Introduction and Background:
The case study involves a small business unit that has gone through significant transformation and continuous change. The business unit (BU) is part of a large global business and is within one of the four primary divisions. Like many business units in larger companies, the BU must constantly adapt itself not only to its direct marketplace impacts but also the dynamics of externally and internally driven changes across the enterprise as a whole. This case study looks at a 10-year period during which the BU went through 4 significant business transformations. Additionally, there were numerous changes across the enterprise that also impacted and created an environment of continuous change for the BU.
Over the next several weeks, we will work through the case study and explore the role of learning and development (L&D) as a key business partner to ensure robust business agility to respond to continuous change and transformational events in this BU. Afterward, we hope you will agree that L&D must now be seen as a business imperative, a partner, and strategic investment in the vital business assets … the people!
The first transformation for the BU took place in the late 90s. It involved the separation of the BU into two distinct business units, each aligned with different divisions. The objective of splitting the BU into two parts was to improve operations across both parts of the former BU and provide better enterprise alignment through the divisions. As you might guess, it involved the development of new business strategies and changes to the operating models and organization structures in order for each business unit to be aligned with their respective new divisions. Unfortunately, about a year after the separation, one of the business units dissolved.
The second transformation happened about 4 years later when the surviving BU was combined with multiple adjacent businesses from the division into a single group. The primary objective of the combination was to gain greater market synergy and leverage the customer base from the combination of the adjacent businesses. The revenue base increased four fold and involved the rollout of a new combined go-to-market and customer strategy. The second transformation likewise brought changes to the core strategy, some changes to the operating model, and significant changes to the organizational structure of the BU.
The third transformation followed a year and half later. It involved a series of strategic acquisitions to expand the overall revenue base of the business. In addition, it involved a combination of businesses from the division making the total group of businesses much larger. The new group was intended to gain further market synergies and grow and leverage the customer accounts. The strategic acquisitions expanded the revenue base and critical talent resources. It entailed acquisitions of very similar businesses, but with slightly different business strategies, quite different operating models, and different organizational structures.
The fourth transformation occurred another year later and was driven by a reorganization following major regulatory changes in the industry. The enterprise had an imperative to redirect and reposition the large group of businesses following the regulatory changes. Several of the businesses were split apart, and some of the businesses were exited as the enterprise adjusted and repositioned to the regulatory changes. This transformation required implementation of a new core strategy, more changes to the operating model and more organization structure changes. It further required changes to staffing due to the elimination of certain lines of the business. The original BU was split off into its own stand alone BU.
Generally, all of the transformational events and related changes would be described as significant.
The leadership, in all cases, utilized the “change enablers and levers” from the enterprise’s talent management programs. To the extent possible, leadership included aligned performance goals, rewards & recognition and learning programs. In all four situations, extensive strategic communications were integral to each rollout and the leadership team was active and involved in the efforts.
With the first and fourth transformations, the operating results significantly exceeded the high expectations of the business as well as individual employee reactions, as collected in surveys. The level of employee engagement increased dramatically both times when you would reasonably anticipate a dip due to the significant changes. The positive financial operating results from both transformations, as described by management, were “off the charts.”
The second and third transformations did not meet the high expectations on improvement of earnings and growth of the combined businesses. Further, individual employee reactions were not as positive. The level of employee engagement remained flat or lost ground compared to the prior year’s survey results.
The events described here are very similar to what happens across many large organizations today. The enterprise executes broader strategies to gain greater synergies within its divisions and constantly responds to the market in an effort to grow the business as a whole and improve operating results. This demonstrates several implications of controlled and uncontrolled changes to an organization or, as we have come to accept, the reality of continuous change in business today.
Now, let's explore some important questions (the “what” and “how”) as well as the role L&D had in impacting the BU transformations.
What was the role of leadership?
Here’s what was interesting. During all of the transformations, leadership intended to utilize all of the programs and tools to enable the changes. Initiatives focused on:
All initiatives were “aligned” with the changes and strategy.
How many times has this happened when leadership and the internal and external advisors pull out the checklist and merely run down all the different initiatives to help enable the change without a critical eye to reality or the true impact the initiative is having or not having or just ignoring the list? As we all know, there are degrees of investment and utilization of initiatives to enable change, in addition to the critical nature of leadership commitment that make the ultimate difference in the effectiveness and achievement of desired outcomes.
What was the role of L&D?
As we said, one of the key factors for success for L&D is: Leadership’s commitment and participation
Given that, you can see the importance of the connection between leadership and L&D. Leaders need to sponsor and approve investment in L&D targeted to the objectives and desired outcomes of the transformation. The leader primarily responsible for L&D needs to hold other leadership accountable for consistent commitment, involvement, and top-down fulfillment of actions and behaviors directed by the change.
For the first and fourth transformations, learning was identified as a key strategic priority and investment. Leadership, for that reason, was vested in its participation. Leadership was involved in the design of the L&D initiative as well as the entire BU who participated in the design, development and delivery of the learning programs (i.e., participatory leadership). The learning focused on developing and improving the core and basic competencies (i.e., knowledge, skills and behaviors) and capabilities in addition to the application of them in the new environment or strategy. Communication of the vision and mission were also embedded in all of the L&D programs. Further, the leadership was actively seen participating in the development and delivery of the learning programs.
Unfortunately, for the lone line of business split off from the BU in the first transformation, nothing was done for the unit. Management assumed the change would just happen and they ignored the use of any “change levers and enablers” from the talent management programs. They were too busy with other matters and they felt everyone would “get it.” In fact, within a year, many people had left the business that was split-off and it dissolved thereafter. Essentially, it was a “case study” in how leadership should not do it.
For the second and third transformation, learning was not a key strategic priority and investment during the transformational business events. In the second transformation, there was an emphasis on the learning programs targeting only the application of the competencies in the new environment or strategy, but there was not a focus on improving the core and basic competencies and capabilities that were specifically relevant to the transformation. Leadership placed more emphasis on strategic communications as part of the rollout. Legacy and outdated learning programs continued without recognition of the changes that needed to happen in the BU.
Observations
What kind of results were achieved?
When learning was a strategic priority and investment and leadership was involved and committed, the return on the investments in the L&D and leadership’s involvement (measured by financial performance in the business unit in less than a year) was excellent and the results were sustained. As management referred to it: “operating results were off the chart.” Furthermore, the employee engagement (measured through employee surveys) increased dramatically.
How was education and learning a key in the two successful efforts?
BU leadership focused on:
What were some of the key challenges in all of the transformations?
Clearly, the second and third transformations were larger. This created an effectiveness issue with the alignment of the operating model with the organizational structure and deployment of some of the “change enablers and levers.” It also created scale issues in managing the significant dynamics of the transformational changes, so it diluted leadership and its ability to have the level of participation that was actually needed. Lastly, all of the transformations had cultural issues to address.
So what’s the moral to the story about the “make or break” role of leadership in L&D?
Leadership became convinced that significant and well-planned investment in learning was critical to enable the change for individuals and the organization. To do this, leadership required L&D to be a strategic priority of the transformational events and an investment, and leadership required commitment to active participation in communication and L&D efforts to realize success.
L&D helped focus on individual and organizational success when its efforts first address the question “What do I need to do my job?” Further, when L&D enhanced individual core competencies and capabilities, it clearly answered the employee’s question “What’s in it for me?” The surveys clearly proved that people embraced L&D as an investment in them and their careers.
At that point, do you then touch the “mind and hearts” of your people unleashing the emotional power of people to work through the changes faster and more effectively? When this happens the return on the investment in the L&D and leadership’s involvement (measured by financial performance in the business unit in less than a year) is excellent and the results are sustained. As management in our case study referred to it: “operating results were off the chart.” Furthermore, the employee engagement (measured through employee surveys) increased dramatically.
Why not invest in your people at a critical time? You might be surprised at the results of the “mind and hearts” of your people.
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