both training and buy-in from staff.

When Office of Personnel Management Director John Berry announced the initiative, he said that, “for far too long, our HR systems have been a hindrance. We have great workers in government now in spite of the hiring process, not because of it.”

But it seems as if HR is still a problem — and that has been acknowledged by OPM’s chief human capital officers, according to this story in the Washington Post about a Partnership for Public Service survey.

“The ‘competency of HR workers’ is one of seven ‘major obstacles’ to building a first-class federal workforce,” according to the 68 CHCOs, who “expressed strong doubts that the human resources community, the very people who will be on the frontlines seeking to implement the hiring reform plan, are up to the task.”

The problem seems to be a lack of training and adequate technology, according to the article.

In the Federal Eye blog on the Post site, OPM responded that CHCOs are generally positive and supportive of the reform, and that criticisms of the initiative “have been taken seriously and have been responded to promptly, leading to a more cooperative, productive and collegial environment for members.”

Well, as long as they are all getting along …