3. different social situations; knowing what makes other people
tick.
12. Spirituality
Having coherent beliefs about the higher purpose and meaning
of the universe; knowing
where one fits within the larger scheme; having beliefs about
the meaning of life that
shape conduct and provide comfort.
13. Zest
Approaching life with excitement and energy; not doing things
halfway or halfheartedly;
living life as an adventure; feeling alive and activated.
14. Bravery
Not shrinking from threat, challenge, difficulty, or pain;
speaking up for what’s right even if
there’s opposition; acting on convictions even if unpopular;
includes physical bravery but is
not limited to it.
15. Forgiveness
Forgiving those who have done wrong; accepting others’
shortcomings; giving people a
second chance; not being vengeful.
16. Perseverance
Finishing what one starts; persevering in a course of action in
spite of obstacles; “getting it
out the door”; taking pleasure in completing tasks.
17. Kindness
Doing favors and good deeds for others; helping them; taking
care of them.
5. Being careful about one's choices; not taking undue risks; not
saying or doing things that
might later be regretted.
24. Self-Regulation
Regulating what one feels and does; being disciplined;
controlling one's appetites and
emotions.
Page 1 of 3
Strategic Change Case Study
1
Signalling Change at Ascension plc
This case explores the changes that took
place in the transport engineering division
(TED) of Ascension plc, a construction and
maintenance company, between 2012 and
2014.
TED was established as a division of
Ascension in 1994 following the privatisation of
the UK railway system. The division handles
track and signalling maintenance as well as
larger transport engineering construction
projects. The largest current project forms part
of the London Crossrail development.
Ascension’s main competitors include Balfour
Beatty, Babcock International and Carillion plc.
6. What problems did the company face in
2012?
Ann Hingston, the
Finance Director of
TED: most of our
revenues before
2008 were from
track maintenance
and repair which
produced a steady
income stream but
little growth, so the
business had started taking on larger projects
which, with hindsight, it did not have the
systems and processes to manage. As a
result, costs rose and the new projects were
loss making. In addition the costs were badly
monitored. The projects were being managed
by a team of project managers and there was
a lack of clear ownership and accountability.
Managers also struggled to cope with a new
information system that Ascension had
introduced company-wide in 2010. Despite lots
of different change initiatives within TED, by
2012 we were on the brink of financial
meltdown. The Ascension board were running
out of patience and we were told very clearly
that, unless we could turn the division around
quickly, it would be sold off or closed.
What was working at TED like in 2012?
Alik Rana, the Commercial Director of TED: in
2012 the situation was actually getting worse
not better. The Managing Director at the time
7. decided to close projects that were loss
making and not to bid for any new large-scale
construction contracts. This had a huge impact
on turnover. It was hard to recruit because
people had heard that Ascension might sell us
1 The case is broadly based on real-world events but the
company names and dates have been changed. It is a
heavily adapted version of original work by Gerry Johnson.
off. Staff motivation hit rock bottom and some
of our best people left us. They could see that
we were not winning new contracts. They
could also see a lack of collaboration and
camaraderie in the senior management team.
Staff talked openly about the company
problems and speculated about whether the
business had a future or not. There had been
lots of change initiatives but they did not
achieve very much. The whole service ethos
was wrong; we weren’t listening to our
customers and we thought we knew better.
This attitude was damaging our daily
interactions with customers. There was very
little knowledge sharing internally between
people and very little transparency or trust.
Effectively it was a fear culture and project
staff avoided giving bad news to the senior
team. As a result, bad news tended to come
as a surprise and late in the contract. Finally,
we lost a major maintenance contract and that
was when Ascension plc decided to act. They
very publicly terminated our CEO’s contract
and brought in Jack Warner as the new Chief
Executive in late 2012. Jack had worked in a
8. number of Ascension divisions and had a good
track record of managing change.
So how did you assess the situation at TED
when you arrived in 2012?
Jack Warner, TED CEO from 2012: Ascension
was ready to close the division if I failed but
they also understood that, if I was to have a
chance of turning the business around, then
they would need to invest. So there was
money available but not a lot of time. I also
found very different views within TED about
how much change was needed. Some people
were in denial and thought that things could
just continue. At the other extreme there were
people who were certain that the decision had
already been taken and the division was going
to close and most jobs would be lost. When I
talked about change there were people who
just thought it had all happened before and
never made any difference and others who
knew change was vital but just weren’t sure if
we could do it quickly enough.
I felt that the core business was reasonably
sound. There were issues in terms of project
management skills and team-working but
technical and engineering capability were all
there. The way people were talking about the
business was much worse than the reality. So,
for me, the real challenge was to turn things
around financially, but without losing things
that were working. Some change experts tell
you to fire the entire senior management team
so that you break with the past and people
9. Page 2 of 3
realise there is a need for change. But that
wasn’t needed here. There were very good
people at all levels but they just weren’t
working well together or were not being
listened to.
The senior management team were frustrated
because they did not trust or support each
other, so it was hard to initiate anything new
that had any real impact. There were lots of
disagreements and very little sense of unity or
common direction. At middle management
level they were less sure about why change
was needed; some blamed the senior
management team and others the customers.
There was a lack of agreement about what
changes were needed and gossip about which
jobs might be axed. The attitude of staff to
each other and to customers needed to
change and that required a significant cultural
change on top of the financial challenges.
So how did the change take place in 2013?
Jack Warner TED CEO: I began to understand
the problems and action required by consulting
with key stakeholders e.g. customers, senior
management, key middle managers and front
line staff. This resulted in a list of key issues
which were then discussed and agreed with
the senior management team. We called the
change programme ‘Future First’ and it kicked
10. off in January 2013. It was a three-year plan
consisting of three major phases: phase 1 –
six months rapid turnaround, phase 2: 6–18
month return to profitability and then phase 3,
long-term growth. Phase 1 was the most
significant as this would determine whether
Ascension would let us continue or not. We
deliberately developed a plan that had
manageable chunks. We communicated a
clear change strategy to people. Change
involves a lot of fire-fighting and can look like
disorganised chaos, so it’s helpful to show that
you have a specific approach that you use and
that it’s worked for you before. I also spoke to
everyone face to face to be honest about the
problems and what change was needed, and
what I needed from them. I needed them to
see I was in charge and, as a senior team, we
knew what we were doing but I also needed
‘buy-in’. Then we broke each phase down into
a set of clear goals that everyone understood
and could work towards. We just focussed on
8 things that we felt could make the biggest
impact; we gave each of those a named
individual and then focussed them on
delivering. Once they were completed, we had
another 8 but, at any one time, there were just
a small number of key goals that were clearly
communicated and understood. Once we had
our 8 priorities we introduced a short fortnightly
review process. For each objective we had a
one slide PowerPoint with key dates, a red,
amber, green progress indicator and key
issues or risks. The owner would provide the
one page report and a face to face verbal
11. update every two weeks to a steering group. A
business plan was also produced and
distributed to employees and customers with
the key challenges and priorities.
Early on we had a big setback when a major
contract went out for renewal and we lost the
business to Carillion. It was one of our largest
contracts so we had to do something radical to
reduce costs quickly. The size of the TED
senior management team was reduced by half
and we reorganised the entire management
structure down to supervisory level, so
everyone’s job role changed. A whole layer of
management was removed creating a flatter
organisation with more devolved responsibility.
We also moved managers out of their private
offices and into more open shared spaces.
Teams that needed to communicate regularly
were physically close. The moves were
practical but also symbolic of the shift to a
more open and sharing organisation.
Everyone’s job was at risk so we interviewed
all the managers and reappointed people we
thought would be able to adapt to the changes
that were taking place.
One benefit was that our industry has a
reputation for tough unions but, given the loss
of income from losing the contract, they
accepted the cuts, even though it was over
400 people (about a quarter of the workforce).
The unions accepted that cuts had taken place
at senior level as well as front line staff and
that, if we didn’t turn the business around,
closure was a very real possibility. The
12. structure of the business was also changed.
Some areas that had operated as stand alone
business units were actually quite small, so
some of these were grouped together and this
resulted in further savings through middle
management staff cuts.
A major priority was to improve relations with
customers. Some of these problems seemed
to stem from the previous CEO. People told
me he was rather distant and unapproachable.
He had his office door permanently closed and
officiously guarded by a steely personal
assistant. People saw this as symbolic of his
general unwillingness to listen to staff or
customers. All I really had to do was to open
my door and tell the senior team that I would
support them in any way they needed in order
Page 3 of 3
to better serve our customers. I was also able
to help by managing our interactions with
Head Office, the group level executive team at
Ascension. By dealing with them myself I was
freeing up my senior team to fix problems with
customers.
The transformation required a widespread
attitude change and my belief was that better
two-way communication would lead to this. I
had to believe that, deep-down, people knew
that the business needed to improve and were
13. looking for a way forward, even if they were
not sure what the right solution was. Face to
face communication matters because people
want to see your face and want to ask you
questions. Smart memos and company
newsletters are just going to be ignored or
misunderstood. You need to put the kettle on
and sit down with people in their own working
environment and talk honestly without using
management jargon, so that’s what I did.
In June 2013 we got some good luck for a
change. One of our biggest competitors, Park
Life, filed for
bankruptcy. We did
track renewals for
roughly half the
country and they
did the other half.
Network Rail
immediately asked
if we could take
over their track
renewals program.
It provided about
£50 million a year
additional turnover,
about the same as the major contract we had
lost six months earlier. We wanted to make
sure the new contract was profitable so we
hired some Park Life people, but not all of
them, and we closed two of their depots. The
transition went very smoothly which also
helped us to build trust and openness with
14. Network Rail, a major customer, and to show
we could deliver on our commitments.
It’s July 2014 now, so how are things
going?
Jack Warner TED CEO: By the end of 2013,
the change programme had been running for a
year and the division was receiving top
customer ratings and customer feedback is
continuing to improve. In eight out of ten
categories we are ahead of competitors. We
have recently heard that we have been
nominated as a Network Rail supplier of the
year. Our 2013/14 turnover of over £160
million means we are back in profit. In our
business margins are low so we are doing very
well. Ascension plc is delighted and the threat
of closure is off the table for the moment.
There is certainly less sense of fear of
redundancy in the organisation but also less
fear of speaking out or challenging senior
management. We have an employee led,
‘Ministry of Fun’, which runs social events for
all employees and we recently entered a team
of 10 for the London Marathon, a mix of
everyone from the senior team to the front line.
They have raised £7000 for charity so far. We
provide resources for them such as a meeting
room for events and some funding. We have
also agreed a discounted rate with a local gym
so it’s not unusual to find me or my team in
there. All these things have helped to reduce
the sense of ‘them’ and ‘us’ between different
parts of the organisation. There is much more
15. sense now of one company and one team.
People are proud to work here and they are
showing off to their friends about the customer
feedback we have received and the money
they have raised for charity. 18 months ago all
the talk was about closure and who was to
blame for poor performance.
We instigated a series of project management
training events and there is much better
coordination and clear ownership and
accountability. There are still challenges
though. We couldn’t make changes to the
company wide IT system that was introduced
in 2010. It seems to work well for some
divisions but it’s not tailored to our needs.
Project administration is taking longer than it
should because so much tinkering is needed
to get the system to do what we need it to do,
like track performance measures in the format
required by Network Rail. But we are back in
profit. It is an amazing achievement to turn
things around in such a short time frame.
Phase 3 of the plan is growth, so we are
bidding for new contracts at the moment and
looking to expand in 2014/15.
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