How does a responsible, large employer, decide how to set salaries for their staff each year?...
You are a bus driver. The bus, your company, is at a standstill, and it’s your job to get it going. You have to decide where you’re going, how you’re going to get there, and who’s going with you.
Most people assume that great bus drivers (read: business leaders) immediately start the journey by announcing to the people on the bus where they’re going—by setting a new direction or by articulating a fresh corporate vision.
In fact, leaders of companies that go from good to great start not with “where” but with “who.” They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats. And they stick with that discipline—first the people, then the direction—no matter how dire the circumstances.
Jim Collins – Good to Great (Oct 2001).
I enjoyed Jim Collins’ book. I remember subsequently being very disappointed when my business school professor was scathing about the flaws in some of Jim’s research. Perhaps it was professional jealousy. I tend to view many business books like I do newspaper stories; they may or may not be literally true but they often inspire new thoughts that help me challenge my thinking.
My favorite piece of Jim’s book is the section starting with the above passage. Where I would modify it, however, is to say that the ‘who’ and the ‘where’ are interrelated. If you have a business where the current teams are capable of maintaining the status quo, you have a choice to settle for that, or change the team.
The hypothesis is that to radically change a company requires changing some of its people. For example, improving a company’s performance by 10/15% is certainly possible with an incumbent team. In fact, you are probably better placed to squeeze marginal improvement from a business with the existing insiders whose institutional knowledge will be an advantage over new blood.
Collins talks about BHAG or Big Hairy Audacious Goals. When a company wants to truly reinvent itself, when the alternative is a slow or rapid decline into obscurity, then this is when one has to break with tradition. There are plenty of examples — Apple’s return to success following Steve Jobs’ return, IBM’s turnaround under Lou Gerstner, GE under Jack Welch, Intel under Andy Grove — and while way too early to declare any victories, BP under Bob Dudley.
In each of these cases, the fundamental shift of strategy simply was too much for the entire incumbent leadership teams to grasp, and consequently some have no choice but to leave. These are the toughest of all business decisions. When Steve Jobs returned, he decimated his Board and the management team he inherited, with over 25% turnover in his leadership ranks. While they have different reputations for how they made the changes, each of the leaders above were clear where they wanted to go, and made difficult choices to let talented people leave if it was clear they were stuck in the past.
Figure 1 – The Adoption Curve
Large-scale change in an organization takes time. Most research suggests it takes between 5-7 years to truly embed large scale ‘cultural’ change. The reason is it requires shifting people’s perspectives, their frames of reference, and eventually arriving at a new equilibrium. The chart above is often used to describe the take up of new technology, but it also reflects corporate change initiatives. The question is, just how patient are we prepared to be with those at the end of this curve?
When we talk about change we often categorize the ‘types’ of reactions in our audience using this classic 2 by 4:
Figure 2 – Champions and Saboteurs
My experience is often that most change processes mobilize 20% champions, with 60% falling into passengers and skeptics and the remaining 20% fighting a battle to sabotage the change.
Change Means Changing People
The battle for the hearts and minds of the middle 60% is the crucial battlefield on organizational change programs. Winning over a majority creates a ‘tipping point’ beyond which we can be confident of succeeding with programs goals. Sadly, the reverse is true. If we lose these ‘fence-sitters’ to the skeptics and saboteurs, then our program will most likely fail.
To help us in this endeavor we can leverage our early adopters/champions. This is critical. They can become powerful role models and symbols of change. They often have much more credibility than an external change consultant and can relate far better to their colleagues concerns and reservations. They are not difficult to find and should become the faces of the change initiative.
The task at the bottom of the curve is different but almost more important. If companies are slow or reluctant to confront the saboteurs, then they run a high risk of fanning the flames of discontent and cynicism. People will look at the saboteurs and ask themselves the question why they are tolerated? They will also wonder about the leadership appetite and resolve. Will personal relationships with some of these people cloud judgment?
Any change will only be achieved by consciously tackling the saboteurs. How we do this is certainly as important as ensuring we have the resolve to face difficult individual conversations. The how must simultaneously honor the past, provide individuals with dignity, and reflect well on the sponsoring company.
The challenge of dealing with poor performance and behaviors is never easy, and it is particularly difficult if we are forced to say goodbye to people with whom we have a personal relationship. At the same time, we must keep a relentless focus on the ultimate goal. The survival and flourishing of the company is more important than a single individual, especially if they are in a position of influence.
Jack Welch once wrote on this topic:
My son John must have been eight or nine when he was sitting on a school bus that stopped for a pickup. We were living in a small town at the time. A kid climbed on and went straight for him and took a swing. The fight broke up quickly, but John had no idea what was going on. That night at dinner he told us what happened, and I asked about the kid’s last name. As soon as he said it, I knew. I had asked the kid’s dad to leave GE. I felt terrible. Terrible! But I explained everything to John. It wasn’t like the guy was being asked to leave immediately. It wasn’t working out, and he was being given time to find a new job. I was not being cruel.
In fact, I’ve come to learn that the worst kind of manager is the one who practices false kindness. I tell people, you think you’re a nice manager, that you’re a kind manager? Well, guess what? You won’t be there someday. You’ll be promoted. Or you’ll retire. And a new manager will come in and look at the employee and say, “Hey, you’re not that good.” And all of a sudden, this employee is now fifty-three or fifty-five, with many fewer options in life. And now you’re gonna tell him, “Go home”? How is that kind? You’re the cruel lest kind of manager.
Jack’s quote reinforces that individuals who have mentally decided they don’t want to join us on our journey are always better off leaving and going elsewhere. There is often some angst and emotion but ultimately, particularly for those with deep technical skills, there are a multitude of bidders in the market place for them. By turning a blind eye or telling ourselves that despite their obstinacy we want to find a way to ‘accommodate them,’ we are actually condemning them to a life of purgatory and unspoken ostracism.
Doing the Right Thing Professionally and with Dignity
While there is never an easy way to tell a long serving employee it is time for them to move on, there is definitely a wrong way to do it. Being forthright, generous, caring, and helpful definitely softens the blow.
Sadly, there are environments where employees have had their desks cleared and are marched off the premises. This is a terrible approach and speaks of a callous attitude that is never forgotten, particularly by those who stay. The key is to deal with people as you would like to be treated yourself. Senior management should to some extent treat an exit in the same way as they think of a hire; it should include management time, a celebration of their past contributions, the opportunity to say goodbyes, have clear terms for the employee, and some flexibility.
This is where a formal exit program is sometimes helpful. At several of my clients whenever there have been wholesale change, they have adopted something of a programmatic approach to leadership exits. In a 2-year period one client changed 50% of its senior leadership cadre population. It did so using a standard redundancy approach that allowed individuals a soft landing and provided generous assistance to bridge to a new job or into early retirement. The vast majority of these individuals still have a very high opinion of the company. In fact, several of them remain important advocates for the company in supplier and vendor companies. They have found a great new employer who values them, they are much happier than they were, and they have still kept a favorable view of their previous employer.
No Sentimentality but respect and dignity
I am not sure there is a place for sentimentality in change or for business generally. However, I strongly believe there is a critical need for dignity, respect, and professionalism. Taking a long term view of change and relationships with long serving employees is important. If one narrows a decision to let someone go to just the immediate transaction, I fear the longer term damage will cost far more to all involved.
No company should take on a major organizational change program unless the prize is very large. On this basis, taking time to ensure that the necessary changes in personnel are handled well, with care, and with a personal touch, is in my experience a relatively small investment that pays huge dividends in the long run.
This said, changing a company does mean changing the people. Many will adapt and become better leaders and managers as a consequence. Others will be unable or unwilling to make the journey and in these cases, a company must confront them head on. In doing so, sometimes old allegiances and unwritten commitments will be reexamined. The choices are hard, of that there is no doubt; then again, the question is, is anything really important ever easy to achieve?
David R Oxley is a Leadership and Organizational Change Advisor. Originally a management consultant with E&Y, David has spent the last 15 years working in senior HR positions with companies wishing to transform their operations. Currently David is advising a large Indian energy and consumer business on organizational change. David is a graduate of the University of Notre Dame, the University of Phoenix, a Fellow of the Chartered Institute of Personnel & Development, and is currently pursuing his Doctorate at Cranfield University. He can be reached at David@DavidROxley.com
Originally published December 2015
 Kotter, J. (1995) ‘Leading Change – Why Transformation Efforts Fail’, Harvard Business Review, MARCH-APRI, p. 12.
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