1. There’s Change.... and Then There’s BIG CHANGE Implications of the BOB Era and How Public Relations Professionals Can Lead Organizational Transformation Kathy Lewton, Steve Seekins, Ken Trester APRs & Fellows Lewton, Seekins & Trester Public Relations Society of America International Conference October 28, 2008

2. Change “You know it don’t come easy” The forces demanding change have been like a tidal wave..... But in a post-BOB economy, when everything is moving at warp speed, the forces will be overwhelming and will overwhelm our organizations unless..... we can manage change And create a culture where change is the norm  Change becomes a core survival strategy

3. Full ppt deck available at www.LSTLLC.com

4. The forces demanding change are ever more powerful In an economic downturn, nothing stays the same, change is inevitable When consumers or businesses spend for anything, they will expect and demand both quality AND service –Focus on “quality” now has a life and momentum of its own -- customers will expect the very best – no tolerance for errors or mistakes –Unhappy consumers know how to dial 1-800- LOCAL TV REPORTER And a highly visible group of companies doing it right and getting the headlines makes it harder for the rest of the pack

5. And yet, our organizations and our people..... Are by nature resistant to change Are built on policies, procedures, process – “We’ve always done it/never done it THAT way” And now – when people are fearful, angry, unsure – they are even less likely to be able to hear, let alone listen and act

6. It’s not the best of times to push for change Employees – those who aren’t fleeing – are tired, frustrated, cynical Managers can be apathetic, or downright antagonistic  Powerful leadership and communications are absolutely essential

7. When simple change is not enough, and transformation becomes the norm... Always remember: Culture eats strategy for lunch!

8. Enter the hero(ine) The CPRO/CCO transformed into: Chief Culture Warrior

9. CEO Can’t Do It Alone CPROs are in ideal position to help: –Environmental scanning: Trend spotters -- hear the drumbeat, collect and “own” data, sense danger that failure to change can bring –Have tools for telling and selling – defining and describing the new vision, and persuading And can adapt them for a situation where the audience is nervous, afraid, in a panic –Work effectively with management peers who are the critical forces in transformation –We can partner with the CEO to calm the waters and lead transformation

10. To begin our transformation, we need to figure out:  How transformation works (and doesn’t)  What’s going on in our organization (and with our CEO)  Where we fit in all of this (and how to claim our seat at the table)

11. And the survey says:

12. McKinsey global survey found: Organizations need to change constantly, but achieving a true step change in performance is rare In recent survey, only a third say that their organizations succeeded in making it happen

13. What McKinsey found New McKinsey global survey on organizational transformation found that most organizations seek transformation in order to move from good performance to great. Those that succeed: Have well defined financial and operational goals AND a genuine NEW LEVEL OF PERFORMANCE Had HIGHLY VISIBILE CEO Had large-scale COLLABORATION across biz units Had COMMUNICATIONS THAT HAD BALANCED FOCUS – building on successes while also addressing problems ENGAGED employees at all levels

14. And the failures (2/3 of companies surveyed)..... Ill defined goals, and goals that were not a “stretch” – but lack of clarity was the biggest problem AND (surprise) ineffective communications –Low visibility CEO –Messages skewed – either too much focus on problems, or only focusing on the good things and the future, and ignoring the problems –Communications programs used one or two tactics, didn’t push messaging to front lines

15. Then we drilled down in an industry* where change is the norm for survival Surveyed CEOs and senior PR/marketing leaders about culture change and where PR/Communications fit *Hint: ER, MRI, IV, CT, MI, $$, HMO...

16. First, PR & Communications Pro’s Surveyed more than 60 very senior practitioners Most at VP/SVP level and 20+year veterans We reported some of these findings in the June issue of PRSA’s Tactics

17. Culture change critical to strategy, less so for survival

18. CPRO’s most commited to change

19. Culture is managed in many ways – no magic bullet

21. Top management fully committed – it goes downhill from there

22. CPRO’s on culture change team, but not as leaders (yet)

23. Why NOT leaders?

24. Then we looked at culture change from the CEO POV CEOs – not scientifically selected, but very representative of hospital types –Couple of huge academic medical centers, multi-state system, urban non-teaching, urban “community hospital,” several suburban hospitals Range in size and geography from NYC to N.California – and Utah, Michigan, Ohio and others in between

25. Q1 : What do they want to change?

26. Many say it’s customer service We want our employees to FOCUS on delivering good customer service “We need to become more driven by needs of the customers”

27. Some say it’s all about employees ” I believe that happy employees will make for more customer satisfaction... BUT I do not really have any data to prove that, nor do we have a plan to make it happen.”  Calling the CPRO!

28. Others say quality is job #1 Well it’s quality – I mean that’s all there is. ”Anyone who says do something else without the grounding in quality is just wasting time, trying to dance around the edges. You do quality, everything else falls out from it – you get better service, you get growth, you get bottom line benefits. “Skip quality and all you’re doing is marking time till you don’t have a choice.”

29. Some wanted to change more fundamental values Every place I’ve worked I’ve focused on the need for a positive culture – it’s about people, helping them reach full potential. “It’s about being open, transparent... how leaders behave, communication, no blaming, treating people with respect.  When times are hard, we need to communicate more.”

30. Especially true in BOB era: National W/S survey two weeks ago: More than half of U.S. employees have not heard from their companies’ leaders about the impact of the financial crisis. 71 percent felt their company’s leadership should be communicating more about the economic crisis. –70% feel that their company will be negatively affected by the crisis -- 26% expect layoffs, 62% say employer will have trouble meeting goals. At companies where leaders have communicated with employees, 86 percent said that senior executives or management who have discussed the crisis were seen as “believable” and “trustworthy” sources.

31. And some want to change it all “We started with a good culture, but it was disconnected from patient service, so now we’re integrating it all including service, quality, staff development and growth, with bottom line impact. ”It’s a BIG BITE – we are changing the entire way we operate.”

32. Key insights: CEOs at high performing organizations realize that achieving a common vision (what should we BE) is critical to achieving the desired result – and CPROs can and should be involved in both. Some clearly ID employee satisfaction as foundation for any change and recognize communications as a core competency.

33. Q2 : How do you manage change?

34. Some aren’t sure. “We don’t have a formal change management process – but we need one. “I’m not sure where this will be managed –needs to be close to me, Community affairs? Maybe marketing??” “Our marketing staff and quality team are the leaders of this initiative. ”It has been interesting to see them working together since that is not necessarily a regular fit here.”

35. Most say “the buck starts here” “I manage the process. Me. Hands-on. If you’re going to ask every employee to change the way they think and act, the CEO has to do the same, be the person at the lead in every meeting. “It can’t be a speech and then introduce someone else who is responsible.”

36. Some say engage senior leadership Top and middle management have to drive it – but they don’t get that yet. “It’s Baldridge – senior management team are the leaders. It starts with us. We have the scorecard and track our resources. Communication is essential!”

37. Some bring in outside experts I’m using a consulting firm to help make it happen, using their standard approach. And I got the two unions to participate. We were starting from ground zero, so we brought in an acknowledged leader and said tell us what to do. “It’s a science and your garden variety executive or manager doesn’t know the science.”

38. Many created formal structure “We created an entire infrastructure headed by one of the leading experts on quality, with a fully formed team. They report to me and it’s Job 1.” “Using Root Learning approach, we reach every one of our 15,000 employees.” “We use a Plan for Excellence and it’s the basis for how we plan, how we communicate. Its values lay the foundation for goals– corporate, unit, individual performance.”

39. Communication is critical “We work hard at communications. SVP PR/Mktng is on senior management team and reports to me. I meet with the communications team monthly so they know what I’m thinking.” Early and prompt feedback is critical, as is holding people accountable.

40. Leadership is the bottom line You don’t “manage” culture – you create it. “You have to live it, model it, set examples, lead by example. Breath optimism into the story.” “We have to be seen as engaged. It’s how we model the behavior.”

41. Key Insights: Most get that it starts at the top – no if’s, and’s or but’s – it’s the CEO responsibility After that, there’s less uniformity –Some use the “add on” method – give it to someone as a new part of their existing job (so it’s not Job #1, but Job #43) –Some hire consultants (so it’s the consultant’s program, and then they eventually go away) –The ones that seem most successful pony up – hire staff, create a fully embedded quality team. They dedicate substantial, if not massive, resources.

42. Key Insights CPROs not often mentioned unaided as part of the team making the whole thing happen.... but when probed, most (not all) get that the function should involve the CPRO as a leader And the presence of some CPROs at the CEO’s right hand, as lead change agent, shows that we can play this role.

43. Q3 : What are the barriers to change?

44. #1 is middle management “Middle management feels disenfranchised by change, so you have to drag them along. “ “Managers are neither hired nor trained to be LEADERS. We had to teach and train and require and motivate and reward. But they CAN ALL do it.” People don’t like to change what they’re doing, especially when they think things are going pretty well. “But since I fired three directors, that may change the dynamics.”

45. Then there’s the challenge of sustaining momentum Keeping going. “This is not a one-month thing – it’s FOREVER. So if you can’t do it, then get out now.” “It’s hard to sustain momentum among the staff.. You can change ops and systems, but its people who impact the customer.” Taking a short-term view. “You have to say this is long-term and stay the course, but it’s hard to keep the workforce engaged through a long- term process.”

46. The “this too shall pass” mentality “I inherited a place in shell shock from the “initiative of the month.” They had so many of these short-term, gimmicky programs – customer service training (a 45-minute video), MBO, gainsharing – the employees now look at any new initiative with great cynicism. “They figure they’ll wait it out, keep doing what they’re doing, and it will go away.”

47. Key Insights: Changing attitudes of middlemen and middle management is a key task – and as we all know, extremely difficult –Have to cast change as a win/win in realistic terms and involve them in leading the process

48. Key Insights: Every team member must have culture change as part of their performance accountabilities, which means a massive communications effort that never quits – just keeps on going Chief communicators can help articulate a vision that enhances motivation.

49. Q4 : Where do PR/communications fit in the quest for transformation?

50. Center stage... “Their leadership has been a critical success factor. We had to create from the ground up an entire communications system, dozens of facilities in several states – and it had to be based on first-line supervisors as the communicators. “WOW! Our PR team created the system, the training, DID the training, for months. Now they manage the info flow. It is the rock of our success.”

51. From delivering messages... “PR creates and delivers the messages. Marketing identifies the key markers and keeps the scoreboard.”..... To managing process: Each of our strategies has an oversight team that the communications people manage. They document the plan and make sure it feeds back to the board and medical staff.”

52. At the heart of... communications “Communications is essential – we do round the clock town halls. Used to be 10% participation, now we’re up to 34%. Plus newsletters and blast emails and videos of patient stories and banners. We are trying to reconnect our employees to our purpose.”

53. At the heart of... communications “We need robust communications. We actually created a new internal communications department because it’s so important.” “Communicators give the organization clarity. They need to stick to the message and the plan and most of all, support management with optimism.” “I expect that my communications team will have the pulse of this very decentralized organization. They bring valuable insights and info to the table.”

54. And some put us on the fringes “Well, sort of peripherally, I think. In a support way. I mean, they manage the channels the quality team needs to use to disseminate info. And they do take our success story out to the media. But I don’t think of them as integral to the process beyond what they already do.”

55. Waiting in the wings... “We give them direction to be more strategic and more challenging – but we have to give them a climate that allows them to do that. We are failing to tell them this is our expectation.” “I need them to be creative and strategic – right now, they’re more likely to be tactical.”

56. Waiting in the wings....with high expectations “Now that I think about it, this is where culture change really belongs. But our people do not seem to be strategy focused – I need to change that and see if they can respond. They have done nothing to date, but I haven’t asked them.” –“I expect them to be skilled strategists, to disagree with me and come up with new ideas not just in culture, but in marketing.” –“I need strategic thinking, creativity and judgment.”

57. Key Insights: Marketing and communications people are owning important parts of the process at some places, barely remembered at others Some CEOs say they haven’t yet told their CPRO that they expect strategic counsel –BUT should they have to ask or tell? We must find the strategies for driving culture change, working with the CEO and senior management team.

58. Key Insights: High performer CEOs clearly understand the value of internal communications, rating it above external PR. –BUT CPROs often relegate internal communications to a newsletter editor and concentrate on marketing communications, advertising and media relations

59. Key Insights: High performing CEOs understand the real value of creativity – can’t get results with old methods. –Creativity should be our sweet spot CPRO’s key skills – analyze the market, develop strategies and manage communications – are central to transformation. So we should be central to the process.

60. The BIG Take Aways: Lessons Learned from the Research

61. BIG Take Away #1 Every CEO gets it. Not one said “Change?? Why?”” They clearly have moved beyond denial (FINALLY) but are at various stages of “What now?” –We should be the answer people And for us, that means no more waiting to be asked or called – the change train has left the station

62. BIG Take Away #2 Culture change is never “over” –You can’t plant a flag and say “We’re done” –The messages and desired behaviors have to be sent and reinforced FOREVER –So make culture change the primary focus of your role and your team’s work

63. BIG Take Away #3 There’s some dissonance in here somewhere –CEOs said culture is being carefully managed –Last year half of CPROs said “culture just happens” –Either the CEO is kidding him/herself, OR... –The CPRO is out of touch or out of the loop

64. BIG Take Away #4 There is a clear role for marketing and communications teams –Some CEOs clearly get it – learn from what they have their CPROs doing –If you work for someone like those who don’t seem to get it, don’t wait to be asked. –Even if they don’t see YOU in the role, figure out how you can get there. Start with the barriers that exist -- speak out, step up, present your plan.

65. BIG Take Away #5 It’s all about working with YOUR CEO –No silver bullet or magic formula. –Can’t ask this on PRSA ListServ –YOU have to dig down and understand your organization, your CEO and the strategies that will work  Take a closer look!

67. Step 1: Get inside the CEO’s head Some CEOs are process oriented and care about systems, metrics. –SO you have to talk Baldridge Some are people oriented and care about attitudes and behaviors –So you have to help with visioning Some are political and care about relationships and power bases –So you have to help them by creating a planning process that’s inclusive and gets all the right people involved (friends and enemies)

68. Getting Inside the CEO’s head Three typical archetypes –The innovator, already out in front – wants you on board with him/her and probably sees a specific role for you –Resigned but willing – wants you to help figure out how to do it, you can design your own role –Resistant – needs you to convince him/her (then make it his/her idea and work it behind the scenes)

69. With CEO, use right ammunition to take your best shots Bring data so CEO can identify issues and answers Bring new tools Trot out outside experts Bring outside models that work to the table Partner with colleagues in middle management - mobilize them

70. Step 2: Be a strategist

71. Strategist: Know where your organization is NOW (post-BOB) We often try to move people toward a new vision with no clear sense of where the people are in terms of attitudes, opinions, morale, commitment. Use comprehensive internal research on the variables most likely to affect ability to change. –Assess attitudes, needs, concerns and commitment of key players such as middle managers and first line supervisor

72. Strategist: Strategic priorities = foundation for transformation Culture needs a foundation – must match strategic priorities & desired market positioning –Customer service strategy means focusing on the behaviors and skill sets that will deliver customer satisfaction. –Quality positioning requires addressing organizational effectiveness. –Low-cost position means focusing on efficiency No one can afford to focus on just one strategic priority and totally ignore others -- BUT one driving imperative makes transformation easier because there’s a clear vision that supports the need for change.

73. Step 3: Bring it all together The CPRO/CCO transformed into Chief Culture Warrior can lead transformation : –With a clear vision of strategic imperatives –With deep and broad understanding of the organization and its people as they are now –With effective marketing and communications strategies and tools to change attitudes and behaviors –And by partnering with operations execs who will lead the effort to re-tool policies, procedures and processes.

74. STEP 4: About Face! Culture is determined by what we DO. It is memorialized by what we SAY. Both are important, but one must precede the other. To be the change agent, the Chief Culture Warrior, instead of communicator: First be the doer, then the sayer.