There’s Change. . . . and Then There’s BIG CHANGE Implications of the BOB Era and How Public Relations Professionals Ca

1. There’s Change. . . . and Then There’s BIG CHANGEImplications of the BOB Era and How Public Relations Professionals Can Lead Organizational Transformation Kathy Lewton, Steve Seekins, Ken Trester APRs & Fellows Lewton, Seekins & Trester Public Relations Society of America International Conference October 28, 2008

2. Change“You know it don’t come easy” • The forces demanding change have been like a tidal wave . . . . . • But in a post-BOB economy, when everything is moving at warp speed, the forces will be overwhelming and will overwhelm our organizations unless . . . . . we can manage change • And create a culture where change is the norm  Change becomes a core survival strategy

3. Full ppt deck available at www.LSTLLC.com

4. The forces demanding change are ever more powerful • In an economic downturn, nothing stays the same, change is inevitable • When consumers or businesses spend for anything, they will expect and demand both quality AND service • Focus on “quality” now has a life and momentum of its own -- customers will expect the very best – no tolerance for errors or mistakes • Unhappy consumers know how to dial 1-800-LOCAL TV REPORTER • And a highly visible group of companies doing it right and getting the headlines makes it harder for the rest of the pack

5. And yet, our organizations and our people . . . . . • Are by nature resistant to change • Are built on policies, procedures, process – “We’ve always done it/never done it THAT way” • And now – when people are fearful, angry, unsure – they are even less likely to be able to hear, let alone listen and act

6. It’s not the best of timesto push for change • Employees – those who aren’t fleeing – are tired, frustrated, cynical • Managers can be apathetic, or downright antagonistic  Powerful leadership and communications are absolutely essential

7. When simple change is not enough, and transformation becomes the norm. . . Always remember: Culture eats strategy for lunch!

8. Enter the hero(ine) The CPRO/CCO transformed into: Chief Culture Warrior

9. CEO Can’t Do It Alone • CPROs are in ideal position to help: • Environmental scanning: Trend spotters -- hear the drumbeat, collect and “own” data, sense danger that failure to change can bring • Have tools for telling and selling – defining and describing the new vision, and persuading • And can adapt them for a situation where the audience is nervous, afraid, in a panic • Work effectively with management peers who are the critical forces in transformation • We can partner with the CEO to calm the waters and lead transformation

10. To begin our transformation, we need to figure out:How transformation works(and doesn’t) What’s going on in our organization (and with our CEO) Where we fit in all of this(and how to claim our seat at the table)

11. And the survey says:

12. McKinsey global survey found: • Organizations need to change constantly, but achieving a true step change in performance is rare • In recent survey, only a third say that their organizations succeeded in making it happen

13. What McKinsey found • New McKinsey global survey on organizational transformation found that most organizations seek transformation in order to move from good performance to great. Those that succeed: • Have well defined financial and operational goals AND a genuine NEW LEVEL OF PERFORMANCE • Had HIGHLY VISIBILE CEO • Had large-scale COLLABORATION across biz units • Had COMMUNICATIONS THAT HAD BALANCED FOCUS – building on successes while also addressing problems • ENGAGED employees at all levels

14. And the failures (2/3 of companies surveyed) . . . . . • Ill defined goals, and goals that were not a “stretch” – but lack of clarity was the biggest problem • AND (surprise) ineffective communications • Low visibility CEO • Messages skewed – either too much focus on problems, or only focusing on the good things and the future, and ignoring the problems • Communications programs used one or two tactics, didn’t push messaging to front lines

15. Then we drilled down in an industry* where change is the norm for survival Surveyed CEOs and senior PR/marketing leaders about culture change and where PR/Communications fit *Hint: ER, MRI, IV, CT, MI, $$, HMO . . .

16. First, PR & Communications Pro’s • Surveyed more than 60 very senior practitioners • Most at VP/SVP level and 20+year veterans • We reported some of these findings in the June issue of PRSA’s Tactics

17. Culture change critical to strategy, less so for survival

18. CPRO’s most commited to change

19. Culture is managed in many ways – no magic bullet

20. Culture is managed in many ways – no magic bullet

21. Top management fully committed – it goes downhill from there

22. CPRO’s on culture change team, but not as leaders (yet)

23. Why NOT leaders?

24. Then we looked at culture change from the CEO POV • CEOs – not scientifically selected, but very representative of hospital types • Couple of huge academic medical centers, multi-state system, urban non-teaching, urban “community hospital,” several suburban hospitals • Range in size and geography from NYC to N.California – and Utah, Michigan, Ohio and others in between

25. Q1: What do they want to change?

26. Many say it’s customer service • We want our employees to FOCUS on delivering good customer service • “We need to become more driven by needs of the customers”

27. Some say it’s all about employees • ” I believe that happy employees will make for more customer satisfaction . . . • BUT I do not really have any data to prove that, nor do we have a plan to make it happen.”  Calling the CPRO!

28. Others say quality is job #1 • Well it’s quality – I mean that’s all there is. ”Anyone who says do something else without the grounding in quality is just wasting time, trying to dance around the edges. You do quality, everything else falls out from it – you get better service, you get growth, you get bottom line benefits. “Skip quality and all you’re doing is marking time till you don’t have a choice.”

29. Some wanted to change more fundamental values • Every place I’ve worked I’ve focused on the need for a positive culture – it’s about people, helping them reach full potential. “It’s about being open, transparent . . . how leaders behave, communication, no blaming, treating people with respect.  When times are hard, we need to communicate more.”

30. Especially true in BOB era: • National W/S survey two weeks ago: More than half of U.S. employees have not heard from their companies’ leaders about the impact of the financial crisis. • 71 percent felt their company’s leadership should be communicating more about the economic crisis. • 70% feel that their company will be negatively affected by the crisis -- 26% expect layoffs, 62% say employer will have trouble meeting goals. • At companies where leaders have communicated with employees, 86 percent said that senior executives or management who have discussed the crisis were seen as “believable” and “trustworthy” sources.

31. And some want to change it all “We started with a good culture, but it was disconnected from patient service, so now we’re integrating it all including service, quality, staff development and growth, with bottom line impact. ”It’s a BIG BITE – we are changing the entire way we operate.”

32. Key insights: • CEOs at high performing organizations realize that achieving a common vision (what should we BE) is critical to achieving the desired result – and CPROs can and should be involved in both. • Some clearly ID employee satisfaction as foundation for any change and recognize communications as a core competency.

33. Q2: How do you manage change?

34. Some aren’t sure. • “We don’t have a formal change management process – but we need one. “I’m not sure where this will be managed –needs to be close to me, Community affairs? Maybe marketing??” • “Our marketing staff and quality team are the leaders of this initiative. ”It has been interesting to see them working together since that is not necessarily a regular fit here.”

35. Most say “the buck starts here” “I manage the process. Me. Hands-on. If you’re going to ask every employee to change the way they think and act, the CEO has to do the same, be the person at the lead in every meeting. “It can’t be a speech and then introduce someone else who is responsible.”

36. Some say engage senior leadership Top and middle management have to drive it – but they don’t get that yet. “It’s Baldridge – senior management team are the leaders. It starts with us. We have the scorecard and track our resources. Communication is essential!”

37. Some bring in outside experts • I’m using a consulting firm to help make it happen, using their standard approach. And I got the two unions to participate. • We were starting from ground zero, so we brought in an acknowledged leader and said tell us what to do. “It’s a science and your garden variety executive or manager doesn’t know the science.”

38. Many created formal structure • “We created an entire infrastructure headed by one of the leading experts on quality, with a fully formed team. They report to me and it’s Job 1.” • “Using Root Learning approach, we reach every one of our 15,000 employees.” • “We use a Plan for Excellence and it’s the basis for how we plan, how we communicate. Its values lay the foundation for goals– corporate, unit, individual performance.”

39. Communication is critical “We work hard at communications. SVP PR/Mktng is on senior management team and reports to me. I meet with the communications team monthly so they know what I’m thinking.” Early and prompt feedback is critical, as is holding people accountable.

40. Leadership is the bottom line • You don’t “manage” culture – you create it.“You have to live it, model it, set examples, lead by example. Breath optimism into the story.” • “We have to be seen as engaged. It’s how we model the behavior.”

41. Key Insights: • Most get that it starts at the top – no if’s, and’s or but’s – it’s the CEO responsibility • After that, there’s less uniformity • Some use the “add on” method – give it to someone as a new part of their existing job (so it’s not Job #1, but Job #43) • Some hire consultants (so it’s the consultant’s program, and then they eventually go away) • The ones that seem most successful pony up – hire staff, create a fully embedded quality team. They dedicate substantial, if not massive, resources.

42. Key Insights • CPROs not often mentioned unaided as part of the team making the whole thing happen . . . . but when probed, most (not all) get that the function should involve the CPRO as a leader • And the presence of some CPROs at the CEO’s right hand, as lead change agent, shows that we can play this role.

43. Q3: What are the barriers to change?

44. #1 is middle management • “Middle management feels disenfranchised by change, so you have to drag them along. “ • “Managers are neither hired nor trained to be LEADERS. We had to teach and train and require and motivate and reward. But they CAN ALL do it.” • People don’t like to change what they’re doing, especially when they think things are going pretty well. “But since I fired three directors, that may change the dynamics.”

45. Then there’s the challenge of sustaining momentum Keeping going. “This is not a one-month thing – it’s FOREVER. So if you can’t do it, then get out now.” “It’s hard to sustain momentum among the staff.. You can change ops and systems, but its people who impact the customer.” Taking a short-term view. “You have to say this is long-term and stay the course, but it’s hard to keep the workforce engaged through a long-term process.”

46. The “this too shall pass” mentality • “I inherited a place in shell shock from the “initiative of the month.” They had so many of these short-term, gimmicky programs – customer service training (a 45-minute video), MBO, gainsharing – the employees now look at any new initiative with great cynicism. “They figure they’ll wait it out, keep doing what they’re doing, and it will go away.”

47. Key Insights: • Changing attitudes of middlemen and middle management is a key task – and as we all know, extremely difficult • Have to cast change as a win/win in realistic terms and involve them in leading the process

48. Key Insights: • Every team member must have culture change as part of their performance accountabilities, which means a massive communications effort that never quits – just keeps on going • Chief communicators can help articulate a vision that enhances motivation.

49. Q4: Where do PR/communications fit in the quest for transformation?

50. Center stage . . . • “Their leadership has been a critical success factor. We had to create from the ground up an entire communications system, dozens of facilities in several states – and it had to be based on first-line supervisors as the communicators. “WOW! Our PR team created the system, the training, DID the training, for months. Now they manage the info flow. It is the rock of our success.”