What's Your Bottom Line?

The public sector in Alberta is again facing significant financial challenges.  The result of which is that we are seeing some agonizing changes in program and service delivery offerings.  These changes are certainly impacting staff and in some cases impacting students, patients, and others who have come to expect certain things from these organizations.  These issues and concerns are certainly not just the purview of the public sector, nor are they unique to Alberta.  We have all seen a variety of headlines over the years about downsizing in the manufacturing sector, boom and bust within oil and gas, and the dramatic changes in the auto industry.  No sector or organization is immune to changes in markets or funding that causes it to rethink how it does its work.

Even in the not-for-profit sector, where I have spent much of my career, one iconic phrase that has gained currency is "No margin, no mission."  The message being reinforced through this phrase was that if an organization couldn't turn a profit or manage to its budget it could cease to exist and thus be in no position to live its values or achieve its purpose. This phrase came to hold some currency and was subsequently used to justify difficult and even harsh decisions through to and including program changes, staff layoffs, facility closures, mergers and consolidations.  Regardless of industry, for many leaders, revenue, cost, black and red became (and is) the strategic imperative.  The bottom line was and is the bottom line.

This is despite the fact that if you were to talk to many leaders about what their organization's greatest asset and resource is many of them would respond with an emphatic "Our People!"  They might tout how much investment they have put into recruiting and training staff, how important their intellectual capital is to developing and sustaining their competitive edge, how staff in all types of positions are the face of the organization and create so many "moments of truth" with a range of stakeholders and clients on behalf of the business. 

Yet the reality of actions taken seems to fly in the face of these strongly stated commitments.  There do not seem to be many organizations that don't react with strength, urgency and conviction to slash budgets, reduce costs, or enhance profit when push comes to shove.  Often the first cuts fall on education, training and travel.  Salaries and benefits may also be tackled.  For unionized staff this may take the form of attempts to reopen collective agreements.  For non-unionized staff it may take the form of wage freezes.  More often than not that doesn't deal with all or even most of the financial requirements and staff changes rapidly follow.  This despite the fact that the human resources of the organization have been touted as the organization's greatest asset. 

This pattern of investment and divestment takes on a degree of regularity that makes for great fodder for a Dilbert cartoon.  I've been through more cycles of this than I can now recall in my former healthcare career where we would often invest significant time and resources in recruiting staff - even engaging in heavy overseas recruitment - and then within a year or two start a round of layoffs to meet a new budgetary challenge.  The larger economy parallels this experience.  For example, business media is starting to note recovery in the US economy and with this rebound the topic of employee retention is getting more play. 

So what should the true bottom line for one's organization be?  To me it hardly seems logical to manage any enterprise, to sustain forward momentum, and achieve long-term objectives by divesting and then reinvesting in staff every couple of years.  I may be cynical, but it appears that too many leaders take more care in the investment and maintenance of the physical assets of their organizations (e.g., buildings, equipment) than they do in their staff.  And yet without skilled, qualified, motivated and committed staff those physical assets stand idle or are not used to best effect.  I don't believe most leaders would make millions of dollars in investments in buildings and equipment only to idle or shutter them only a couple of years later.  It would seem that doing so on a regular basis would start to call into question leadership competence...or so one would think...

I have already shown my bias as to what I think an organization's bottom line should be.  I do believe that we should truly commit to the principle that, as leaders, we so often espouse.  Namely that our staff are our greatest resource.  What are the implications of making this type of commitment real?  For one, I believe as leaders we need to exercise diligence on both sides of the equation of creating/expanding programs, services or product lines as we do in reducing/ eliminating them.  As leaders our goal should be to create some semblance of stability and measured response to environmental pressures.  I believe we should endeavor to create a plan for product, program and service delivery that is sustainable and is informed by our past experiences and future - realistic - expectations. 

Have I just crafted a fairy-tale scenario?  Is this a realistic perspective on how to handle pressing financial considerations?  Is this at all doable?  For some organizations the answer is evidently yes.

Just this week, CNN Money (August 27, 2013) reported that Starbucks would not be following the lead of other US companies in cutting staff or benefits as a result of healthcare reform south of the border.  Starbuck's CEO, Howard Schultz, took a stand for its company and said that its current benefits and commitment to staff was non-negotiable.  This is no small commitment.  In 2010, benefits cost the company $300 million.  That's more than the chain paid for coffee in the same year.  Starbucks has made their commitment to staff - their bottom line - real.  I expect that this commitment puts them at some advantage in recruiting and retaining the most important asset in any enterprise - it's people.

So what's your bottom line as a leader?  Do your words as a leader match your actions?  Does your vision extend beyond the next quarter's financial results? 
______________________________

Greg Hadubiak, MHSA, FACHE, CEC, PCC
TEC Canada Chair/Executive Coach/Senior Consultant
hadubiak@wmc.ca

Helping leaders realize their strengths and enabling organizations to achieve their potential through the application of my leadership experience and coaching skills. I act as a point of leverage for my clients. I AM their Force Multiplier.

Change - Only Effective if you Make it Stick!

The only constant in life is change.

Amazingly enough this quote comes from a Greek philosopher by the name of Heraclitus (500 BC) and not from a thought leader of our present day.  Regardless, I expect that most of us can relate to the sentiment expressed by Heraclitus and in fact might consider it to be an understatement in today's environment.  As organizations, leaders and individuals we seem to be constantly bombarded by and responding to change.  Just as frequently, leaders see or believe in the need to proactively initiate change to better position their organizations for future success - or even survival. 

One would think with so much at stake for organizations in these change initiatives that nothing would be left to chance in ensuring success.  The track record, however, is not so encouraging.  A variety of sources identify the success rate for major change initiatives as being between 20% and 40%.  Put another way, fully 60% to 80% of change efforts fail to achieve or sustain the objectives for which the change effort was established! An abysmal figure given the significance of the resources devoted to these initiatives.  Add on to these direct costs the lost opportunity cost to an organization (e.g., what else could have been done with that time, energy and money) and the impact can truly be staggering.  Indeed, some organizations fail so completely at implementing change that they cease to exist.

What accounts for this staggering rate of failure?  And what are the critical factors in making sure that change can be managed and the gains sustained?  This latter question was recently tackled by several of my colleagues and myself within the context of an academic exercise.  We could all bring to bear our personal experience of success and failure in organizational change initiatives. 

Not surprisingly (maybe particularly so for a blog focused on leadership) the first critical success factor identified was the need for sustained, visible and credible senior leadership commitment.  Too often - in my experience - senior leaders are great at calling out the need for change, are visible at the launch of a change initiative, or can tell others what new behaviors are expected but fail to stay intimately involved in the change initiative for the duration.  Major change initiatives need constant engagement of leaders, role models and executive sponsors.  Major change initiatives take time to fully realize their potential and success does not come without overcoming bumps and barriers along the way.  If senior leadership is only fleetingly or superficially engaged failure of the change initiative is a near certainty.  (For additional perspective on the importance of executive sponsorship check out http://www.wmc.ca/ebooks/sponsorship/)

Directly related to the need for senior leadership commitment is a requirement for a compelling vision for change - why is the change necessary, what are the expectations for the change initiative, what will success look like, what steps must be taken, how will people within the organization be impacted, and so on.  If leadership of an organization cannot develop and articulate a compelling vision for the initiative natural resistance to change will take over and the odds of successful implementation will be significantly diminished. 

Following immediately on the need for a compelling vision is the need for a real and substantive plan for the change initiative.  It's not just that a major change initiative needs to have a detailed plan from initiation, through to key milestones, conclusion, evaluation and ongoing monitoring.  It also won't be just enough to make sure that there are change champions in place or training initiated as required.  Leaders must also ensure that the change initiative is complemented by and coordinated with other ongoing organizational initiatives or existing systems or ways of doing things.  A lack of internal alignment means that organizational gears will grind against each other slowing if not entirely defeating hoped for results. 

Communicate, communicate, communicate.  There cannot be enough communication in all phases of the change initiative.  A communication plan must be created and implemented in lock step with key milestones of the overall change initiative.  This plan must take into account the appropriate role for senior leaders, middle managers, front-line supervisors and other change champions - each of whom will play a different but critical role in keeping information flow alive and rumors at bay.  There will certainly have to be internal consistency to the messages being sent.  However, timing and tailoring of content to a variety of stakeholders will have to account for different needs, perspectives and capacities of the different audiences.  This is no small job.  And the communication should be two-way, allowing for feedback/evaluation as the initiative is rolled out.  This feedback loop can help identify problems quickly and reduce points of resistance.

Target and celebrate early wins.  It's important to demonstrate as soon as is possible some of the success that the initiative is achieving.  People will need positive reinforcement for the effort they are putting in and for the sacrifices they are making.  Reward and recognize along the way.  Failure to do so will at best induce apathy in change management efforts and at worst will lead to entrenchment in the old way of doing things.  A couple of cautionary notes though - make sure the win is real and the reward authentic.  We are all intelligent enough to sniff out a lack of reality when we are being falsely complimented.  Credibility is key.  Just as important is making sure that leadership does not prematurely announce "victory" for the change initiative.  Any major change requires a significant investment of time before it truly supplants past behaviors.  Don't get distracted and complacent only yards from the finish line.  You will find yourself back at start before you know it and wondering what happened. 

One last note.  It may, again, seem self-evident but I believe that an organization can only sustain so much change at any one time.  Self-evident as it may be it appears that too many leaders still try to defy the odds and take on all comers.  So what's the answer to how many change initiatives?  I don't have a magic number but I believe there are a couple of parameters to be considered.  First, if we reconsider  the critical role of the senior leader or executive sponsor a key question should be how many change initiatives can these individuals effectively lead.  I suggest that this number is realistically not more than two.  If we are talking about major change initiatives - stacked on top of regular, operational responsibilities - I don't believe any leader/executive sponsor can effectively manage more than that.  Second, just because an executive team might be comprised of 6, 10 or 15 individuals it should in no way imply that 12, 20 or 30 change initiatives can be managed/tolerated by the organization.  Again, if we are talking about major change initiatives, it can be expected that more than one senior leader and department in the organization will be impacted by or play a role in supporting each initiative.  So as a leader you are not just leading two initiatives but also being looked to for support in perhaps another six.  And staff of the organization are going to have to somehow manage, navigate, and prioritize all of these "critical" demands from their senior leadership.  A truly unenviable task.

The only thing that is constant is change.  This may be particularly true if as a leader you don't do change right.  Do it right, do it well, and make it stick.

______________________________

Greg Hadubiak, MHSA, FACHE, CEC, PCC
TEC Canada Chair/Executive Coach/Senior Consultant
hadubiak@wmc.ca

Helping leaders realize their strengths and enabling organizations to achieve their potential through the application of my leadership experience and coaching skills. I act as a point of leverage for my clients. I AM their Force Multiplier.