Serving Leadership Sunny-Side Up

Is all this a bit too touchy-feely to be true? Duck believes that senior managers are out of touch with the people in their organizations. She also contends that despite the hue and cry over the importance of communication, not much actually takes place. CEOs say too little and — often — say it too late. And the consulting firms they engage may not provide adequate consideration of the psychological and emotional residue of change on the workforce. "Many consultancies are more concerned with the nuts and bolts of the transformation, not the rank-and-file wielding the nuts and bolts," Duck charges.

But nearly all consultancies will argue that they do address change management issues. Indeed, phone calls to six major firms, including Accenture, Booz Allen, and McKinsey, elicited responses that change management is a routine part of strategy engagements and implementations. The difference regarding BCG: They do not have a senior partner whose sole purpose is assessing and managing the human side of change.
Some are beginning to repurpose their engagements to confront human behavioral issues — Booz Allen senior vice president John Harris says that the New York–based firm "is developing a series of programs for staff to help them be more effective in interpersonal relationships involving change management." But other than a few boutique firms specializing solely in change management (see sidebar), most consultancies view business transformations as just that — a transformation of the business. This is illogical, Duck contends, "because people are the business."

Failure and Frustration

Pity the people, then, in a business transformation. Take the case of a merger of two companies of equal size and stature. Employees intuitively know that there is a strong likelihood of a headcount reduction postmerger, but don't know if their heads are the ones to be lopped off.
"They're not sure they're staying or going, and in the meantime they're told to work extra hard to make the merger a successful integration," says Duck. "What this produces, from a medical perspective, is stress — or what I call distress — characterized as enormous wear-and-tear on the body, sleepless nights, crying unexpectedly. Few things cause distress more than the high-demand, low-control situation you experience during a business transformation. Add high visibility, the self-consciousness that derives from thinking you're being watched, and fear — thinking you will be asked to do things you don't understand or have the skills for — and you've got one shell-shocked employee."

Companies typically believe that the antidote to stress is simply to assure employees that they will maintain their jobs post-transformation. "They think that once people know they're okay, that's the end of it," Duck says. "But what about all the other stressors? Sure, you may still have a job, but what about the quality of that job? Whom will you work for, and do you share that person's values? Do you even like them? Will you have to learn new technology, and will this technology replace the value you bring to the organization? Will your peers keep their jobs? The myth is that once everyone knows they have a job, the stress ends. It's only just beginning."

But isn't transformation an organic process thwarting the ability to answer all these questions at the onset? Doesn't change spread in unforeseen directions once sprouted? For example, an HR outsourcing project may start with payroll and then gradually embrace benefits and employee training, neither of which were planned when the project was announced.
Duck concedes that many companies aren't exactly sure how the new organization will look, feel, and move post-transformation. "People dislike ambiguity; they want the blueprint, and that is not always possible at first," she observes. "They want to know what will be expected of them, and what resources they'll have, and how they will be measured, and these answers may not be apparent. But that doesn't mean that the company should not anticipate the questions. Work with employees to unearth the questions and figure out the answers as the change progresses."
She calls this dimension of communication "the socialization of decisions." In effect, it calls for communicating with employees, not to them.
There's a difference. Employees, after years of service, arguably end up knowing more about what works and what doesn't in their areas of responsibility than senior management, yet they rarely are solicited for their opinions on a business transformation affecting their work processes.
"The impacted group needs to be involved early in the process of transformation," Duck asserts. "Their opinions of the real barriers need to be understood thoroughly, and the overarching goal of the new strategy, whatever it is, should be to solve their problems in a way that works best for them. While a new strategy is predicated on a company's business performance issues, you will not get traction if you don't consider the human performance issues. Besides, you may end up spending a lot of money to fix something that wasn't broken to begin with."

Setting the Stage

CEOs bear the blame for failed business transformations, yet many fail to realize the root causes of that failure. Duck argues that a major factor is stressed-out workers. She says that CEOs may be good at crafting a new strategy and expressing it in business terms, but they neglect to articulate it in terms of the human impact. "CEOs and business unit heads are convinced that the brilliance of their ideas and plans alone will win people over," she says. "But people want to know what's in it for them."

Frequently, a CEO will think he or she has made the case for a business transformation, only to find out later that no one bought the rhetoric.
"I once worked with a client, a very charismatic CEO, who got the top 300 people from the company together to hear his new vision and get their new marching orders," recalls Duck. "He gave what he thought was a real stem-winder of a speech. As part of the engagement, we had set up this instant polling system whereby a series of questions would pop up — stuff like 'Do you understand the new mission?' and 'Do you think it will be successful?' — and the attendees would provide an answer. Only 47% said that they understood what he was talking about, and far fewer believed that the strategy would be successful."

CEOs tend to think that they need only to inspire managers and the workforce, and market share and earnings "magically will rise," Duck adds. "Think again. If people feel disconnected from the goal, no matter how laudable, they're not motivated. They're what I call demotivated."
One CEO who has leveraged Duck's expertise is Jerre Stead. Stead has held numerous CEO positions over the last 25 years, and today sits on six corporate boards (he's the chairman of two) and teaches at two universities. He met Duck in 1982, having heard her speak on change management at a seminar. At the time, he headed up Honeywell's European office and was about to be brought back to the States to run the buildings and homes group, a once-profitable division that was losing millions of dollars. Duck, an independent consultant at the time, was engaged to solicit from the workforce what was going wrong — not an easy task. "They were Minnesota engineers for the most part, many of them Scandinavians uncomfortable opening up," Stead recalls. "They had felt very defeated, since their organization was the historical origin of Honeywell and had been very profitable. She got them in one-on-one meetings to open up and be frankly honest. Then, she prepared a concise plan of what was needed from a human standpoint to deliver great results. We ended up doubling our net income every year after that for the next four and one-half years. Jeanie was absolutely critical to this."

So critical, in fact, that Stead engaged her services again and again. At Square D Corp., an 85-year-old factory automation company he headed in the late '80s, Stead brought Duck in to reposition the workforce "to make a comfortable company a very successful company," Stead says. "Jeanie was instrumental in developing what we called the Vision College, an educational program on change management that we copyrighted. Over a two-year period, 25,000 workers were given courses on teamwork, values, really fundamental stuff. That's when she coined her '3-P' phrase, for power, protection, and permission, which I've used at every company I've led since. It's the power to have ideas, permission to make decisions, and protection from when you've made a mistake to learn from it and move on."

Stead later engaged Duck when he was CEO of Global Business Communications Systems, now part of Lucent Technologies; Regent Corp., now part of Computer Associates; and Ingram Micro, which he led as CEO and chairman until recently. "In all cases, Jeanie dealt with the psychological and emotional aspects of change, whether it was a company I needed to downsize or one I needed to grow," Stead says. "Her talents work in different directions."

All Together

How can a CEO motivate a workforce during a major business transformation? By talking about transformation in the context of how an employee's job will change, what they will be held accountable for, and how their performance will be assessed, Duck says. "You need really clear performance objectives and expectations that are tied to what the company is trying to achieve," she explains. "Unfortunately, business leaders only tell employees what they want the company to be, not what they want employees to do. Employees need to understand their connectivity to the goal. In other words, for us to achieve a 10 percent increase in market share means that you must do this, this, and this — real job descriptions and responsibilities that ultimately are measurable and linked to incentive compensation. It's what I call productive anxiety."
At the same time, she warns against micromanaging. "Employees need to feel that they have enough freedom within their jobs that they can show some ingenuity," Duck comments. "You don't want automatons working by rote. You do want employees who will challenge you and still let you coach and encourage them. For every dimension of change, you must balance the need for clarity and measurement with the emotional aspect of that change."

In fact, Duck maintains that what employees believe about the business transformation, whether it is accurate or not, conditions their behavior during and after the transformation. If they consider a particular IT project to be misguided, for instance, all the numeric reasons why the project is sound will fail to sway them. "If companies focus on the corporate changes alone and not the personal experiences of those changes, then employees will not see the change objectively or clearly," Duck says.
Yet another problem with business transformations is their ubiquity. Change is constant. But Duck says that companies that don't stick to a transformation until it is completed, and then measure its progress over time, will have greater difficulty convincing the workforce of the necessity for the next major project or acquisition. "Companies must resist the program du jour phenomenon, where you start the next new plan before the last one has fulfilled or failed its purpose," she explains. "Not only do you end up with a cynical and fairly burned-out organization, but you also embed into the organization some serious counterproductive instincts to resist change. You can't go into the next battle without knowing if you won or lost the last one."

She advises a rigorous postmortem after each change effort to discern which parts of the new strategy are working and which are not.
"I think it's critical for a project's steering committee to stay together until the new process is fully functional and operating," Duck says. "Typically, the committee will disengage early and provide no follow-up or monitoring activities. When problems erupt, the steering committee is gone and employees have no one to report them to. Consequently, they become jaded by negative experiences and will view the next change effort skeptically."

To keep employees energized for change and after it, Duck says that the management team must itself be energized about the new strategy or project, and able to articulate it in such a way that employees understand it clearly. Additionally, they must generate "a healthy dissatisfaction with the status quo" within the workforce and a "genuine appetite" for change, she adds.
But, as Duck writes in The Change Monster, "getting close to your own organization is tougher than getting close to your customers. In the absence of communication from leaders, the organization will seek information from other sources — whether those sources know what they're talking about or not. Silence doesn't stop the conversation; it just means that leaders are not participating in it. … It sounds obvious to say that listening to others' perspectives is a fundamental skill for effective leaders, but it is a skill that is often ignored."

On the Job

Duck does not run some rarefied change management practice within BCG or sell it as something separate from the firm's traditional consulting services. Instead, she accompanies other BCG consultants on specific engagements to evaluate and manage the human impact of the considered change. "My job is to help clients effect the transformation with the least emotional disruption and the greatest traction possible," she says.
Recently, she assisted BCG vice president Mark Lubkeman, a strategy consultant, with the change management aspects of a major bio-pharma client, which did not want its name divulged. "What I do is hard analytics, which are very important to me and, of course, to my clients, giving them the confidence that the path forward is the right one," Lubkeman says.
"In my work with Jeanie, she takes the same disciplined, analytical approach to the human impact of the business transformation. It's a nice marriage between hard business and the softer recognition that people are involved here. In concert, we present a way for the client to overcome barriers to change and move in a new direction."

What specifically did Duck do? Lubkeman says that she conducted employee surveys and senior management interviews to "appreciate what they were getting into. Then, she helped the team define a vision for the change effort right down through the organization. She also shaped communication and training programs between front-line managers and staff, monitoring them for what was working and what needed corrective action. She was able to pinpoint bumps in the road, the pockets of resistance that were likely to emerge from groups of employees, and she created the plans that were needed to address this."

The strategy ultimately was successful. But would it have failed without Duck's efforts? "Well-conceived strategies that are successfully implemented must consider the changes that the strategy will have on the organization," he responds. "What is different now is that we are far more disciplined and systematic in effecting positive organizational change that is synchronized with the strategy, and that is a very powerful combination. Strategy is only as good as it is executed."

Sidebar: How UBS Nurtured Trust and United Nations

UBS Global Asset Management is a composite of executives from several countries, business cultures, and nationalities tossed together in the wake of multiple mergers and acquisitions. The Chicago-based asset management company, part of UBS AG, not only had executives steeped in different ways of doing business, but also a belief in each one that his or her way was best. Distrust ran high, territorial issues were common, and the whole organization seemed locked in inertia. "The morale was so low that we feared there would be mass departures and the whole group would break down," sighs Brian Singer, UBS Global Asset Management managing director.