The process of culture change is often easier said than done. Craig Donaldson speaks with Mike Shove, managing director and CEO of CSC, about this process and how to embed long-lasting culture change
What was the catalyst for change within CSC?
There were a number of things here. First we had a case for change. In 2003, we’d had a difficult financial year. Internally, our processes were driving compliance and staff were weary and disengaged. The management team lacked confidence and cohesion, and we wanted to understand the impact of leadership and culture on performance. We were too internally focused as opposed to being externally focused.
Externally, the market was also shifting on us –we’re a ‘big deal’ IT services company, and there were less big deals in the marketplace. The business environment and competitors were changing with large scale outsourcing arrangements and there were new players in the market through Indian offshoring. Customer expectations had also shifted. They were more educated, highly cost-conscious and looking for more return on investment and innovation and creativity in our service offerings. So it was obvious that we needed to look at how we could do things differently.
How did you gain the support of executives for culture change?
The executive team spent hundreds of man-hours debating what we should do, until we reached a common goal of where we were going to take the company. We developed a set of standards for how the executive would interact and behave, both within team meetings and externally. We had to create a safe environment where people could openly discuss things and provide both positive and negative feedback. It was important to discuss these values and stick by them. It’s not about making the numbers at all costs. It’s about making the numbers and maintaining the values of the organisation.
Once you get executive buy-in, they understand how they should behave. That’s an enormous first step in making change real. Senior management is critical to the success of a change program. If they haven’t bought in 100 per cent to the change, then it’s going to be less successful and take much longer. The process starts at the top of an organisation – it’s about the kind of the shadow you and the senior executives cast across a company.
What prompted you personally to embark on change?
Using the Human Synergistics tools. Where we did the leadership impact circumplex, I got direct feedback from my team about the behaviours and actions I was exhibiting. It was very confronting. If you know the circumplex, it’s uncomfortably confronting to realise that the management style that’s worked for the past 10 years that has got me to this level has very little blue at all, with a great deal of red and green. If you get a reasonable sample to let you know how the organisation feels about you, you can’t rationalise this away forever.
Within this, I realised I had two choices. I could fire the team and get people who will say nice things, or I could internalise the feedback and acknowledge that I needed to do things differently. And I made that commitment to myself and to the team that I would modify my approach.
What about those who weren’t willing to change?
There are detractors, cynics and sceptics everywhere within organisations, looking to see whether change is real or not. Everyone is looking to see if you will slip backwards so the sceptics can say, “See I told you they’re not really serious”. You get some people who think they can outlast it, that it’s just another fad going through the organisation. They need to see that you’re serious about change and investing in the process.
Staff look to see where executives are spending their time and money. And they quickly figure out that if this is what they’re spending their time and money on, then it must be important and they start to get on board.
Some people didn’t get on board. They didn’t necessarily see a need to change, so those were people we helped off the bus and are no longer with the company. That sent a strong message that the company was serious about making some changes.
How else did you go about reinforcing culture change?
You’ve got to demonstrate to the staff that you’re serious. You have to have symbols and signs for rewarding the right behaviours needed to head in the right direction. So we built reward and recognition programs which regularly reinforced those positive behaviours that people were exhibiting.
We had to find other things to make it real. We put some serious funding into capable change leader training programs, which have provided hundreds of managers and team leaders with the tools and the expertise to effect change in their part of the organisation.
Communication is also important. Over the last three years we have run road shows all over the country to reach all 4,000 staff. We get 85–90 per cent participation in these face-to-face workshops where we interactively talk to staff about changes we’re making, the direction we’re heading in, the successes we’ve had, some of the mistakes we’ve made, and how they fit into the organisation.
So we tell them how we’re doing financially, where we’re winning and where we’re losing. We share a great deal of information so they have some context for some of the decisions that we’re making. It just gives them a better sense of where we’re going.
What was HR’s role in culture change?
HR plays an absolutely key role from my perspective. HR has to be an equal at the executive table. We certainly look to HR to help lead some of this change, because in many cases they are the experts and professionals in this field.
For example, HR was also instrumental in helping to facilitate the discussion to get everyone on board in the beginning. The vice-president of HR came to me several years ago, with some ideas and recommendations on how we could look at things differently. It was HR that recommended looking at external consultants.
So we engaged a management consulting firm called PCD (Professional Change & Development) in conjunction with the practitioners from Human Synergistics to build quite a rich program for the entire organisation. We weren’t looking for a McKinsey or a Bain to talk about content in terms of the IT industry, because we’ve got people with decades of knowledge in this area. We were looking for some process expertise and help, and HR played a key role in bringing the leadership team along on this journey.
What have been the benefits of culture change?
There has been significant change. I think our staff are more engaged, enthusiastic, energetic and committed to the organisation, and their feedback is much more positive than it’s been in the past.
We have hired good people purely because of what they’ve heard about CSC from customers and other people in the industry. It is quite a hot market at the moment, and IT skills are in demand. Good culture is a differentiator, particularly for generations X and Y who like to ask direct questions about the culture of a company.
Our turnover rate has also fallen. We’re certainly below the industry average, which runs at about 13–14 per cent.
We have strong revenue growth and operating income has increased substantially. We still have a long way to go. Things are much better than they were, but it’s an ongoing journey and there’s never really an end with culture change.
Are there any lessons learned in hindsight?
Looking back, I have a better line of sight on some issues. Rather than trying to fix everything at once, I would have taken on fewer initiatives and completed these first before moving onto the next group of initiatives. This was an important learning.
You simply don’t have enough good people to manage all these initiatives at once. They’re expensive, and when they get difficult it is sometimes easier for some people to back away and move onto something else.
I also would have taken more risks, moved more quickly and found more money to invest in some of these tools. And then test it – test it with customers and with staff. See if all the rhetoric is true. We may feel good as a management team but you also need to see if customers and staff are feeling a shift.
This is particularly important for us, as we don’t make anything. We’re an IT services company. Our assets are our people. All our assets go home at night, and the trick is to get them to come back the next day motivated and wanting to be here.