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If a company wants to transform into a more-competitive fighting machine, management must work with human resources staff to get employees onboard with the plan or the whole effort could fall flat, experts say.
Just ask Alex Jung, senior vice president of Health Initiatives Strategic Solutions at Walgreens in Deerfield, Ill. Walgreens claims it is the largest drugstore chain in the U.S. with 7,779 stores. However, the 110-year-old company is facing more competition from CVS, Target, Wal-Mart and other stores that have pharmacies, said Jung, who participated in a panel discussion about organizational transformation and change during the National Association of African Americans in Human Resources annual conference held Oct. 20-23, 2011, in Washington, D.C.
“I had to make them realize their business was under threat,” Jung said. “My father was old-fashioned. He used to say you have to hit the mule over the head and then tell them which way to go.”
Companies transform themselves to adapt to a changing environment, align core strategies or merge with another company, said Viq Pervaaz, who joined Jung on the panel. Pervaaz is senior vice president of corporate transactions at Aon Hewitt, a Chicago-based human resources solutions company.
For the most part, transformation decisions are made at the top management level and trickle down to the rank and file, Pervaaz said. As a result, communication about why and how the company is transforming can be spotty. That is why it is so important that human resources be involved in the earliest planning stages so it can motivate employees to get involved in change, he said.
“You want each individual to understand what they have to do on a personal level to shift the organization and make transformation,” Pervaaz said.
Changing Mind-Sets, Skill Sets
Jung, a health care consultant for 24 years, said Walgreens had a strategy of buying up as many properties as it could, but that strategy of being on every corner no longer made sense and the company found itself overbuilt. Walgreens has had a healthy rate of return on investments for decades; however, that was not guaranteed to continue indefinitely because of the increased competition and changes in health care laws that could reduce future revenue streams, she said.
So Jung convinced Walgreens to concentrate more of its business on offering pharmaceuticals and patient care and less on being just another drugstore carrying deodorant, toothpaste and shower gels.
Pharmacists were encouraged to come from behind the counters to advise customers and go back to school to get certified so they could educate consumers about diabetic care and other health conditions and give flu and other vaccinations.
“We had to train them over and over again,” Jung said. “But we did it in such a way that we appealed to them on why they became pharmacists in the first place.”
In addition, Walgreens worked on redesigning stores so 70 percent of floor space was concentrated on health care items and 30 percent on other retail products—the reverse plan of most existing Walgreens outlets, she said. About 200 stores have already been converted.
But change is never easy, Jung and Pervaaz said. There was some early excitement at Walgreens, but some employees decided that it was too much change and it was time for them to retire, Jung said. Others accepted change with little enthusiasm, reasoning that they would do what they had to do to collect a paycheck.
Jung said that is why it is crucial that managers communicate with employees about why transformation is needed. Human resource professionals can offer employees training programs that help walk them through the transformation process, Pervaaz said.
“Two-way communications must exist in transformation,” Pervaaz said. “A lack of communication, coupled with a lack of HR presence, is a problem.”
Greg Wright is a freelance writer based in Washington, D.C.
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