Everything’s fine, and then…

In volatile times, everyone faces change — not everyone does it well.

Halfway through last year, Calgary-based Inventronics Ltd knew it was time for some sweeping changes.

The manufacturer of metal enclosures for electrical equipment was floundering and preparing to close one of its two plants when a new leadership team took over.

To turn the company around, the new executive team decided they needed to remodel the company to keep it competitive in the global economy.

More than $11 million in new equipment, hardware and software was put into upgrading the two plants. But to succeed, to become truly world class, meant processes, attitudes and skill sets would also need to change, explains Mel Zimmerman, manager of human resources.

This is the part that derails a lot of change initiatives.

The difficulty comes in balancing pressure from the top to change quickly with the natural reluctance of employees on the front line to embrace new plans.

Almost by definition, top management is impatient, says Zimmerman. But for a company to change direction usually takes a culture change and that is not something you can mandate. “People don’t resist change, they resist being changed,” he says.

It’s been a challenge for many companies in the past few years. They have been subject to powerful social and economic forces beyond the control of any boardroom. In other words, change often can’t be avoided; all that is left is to absorb it, manage the consequences, chart a new course and get on with it. It is often a difficult, damaging journey, but with a clear vision and unfailing perseverance, it is possible to make it through the trying times of reinvention and emerge essentially unscathed, a changed company.

Statistics Canada, like most government departments and agencies beginning in the late ’80s and throughout most of the ’90s, faced enormous pressure to reduce costs. But unlike most departments and agencies, rather than recklessly cutting staff, Stats Can introduced a no-layoffs policy and increased investments in its human resources.

Ivan Fellegi, the chief statistician at Stats Can, recognized that beyond the immediate pressures to reign in costs, the organization faced looming skills shortages. The best chance for long-term success would be to hold on to as many of its employees as possible, to invest more in human resources and to ensure employees were able to respond to change as quickly and effectively as possible.

At a time when the federal workforce was cut by 25 per cent in the mid ’90s, staffing levels at Statistics Canada remained constant, spending on training went from about $3 million in 1990 to $9 million by 1997 and today about 85 per cent of employees say they are happy to be working at Statistics Canada.

Eve Simpson, a human resources strategist with Stats Can, says that for a no-layoff policy to be successful, they had to have the flexibility to move people around the organization. In intensive training courses, employees network with people across the organization and learn about the business outside their own department. New recruits, no matter what department they are going into, take courses on surveying, for example, and computer scientists spend time learning about economics.

“We pack into a six-week course what it would have taken five to eight years to learn out in the workforce,” Simpson says.

Also critical to its success was taking human resources management out of the HR department, she says. “Human resources is run not just through HR but through committees of line managers,” further reinforcing the importance of human resources management as an organizational imperative.

Each committee is composed of 10 or more senior managers, and oversees a major HR program. The work done by senior managers is also considered part of their job and not an add-on to regular duties.

One committee charged with overseeing recruitment and development issues, for instance, analyzes corporate staffing data to determine what positions will need to be filled and when. Recruitment strategies are then shaped accordingly.

With only a hint of irony, Linda Duxbury a professor of HR at Carleton University and specialist in change management, explains why the government agency did such a good job of emerging from its challenging times while others struggled so badly: “What is stunning about StatsCan is that they actually listened to the experts,” she says.

Most importantly, perhaps is that they stuck with the plan for the long haul.

“There are two kinds of change: incremental and transformational,” says Duxbury, who has studied Statistics Canada’s change management strategies. Dealing with incremental change is relatively easy but today most companies are facing transformational change. The problem is transformational change takes time and patience. Though its onset can be sudden, it takes a long time, anywhere from three to eight years, to respond and emerge successfully from the turbulence into smooth waters again. A lot of transformational changes fail but that is only because they give up too soon, she says. Statistics Canada has stuck with it and even today they say they aren’t done, they are still looking for other things that will help employees adapt and by extension enable the organization to succeed.

At Inventronics, a lot of energy is being put into ensuring the still relatively new leadership team can manage a performance driven culture. Every member of the group is being taught to understand their leadership style and 360 feedback tools are being used. “I’ve been pleasantly surprised how quickly leaders embraced it,” says Zimmerman. “I was worried they would think it was airy fairy stuff.”

On the front lines, leaders also work to get employees, who typically have relatively short-term perspectives, thinking about the long term to better understand the need for change. The millions of dollars poured into upgrades signaled the company was serious about changing, but management has been committed to educating employees and giving them a sense of what each individual has to do to transform the company into a world-class player.

Just working with partners like GE and 3M, well-known for exacting and pretty high standards, rubs off on employees and they are introducing sixth sigma training to keep up with those high standards.

Corporate performance would suggest they’ve done a good job of turning the company around, with revenues more than doubling after launching the corporate overhaul. Zimmerman is both pleased with what they have achieved so far and optimistic about how employees are adapting. But he also knows they can’t get complacent.

Actions will speak louder than words, says Zimmerman. Empowerment can’t just be a buzxword and the employees have to believe and see their leaders are truly committed to the cause and will stick with it to the end.

Having the right people in charge is absolutely essential to successful change, says Duxbury.

“You need strong leadership, that is one of the things StatsCan definitely has,” she says. There has to be charismatic, inspirational types, but there also have to be “leaders that dot the I’s and cross the Ts, to figure out the roadmap. If you have only one kind of leader, people go on the journey but don’t know where the destination is and quite often they end up in the bog. On the other hand if you have only instrumental (those focused on the details) leaders nobody wants to go on the trip.”

There has to be a sense of urgency among employees that the change is necessary, she adds. Employees need to believe they have to start doing things differently or else the company is in trouble. Once the sense of urgency exists there needs to be a clear vision about where the organization is headed. People are very cynical these days and they have been through so many failed change initiatives they often doubt efforts will be successful or the goals achievable. Having a clear vision and a well-defined map of where the company is going energizes people, she says.

After the vision is clear, processes and behaviours need to be reviewed and compensation structured to reward behaviours that will drive success.

Statistics Canada’s success stems from getting a lot of these things right, says Duxbury, but importantly they also benefited from a great deal of foresight.

Statistics Canada was very proactive rather than reactive, she explains. Many of the problems companies are facing today — particularly those dealing with the reverberations of the attacks Sept. 11 — is that they have to respond quickly without sober second thought.

Much of the literature on change management says that it is the organizations that appear to be the most successful that are likely to fail because they rest on their laurels and aren’t looking around to see what change is coming.

Companies like Nortel were extremely successful, says Duxbury, but they weren’t paying enough attention to what was going on in the environment around them and they proved in dramatic fashion to be unable to respond to the forces beyond their control.


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