Human Capital Australia Magazine - June Cover Story


Published on

Cover story from June\'s Human Capital Australia Magazine by Iain Hopkins. Features quotes from Matt Hewitson on the organisational culture.

Published in: Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Human Capital Australia Magazine - June Cover Story

  1. 1. issue 7.5 cover story How will your corporate culture shape up following redundancies? Iain Hopkins investigates why some organisations will thrive and others will falter After : The culTural Toll of redundancies mAth 14
  2. 2. cover story issue 7.5 A piece of academic research from the US conducted in the airline industry in the months after 9/11* provides a fascinating glimpse into the cultural aftermath of redundancies and financial turmoil. Following 9/11 the airline industry experienced a rapid decline. From a researcher’s perspective it provided a controlled experiment. There were very few external environmental factors for the organisations involved – just a sudden, sharp decrease in passenger numbers. The researchers looked at the airlines that laid off staff verses the airlines that did not. They longitudinally studied how these companies ‘bounced’ – or showed resilience – in terms of how quickly they came back from such a dramatic fall. In particular the study examined the existence of relational reserves (the maintenance of positive employee relationships). The researchers concluded that companies are better able to cope with a crisis when they maintain strong relational reserves and have adequate financial reserves needed to avoid layoffs. Quentin Jones, managing director of culture consultancy Human Synergistics International, says the results were hardly surprising. “It was one plus one equals two stuff – if you lay off staff, guess what? You’ve lost capability, trust, goodwill – the fundamentals of human capital management. When things picked up, those companies weren’t in a good space.” Fast-forward eight years and that research provides an interesting insight into the current challenges facing the business world in general. Following the global financial crisis and the subsequent dip in the Australian economy, many organisations are facing the same dilemma as those airlines. Do we lay off staff? Do we have a corporate culture that can survive the external and internal turmoil? Values and behaviours Resilience is suddenly a buzz word: graduates should be hired if they show traits of resilience; leaders are urged to demonstrate resilience; and those corporate cultures that show resilience are deemed more likely to survive. But what does resilience mean? On one level it could simply mean that when an organisation is sideswiped from the left or right, it can bounce back without being totally derailed. 15
  3. 3. issue 7.5 cover story Justin Papps, practice leader for innovation at Mettle, says you could have ‘we want to be the leaders in innovation through that an organisation can have a resilient culture only if it has a team-centred action and open thinking… just like everyone else’. well defined culture to start with. Resilience is an outcome, not It’s getting something that’s true to who you are and also that’s an output of culture. “You must have a clear definition of who close to you achieving your strategy,” Papps adds. you are, what’s important and what’s acceptable in the form of behaviours – in other words, what you need to do to fit in around cultural styles here. If that’s really clear and it’s consistent it will lead to resilience Resilience aside, some cultures will withstand redundancies better – I don’t believe you can set out and say ‘we’re going to build a than others, although Papps notes that all cultures – regardless of resilient culture’,” he says. how strong they are – will feel some impact. Following that definition through, Papps believes resilience Jones questions whether redundancies cause the inevitable applies to any business that has a core set of values and behaviours cultural slide of an organisation or if the negative culture is in that can withstand the pressures of corporate life. “If at any time place to start with. Corporate cultures can be broadly divided into you feel those values or behaviours are being compromised, then three groups: constructive, aggressive and passive (see leadership the decision you make – ‘yes I’m willing to compromise’ or ‘no styles graph). He cites research by Human Synergistics conducted I’m not willing to compromise’ – is the difference between being in 2005 on 40 organisations undergoing cultural change. In resilient or not,” he says. 2009, five of those organisations with constructive cultures were It’s easy for people to get caught up in the potentially glib revisited. How were they handling the economic downturn? Had nature of values, which are usually things like honesty, integrity, the investment in building a constructive culture paid off? entrepreneurship – but which organisation doesn’t want those? “One organisation was a water utility in Melbourne. The CEO Papps believes the relevance comes at the next level, “which is said they had already had their GFC because a couple of years ‘how do I need to behave here in order to fit in and to represent ago the then Premier amalgamated all the water functions, and the brand’,” he says. these organisations were forced to undertake cultural change in “The risk comes where you have mission statements where you order to survive. The CEO’s view was that if it hadn’t been for could add ‘… just like everyone else’ at the end of it. For example, the [constructive] culture they had developed, they wouldn’t have leadership/impact® “research and development by robert a. cooke, Ph.d and J. clayton lafferty, Ph.d. copyright © 1987-2009 by human synergistics international. used by permission” Source: Human Synergistics For more information on Human Synergistics visit or e-mail: 16
  4. 4. cover story issue 7.5 survived,” Jones explains. The new- around that. “Take a sales organisation,” he says. “The leaders look water utility didn’t have to deal should say ‘we have upped the sales expectations for all of you with the infighting, lack of trust, because there are fewer of you but we need to keep the same and all the other intangible costs of numbers flowing in – so this is what it means’.” having a negative culture. “It’s like a relationship. If you’re married and handling redundancies the relationship already has some Unfortunately many organisations are operating without trust, cracks, and you put pressure on it truth and transparency, especially when it comes to redundancies. like another child or a job loss, it The way these organisations handle redundancies will be dictated falls apart. But there is what we by their culture. Jones cites the approach of a well-known call capability in the business to Australian financial institution: employees were told to sit by their bounce. That is where trust and deep desk, and if they received a phone call they knew they had to exit relationships come into play – they Quentin Jones the building. It was typical of that culture. are all intangibles but an essential “The predictor of how organisations handle their redundancies part of the outcome: resilience,” Jones says. will be their culture. Aggressive styles will do it the way Similar feedback was received from other CEOs in the demonstrated by that financial institution. Constructive styles study. Most claimed that if they had aggressive, blame-ridden, will do it with real compassion but in a very strategic way and competitive dog-eat-dog cultures, they would have had no be very clear, open, rational, even caring if they have some of compunction about cutting staff. Now, if they still have to cut staff those humanistic values. With the passive styles, leaders will after trying other alternatives, they are being smart about where acknowledge they need to cut people but they won’t do it overtly, they cut. The blanket 10% cut across the board is out; instead they but rather under the table. People will just disappear,” Jones says. will look at where productivity and innovation is low, examine the Perhaps more importantly, the post-redundancy aftermath is causes of that, and then make the call. “This is a big turnaround. a product of the culture. “If it’s done with fear and with people We actually have companies out there saying they won’t make disappearing without explanation, of course that will reinforce cuts. At QBE the CEO has come out and said no cuts. I’ve talked anxiety and all those security-oriented behaviours,” says Jones. with the HR director at Woolworths – again, no cuts,” says Jones. When organisations cut staff, they tend to place emphasis on those leaving, but to ensure the people left behind remain The three Ts productive Jones says it is essential for leaders to focus on culture Moving away from theoretical cultural models, Papps believes and prioritise ways to inspire and motive remaining staff. the key to an organisation that can say ‘no cuts’ with some This is easier said than done. Many leaders – especially mid- confidence is the three Ts: truth, trust and transparency. “For level managers – are witnessing an economic downturn for the whatever reason, in some organisations truth is the first victim of first time in their working lives. Papps notes there can be some a downturn, followed closely by transparency. Organisations that survivor guilt, particularly when trust and transparency are not stay true to the three Ts or try to focus on them during these times present. will come out the other side much stronger.” The truth piece is critical because in the absence of real facts leaders people make up rumours, and rumours will undermine a culture. There are six of drivers or levers of culture. They are ‘hard wiring’ “The worst thing we hear is when people are told that last week’s levers such as structure, systems and symbols; and ‘soft wiring’ round of redundancies was the last round, and then the following levers including leadership, mindsets and the resulting behaviours. week there is another round,” says Papps. He notes that a trait of By general consensus the most important lever is the leader. “A successful and sustainable business leaders is their ability to tell simplified model is that leaders are the primary drivers of culture the truth whatever the circumstances – they explain the current at all levels, and then culture drives business performance. Those situation and why cuts have to be made, and don’t make empty leadership norms are also embedded in the systems, processes and promises about further cuts not occurring. “People just appreciate structures,” says Jones. “For example, if I’m a constructive leader being told the truth, which leads to the other part: trust.” I expect people to be constructive and I will reward constructive Papps cites an example of the ultimate trust breaker: a mid- behaviours. If I’m an aggressive leader then I expect people to do sized company of around 100 employees that had a round of what they’re told, follow the rules. Aggression actually produces redundancies on a Tuesday and the next day the management passivity, and what do aggressive leaders complain about most? team went to Noosa for a four day retreat. “How do you expect Their staff don’t take initiative, don’t think for themselves. It’s a people to react to that? Do it in the boardroom instead!” he says. vicious circle.” Transparency is also crucial. Papps urges leaders to be clear on Papps says the most successful leaders will be the ones who what is important and how success will be measured in the future continue to communicate with their people. Even if there’s no – and if the goalposts have changed be completely transparent news, he says it’s still important to stress the company is tracking 17
  5. 5. issue 7.5 cover story ahead and there are no changes. “That in itself is great because in the absence of fact gossip starts,” he says. human synergistic’s top culture tips In the post-redundancy aftermath employees are searching for 1. Be honest about the situation; you don’t know the motivation, inspiration and the assurance that they are valued by future their bosses. “Despite corporate mythology, fear is not an effective 2. Be accessible – open door policy is a must, walk the motivator,” Jones adds. corridors – employees need to voice their concerns and feelings in order to deal with them. Turning it around 3. Be empathetic – acknowledge the loss and how The positive news is that cultures can be transformed – the only people might be feeling. catch being that it takes extraordinary leadership to do so. Jones 4. Focus on the big picture and purpose and remind uses Andrew Mohl at AMP as an example. Back in 2003 he was people about core values. dealing with a basketcase. His company had been reduced from 5. Keep language positive and action driven. 27,000 to 3,000 employees, it was struggling financially and was 6. Reset goals and share them amongst the organisation on the brink of extinction. Mohl turned it around. – maintain a long-term focus. “Andrew Mohl spoke at a conference just before he retired 7. Make sure the focus is on ‘working together’ – this will as CEO and we listened to this cool-headed, rational, but in his ensure motivation levels are maintained. 8. Show that you are responding effectively to the own way incredibly people-oriented leader. He did some smart current situation – staff will be more forgiving if they things financially and technically but also smart things in terms know redundancies were the last resort. of communicating to all staff. He used open e-mails and always responded to queries. He shared with us his e-mail from when There are countless examples of employees making suggestions they were in the thick of it, that management teams would not be able to introduce without saying ‘it’s tough but we’ll see employee support. this through’. It was leadership “We’ve seen employees volunteer to drop their hours or of a different calibre. We don’t change rosters to prevent the company having to make colleagues have too many of those leaders, redundant. This approach shows that the organisation is inclusive, but Andrew Mohl knew it was respects the opinions of their employees and is open to change. It through the people that he also says to the workforce that management don’t necessarily have would get to the bottom line.” all the answers in dealing with these unprecedented economic The rebuilding and conditions, but they value the thoughts and insights of employees,” reinforcing of a culture needs to Hewitson adds. start the moment redundancies are being considered, not the The broader picture day after people leave the The fictional Gordon Gekko once said that greed is good; indeed, organisation. “How you plan greed perhaps best summed up the 1980s. How will the last it, how you go through the decade be summed up? Jones believes the corporate cultures of Matt Hewitson process for the employee and passivity and aggression have brought the world’s economies to organisation, and those messages people receive from that process the current crisis point. Fortunately, he says, the landscape is are vitally important. The culture is built through that process, not changing. “The raison d’être for organisations by the community the day after it’s happened. If leaders wait and do the cleanout and is being renegotiated as we speak and that’s exciting to witness. then start thinking about the culture, you’re already starting two We can’t do this again but there’s an environmental crisis that will steps behind everyone else,” says Papps. make this economic crisis pale into insignificance.” Papps believes that truth may make a comeback. “We’ve seen unity = strength the results of not having truth in the current GFC – yet there’s Ironically, it is during these times that corporate reputations can great liberation for companies that have it. CEOs can say, ‘we’re actually be enhanced. “Organisations that behave in a way that not doing as well as we thought we would, but here’s what we’re is consistent with their espoused values, even if they are making doing about it. We’ll do our best to keep the company going if you people redundant, will build and maintain their employment put your trust in us and stick with us’. If you are truthful with brand. Whilst the wordings of the values are different, typically your people they will understand why the tough decisions are they are centred on integrity and respect for the individual,” says being made.” HC Matt Hewitson, lead talent manager, Harrier. Organisations taking an employee-centric approach to dealing *Relationships, Layoffs and Organizational Resilience: Airline Industry Responses to September 11 by Judy Hoffer Gittell, Brandeis University; Kim Cameron, with the current crisis will also benefit from employee goodwill. University of Michigan; Sandy G.P Lim, University of Michigan 18