When productivity is low, and revenues are falling, most executives point at staff morale. The result are series of team building events and salary increments which never solve the problem. In this case study, we explore how you can lead a successful transformation journey by providing clarity of individual staff roles in the journey and taking their morale through the roof without spending money on unnecessary team building events.
The sudden change
Many things were going the wrong way at one of Summit Consulting Ltd’s clients, Business Banking Ltd (not real name). Within a period of just two years, the company was experiencing challenges paying the monthly salaries of 180 staff, not withstanding pilling supplier bills. Before the retirement of the old chief executive officer, BBL had reported a consistent revenue growth of 10% year on year since 2007 to 2013.
As we say at Summit Consulting Ltd, it is very difficult to hide an elephant. If something is not going the wrong way, it is very difficult to hide the numbers. Likewise, if someone is doing great job, it is very difficult to hide the fact. In this case, the board was able to notice the declining performance. Every Board want business stability. They don’t want to keep changing the CEO frequently unless facts are overwhelming that something must be done.
Before long, the Board was faced with a hard to neglect fact: performance was declining sharply, and the shareholders were becoming uncomfortable.
That was in March 2013.
The company made two major leadership changes. (i) Appointment of the new Board Chairman; which led to the (ii) removal of the company’s Managing Director; as the board was not satisfied with her presented strategy. This sudden change in leadership plunged the company into a crisis as staff became anxious. And that was not enough: the newly recruited MD; came with a whole new leadership style – position by merit. First to be affected were the top managers – the once untouchables.
The message went across the company: no one is safe. The result: Panic. Confusion. Worry. And lots of anxiety about when will the axe fall and to whom? A letter addressed from the HR department to any staff became the most feared letter. And instead of performing; staff got worried and afraid of their job security.
The HR consultant and team building
Staff would report to work and pretend to be busy, and instead spend the rest of the day looking for the next exit. The new CEO caused so much anxiety among staff that they stopped working and started worrying full time. This caused morale to plummet and team spirit to die. The company was breaking apart and everyone needed answers. The first step the new CEO did was to bring human resource consultants who easily and quickly diagnosed the problem to be lack of staff morale leading to low productivity and poor performance. The HR consultant suggested that the company invests in a series of team building events as well as give staff new titles and increase their salaries. The proposal was so well articulated that the CEO immediately approved the proposal and signed the contract.
Six months later, the Board was becoming so impatient and no longer had trust in the ability of the CEO to drive change and transform the business. No one could believe how a once profitable company could suddenly become loss making. And how all initiatives were like good seeds falling on rocks. Nothing was working.
It became clear with each passing month that paying demotivated staff higher salaries makes demotivated staff who are highly paid. That is true. If someone is demotivated, paying them more money does not change things. It is like treating the symptom. If a staff does not have clarity of their roles and what work well done means, paying them more money will not make them motivated and high performers.
The Summit Consulting factor
A casual visit to the Operations Manager at Business Banking Ltd by Summit Consulting Ltd’s practice leader brought a sigh of relief. I asked the Ops Manager, “what is the number one thing keeping the EXCO (executive committee) up at night recently?”
He replied with clarity: declining growth. In fact, the CEO’s job is on the line?” He said, everyone thinks it is changes of the CEO and Board Chair at the same time two years ago. I think the problem is not that. I am sure it is poor change management. The problem is the EXCO knows the problem, but we have failed to get the right person to help the team navigate through it.
I immediately suggested to a short interactive presentation to all top management on “crafting an organic strategy for the new era that is easy to implement. where we are heading, how we will get there and your role in the journey.” I was instantly introduced to the CEO, who fixed for me an appointment the following day to make the presentation. As they say, the rest is history. Today, the CEO is one of the top performing executives.
As a CEO, you need a great team of trusted circle of independent advisors to help you see the business from an ‘outside’ view.
Clearly, team building and salary increments, although good initiatives, were done pre-maturely considering the state of the business and the problems at hand. The initiatives instead landed the business in deeper troubles of cash flow as a poor performing company with declining cash flows does not need to pay higher salaries unless after restructuring informed by a clear strategy and business model.
Summit Consulting Ltd implemented the #WinningTheGame approach – a four stage business transformation model – context, perspective, strategy and change – to deliver real and lasting change solutions that focus on identifying and fixing the most pressing issue first.
And it has become a model for effective change management. Today, Business Banking Ltd have increased annual revenue from Ugx. 55 billion to 120 billion within a period of three years, with a corresponding increase of profit margin from under 6% to 21% presently because of implementing effective diversification by introducing new products that require low costs to deliver. This has been a real game changer.
There are so many companies with potential, but they settle for small revenue and profits because they continue inhaling their own exhaust – using internal advisors, continuously using the same consultants, among others.
Are you a leader? Do you want to explore new growth initiatives? You need to remove staff anxiety and improve team performance. But how?
Consider the following
- People/ your staff will resist change if they are being led in darkness. If your staff have not been clearly informed of what next. It does not matter how much team building training you do, if your team lacks clear understanding of the company’s direction (strategy), company’s journey (implementation plans and upcoming changes), and the expected outcomes; all the training you do will be wasted resources.
- Alignment of your strategy to the structure and Balanced Score Card for respective departments delivers outstanding results. Team building is great, only when people have clear understanding of what needs to be done now and how will it be measured. There will be loss of morale and team spirit when staff are not sure of what to do; how to do it; and the expected results. Lack of alignment of strategy to structure to performance measures; leads to team dysfunction. Our experience is that many leaders spend a lot of money to kill morale and fail their organizations. You don’t have to. Call us in today for a change! Our practice leader also makes key notes and strategy planning moderation. You will love it.
- Communication of your planned changes, roadmap in invaluable. It is good to bring new things on the table; however, a clear roadmap must be in place and communicated to all staff and provide clear expectations. People are afraid of the unknown. That is why me and you probably fear any mention of the word death. It is unknown. It does not matter how much you try to assure them, if the roadmap is not clearly articulated, there will be no morale. Without morale, there will be no team work and the company will experience downtime.
Summit Consulting Ltd helped Business Banking Ltd overcome dysfunction and failure. We are experienced experts and our focus on results, not input will improve your condition. The measure of successful consultants is the condition in which they leave you.
All our approaches focus on skills transfer to your team to make sure the desired results are attained and sustained. We improve the client’s condition.
Need strategy execution support services, email strategy[at]summitcl[dot]com or contact us using the contact page on this site.
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