“The CEO’s Role in Leading Transformation” (McKinsey & Company) defines how CEOs can help in a time of company transformation:
In effort to turn Lenovo into China's first successful global brand, CEO William Amelio is counting on cross-cultural thinking. True to traditional Chinese culture, Lenovo is "beset by deeply hierarchical and deferential behavior." An "Executive Expressions" course helps Lenovo managers learn how to straight talk in meetings, not afterwards, and confront their superiors. (The Economist, February 17, 2007)
The CEO of the Chrysler Group, Thomas W. LaSorda, issued a letter to Chrysler employees to reassure them of Chrysler’s commitment to maintain its business focus while conjecture of a buy-out abounds in the media: LaSorda's Email to Employees
“When (Organizational) Change Hurts: Startups Need to ‘Think Employees’ from the Get-Go” is a new report from the Stanford Graduate School of Business. A decade-long study of Silicon Valley technology startups finds that companies are three times more likely to fail and have six times lower long-term stock valuations when they alter the founder’s blueprint for employee relations than if they maintain the model. Stanford Graduate School of Business Professor Michael Hannan states that “The tension comes in when the company gets larger. As you’re trying to scale up, bureaucratic and autocratic models work better. But making the transition to that from a star or commitment blueprint proves to be dangerous.”
“I no longer want to work for money” is the powerful statement Whole Foods CEO John Mackey made in a letter to employees in November 2006. Mr. Mackey announced to his employees that while the salary cap for employees would increase five percentage points, he would relinquish his salary and work for the “joy of the work itself and to better answer the call to services that I feel so clearly in my own heart.” (Fast Company)
The Financial Times reported on the lack of internal communications. According to research by Sage, the UK software company, 86% of respondents believe that deliberately keeping information from colleagues has a detrimental effect on the business, yet 28% admitted to doing so.
Frequently, departments simply fail to talk to each other. The Sage research found that this roadblock is typically due to personality clashes (69%) and, to a lesser extent, jargon used by IT (33%) or finance (28%).
Accenture research conducted among 1,000 middle managers of large US and UK companies showed that three out of five said they missed out on information that someone else in their company was holding. Even more interesting, while 45% said that finding information about their own company was a challenge, only 31% found it difficult to get information about their competition.(Financial Times)
The Watson Wyatt 2005/2006 Communication ROI Study found that internal communications matters. It makes such a difference that companies with strong internal communications also fare well financially. Companies with solid and effective communication practices have a 19 percent higher market premium, 57 percent higher shareholder returns over five years and employee engagement almost five times higher than that of competitors. Moreover, companies that are more effective at communicating are 20 percent more likely to experience lower turnover rates than competitors.
Following the widely publicized e-mails sent by RadioShack HR as the company laid off 400 employees, managing internal communications well has become a popular topic among management gurus. Once considered less important than external communications, the quality of internal communications is proving to be a valuable asset to companies that want to enhance their corporate reputation. Internal communications has shifted from how to best communicate information to how to best energize employees, according to Lisa Davis of PR Week. The article suggests three key internal communication strategies: keeping employee and CEO visions aligned, honestly explaining third-party news, and articulating why the company is a great place to work. As employees feel more connected with the company, employee satisfaction rises, bolstering the corporate brand.
By predicting the rise of the knowledge worker and positing how to best harness their talent, Peter Drucker established himself as the “most influential management thinker of the past century,” according to The Wall Street Journal. Over his sixty-year career and 39 books, here are snapshots of his best advice:
Sound internal communications is a two-way street. In leading the newly acquired Gillette's turnaround, former CEO Jim Kilts was praised as a straight shooter. If you listen to Jim analyze a business situation, you get absolutely no baloney, says former Gillette Director Warren Buffett in an interview with Fortune. Kilts was equally direct with Wall Street, telling analysts that Gillette's growth would hit between three percent and five percent, as opposed to the double-digit growth it experienced before his takeover. Likewise, Kilts demands his direct reports to meet the same standards of directness and accuracy. At the beginning of each quarter, direct reports handed over a list of goals they expected to achieve. To follow up, each week the direct reports presented a one-page minimum memo updating Kilt on their progress. At the end of the quarter, the direct reports knew precisely how they had done, as Kilts graded their performance on a 100-point scale.
Managers who “walk the talk” experience greater profits than their peers who say one thing and do another, according to a survey conducted by Harvard Business Review in 2002. Judy McLean Parks and Tony Simons set out to measure the impact of manager follow-through on the bottom line. Their hypothesis - that employees are unwilling to go the extra mile for hypocritical bosses, which adversely effects customer satisfaction and leads to high employee turnover and decreased profits - proved true. The pair surveyed more than 76,000 employees at 76 U.S. and Canadian Holiday Inn Hotels. Employees who perceived their managers as following through on their promises increased the hotel's profitability by 2.5 percent, or $250,000 a year.