11

The PCo Business Transformation Case

Sharon had a hunch that joining PCo as the company’s new director of learning and organizational development would be an opportunity of a lifetime. PCo was a midsize, privately held developer and manufacturer of chemical additives, with research facilities and manufacturing plants in the northern half of the US. After the sudden resignation of its long-time CEO, the company’s board promoted Petrina Kovac, PCo’s young chief operating officer, to the company’s top leadership position. Petrina had just joined the company six months earlier, and had already impressed the board with ideas for strengthening the company’s rather tepid market position. With the departure of the prior CEO, the company could now move into high gear with changes needed to produce much-needed market and financial improvements.

During her job interview with Petrina, Sharon learned that the company’s product development, production, and sales processes were seriously outdated. If PCo was going to survive into the next decade, radical transformation was needed. This meant introducing rigorous business practices at the company’s R&D labs and manufacturing facilities and completely overhauling PCo’s approach to sales. And the company’s culture needed transformation too. PCo was widely known to be a nice, low-pressure company to work for. The work was steady and predictable, albeit not all that exciting, and employees felt like family. It was a place where good news—whether it was business-related or personal—was openly shared. And bad news? Well, no one really ever brought that up. Petrina knew that for the company to change, employees needed to hear the truth about PCo’s weak market and financial position. New performance goals needed to be set that stretched people beyond their current comfort zones. Everyone needed to be held accountable for producing results. Petrina hoped the company could retain its family feel and culture of niceness. But it also needed to run more like a business. That meant that some hard work—and some unpleasant news—was in store.

When Petrina called and offered Sharon the job, Sharon wondered how wise it would be to join PCo at this moment in its history, because the company’s financial viability was a real question. But Sharon was intrigued by the chance to apply her change management skills to a full-scale organizational transformation. She had created training and communication programs to support other companies as they implemented change, but PCo’s change appeared massive in comparison. And Sharon looked forward to working with Petrina. From what she could see, PCo’s new CEO really seemed to get it. She understood the need for change, wasn’t afraid to make big moves, and respected the role that learning and organizational development could play in helping employees embrace the changes that were about to occur. After all, it was Petrina who had recognized the need for the lead L&OD position that Sharon had been offered. And it was Petrina who convinced Sharon to take the role.

Sharon had barely begun to settle into her new job when Petrina invited her to join one of her regularly scheduled CEO staff meetings. “We’ll be discussing some of the changes planned for R&D, sales, and operations,” Petrina relayed during a quick phone call with Sharon. “We’d love to bounce some ideas off of you. We’ll send you the WebEx info.”

A few days later, when Sharon called into the meeting, she was early. She surveyed her screen, and saw that most of Petrina’s direct reports had already logged in and were exchanging pleasantries. There was Ivan, PCo’s vice president of R&D. Sharon had met him during one of the meet-and-greet sessions that had been arranged during her first week on the job. Ivan had joined PCo just a year earlier, and he seemed as eager as Petrina to shake things up. Sharon also recognized Phil, the company’s CFO, and Lupe, PCo’s vice president of sales. Lupe was a relative newcomer to the company too. Sharon’s manager, Evelyn, who led HR and internal communications, had the day off, and had promised to check in with Sharon when she returned.

Right on time, Petrina pinged in. And a moment later, another face appeared. Sharon assumed it was Ed, PCo’s acting vice president of operations. Ed managed PCo’s largest plant and had stepped into the acting VP role following Petrina’s promotion to CEO. Ed wasn’t available during Sharon’s meet-and-greet sessions, so she was eager to connect with him. Perhaps they could arrange a videochat after today’s meeting ended.

“Good, we’re all here,” Petrina announced as she kicked off the meeting. “Thanks, Sharon, for joining us today. I think you all know our brightest new addition to the PCo team. Sharon has a wealth of experience helping companies manage change. I know you’ll all enjoy partnering with her as we take some big steps forward.”

Sharon nodded and smiled. It felt good to be recognized as a partner to the executive team. Petrina really did get it.

“OK,” Petrina continued. “So we have some ideas we want to share with you, Sharon. You’re the expert, so let us know what you think.”

“I’m eager to hear and I’m here to help,” Sharon responded. This meeting really was opportune. From what Sharon could tell, all PCo employees knew at this point was that there were leadership changes at the top. It would be Sharon’s job to create a communications plan. The plan would summarize the steps PCo would take to help employees understand what was changing at the company and why, and how their own work would be affected. She needed to create a training plan, too, that described how employees would build the knowledge, skills, and attitudes they needed as their jobs and work environment changed. And she’d create a resistance management plan, because not everyone would see the changes at PCo as a good thing. There could be some foot dragging and even outright opposition. Sharon wanted to make sure employees felt like they were part of the transformation—that they were participating in creating the change, and that it wasn’t just something happening to them. Today’s meeting could really help Sharon start developing these plans. She was excited to hear everyone’s ideas and to have the opportunity to share some of her own thoughts.

“Ivan, why don’t you kick us off with your thoughts about R&D?” Petrina proposed.

“Hi, Sharon. It was great talking with you last week,” Ivan began. “As I mentioned, we’re in a bit of a pickle at the labs. Our lab managers are brilliant researchers. They’re creative geniuses. The ideas they have in the pipeline will be phenomenal for PCo when they finally hit the market.” For a moment Sharon thought she saw Phil rolling his eyes as Ivan gushed about his team. “But we’re facing significant cost overruns,” Ivan continued. “These guys aren’t business people. They’re chemists. And despite all their brilliance, they’re making really stupid decisions when it comes to buying equipment for the labs and managing people. They just want to run their labs and focus on the science. But we have to pay attention to the business side too.”

Sharon nodded. Ivan was repeating what he had shared during their quick meet and greet.

“So here’s what I’ve decided to do,” Ivan continued. “I’m going to hire a business manager for each lab, someone who can handle day-to-day lab operations so each lab manager can focus exclusively on science and innovation. The business manager and lab manager will be partners in running the lab—co-equals of sorts.”

Phil, PCo’s CFO, interrupted. “Ivan, they will never go for that! The R&D managers are going to see it as a whopping demotion. They’re used to being kings and now they need to consult with someone when they want to buy supplies for their own labs? We need these guys, and they’re going to be heading for the hills!”

“I think I can convince a few of them,” Ivan responded. “They really do just want to focus on the science. Everything else is just a big distraction. I can help them see that the business manager will be there to remove distractions.”

“And the R&D managers who don’t agree?” Phil countered sharply.

Sharon was about to speak when she saw Petrina frantically waving her hands. “Stop, guys. Stop!” Petrina cut in. “I think Sharon can help us out here. Sharon can join the meeting when Ivan lets the lab managers know about the plan. And then she can circle back to the ones who seemed to have the most issues with the idea. I agree with Phil that some of the lab managers won’t want to get on board. But Sharon’s an expert here. She’ll turn them around.”

That wasn’t at all what Sharon was about to propose. She’d hadn’t even met the lab managers yet. Why would they listen to her? Sharon was about to unmute herself so she could suggest a different approach, but Petrina wasn’t done speaking.

“So, Lupe, how about sales?” Petrina asked, switching gears.

Lupe was quick to respond. “Our sales staff and sales managers have been really complacent. They spend most of their time calling their regular customers for reorders. They figure, why seek out new customers when the regulars are sure things? That worked in the past when we were really the only game in town, but there’s tough new competition now. I need sales staff out there hustling. And they need to view themselves as consultants to prospective customers, instead of just order takers.”

Sharon nodded. Lupe had shared this assessment when they had met too.

“So I want the entire sales team to take a consultative selling course,” Lupe continued. “There are lots of good vendors out there. I need the sales team to learn what consultative selling is and then they need to just do it.”

Petrina interjected again. “You got that, Sharon? When we’re done today, why don’t you and Lupe look at a few vendors and decide which one we can use.”

Sharon was about to ask a question, but Petrina pressed on. “Phil and I have been talking about PCo’s culture. Employees are clueless about our financial situation because we don’t share the numbers with them.”

“Sharon, our P&L is confidential,” Phil explained. “We can’t have any leaks.”

Petrina cut in. “Phil, you and I both keep talking about accountability. But how can we hold employees accountable for results they know nothing about? We need to figure out which financials make sense to share. And we need to let employees know we’re trusting them to use these financials wisely.”

Sharon jumped in. “Will employees understand what the financials mean? Will they know how their work affects the financials?” she asked. She had to admit, interpreting P&L statements wasn’t her forte. And although she thought she knew how her work affected PCo’s P&L, she wasn’t 100 percent sure. Sharon assumed most PCo employees would struggle to see the connection for their own work too.

“Great question,” Petrina responded. “Phil and I have been talking about that. Tell her, Phil.”

Phil sighed as he explained. “We think everyone should complete an online tutorial. You know, Finance 101. I can show you some examples of what we have in mind. And maybe we can do a tutorial on ethics and confidentiality too.”

Sharon sensed Phil wasn’t completely on board with the approach. “OK, I’d love to talk with you about that,” Sharon assured Phil. “A tutorial could address a piece of what’s needed.”

“Great,” Phil responded. “I’m willing to give it a try. But the finance managers are going to go nuts over this. You know, they consider themselves to be the keepers of the secrets. What will they think when every last employee knows those secrets too?”

“The numbers can’t be secret, Phil,” Petrina reiterated. “Nothing is going to change if people don’t know what’s going on.”

Phil smiled. “Yup. Sharon and I are going to work up a plan.”

Petrina nodded and pressed on. “So I’m going to start holding town hall meetings during my visits to the labs and plants. I’ll share the financials during these meetings, let employees know what’s happening in the business. And I’m going to use those meetings to talk about accountability: what it means, what it looks like.”

Sharon thought back to her interview with Petrina. She found Petrina to be an engaging storyteller. Maybe they could tap into Petrina’s storytelling skills during the town hall meetings. But she’d need to rein Petrina in and make sure employees had a chance to speak too. She didn’t want the town hall meeting to be a repeat of what this meeting felt like. She had come prepared with ideas but found she couldn’t get more than a word or two in.

Right on cue, as Sharon was about to share a thought, Petrina plowed forward. “And speaking of needing more accountability, there’s operations.” Sharon thought she saw Phil and Lupe wince.

“Present!” Ed chimed in.

“We have some real work to do there,” Petrina continued. “The plant managers know how to make stuff. But they’re ignorant about financials and marketing, and they’re making some really bad decisions because of that. They don’t act like they’re running a business. I need them to act more like entrepreneurs.”

Ed was silent so Petrina pressed on. “During her interview, Sharon told me about an MBA boot camp she created at another company. We need something like that for the plant managers—PCo executives and faculty from a university working together to teach the plant managers how to act like businesspeople.” Now Sharon was wincing. Maybe that’s what the plant managers needed and maybe not.

“Sounds great,” Ed responded, a bit too quickly. “I’m all in. Just let me know when and where and my folks will be there.”

“Well, let’s talk first,” Sharon jumped in. Was she finally going to have a chance to speak? “If you all have time now, I have some questions. And I have some ideas I’d love to bounce off of you.”

“That would be great, Sharon,” Petrina responded. “Right now, we have some other agenda items we need to cover. But I think you’re clear on what we need. So, it was so great having you join us. Thanks so much for your time today.”

Wait, Sharon thought. Was she being dismissed? She had barely scratched the surface of what she hoped to discuss.

“Bye, Sharon!” Petrina announced.

Yup, Sharon realized. She had just been dismissed.

Sharon clicked “Leave Meeting” and watched the images of the executive team members disappear from her screen. She sighed as she chastised herself for not pushing back on some of the ideas Petrina and her team had proposed. She vowed to do better when she circled back to each executive later this week. Sharon had so many questions for the team, and real doubts that the ideas they wanted her to move forward with would have any impact.

Did Petrina and Ivan really think she could convince R&D managers to share their labs with a business manager? They’d never even met her. Sharon didn’t want to engage in arm-twisting anyway. Perhaps there was a better way.

Did the sales staff need consultative selling skills training? True, Sharon thought, the sales staff were just operating like order takers today. But was that because they didn’t know how to engage in consultative selling? Or was something else going on?

What was up with Phil, PCo’s CFO? Sharon wondered if the financial tutorial Phil proposed was just a throwaway—something Phil agreed to work on to appease Petrina. He certainly seemed to have reservations about sharing financial documents with employees, and his finance staff did too. Their concerns about confidentiality seemed valid. Or maybe they didn’t like losing their status as “the keepers of the secrets.”

How about Ed, PCo’s acting head of operations? He seemed almost too agreeable, but in a passive sort of way. Was he just “checking the box” on the whole MBA boot camp idea? Sharon had seen behavior like this at her last company—leaders outwardly complying but not really changing anything in the way they ran their business.

And what did Petrina really want when she talked about culture change and accountability at PCo? Sharon was happy that Petrina wanted to conduct town hall meetings. They could provide a good opportunity for PCo employees to meet Petrina and hear her ideas and perspectives about the company. But from what she’d just witnessed, Petrina could be a bit of a bulldozer. Would she be open to hearing what PCo employees had to say? And who else besides Petrina should be talking about accountability, anyway?

Sharon shook her head as she realized that only 10 minutes had elapsed since she first joined the meeting. “So much for being a partner,” she muttered out loud, glad that no one could hear her in her home office. So where to begin?

Sharon mused for a moment, then clicked to open a blank spreadsheet on her laptop. “Just get down everything you just heard.” Sharon chuckled as she realized she was still speaking to herself. But it seemed like good advice. “Then you’ll figure out what to do.”

A half hour later, Sharon had created three separate spreadsheets: PCo Communications Plan, PCo Training Plan, and PCo Resistance Management Plan (Tables 11-1, 11-2, and 11-3).

Table 11-1. PCo Communications Plan

Table 11-2. PCo Training Plan

She skimmed the documents and shook her head. “Not good,” Sharon announced aloud. “Not good at all. But it’s a start. I have my work cut out for me.”

Table 11-3. PCo Resistance Management Plan

What work was Sharon thinking about? Was she wondering about the communications plan she needed to flesh out? In chapter 12, we’ll look at the many factors to consider as you develop plans to help employees understand what is changing, why, and how their own work is affected. You’ll see that Sharon was right to think about who—besides Petrina—should be talking about the changes planned for PCo. And you’ll see that there are lots of other approaches to communication that Sharon and the PCo executive team need to employ.

Was Sharon wondering about the items she had included in PCo’s training plan? In chapter 13, we’ll review steps you can take to help employees build the knowledge, skills, and attitudes they need to succeed as their jobs and work environment change. You’ll understand why Sharon was uncomfortable proceeding with the training plan she had drafted. And you’ll see why she felt like she had so many questions to ask about training that PCo employees may or may not need.

Or was Sharon thinking about resistance to the change? In chapter 14, we’ll look at steps you can take to create a resistance management plan. A well-crafted plan can help your organization anticipate and address resistance and use that resistance to improve how your organization’s change process unfolds. You’ll see that Sharon has lots of opportunities to intervene and address resistance as it emerges at PCo.

As you read on, you’ll see that Sharon does indeed have her work cut out for her. Building awareness, understanding, and support for organizational change isn’t easy. The position Sharon accepted at PCo is in fact challenging. But it also can be, as Sharon thought, the opportunity of a lifetime. Let’s look at the steps Sharon—and you—can take to meet that challenge.