Category Archives: change management

Productive Thoughts on Uncertain Benefits

A reassuring moment occurred at Tuesday’s CHRO panel discussion on “Benefits in a Time of Uncertainty” during the 15th annual HR Technology® Conference in Chicago.

To a person, every panelist — Artell Smith, CHRO at Aon Hewitt; Brian Johnson, executive vice president of HR at Fidelity Investments; Norbert Englert, CHRO at Mercer; Gail McKee, CHRO at Towers Watson; and Tom Maddison, corporate senior vice president and CHRO at Xerox Corp. — agreed their companies would not be casting their employees off, across the board, into healthcare exchanges under the impending healthcare-reform implementation.

And this despite prevailing research showing between 2 percent and 20 percent of employers are expecting to drop employer-sponsored benefits and release their employees to the exchange system come reform-enforcement time, said Mark Stelzner, principal and founder of Inflexion Advisors, and moderator of the HR Technology® Conference session.

Nevertheless, also to a person, panelists shared new strategies and approaches they’re taking to help their workers embrace the coming healthcare-change monsoon.

“My charge,” said Smith, “is to help employees see what they can take charge of in this uncertainty.”

Or, as Maddison agreed, “Uncertainty is an enabler of change.”

All discussed their slow-but-proven successes in consumer-driven-healthcare and health-savings-account initiatives.  They also elaborated on some of the bumps in the roads.

Are employees ready for the added responsibilities in determining their own care, adopting healthier lifestyle choices and taking additional steps to reduce costs?

“Yes,” said McKee, “they are ready to take control of their care. We’re already seeing results in dropped emergency-room visits [and other indicators], but it takes time … and it takes identifying and going after those pockets of resistance [that emerge]. It has to evolve.”

Making the successful transition from top-down to employee-owned healthcare, here and abroad, will also require more energy on the part of employers in setting up action plans for each individual. “We need more energy around the specifics,” said Maddison.

Englert agreed: “The way people decide is usually not as rational as we would like. It’s not easy to get people to really spend the time to manage health and cost consequences. We can’t just say, ‘Here is it, go for it and good luck with it.’ We need to provide guidelines and pointers.”

Johnson concurred as well. “Anything we can do to ensure, simplify, personalize, streamline, use vehicles of education — such as role-modeling — that we’ve never used before,” he said, “we should be doing.”


Of Mergers and Politics

We’re well into the silly season of politics, as any glance at the headlines will confirm. Politics is also an inevitable part of just about any organizational merger or acquisition and, just as in Washington, can be downright silly. I gleaned this from a recent interview with Shari Yocum and Niki Lee, two managing partners at San Francisco-based Tasman Consulting.

Yocum and Lee know mergers: Prior to forming Tasman Consulting, they served on the HR mergers-and-acquisition team at Cisco Systems. Cisco’s acquired a lot of companies during its time on this planet, including WebEx and Scientific-Atlanta, not to mention a boatload of much-smaller startup firms. As people familiar with the process know, one of the biggest M&A risks is losing the very talent you’re trying to obtain by buying the company. That includes the CEOs and founders, who–especially in smaller firms–have gotten used to calling the shots and setting the pace.

This can extend to things like whether or not they’ll continue to be able to fly first-class on official business once the deal is sealed. ” ‘I fly first class and so does my team,’ ” says Lee, relating a typical statement from these executives during her time at Cisco, “and then on Monday, they’re flying to India on coach.” Personally, I do think that would be a bit tough to swallow. But Cisco had its own cultural norms that needed to be adhered to, she said, and one of them was consistency: Everyone is expected to fly coach.

“Dealing with the executives at the company being acquired can be very difficult,” says Lee. “A lot of times, you’ll see the true colors of these executives” during this very delicate process.

Other sensitive areas included post-merger span of control, integration and marketing strategy–all areas that, as company founders, are of particular concern to them. While it may be tempting at times to simply buy these folks out and say “See ya,” the inconvenient truth is that their knowledge and insight is often extremely valuable, say Lee and Yocum, and ways must be found to keep them reasonably happy and engaged–for the short term, at the very least.

Politics is practiced on both sides of a deal–including at the acquiring organization, they say. Managers and executives will often jostle to be included in key decisions, hoping to make their mark and expand their own portfolios. Dealing with this vast array of hungry egos while attending to the hundred other details involved in a merger will test you like few other corporate experiences will, say Yocum and Lee. It’s why they believe HR leaders need to plan now for the eventuality of an M&A at their own companies, regardless of whether one is on the horizon or not.

Part of this is ensuring that you have a good working relationship with each of the key players in your organization, says Yocum. That way, you’ll have their trust and will be more likely to respect and adhere to the advice you have to give on crucial matters pertaining to talent. This also requires you to have a deep understanding of the business: its challenges, market conditions, opportunities, etc. Another piece of advice: If you’ve been involved in a merger before, go back and create a playbook, a repeatable process so everyone on the merger team will understand what their responsibilities are, she says, and create some online training that captures the critical knowledge you’ve gained so others can view it.

You can learn more about Yocum and Lee’s insights by reading the Q&A with them that will appear in the August issue of Human Resource Executive, our first-ever digital issue.

Building Leadership, Other Big Goals into Your System

The top companies for developing leaders build innovation and idea-sharing into their corporate systems. This, according to the seventh annual Best Companies for Leadership Study, released today by the Philadelphia-based Hay Group. (Here’s a release from Business Wire about the study, and here are the top 20 companies, with General Electric and Procter & Gamble topping the list.)

According to Hay’s study, the Best Companies for Leadership create workplace environments and processes that enable innovation to thrive. In fact, 90 percent of the top 20 report that, if individuals have excellent ideas, they can bypass the chain of command without the threat of negative consequences, compared to only 63 percent of other companies.

“Many companies prize innovation,” says Rick Lash, director in Hay Group’s Leadership and Talent practice, “but the Best Companies for Leadership approach it in a disciplined way by building agile organizations, promoting collaboration, celebrating successes, learning from setbacks and fostering a culture that encourages a passion for innovation throughout the organization.”

To do that, they “train and develop their people, celebrate diversity [and] reward collaboration …,” says Susan Snyder, a senior principal in the practice and co-leader, along with Lash, of the study.

Their announcement got me thinking about a news analysis I’m currently working on (to be posted on HREOnline in the near future) tied to this global study by New York-based Towers Watson on what makes companies succeed in organizational change management. (Here’s Towers Watson’s press release about the study.)

The study finds nearly two-thirds (65 percent) of companies with the best change-management outcomes follow a formal, systematic process, compared with just 14 percent of companies that just can’t seem to get it right.

Also, 45 percent of respondents in the Towers Watson study (604 organizations worldwide) with high change effectiveness have staffs dedicated to change-management efforts, versus just 16 percent of those with low effectiveness. Seventy-six percent of the former also set measurable goals for the imapct of changes and 73 percent measure their progress against their goals.

I’ll be interviewing a few folks later this week about more of the specifics that companies are doing, and should be doing, around change management. But for now, based on both sets of findings, I think it’s safe to say that, if you want to get the really big HR goals right (leadership development, innovation, change mangagement, talent management … you know the list better than me), you can’t just talk about them, or go to conferences and hear about them, or complain to the executive team about their absences from your organization.

You have to have clearly defined and well-designed structures and disciplines to make them happen. You have to assign staffs to them. And make sure you’re measuring them, too.

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 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.