Part II
Employees expect the CEO to live up to Mahatma Gandhi’s famous edict, “For things to change, first I must change.” The CEO is the organisation chief role model.
Typically, a personal transformation journey involves 360-degree feedback on leadership behaviour specific to the programme’s objectives, diary analysis to reveal how time is spent on transformation priorities, a commitment to a short list of personal transformation objectives, and professional coaching toward these ends.
CEOs generally report that the process is most powerful when all members of an executive team pursue their transformation journeys individually but collectively discuss and reinforce their personal objectives in order to create an environment “Of challenge and support.
Mr Murthy’s 2002 decision to take on the job title of Chief Mentor at Infosys, for example, meant that he had to reinvent himself, because he laid aside his formal managerial (CEO) authority at the same time. He explains, “You have to sacrifice yourself first for a big cause before you can ask others to do the same,” adding, “A good leader knows how to retreat into the background gracefully while encouraging his successor to become more and more successful in the job.”
Take symbolic action
The quickest way to send shock waves through an organisation is to conceive and execute a series of symbolic acts signalling to employees that they should behave in ways appropriate to a transformation and support these types of behaviour in others.
For instance, C John Wilder, CEO of the Texas energy utility TXU, gave a large bonus to a woman who had taken a clear leadership role in a very important business initiative. “This leader’s contributions generated real economic value to the bottom line,” he explains.
“Of course, news of that raced through the whole organisation, but it helped employees understand that rewards will be based on contributions and that ‘Pay for performance’ could actually be put into practice.”
Building a top team
The CEO’s team can and should be a valuable asset in leading any transformation. As Deutsche Post’s Mr Zumwinkel suggests, “You need excellent individual players, but you also need players who are dedicated to playing as a team.” Sharing a meaningful story and modelling the right role will certainly increase the odds of getting the team on board, but it is also vital to invest time in building that team.
How do CEOs know when to intervene with the strugglers? They can reflect on the following questions:
nDo team members clearly understand what is expected of each of them in relation to the transformation?
nIs the CEO serving as a positive role model?
nDoes everyone recognise the downside and upside of getting on board and doing what is required?
nHave struggling team members received a chance to build the needed skills?
If the answer to all of these questions is yes, decisive action is justified. Experienced CEOs attest to the positive impact this can have on the rest of the company.
EMC’s Mr Tucci says he had to take “Public” action to tackle the “Whiff of arrogance” that used to characterise certain parts of the company. TXU’s Mr Wilder recalls that, “When we did a cultural audit, we found that the number-one complaint was that management was not dealing with employees that everyone knew weren’t carrying their load.”
Invest team time
Even with the right team in place, it takes time for a group of highly intelligent, ambitious, and independent people to align themselves in a clear direction.
Typically, the first order of business is for members to agree on what they can achieve as a team (not as individuals), how often the team should meet, what transformation issues should be discussed, and what behaviour the team expects (and won’t tolerate).
These agreements are often summarised in a “Team charter” for leading the transformation, and the CEO can periodically use the charter to ensure that the team is on the right track.
Effective dialogue requires a well-structured agenda, which typically ensures that ample time is spent in personal reflection (to ensure that each person forms an independent point of view from the outset), discussion in pairs or small groups (refining the thinking and exploring second- and third-level assumptions), and discussion by the full team before final decisions are made.
In this process, little tolerance should be shown for minutiae (losing the forest for the trees) and for any lack of engagement. Face-to-face meetings, as opposed to conference calls, greatly enhance the effectiveness of team dialogue.
Initiatives with a significant financial or symbolic value require the CEO’s personal involvement for maximum impact. There may be several beneficial effects, among them ensuring that important decisions are made quickly — without sacrificing the value of collective debate — and sowing the seeds of a culture of candour and decisiveness.
Leaders must be willing to leave the executive suite and help resolve difficult operational issues. Peter Gossas, President of Sandvik Materials Technology and a man with lifelong experience in the steel industry, observes, “If there’s a problem, it can be helpful if I come to the work floor, step up on a crate so that everyone can see me, and hold a discussion with a shift unit that may be negative to change.”
Review of the process
Successful CEOs never lose sight of their management responsibility to chair review forums. Through these, they compare the results of the transformation programme with the original plan, identify the root causes of any deviations, celebrate successes, help fix problems, and hold leaders accountable for keeping the transformation on track, both in activities (are people doing what they said they would?) and impact (will the programme create the value we anticipated?).
A central role for the CEO during these review forums is to ensure that decision making stays grounded in the facts. The CEO also plays a critical role in ensuring an appropriate balance between near-term profit initiatives (those that deliver performance today) and organisational-health initiatives (those that build the capacity to deliver tomorrow’s results).
During the transformation, some CEOs even choose to hold separate review meetings for short- and long-term objectives in order to ensure that companies maintain a balance between operational improvement (tactical strategies, wage management, productivity, and asset management) and long-term growth (revenue and volume growth through market share, new products, channels and marketing, M&A, talent, and capability management). For CEOs leading a transformation, no single model guarantees success. But they can improve the odds by targeting leadership functions: making the transformation meaningful, modelling the desired mind-sets and behaviour, building a strong and committed team, and relentlessly pursuing impact. Together, these can powerfully generate the energy needed to achieve a successful performance transformation.
The writers Carolyn Aiken is a Consultant in McKinsey’s Toronto office and Scott Keller is a Principal in McKinsey’s Chicago office.