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There’s no easy way to transform companies into more productive and more profitable organizations. It takes hard work.
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"We knew the company had the potential to do it, but we didn't think our people were positioned in the right way," Miggo says.
To achieve the ambitious goal, the company would need a major transformation. Its culture had to be reinvented so that every employee would put customer satisfaction above all. To get there, Miggo knew Safelite's employees had to feel valued. Managers needed to be retrained and held accountable. Everyone needed to be united.
"Cultural transformations fail when they ignore the human and behavioral side of change," Miggo says. He didn't want to make that mistake.
Miggo and Feeney recognized that change is inevitable and often necessary for an organization's survival. But that doesn't mean it comes easy.
Just 43 percent of 604 organizations surveyed by Towers Watson in 2011 achieved their goals in change initiatives. Another study shows even more dismal results: Just 30 percent of change efforts succeed, according to The McKinsey Quarterly, which in 2008 surveyed 3,199 executives worldwide.
Change initiatives frequently run over budget or behind schedule. New processes or technologies are ignored by workers. New leaders move on to other projects.
One underlying reason for failure: Managers and top executives never fully believe in what they are asked to do. They lack "adoption and buy-in," says Brad Messinger, director of change management at Towers Watson.
News alert: People don't always behave rationally.
"If you just communicate the business case, and the rationale, you're not going to win them over. There's a lot of other stuff, emotional stuff," he says.
People are the problem—and the solution—when it comes to change, according to a March survey by Prosci Inc. The company provides research and training on change management.
In the survey, 650 change management team leaders, HR professionals and others in 62 countries identified the following top obstacles:
While there is no magic wand that can instantly transform an organization, some HR professionals have figured out how to overcome those obstacles. Their experiences show how to engineer transformations of multiple programs and processes that affect most employees—in ways that have staying power.
What do such transformations have in common? Unlike many change efforts, HR professionals played integral, strategic roles. For change to take hold, HR professionals say they need clearly defined goals; employee buy-in, passion and commitment; engaged managers and senior leaders; and great communication.
Define the Goals
At Safelite AutoGlass, Steven Miggo and his HR team in 2008 developed a plan for transforming the culture to focus on "customer delight."
On average, drivers need vehicle glass repaired or replaced only once every seven years. Typically, they don't research options. Referrals are crucial. "A great customer experience can differentiate us in a highly fragmented industry," Miggo says.
The company's Destination 2012 plan defined what they wanted the Columbus, Ohio, company to be and what behaviors would help them achieve that goal. They developed the following competencies, which all employees were to embrace:
They knew leaders must pave the way. "What defines us as a company is really going to come from our people, and our leaders are a big part of that," Miggo says.
To prepare for the cultural shift, Miggo and his HR team developed leadership training with the message "Our leaders are accountable. They don't shirk their responsibility and put blame on others."
Each of the 1,000 managers received initial training, and additional training is required each year.
"There were some managers who don't get our 'people first' philosophy and would rather lead through intimidation, and that's not acceptable to us anymore," Miggo says. Such managers have a year to be trained; if they show no improvement, they are fired.
"We had to make some tough decisions and actually get rid of high-performers, if you look at it strictly by the numbers," Miggo says. Senior leaders still care about employees hitting their targets, but they have to do it the right way, he explains.
From 2010 to 2011, the Belron S.A. subsidiary had 20 percent turnover among general managers who run 90 regional operations. Three-quarters of those who departed weren't living up to the "people first" philosophy, Miggo says.
On the other hand, turnover among technicians has gone down. Technicians "feel we're a changed company culturally," Miggo says.
Managers' compensation is now tied to reaching sales and customer satisfaction goals. Their performance is evaluated with 360-degree reviews and engagement surveys. If internal feedback is not good, they won't receive raises or promotions. And employee recognition incentives now align with behaviors outlined in the strategic plan.
So far, the cultural shift appears to be taking hold. Engagement scores increased from 71 percent in 2010 to 81 percent in July. As measured by Net Promoter Scores, customer satisfaction grew from 84 percent in 2009 to 86.9 percent last July. The company has grown from 7,500 employees in 2008 to 10,000 today, and the number of service centers increased from 300 to 500. Annual revenue grew from $836 million in 2008 to $1.1 billion in 2011.
According to Miggo, CEO Tom Feeney's support was critical to shifting the culture and sent a message to employees. He was "beating this drum every single day," Miggo reflects.
Faced with budget cuts two years ago, one Colorado nonprofit transformed itself into a leaner, more efficient operation in three months—and retained the respect and loyalty of its 145 employees.
Staff involvement was a priority for Mary Lu Walton, executive director of Envision, Creative Support for People With Developmental Disabilities, in Evans. She wanted to keep up morale, especially among caregivers. Her employees provide services, such as adult residential care, and contract, coordinate and monitor services for adults and children.
The nonprofit receives 94 percent of its funds from the state, with the rest coming from county and private grants, and the transformation was forced in September 2010 when the state cut 7.5 percent of the organization's $8.7 million annual budget.
The organization doesn't have an HR professional on staff, so Walton called in HR consultant Mark Weaver, SPHR, to help her look at the processes and positions in a new way. To improve morale, he advised her to focus on eliminating tasks that employees hate most.
Walton appointed a design team of front-line employees and care providers to look for ways to change. Weaver met with the team twice a week, guiding them through the process. Their recommendations were accepted in full by senior leaders and board members.
Six full-time workers' hours were reduced to part time. But only three employees were laid off, not 10 as initially planned. Envision's leaders created an onsite food bank that saves money and time. They started enforcing caregivers' contracts more strictly—requiring host families who are paid to care for individuals with developmental disabilities to transport them to doctors' appointments, for example, since Envision staffers no longer had time. They created a scheduler position to alleviate supervisors' workloads.
"Employees were invested in the process because they got to fully participate," Walton says.
"Involve employees," Weaver advises. "You're going to have a whole lot more buy-in."
Heineken USA has suffered declining sales in recent years. Some say the beer marketing and sales arm of the Netherlands' Heineken International lost focus when acquiring other products, even as competition from small craft brewers grew.
The U.S. subsidiary had three chief executive officers in five years. During that time, for the first time, the company laid off 10 percent of its workers.
"Employee morale had definitely gotten dented," says Maggie Timoney, chief people officer at Heineken USA. "People got really nervous."
Employees were afraid to speak up and take risks, she says. "When your business volume is declining and your people are sitting back waiting, that is not a recipe for success."
When current Chief Executive Officer Dolf van den Brink came in October 2009, he concluded that the company had lost its entrepreneurial spirit.
"We needed to get passion back," says Timoney, whose previous post was general manager of Heineken Canada Inc.
To figure out how, executives invited employees to sessions where they could suggest ideas. More than half the 500 employees—representing every department—participated. At subsequent cultural workshops, employees were asked to paint a picture "of what we feel about Heineken today and what we would like to feel about Heineken in the future."
A change team of cross-functional leaders collected information as a basis for six operating principles. The principles led to development of 24 desired behaviors, which were consolidated into four cultural pillars:
The pillars were brought to life at a pirate-themed gathering of all employees in Boston last fall.
"To have a challenger mindset, we needed to unleash everyone's inner pirate, from the administrative assistants all the way up to the CEO," Timoney says. "We need to be nimble. We need to be quick. We need to be brave. We need to take risks. We need to make decisions."
Heineken's People Department realigned employee recognition to reflect the entrepreneurial culture. In addition to annual awards, Timoney's team added two quarterly awards and a president's award—a Caribbean trip for the employee who best embodies the challenger mindset.
To reflect the priorities, leaders renovated headquarters in White Plains, N.Y., creating an open space to literally break down barriers and encourage collaboration.
With one-third of the employees in new positions and one-fifth of those outside hires, the company dedicated $2 million to learning and development, including a program on beer basics.
The efforts appear to be working. From 2010 to 2011, the percentage of employees who said they felt proud to work for Heineken USA grew 13 percentage points, reaching 96 percent. For the same period, employee surveys showed a 17-point increase in employees feeling comfortable taking reasonable risks, a 9-point increase in team cooperation and a 23-point increase in employees' perception of company efforts to keep them informed. Heineken USA has seen a 3.9 percent increase in volume of beer sold for the 12 months prior to Aug. 11, according to a recent Nielsen report. The 2011 annual revenue for Heineken Americas, including Heineken USA, is $5 billion.
Seven years ago, Deltek Systems was a family-owned software company with 800 employees.
After private equity fund New Mountain Capital LLC purchased a majority stake in 2005, the management team launched a high-growth strategy. The newly named Deltek Inc. purchased several software and consulting companies, bringing the workforce to 1,700.
Deltek is expected to see even more growth after its purchase by equity company Thoma Bravo LLC becomes final this fall.
Holly Kortright, Deltek's senior vice president of HR, was hired to merge new workers with longtime employees and to create one cohesive group that could drive growth.
Through focus groups, she learned that Deltek's strengths were employees' dedication to serving customers and their ability to work as a team. The challenge, she says, was "How do we take what is so powerful at Deltek and leverage that, but also stretch the organization?"
Employees had to be taught standards and processes to comply with federal regulations that now apply to the publicly traded company, whose revenue in 2011 was $341 million.
All employees needed a sense of urgency to compete with larger government contractors.
The first attempt at introducing new company values failed in 2007. "We didn't spend the time to get everybody on board. So [the values] didn't galvanize people to operate differently," Kortright says. Before the second attempt, leaders agreed that "all the execs were going to be heavily involved and we were going to spend the resources to make this happen."
They paid about $80,000 to the consulting service Careerstone Group to help them plan. The consultants facilitated a senior leader session that included HR staff.
With the second attempt in 2011, more than 150 employees were involved in developing nine values unveiled.
"The key value is 'play to win,' which is how we can be competitive in the marketplace but still maintain our integrity and our ability to do the right thing. And people really rally around that," Kortright says. Town hall meetings, newsletters and a video focus on people and teams that "play to win."
Getting people to understand why the company was changing and why employees must adapt was critical, she says. "You have to rely on the business unit leaders and the front-line managers to take that context and translate it into what that means for each individual," she says. "Arm managers with talking points."
To help, the HR staff provided managers with questions they use to stimulate quarterly discussions: What do these values mean for our team? How do these change our goals and how we operate?
These discussions make the values "come to life day-to-day, instead of just being an initiative that we were going through," Kortright says.
Kortright established an informal network of employees—ranging from individual contributors to executive vice presidents from various departments—who meet with her monthly to discuss what can be done to cement the culture.
Periodic surveys gauge how well the values are taking hold. In April, 45 percent of responding employees reported seeing their teammates actively looking for ways to compete as a company four or more times in the previous month.
Kortright reworked the recognition program to align with the values. Rewards of $200 increased to between $500 and $1,000. The program was delayed to provide more time for employees to learn what was expected of them. Now, employees and teams exemplifying the values are recognized at town hall meetings.
In addition to guiding culture change, Kortright led a yearlong effort before November 2011's move into a new headquarters building to ensure that employees would embrace the open-office environment intended to promote collaboration, innovation and shorter production schedules.
Communicate Early and Often
Novo Nordisk USA
Novo Nordisk USA has grown from 750 to 5,000 employees in eight years. By year-end, the company plans to add another 600 positions.
Rapid growth was prompted by a business decision to focus on innovative ways to treat diabetes. The disease affects 25.8 million Americans, triple the number since 1980. The company has had 40 consecutive quarters with double-digit sales growth.
With such rapid growth, the U.S. company's leaders in Princeton, N.J., wanted to preserve the Danish parent's commitment to high ethical standards.
Before the company announced the latest expansion, Jeff Frazier, vice president of HR, put together a steering committee to evaluate how the market was expected to change from 2010 to 2015. The committee provided data and analysis to develop a hiring strategy, but the analysis also was used to allay employees' fears that the company was expanding too quickly. Many had seen it happen before in the pharmaceutical industry—companies add jobs and then eliminate them just as fast when, for example, the U.S. Food and Drug Administration doesn't approve a drug or a drug has to be withdrawn. Senior leaders at each level explained why the decision to expand was made, displayed the data and described what the benefits would be to employees.
The decision to expand included a commitment to preserving culture and values. The challenge for the HR staff has been to teach the values even as many employees are being brought on board. From March to November 2011, the company rolled out a refinement of previous values called "The Novo Nordisk Way."
Employees received a written explanation, heard a senior leader explain why values are important and participated in discussions about what values mean for them in their specific jobs.
The HR team also led other parts of the transformation, including restructuring field operations such as sales and medical groups and diabetes educators.
The six-member project management team shepherding the expansion, led by a senior director of HR, includes representatives from many departments. In various stages, the change effort will have from three to 100 people working on it, Frazier says. The team has 10 milestones and reports progress to the steering committee.
Novo Nordisk has made Fortune magazine's top 100 Best Places to Work list for four years in a row. In the employee survey that's part of the application process, 98 percent of responding employees said they were proud of the company and its products and 96 percent said they knew how their jobs contribute to company performance.
"Those are two statistics that are amazing indicators to me of how engaged our workforce is," Frazier reflects.
The author is a senior writer for HR Magazine.
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