CIPD Podcast 31 - Making change work: part 1

Date: 05/05/09 Duration: 00:25:46

This podcast presents interviews with some speakers from CIPD’s recent HRD conference: Victoria Woodison, HR Director, UK & Ireland for Gate Gourmet, Robert Galavan, Head of the Department of Business and Law and Dean of the Faculty of Social Sciences at the National University of Ireland Maynooth, Co Kildare, Edward Lawler, honoured as a top contributor to the fields of organisational development, human resources management, organizational behaviour and compensation , Nicola Riley, Health Strategy and Vendor Manager, GlaxoSmithKline, Chris Worley, Research Scientist at the Center for Effective Organizations at the Marshall School of Business at the University of Southern California, Linda Holbeche, Director of Research and Policy CIPD, Mandy Coalter, Director of HR & OD, Heart of England NHS Foundation Trust and Valerie Raven-Hill, HR Director of Look Ahead Housing & Care.


Further reading

LAWLER, Edward E.  and WORLEY, Christopher G. (2006) Built to change: how to achieve sustained organizational effectiveness. San Francisco, CA, Jossey Bass.

Transcript

“We did end up with a thousand employees striking illegally in the summer of 2005. We literally had no choice, we had to do something about the situation otherwise the company just wouldn’t physically have survived.” 

“For us it was about trying to find ways of communicating with different people in different ways – this is change, it is tricky, it is going to be difficult, you may be worried but what can we do to make that better for you? You can never communicate enough.” 

“Practically overnight customer relationship management became key. Accounting systems had to change, new infrastructures had to be developed.” 

Philippa Lamb: Three brief perspectives on change there from three very different organisations and we’ll be hearing more from all of them during the programme. 

Someone once said that it’s not the strongest of the species that survive nor the most intelligent but the one most responsive to change. That’s truer now than ever with this global recession driving organisations to adapt, evolve and transform, with an urgency not seen for decades. But the causes of change are never quite the same. 

Vicky Woodison is HR Director at Gate Gourmet, the aviation food providers. She spoke at the CIPD’s HRD conference in April about the dramatic turnaround which was forced upon the organisation back in 2005. 

Victoria Woodison: Imagine a company which was losing money year on year yet the employees and the managers thought all was well. Imagine a company where there was a complete lack of trust between the management and the union, between the management and the employees and even (as was later realised) between the union and the employees. Imagine a company where it was common practice for the employees to regularly down tools, just stop working and an organisation where there was no formal process for negotiation or consultation or ability to be able to discuss and resolve the issues that were existing; that was Gate Gourmet four years ago. 

PL: I caught up with Vicky afterwards to find out more about a change strategy that took the organisation from a situation where they were facing enormous losses one year to breaking even the following year and making a profit the next. 

VW: Basically Gate Gourmet was totally at crisis point so we were losing millions of pounds; we were losing £27m year on year. The union essentially were sort of running the organisation or the employees were running the organisation and managers were just scared to actually to do anything about it, so things were just getting worse and worse and worse. I guess the culmination of it was we did have the administrators in the business, we did end up with a thousand employees striking illegally in the summer of 2005. We literally had no choice, we had to do something about the situation otherwise the company just wouldn’t physically have survived. We wouldn’t be here today if we’d allowed it to carry on. 

“Survival really depends upon continuous change in today’s economic environment. Sure there are organisations that are in more stable situations – pieces of government and so forth – where it’s not job number one but increasingly in the private sector, in most competitive business situations there’s no challenge to making the argument that boy if you aren’t changing and changing regularly you’re going to lose out because the market is moving that rapidly.” 

PL: That was Ed Lawler, Director for The Centre for Effective Organisations at the University of Southern California; more from him in a moment. But as he says, change as part of strategic growth, can bring with it all the challenges that sudden unexpected change also can. 

The Heart of England NHS Foundation Trust took over a poorly performing neighbouring hospital in Sutton Coldfield near Birmingham in 2007. The acquisition was one of the largest of its kind, with a workforce of ten thousand and a budget of nearly half a billion pounds. Mandy Coalter, Director of HR and OD, explained why when Heart of England NHS Trust became a Foundation Trust in 2005 the purchase of failing hospital Good Hope became an attractive commercial option. 

Mandy Coalter: Being an FT it creates all sorts of opportunities. It’s a new system for hospitals to have more freedoms and flexibilities and actually to be more commercial. I think that really was the catalyst in a way because it then gave us the opportunity to look around locally, saw what was happening with Good Hope and that there were some significant issues in a local hospital that was on our, if you like, local patch but presented for a Foundation Trust, with big ambitions and the potential to be more commercial, it did present some new opportunities that perhaps wouldn’t have been open to us in the old regime before being a Foundation Trust. 

PL: But the big challenge for you was that The Heart of England was a very successful outfit indeed and Good Hope had its problems didn’t it?

MC: Yes it did. 

PL: You must have known at the outset you were going to have people problems, marrying up two organisations like that. 

MC: Absolutely and I think one of the things that really attracted me to join The Heart of England was the fact that they really recognised that. I joined them about nine months before the acquisition and they wanted an HR Director to come in and support them with the people management. They really understood that at Board level so it wasn’t difficult to put the business case to them that we needed to invest, and that really was the platform for everything that we did. I’m not saying we did it perfectly, I’m sure if I went back I’d do things very differently. You had a whole host of very different people that we had to engage from very senior people at Good Hope, clinicians, the doctors, some of your other frontline staff but we also had to remember that there were a lot of people in Heart of England looking at this and going, “But why? We’re successful, why risk that by taking on this organisation?” so some of the messages had to be very different for those different stakeholders. 

PL: It wasn’t always easy for Mandy and her team. The challenges were very large, but one measure of her team success was their placing as runners up in last year’s CIPD People Management Awards.

Would you say that the work you’ve done on actually bringing the two hospitals together means that as a joined organisation now they are more agile and ready for the change that will inevitably come in the future? 

MC: We’ve certainly got a greater sense now of being one organisation. It’s still not perfect but the kind of ‘them and us’ isn’t really there but we’ve still got work to do to make that absolute but it’s getting there. 

PL: At Heart of England one of the biggest challenges was to get emotional buy-in to the idea of joining forces from the thousands of employees and next month, in the second of this two part podcast on making change work, we’ll hear more from Mandy about how she actually did that. 

Look Ahead is a charitable organisation providing housing in London for the most vulnerable members of society. There it was a shift from charitable to commercial culture that drove the changes. A voluntary organisation yes but in recent years an organisation that’s had to adapt to a more commercial framework. It’s been a huge cultural shift and the challenge was to retain the core values of a charity while adopting commercial business practices. 

Valerie Raven-Hill joined the organisation as it underwent this transformation. 

Valerie Raven-Hill: Practically overnight a contracting market emerged and it has grown and become fiercer and fiercer and fiercer over the last four years, so all the skill sets that you would need in private sector – all the business practices – became a requirement in the sector; we became financially accountable on a contract specific basis. Customer relationship management for example became key, accounting systems had to change, new infrastructures for presenting data to different local authorities had to be developed. It was a massive change and it was a massive behavioural change. I think previously in the sector the focus had been very much on support and care, which is what we do and we do really well, but the balance of moving towards sound professional business practices was now needed in this changing market, so that was the need for the change. 

PL: And as you say, this is a huge shift in practice and emphasis. What sort of timeframe did you have to make it all happen? 

V R-H: We really had to gear ourselves up from day one and sort of muddle through and what Look Ahead did was essentially when I joined put in a strategy to manage that change proactively to get ahead of the game. 

PL: We’ll hear in detail about the highs and lows of overseeing major changes from Heart of England, Gate Gourmet and Look Ahead, as well as from Xerox, in next month’s podcast, part two of the series Making Change Work. 

In these economic times we all tend to take the view that change is forced upon as a negative thing, but of course in the end it can often be an opportunity rather than a disaster. Here’s Chris Worley. 

Chris Worley: The global recession that we’re having now I think is a good case in point. There were a lot of indicators that organisations had saying that the environment was going to change, but even with that they didn’t adapt very well and have struggled with their adaption. So, the notion that this change can be a positive thing has been part of the conversation in a lot of the organisations in the United States. Limited Brands, Boeing, a lot of these organisations in the US have been taking this economic crisis, not only just reacting to it but also taking the opportunity to make some positive changes in their organisations because of the downturn. 

PL: Chris is a Research Scientist at the Center for Effective Organizations at the Marshall School of Business at the University of Southern California. Both he and his colleague, Ed Lawler, have done a lot of work exploring how best to design an organisation that can adapt freely. Together they wrote Built to Change and between them they’ve advised hundreds of leading organisations. Here’s Ed again. 

Ed Lawler: We see a number of organisations now saying “Gee, if only I had known this kind of change was coming I would have…” and a lot of them are HR issues, “…I would have put this system out, I would have put this practice in, I would have put this policy in” and of course now they are struggling to do it, it’s not as easy to do as if they had done it earlier but it certainly has highlighted the point that you have to think about change as a continuing and ongoing process and an important piece of that certainly is the human capital issues that arise with massive change like we’re seeing today. 

PL: So the way we view change is the crucial factor here and being prepared for it is key when it comes to long term survival. 

EL: To me the distinction that makes sense, and it’s a little bit grey, not certainly black and white but it’s the distinction between episodic change and continuous change. How do you create organisations that go through continuous change? Yes they execute but execution is not the number one objective so much as continually adapting to the environment and we know that inherently has some inefficiencies in it because you have to maybe sacrifice a little bit of current performance in order to get ready for the next change that’s coming along. 

We argue that that execution orientation, yeah is okay in a stable environment, makes a lot of sense, you can fine tune forever and still gain more efficiency but that many organisations that’s just not the way to go, that you really need to focus on continuous change not episodic change. The problem with relying on episodic change, meaning you’re stable for a while and then you make a big cut point and say okay now we’re going to reinvent ourselves or we’re going to change is that most of those efforts are unsuccessful. 

The landscape of large corporations that have failed when it came time to make episodic change is everywhere, you can see it in General Motors or Ford or you name it, the ability to make those big adaptive changes is not very good. 

PL: So if the important thing is being continuously ready, what’s the secret? 

EL: What all organisations can do is build a culture which supports change and likes change and that’s the most difficult thing to do in many respects, is how do you create a culture where people say, “Oh good! We’re going to change?” rather than “Oh no! Here it comes again, we’re going to get…” you know blah-blah-blah-blah-blah and all too many organisations are in the latter condition. 

PL: Yeah that point about achieving a continuum, I mean it’s just not possible to do that is it with organisations in the mindset, as you say, of oh panic yet more change. 

EL: Yeah and building the culture that loves change, has an identity around change is very difficult. It takes a combination of leadership and reward systems and training commitments, commitments to people of the right kind and selecting the right people that makes them comfortable with change and enjoy change. 

“Change is now the norm, it’s not the exception anymore and I love the phrase that a guy called Abrahamson came up with, which he borrowed I think from either physics or chemistry, which is about we shouldn’t think of change as aberration anymore, we should think of it as actually dynamic stability because it is stable because we can anticipate it, therefore, we ought to be ready for it.” 

PL: Linda Holbeche is the CIPD’s Director of Research and Policy and an expert on organisational development. 

Linda Holbeche: For me, being change ready is people in organisations big and small somehow being made much more aware of what’s happening externally, how their suppliers and customers are experiencing things that are just round the corner. Being alert to how their own organisation is going to need to change and so there’s something around how organisations can get, if you like, anticipatory of change, which I think is really fascinating. 

There are lots of ways organisations do that, you know, part of it can be little things like sending people from call centres along to meet with some of the customers that they deal with, just having conversations chewing over what the problems have been in the recent months. You provide people with information that they sit around in groups, business information and make some sense of for themselves and then pull together their thinking about well crumbs, if these are some of the things that are round the corner, what does our organisation need to do about it? 

So it’s not around always thinking it’s the top management that need to be telling people to get ready for change, it’s around helping people to help themselves get ready for change. 

PL: As you say, I think that’s a really interesting point, the business of knowledge sharing because in most organisations (large or small) some departments are already ready for change as part of what they do. A lot of possibly support departments are not, they just do what they do the same way most years and so I rather suspect that a lot of organisations will find they have the expertise to skill their people up, in-house already, it’s just a question of sharing it isn’t it and talking about the skills that are necessary to accommodate change when it does happen. 

LH: Yeah I think it is. In the busy organisations we all work in now, it’s almost illegitimate sometimes it seems to actually just have some space to hold informal meetings. The idea of conversations round the water cooler or whatever seem, you know, what are those people doing wasting time? As opposed to actually, they may be having conversations that are really really helpful. 

PL: When it comes to starting to get an organisation ready for change there’s no single formula. Here’s Chris Worley again. 

CW: We get the question about how do you sort of implement agility a lot and the question is not so easy to answer because there’s lots of places where you can begin. In the book we try and pass that out a little bit and say there are issues around strategy and the way strategy is developed in the organisation. There are issues around structuring and how you align the organisation to the strategy. There’s human resource issues involved and there’s a whole set of capabilities that organisations needs to put together so the question about how you build a built to change organisation is a little daunting because there are so many places that you can begin. 

What we’ve tried to get organisations to do is to think about where are they agile now? Most organisations if they’ve survived for any length do possess some level of agility and we try and help them understand what parts of their organisation or their strategy or their culture are currently supporting changeable sort of attitudes and then identify those areas where they need to make changes to increase their agility.

PL: This idea then of sharing knowledge across the organisation is clearly a good place to start, at the very least it will raise the general awareness of the issues at hand. Here’s Linda Holbeche: 

LH: I think it’s really crucial that if you want people to be change ready as individuals and then collectively as an organisation, I think that really only happens when people have more of a sense of ‘I’m doing this because I want to’ and I think people are often more willing to change when they know why and what’s happening than if it’s just imposed. 

PL: It’s about ownership isn’t it? It’s about people feeling that they’re actually part of the organisation not just employed by it. 

LH: A change ready organisation has sometimes more the challenge that people are so hungry for change and so impatient, it’s senior management who can appear to be the blocker on all that and that’s where again senior management really needs to be aware that whilst they do want change able organisations, they themselves have a responsibility for being clear in their own thinking about where and why they want people to be in that state because once you let the genie out of the bottle it’s hard to put it back in. 

PL: It makes sense that in order to make an organisation embrace change, to make change part of the DNA of the culture, you have to employ the right leaders and managers, making recruitment an intuitive place to start. 
Robert Galavan is the Dean of Social Sciences and the Head of Business and Law at The National University of Ireland, Maynooth. He teaches and consults on strategy, leadership and top team development. 

We hear a lot about the characteristics of individuals who are most able to handle change well. It’s a very comfortable idea that there is a shopping list that we can go out and look for in people, get those people onboard and they’ll be able to do it for us. Do you think that has merit or is it actually nonsense? 

Robert Galavan: Thankfully I think it’s nonsense because it would be a really boring world if there was one single set of characteristics or one person that was the ideal leader, and this is research that’s been going on since the twenties and thirties, looking for the ideal set of characteristics. A search for one type of organisation that’s suited to change or one type of person that’s suited to change is absolutely futile. 

PL: But Robert’s research has shown that HR’s position when it comes to becoming change ready is increasingly key. 

RG: One of the shifts that’s taken place is that the traditional strategic model of the last thirty or forty years has been about trying to create competitive advantage by an organisation designing itself, building itself, distributing itself and selling itself of a product that it could control the market with. Most organisations have recognised that actually to do that these days and to have the pace to respond to the market they need to network and they need to work with other organisations and they become a node in an international network of organisations. 

That shifts fairly radically the skill sets that are required inside an organisation, so it’s no longer one of legal control, financial control, engineering and process control but it becomes much more important that people can have trustworthy relationships with their partners, they can understand how to work with people in a creative way to find new opportunities out there and those skill sets don’t emerge from the traditional functions of marketing and engineering and finance. Those skill sets are actually best developed by people who understand people, which is the HR world. The question is now really are HR people up to it? Will they live up to this challenge and will they take it on going into the future? 

PL: Yes because this collaborative new world is a complex thing isn’t it and as you say for traditional HR in it’s traditional bunker – as it still is in many organisations I think it’s fair to say – are they the people, because they don’t use those skills themselves do they so if you’re saying that collaborative sharing way of behaving is that so throughout organisations of all sorts, where does that knowledge come from? How do you teach people to do it? 

RG: Well this is a shift to the importance of psychology and sociology and anthropology in organisations as opposed to the economics of organisations. Now economics is still terribly important to us but we more and more need to understand the social processes in organisations and there isn’t an obvious function in organisations that will bring those skills in other than HR. So the challenge is for HR to live up to this in a strategic way now and to say look part of our role is as the personnel people of the world but part of it is also as the strategic people who understand how relationships work inside organisations. If they don’t step up to it somebody else will. 

PL: GlaxoSmithKline is one of the world’s largest pharmaceutical and healthcare companies, so perhaps we shouldn’t be surprised to hear that they’re approaching the ability to change the organisation as a personal wellbeing issue. 

Nicola Riley is the Health Strategy and Vendor Manager at GSK and I asked her why they’re focusing so strongly on adapting their people to be resilient to change. 

Nicola Riley: There is no other constant but change so as employees functioning within small, medium and large organisations we have to be agile, we have to be flexible, we have to be resilient in order to cope with the demands of the day but also whatever the future may hold. 

PL: They have a range of programmes in place in order to boost resilience, going from company wide to individual level. They look at team resilience and personal resilience. At the heart of their approach, particularly for stressed executives, there’s the individual energy for performance programme. This includes blood tests, personal audits and even spiritual analysis. 

NR: We realised that we had an energy deficit, particularly in our senior groups in terms of sustainability and really in times of change it’s about sustaining our energy levels for the long run. So with that particular group we’re offering them our energy for performance programme, which is based on the corporate athlete which is worked by Jim Loehr, and this programme covers four key dimensions of energy. So it looks at the physical energy of the participants, the emotional energy, the mental and the spiritual energy and that’s very much looking at physical energy in terms of how they’re leading their life, the nutrition they’re having, whether they’re being physically active, what type of exercise they’re doing. 

We also then focus on emotional energy in terms of are they self aware, are they managing relationships, are they managing their emotional states to the optimum? And we look at spiritual energy which is looking at their deepest sense of beliefs and values and whether the way in which they’re currently leading their life is fully aligned to those inner most sense of purpose and belief.

PL: So this is quite a spring cleaning process for these people isn’t it? They have to be very open and honest with you about how they’re living their lives, what they’re doing, what they’re not doing and they’re assessed – you get input from their family and their colleagues. I presume people learn quite a lot about themselves that perhaps they didn’t know before. 

NR: They do. Sometimes it does cut fairly close to the bone in terms of the feedback, you know having been through the programme myself, in terms of the feedback that you get but I think it’s such a catalyst for change because people self-elect to come on this programme so they’ve already identified that okay they’re functioning very well at work, their outputs are very strong but they maybe have a concern about can they sustain this level of performance for the long run. 

PL: And you’re seeing really positive outcomes from this aren’t you, in terms of productivity, in terms of energy level? 

NR: We are. We have very senior sponsors through the organisation that are advocates of the programme, having experienced it and put their own teams through and at the moment we’re noting a 50% increase in self reported energy levels. 

PL: That’s very high. Are people over egging it do you think? Is it really a 50% increase? 

NR: Well I guess if an individual self reports they have a 50% increase in energy then they believe that to be the case so you can only say it’s as much as the individuals are giving us that information. 

PL: Now you’ve put three thousand people through this course so far, are you planning on rolling it out across the company? 

NR: We’ve currently offered this programme in fifty one countries so we’re looking to roll this out globally. It’s very early days, three thousand in terms of the global population is very small, it’s only been launched for two years so it’s sort of early days with this particular programme but the indications are that there’s a real thirst for it. 

PL: So at GSK they’ve put in place a truly holistic programme to deliver razor sharp focus in an environment requiring real agility. It’s one way of preparing individuals and the organisation to be resilient to constant change. 

Next month, in the second part of this podcast, we’ll be looking in-depth at how four organisations – Gate Gourmet, Look Ahead, Heart of England and Xerox – have tackled major change. That will be on the CIPD web site from the 2nd of June. Until then, if you’re looking for more support and advice on delivering change, take a look at the notes accompany this programme, they include links to factsheets, research and other resources. For now though, goodbye.