communication question 2

profileBayhawks22
CaseCommentary.pdf

1  

Is the CEO pushing too much change too quickly? Four commentators offer expert advice.

I. Kathleen Calcidise is a vice president and COO of Apple Retail Stores, headquartered in Cupertino, California.

Several years ago, I found myself in a turnaround situation with many parallels to Cheryl Hailstrom's. The company I signed on to lead had new external investors with high expectations about our growth potential and a management team resistant to the significant changes needed to hit those aggressive targets.

It's easy to see why Cheryl is frustrated. All the key indicators support her midmarket growth plan. She has a huge customer account in her sights and a legitimate sense of urgency; if Lakeland wants to ship in time for the holiday season, it has only a few months to design products, secure offshore production operations, and develop a marketing message that answers the branding issues. But she's saddled with a bunch of managers more interested in clinging to their familiar turf.

To get beyond this impasse, she'll have to make some changes. There's no reason she can't bring in experienced outsiders like Cecil and Pat, but she should pair them with members of the existing organization. I'd suggest appointing a team to guide the midmarket private-label development strategy and empowering the group with authority to do whatever is necessary to ensure on-time product delivery for the holidays.

Cheryl may also need to change her leadership style. What she sees as leading "by example" and relocating her office "to be right in the thick of the action" may be seen by others as coercion and intimidation. An emphasis on persuasion, inspiration, and negotiation might work better. She must start signaling her openness to hearing the concerns of people with divergent points of view.

Meanwhile, she needs to be communicating, consistently and enthusiastically, with her internal and external constituencies about how her growth strategy serves all their interests. Resistance to change will continue unless Cheryl can link her vision of expansion with their individual needs and expectations. I found, in my attempts to get some of the foot-dragging employees and board members to buy in to a vision, that it was best to frame it in bold contrasts. I compared the tangible future benefits of change for our organization, its employees, and its stakeholders with the dangers of doing nothing--which in our case would have involved bankruptcy and job losses. Whether Cheryl's message is as dramatic as that or not, it should aim to ensure that no one is blindsided by change. Surprises can only increase the fear and resistance that cause delays.

Perhaps most important, Cheryl needs to articulate a clear operating direction for Lakeland, one that specifies how structural and behavioral changes can be consistent with the company's most treasured values and norms and also improve performance. She can lead Lakeland's employees over barriers to change by affirming what they love about the place, even while she challenges comfortable ways of doing things.

To bring about cultural and performance transformation, I made it the explicit work of several teams. I charged them with identifying any obstacles to change and with recommending new structures, initiatives, and reward systems. By involving lots of employees, I was able to speed the process along.

I should stress that the company I worked for was in far more trouble than Lakeland. In two years, it went through three other CEOs, each with a different vision. When I came on board, time and money were running out, and internal expectations for my success were low indeed. Ultimately, several years after I moved on, the company did fail.

Cheryl, however, has a few advantages. Thanks to her past role with Lakeland, people there already believe in her. That's a big leg up. Still, she may be mistaking how much license it gives her. Obviously, she hasn't felt she needed to spend much time building consensus for her potentially risky product- expansion plan. She thinks she's already earned the support of her colleagues and investors. I would caution her: She needs to earn it anew each day.

2  

II. Debra Benton is the president of Benton Management Resources, in Fort Collins, Colorado, and the author of Secrets of a CEO Coach (McGraw-Hill,1999). She can be reached at [email protected].

If Cheryl were my client, I'd point out that her relationship with the company has changed. She's no longer the customer, she's the boss. But she hasn't established the rules of engagement of working together.

To do so, she should privately explain to each individual on her team how she works. She might say something like, "I operate with full disclosure and mutual respect. I will never make you guess what I want, and I don't want to guess what you want. We must communicate relentlessly about how we will achieve our goals. And after we've discussed an issue, we will come up with one voice, which will be spoken up, down, and sideways in this organization." As Cheryl speaks, she'll smile, maintain a pass-the- salt tone of voice, and touch the person's arm.

Once the ground rules for effectively working together have been laid, Cheryl needs to address the goal of taking the company to the next level. The growth targets were set by the board and aren't up for debate, so the sole issue is how to achieve them.

Cheryl should ask each team member, "What do you see as a priority? What stands in the way of accomplishing that goal? How can we change that?" The priorities named in these individual conversations should then be put to the group for discussion. Once the team determines one voice on each issue, it can assign responsibility, create a strategy, and set a time frame.

If Mark Dawson continues to oppose the plan in management meetings, Cheryl must ask him to step outside to talk. The conversation could begin like this: "You may or may not be right in your assessment. We don't know yet. But we have all agreed to this plan. Supporting the plan to my face and then shooting it down later does not show respect. I know your opinion on the obstacles ahead. And I know you have a lot of experience here, but even the minimum-wage people can tell me why it won't work. You are the cream of the Lakeland crop, and your job is to make things happen that others thought couldn't be done.

"When I ran Kids&Company, you worked miracles--you found ways to get things made quickly without sacrificing quality. You need to perform that same magic now.

"When you have problems with what I say, please talk with me first; I will do the same with you. I don't want to be told about roadblocks for the first time in front of others. I work with a full-disclosure approach, and I expect the same of you. If you won't or can't, I'll hire someone who will." While she's talking, she should again be speaking calmly, have a relaxed smile, and stand where she can put her hand on his shoulder and grip just a little too tightly.

If Cheryl isn't clear with this team, she'll be no better with the next. She should not make personnel changes until she has given the current team a chance. Once she sees people's reactions, she can decide who stays, who goes, or who gets added.

In addition, Cheryl must have the rules-of-engagement discussion with Wally Swensen, members of the board, and the venture capitalists. No one must have any doubts about how she will lead. When Wally mentioned his discussion with Mark, Cheryl should have said (with, of course, a relaxed smile, a pass-the-salt tone, and a firm touch ), "You have always made prudent decisions in your business; that's why you hired me. We can take this company to the next level without sacrificing quality. I will provide you and the board, as I have the management team, with full disclosure about what we need to do and how we plan to do it. If someone or something is a sacred cow and cannot be touched, tell me now. And if that restriction compromises our objectives, I will readjust our profit estimates. But if you want me to effect change, some blood will be spilled."

If the chairman, the board, or the venture capitalists do not let Cheryl do the job she was hired to do, she must decide whether to stay or go. No job is permanent anyway.

3  

III. Dan S. Cohen is a partner at Deloitte Consulting (soon to be Braxton) in Irving, Texas, and the coauthor, with John P. Kotter, of The Heart of Change (Harvard Business School Press, 2000).

Cheryl has walked into Lakeland Wonders like a bull in a china shop. She wants to change the culture--she complains that they're all dragging their feet--but she's the one who's out of step. She has shown little respect for the operating style of this 94-year-old company. She hasn't been listening to senior managers, and she hasn't been talking to the board of directors to line up votes for the upcoming board meeting. She 1ust expects everyone to follow her lead.

This is a very common mistake. Executives come in and say, "Here's my vision, let's go forward." But they fail to create any sense of urgency about why a change is required. In other words, they don't lay the groundwork to allow the change to take root. Unless Cheryl can figure out a way to get people excited about this new direction for the company, her vision will die a quick death. Mark is already throwing up roadblocks; he's concerned about the union's reaction to offshore manufacturing, and he's gone so far as to speak with the previous CEO. The head of marketing raises branding issues and resists working with a new design firm. And the sales director seems swayed by Mark's argument against offshore manufacturing. The only team member who supports Cheryl's plan is the CFO, and he's looking at it strictly from a numbers perspective.

For the team to come together, Cheryl has to stop talking about "my" vision and start acting on "our" vision. It appears that she and the senior management team never really developed a common vision of the company's future. If objectives aren't obvious to members of the top management team, what are the odds that the rest of the company will understand them, let alone get behind them?

My immediate advice for Cheryl is to take a minute to reflect on her performance over these past few months. In her quest to grow the company, she has done several things right: She moved out of the secluded corner office. She enhanced the bonus plan. She has tried to improve productivity. But the fact is, Cheryl hasn't thought through her strategy very well. For instance, union negotiations come up in nine months, but she hasn't yet brought a union rep into these discussions. She seems to think that the company will deal with the negotiations when the time comes. The same is true for the branding issue. Elaine says she can handle it, but she hasn't proposed a solid plan.

The most troubling aspect of Cheryl's performance is that her driving style isn't aligned with Lakeland's culture. She hasn't recognized that rather than increasing urgency, she is creating fear and anger among her executive group. If she doesn't adjust her operating style, she will continue to lose the confidence of key stakeholders. It's almost to the point that Wally, once her champion, fears that she could tear the company apart. And without Wally, she has no chance of winning the board's approval.

To regain Wally's trust, Cheryl must mend her relationship with Mark and show him why he should change his feelings and behavior to support her vision. If they put their heads together, Cheryl and Mark may come up with a new plan that addresses the growth goals and better fits Lakeland's culture. For instance, Lakeland might consider opening a subsidiary that does offshore production and sells to lower- end markets, thus eliminating some brand issues.

It's true that the board set aggressive growth goals, and Cheryl is working hard to meet them. But she can't do it alone. Unfortunately, she has yet to reach the emotions of the senior team, and she must if she's to ignite their active support of her change plan. Without that support, it doesn't matter if her vision is objectively sound; it won't get off the ground until she deals effectively with the current level of complacency among her senior team.

4  

IV. Nina Aversano has held executive positions at IBM, Xerox, AT&T, and Lucent Technologies, among other companies. Currently, she runs her own consulting practice in Kinnelon, New Jersey.

It seems that Cheryl believes that her plan is the only way to grow the business. I fell into that trap when I was starting my career at IBM. I knew my proposals were right, so I was frustrated that I had to spend time convincing others that my ideas needed to be implemented without delay. Then a wise and seasoned manager said to me, "Nina, people support what they create. You need to engage others in the creation process, or you are doomed to failure." What a lesson! I had believed that involving more people in the planning process would slow things down, but in fact, the opposite is true.

Cheryl also needs to learn a related lesson: "There's more than one way to rope a calf." A Xerox veteran with a pronounced Texas drawl told me that. I'd been hired to launch a line of word processors, and I can remember looking at my colleagues as though they were the "great unwashed." They'd never sold in this nontraditional (that is, non-copier related) market; they didn't understand the technology; and, in my mind, they had no understanding of how to build a launch plan to meet our aggressive objectives. But this experienced manager wouldn't let me discount the thinking of others. He patiently discussed the alternative views and forced me to see that there are many ways to succeed. It wasn't easy, but I learned to try other people's solutions--and I found that approach very liberating. Cheryl might, too. It seems crazy that she hasn't asked Mark, her key manufacturing manager, for his solution, especially since he's delivered for her in the past.

Like Cheryl, I've also had to deal with unions. I joined AT&T Network Systems (the offspring of Western Electric--a 100-year-old manufacturing, R&D, and distribution arm of the former Bell System)-- in 1990. Bill Marx, the president, chose leaders who he thought could change the culture of this former monopoly without wreaking havoc. I headed up an organization of roughly 1,500 installers and managers; most were members of the powerful Communications Workers of America and the International Brotherhood of Electrical Workers. They were predominantly white men, aged 48 or older, with high school educations. They were well trained, dedicated, and highly respected by the customers. But the unit was hemorrhaging money.

When I walked in the door, I felt as if I had been thrown into some alien culture; I wasn't sure how to begin to turn things around. I knew I needed the knowledge that these managers possessed, but it was clear they didn't want me there. So I began by reviewing the financials. Then I met with every local union president to go over the state of the business in detail--the good, the bad, and the ugly. And you know what? With the exception of one old, crusty union chief, I got a great reception (and even he came around eventually). Then I held town meetings with all the employees, in groups of 50 or fewer. It was usually just the rank and file and me--I didn't want lots of supervisors there to constrain the questions.

It was one of the most valuable learning experiences of my career. Those people were the heart and soul of the business. They wanted it to succeed, and they were open-minded enough to let me share the realities of the business and seek their opinions and ideas. Together, we turned our losses around and built a highly competitive machine. Cheryl would be well served to talk to the union members about her plans and solicit their help in making Lakeland more competitive.

Finally, our young CEO needs to recalibrate the board's expectations. Yes, growth is needed, but the targets must be realistic. The "growth at any cost" mind-set will be disastrous for this company. Cheryl has many of the right ingredients to make a great leader. She needs to move with speed and intensity to build a new culture from the strong foundation she has been given.