Knowledge Center: Article
Engaging employees to transform company performance10/19/2017 Hervé Borensztejn and Anne-Frédérique Burgaud
How do you improve an organization that is already performing well and knows it? That was the dilemma the services unit of Alstom Transport in Romania faced in 2015. The unit, which maintains the Bucharest subway system’s rolling stock, was by many measures doing fine. It was among the best-in-class operations in the transport group in Romania, scoring well on lean-management indicators, compliance processes, and sourcing performance. The challenge of improving on strong performance was compounded by the unique circumstances of the unit’s workforce. When Metrorex, the Bucharest subway system, awarded the 15-year contract in 2004, Alstom took over the city’s four maintenance sites and the associated staff. In 2018, when the next contract is to be awarded, a competitor could do much the same thing: replace Alstom and rehire its workers. Thus the future for employees would be secure, but not for the company.
With contract renewal approaching, Philippe Dumé, then the managing director of services and rolling stock, and his leadership team needed to achieve a level of cost competitiveness and customer satisfaction that would make Alstom’s position as the incumbent operator unassailable. To do so they would have to create a sense of urgency where little existed. And to realize their ultimate aim—transforming the unit into a world-class performer and greatly expanding the business—they would have to find a way to make improvement sustainable for the long term. While the transformation is still ongoing, the unit’s strong improvement thus far offers lessons for senior managers everywhere in how to inspire, motivate, and secure lasting change.
The unit’s leadership team began to look closely for opportunities for improvement—and soon turned up some troubling issues. “Only about 10% of top-down messages about key objectives were being truly understood on the shop floor,” says Dumé. “Many of those messages died at the level of middle management, where managers were reluctant to cede control or collaborate across silos.” In addition, employee engagement remained low, with few initiatives bubbling up from below, little proactive embrace of other initiatives, and a lingering feeling among employees that they weren’t trusted to do their jobs properly. “Much time was spent on bureaucratic paper-pushing to demonstrate fulfillment of key performance indicators,” says Dumé, “and implementation of most initiatives was taking longer than expected, greatly reducing their payback.”
Through the end of 2015 and the beginning of 2016, the leadership team engaged in intense discussion about the best way to lead the organization to a significantly higher level of performance. It examined best practices in other organizations, benchmarked itself against the characteristics of high-performing leadership teams, and weighed various approaches to organizational transformation for their suitability to Alstom. The leaders concluded that the hierarchical leadership model they had employed over the previous decade had outlived its usefulness. Instead of attempting to dictate transformation from the top, they would transfer the “engine” of transformation to all levels of the organization by fully engaging employees and empowering work teams to lead efficient change.
The transformation would unfold in three phases: assimilate, create, and engage.1 In phase one, leaders would immerse themselves in the organization, collaborating with managers and frontline employees to generate ideas for improvement and assimilate them in a widely shared strategy for implementation. In phase two, a cross-functional pilot team would be formed to test the validity of the strategy. In phase three, leaders would continue to collaborate with employees to refine what had been learned in the pilot and deploy the strategy throughout the organization.
To begin to overturn the hierarchical model and develop a widely shared strategy for improvement, leadership engaged in face-to-face interviews with scores of employees. To elicit more genuine and uninhibited feedback, interviews were facilitated by a third party. The interviews were followed by meetings at all sites with small groups of employees for frank and open discussions about the business and to generate ideas for improvement. Managers and support-function personnel were briefed on the findings from the interviews and meetings, and they were coached on the new approach to empowering teams to improve performance.
Besides uncovering problems and sources of dissatisfaction, the sessions with frontline employees renewed leadership’s direct contact with the workforce. Leaders, managers, and workers not only exchanged views but also learned things about each other that fostered new respect. Dumé, for instance, learned that one of the frontline workers managed a football club in his spare time. “Such encounters confirmed our belief that our people were capable of handling far more autonomy and responsibility than our traditional way of working permitted,” he says.
The trust these encounters fostered set the stage for a series of surveys. Having experienced the genuine interest of the unit’s leaders, the workforce participated enthusiastically—the first survey achieved a 75% response rate in the first week that it was introduced, though workers had to complete it by hand instead of online. That initial survey asked a simple question: “If we all shared a common dream, what would it be?” For the vast majority of respondents the answer was to win renewal of the contract with Metrorex. The second survey asked, “If you were the boss this year, what would you do?” It produced 280 potentially workable ideas. The third survey asked participants to choose from a list of 30 generic corporate values those that were most meaningful to them. The overwhelming favorite was trust, cited by 40% of respondents, followed by teamwork, cited by 10% of participants. Percentages for the remaining 28 values were all in the low single digits.
Trust is no small matter. Fortune magazine’s most recent assessment of the 100 greatest places to work found that trust in coworkers and managers was the value almost universally cited by employees at the companies that made the list. And, as Fortune points out, numerous studies have found that organizations with high measures of trustworthiness lead in profitability, revenue growth, and other key performance indicators.2
Encouraged by the enthusiasm and ideas that these initial efforts generated, leadership believed that a renewed focus on organizational development and employee engagement could yield gains in improvement that greatly exceeded the usual single-digit targets. Another series of small-group meetings that included leaders, managers, and workers was conducted to align everyone around the strategy, sort through all of the worker-generated ideas, and refine specific tactics. These discussions were guided by a simple principle: focus on what needs to be transformed, not on what can be transformed.
Creating a pilot project
To test the strategy, they embarked on an ambitious pilot program at one of the unit’s four maintenance depots. Ambitious improvement targets, like a 15–30% reduction in lead times to complete maintenance tasks, were set. To clear away bureaucracy and empower frontline employees, a number of initiatives were launched:
- Authority to spend money to correct deviations in environment, health, and safety (EHS) requirements was transferred directly to the shop floor. In the past, workers had to go through a time-consuming budget approval process, resulting in costly delays and allowing potentially dangerous situations to persist. Under the new way of working, they could spend up to €10,000 on remediation without having to seek management approval.
- Individuals were empowered to manage their own time off. Previously, they had been required to seek approval from the human resources department. Now they had the HR password and could go directly into the system to enter their plans for time off.
- Flexible work hours were introduced. Demand in maintenance businesses is inherently uneven, with the volume of work varying significantly from week to week and day to day. Self-managed, flexible work hours enabled teams to more closely match demand with capacity.
- Responsibility for lean operations was transferred to the front lines. After some coaching in lean principles, teams were empowered to design their own workflows and to devise ways of eliminating waste. Instead of performing their work in strict accordance with instructions from the industrial department, they could do it in whatever way produced the best results in terms of efficiency and effectiveness.
In this phase, executives participated directly—as collaborators, not commanders—so that they could validate strategic assumptions faster, allocate resources effectively, and encourage behavior change. Once a month, for instance, members of the leadership team worked right alongside frontline employees, cleaning trains and performing other basic maintenance tasks. Workers saw firsthand that leaders were serious about the transformation project and committed to maintaining their renewed contact with workers.
Results from the pilot phase were impressive:
- Lead times for major maintenance tasks dropped 20–30%.
- Total hours worked declined by 10–15%.
- Lean maturity scores doubled on such parameters as employee involvement, training, approach to problem solving, and continuous improvement.
- Scores for cleanliness of trains, as judged by the client, reached the highest possible mark.
- Absenteeism fell by 30% in the six months after the program began.
- Employee engagement scores topped 90%—nine times higher than in comparable work units.
Together these changes added up to significant improvement in overall productivity. Because the depot could do more in less time, a number of people could be reassigned to other parts of the unit, demonstrating the power of the approach to save money. Similarly, more-engaged workers, who didn’t require constant management oversight, enabled leadership to prune the hierarchy. Less concretely, but just as importantly, leaders began to see a distinct change in attitudes, with employees and managers developing a mutual sense of trust.
Engaging the entire organization
At the end of the pilot phase in September 2016, the members of the extended project team gathered to assess where they stood. To do so, they administered the Organization Accelerator Questionnaire (OAQ), a proprietary tool developed by Heidrick & Struggles to assess 13 factors that drive organizational performance (for more on these factors, see “Adapt to change and take back control.”) The detailed results provided insights into what aspects were working well to accelerate performance and what aspects were creating a drag on acceleration. The primarily high scores on factors driving performance confirmed the perceptions of the leaders—that the success of the pilot warranted the organization-wide deployment of their approach to transformation. The OAQ also indicated some additional room for improvement—especially in communicating key messages and engaging a key demographic of workers who were crucial for the company’s future.
Organization-wide deployment began with a new round of small-group meetings at all sites to determine the best way to transfer responsibility to the shop floor at each depot. Once again, members of the leadership team immersed themselves in the process, coaching managers on ceding control to employees, looking for opportunities for communicating key messages, and assessing the extent to which everyone was adopting new attitudes and new ways of working. The benefits first seen in the pilot have now spread to the unit’s other sites.
The greater productivity generated by highly engaged employees has meant the ability to do more with less. The unit has been able to reduce the top team from ten members to eight, and overall headcount has dropped about 10%. These cuts were accomplished through retirement, voluntary departure, and buyouts—not draconian cuts.
The ability to do more with less has positioned the company to be able to offer a far more competitive contract bid with Metrorex. Says Dumé, “We’ve achieved a level of productivity and cost effectiveness that we don’t believe any competitor will be able to match.” And with contract renewal looming, performance is likely to continue to accelerate. Newly empowered, fully engaged employees have more reason than ever to want Alstom to remain the incumbent operator and to work enthusiastically to make sure that happens.
About the authors
Hervé Borensztejn (email@example.com) is the regional managing partner of Heidrick & Struggles’ Leadership Consulting Practice in Europe and Africa; he is based in the Paris office. He is a coauthor (with Saad Bennani, David Briggs, and Philippe Dumé) of Conduire le Changement avec la Méthode ACE (Eyrolles, 2016).
Anne-Frédérique Burgaud (firstname.lastname@example.org) is a consultant in the Paris office and a member of the Leadership Consulting Practice.
A version of this article was previously published in Chief Executive.
2 Michael Bush and Sarah Lewis-Kulin, “The 100 best companies to work for: Why they matter,” Fortune, March 9, 2017.