"The US subsidiary business was achieving sales targets, but was doing this at the expense of the morale of the broader team."
Client: >$200M US Life Sciences Company
Goal: Assess the culture and engagement of 180 member team
Industry: Medical Technology
Services: Cultural Assessment, Action Plans
There were significant challenges with team morale at the US headquarters location as well as the remote associates tied to this location, primarily an embedded culture of blame within the organization, lack of accountability, and the mentality of ‘that isn’t my job’.
It was apparent that the most recent President shared information with the Leadership Team/L1 (his direct reports), that was detrimental to an environment of trust between the US and European associates. There is a strong impression at all levels that the US doesn’t have decision making authority and has no autonomy from Europe. This former President shared confidential performance management information about peers within the L1 Team. Although the former President brought hope to the team, he was at the same time divisive through his communication; both in content and in style. The L1 Team had in some cases shared confidential information with their direct reports, (L2) in the same manner as the President, further deteriorating morale and trust.
- At his introduction meeting to the entire US team, the former President shared that he not only didn’t need this job, but he also didn’t need the money, and that he turned the job down twice before he was talked into accepting the role.
- At this same introduction meeting, the former President shared highlights of his past success on a PowerPoint presentation including pictures of his house and his car which cost several hundred thousand US dollars.
- The former President shared with the VP-Sales that he was going to terminate (his peers) the VP-Service and the HR Director.
- The former President told the VP-Sales that European leadership wanted him to be fired but that he, the former President would save him and not allow that to happen.
- The former President shared with the Leadership Team on several occasions that ‘If I leave it means that we aren’t going to be successful and you should all leave too’.
- The former President shared with newest member of the Leadership Team team that he was going to terminate several of her peers; HR Director, VP Sales, and VP Service.
- Team members were counting the number of days that the former President was present at the NC office, his lack of presence was noticed and frequently discussed.
- Team members had a pool going on how long this gentleman would last. They assumed no more than 6 months.
- The former President told the HR Director that he was going to terminate some of her peers, VP of Sales and VP of Service.
This public life sciences organization is a US subsidiary of a larger European parent company. The US business was achieving sales targets, but was doing this at the expense of the morale of the broader team. They had recently removed a new President, who was not a match for the organization, and the Leadership Team reporting to him/her was struggling to align. Carrie Haas-Vukosovich was engaged to evaluate the culture and make recommendations for immediate improvement.
Vukosovich met with each member of the L1 (direct reports of president) team one-on-one to gain their insight and ask questions about their concerns, their level of engagement, and their retention risk. These meetings, as well as those to follow, had guidelines of strict confidence. The team members were told that their contributions would not be specifically shared, but that they would be rolled up into themes. The team was made aware that should they share any illegal activity that it could not be held in confidence but shared and dealt with appropriately; sexual harassment, discrimination, etc.
Vukosovich held L2 (direct reports of the leadership team) meetings with local and remote leaders to gain their insights of morale, overall job satisfaction and concerns. Many L2 team members requested one-on-one conversations with Vukosovich where they shared more in-depth concerns.
Breaking it Down
Vukosovich ranked this as top/first priority. The HR Director had worked for the organization for six years. There was overwhelming feedback from all levels of the organization that the HR Director was not effective and was not confidential. There wasn’t a vehicle in which the team members felt that they could use to share concerns in a manner that garnered action. In one case, an L2 team member shared that she had opened a CAPA (corrective action) in the past to address headcount concerns. The HR Director was not seen as a strategic business partner; unable to adequately assist in budget and headcount approval process/discussions, was not trusted by broader team, and there were no retention mechanisms in place although turnover was a large problem. Vukosovich believed that top-grading this position should be a first priority and that there would be little to no fall-out from the team from a morale stand point should she leave. There needed to be a better understanding of the compensation; payroll, merit, bonus, promotion processes that the HR Director handled as well as timing around benefits re-enrollment. What is she personally responsible for? Does her departure impact these processes?
- Sexual harassment allegations were not addressed by HR and this was widely talked about among the team members.
- Several L2 associates shared examples where they were told to ‘figure it out on their own’ when they witnessed or experienced “bullying” by other team members.
- The HR Director shared health and mental well-being information about employees to others unnecessarily, breaking HIPAA laws.
- The HR Director shared performance information about team members to their peers; who had been written up on performance improvement plans, etc.
- A L2 leader was allegedly told to terminate someone for having breast cancer by the VP-Service and no one felt that HR would investigate or address the issue.
- There were no action plans built for the Employee Opinion Survey, or any other follow up.
- Someone that filled out a free form field on the employee survey was pulled into the HR Director’s office to be reprimanded for their input, reinforcing the sentiment of the broader team about HR.
- There is a suggestion box in the breakroom that is unused, as no one believes their suggestions matter.
- The HR Director was seen as a gossip.
- Team members felt that poor performance is not only tolerated but rewarded because their work will shift to someone else, creating more workload and morale issues.
Vukosovich ranked this as second priority. The VP of Service had worked for the organization for 27 years and it was apparent that he cared deeply about the success of his team and the business. It appeared that the VP Service had many responsibilities and that he also largely managed Operations. He was overwhelmed but meant well. He had taken short cuts with compliance and had undermined the trust of many of his local team members. There is an underlying sentiment of revenue recognition before all else. VP Service shared that should he leave he thinks his remote service leaders; regional managers and FAEs would follow suit. This needed to be more thoroughly considered.
Vukosovich’s opinion was that the east and west coast regional leaders would be the most likely to exit should the VP Service leave. There needed to be a compensation evaluation of the field service team. Vukosovich recommended that this happened as soon as possible for all of the field service associates with particular attention paid to the San Francisco Bay area and the area of Boston, MA.
Vukosovich saw this as the third priority. The VP Sales had worked for the organization for 30 years and this is the only company that he has worked for since he graduated from college. He worked remotely from another state. He seemed to be well liked and seen as a nice man. Similar to service there is a strong emphasis placed on revenue recognition that potentially perpetuates compliance issues and bad behavior.
- Free of charge orders were frequent but once discontinued they started covering ‘free of charge’ under warranty a label as a work around, resulting in a warranty costs increase by $200k.
- Pallet installs happened at customer sites to get sign-off of customer ASAP, enticed by free of charge and free service contracts thus allowing sooner revenue recognition.
- Pre-order seen as rampant, causes reconfigurations to increase in US and creates compliance issues
- Some customers felt sales was erratic, they push really hard for PO#s but then limited to no follow up.
Vukosovich saw the Director RA/QA, as one of the strongest leaders on the L1 team. Director RA/QA was committed, and seen as approachable by the team. Vukosovich’s impression is that the team will go to her with concerns more than they will anyone else. Director RA/QA does a nice job of educating peers and team about regulations, builds and maintains relationships, and influences without authority. Vukosovich does not see her as a retention risk, however; she has children that are young and leadership should be aware of her travel schedule, should it get too heavy.
Vukosovich’s assessment of the Head of Finance and Controlling, was that she is competent and well liked and admired by her team. The broader team also sees the Head of Finance as a person to approach should they encounter compliance issues. She was committed to do the right thing. She had clearly communicated to the former President that she intends to relocate out of state after her son graduates from high school. There is an opportunity to retain the Head of Finance should she be able to work remotely. Vukosovich thinks that the Head of Finance will also explore other options as the relocation date approaches.
The VP Marketing, had only been with this company for nine weeks. She worked remotely but has traveled to the US headquarters for eight of the nine weeks that she has been employed by the company. She worked with the former President (as a consultant for him) in three other company engagements. She is bright, and had a somewhat direct communication style.
First 30 Days
- Hire VP Operations
- Evaluate key HR compensation/benefit processes that need to happen over next several months, can the HR Admin support in the absence of HR Director or bring in interim HR leader
- Begin confidential HR Director search
- Terminate HR Director ASAP
- Institute an open door policy and a vehicle for associates to use to raise concerns
- Have discussions with field organization(s) to assess retention risk and concerns
- US should have separate compensation strategy
- May not be necessary to pay bonuses to all employees that leave, can be handled on a one-off basis in separation agreements
- May not be necessary to build merit increases off of both base and bonus, just base
- Build retention action plan
- Hold regular town hall meetings, and increase communication cross-functionally
- Increase L1 presence in the NC office
- Continue providing sodas and fruit in the breakroom
- Compensation evaluation of service team
- Assess customer agreements, they are poaching talent from the company
- Need to get in front of this
- Evaluate sales compensation and incentive plan, is it competitive, reinforcing good behaviors?
- Follow up on employee opinion survey
- Monthly chat sessions with team, all departments to be represented, post notes for all to see
- Celebrate and share wins
Next 60 Days
- Update US décor with collateral on current products, and life-saving technology, increase employee brand proposition
- Re-instate $100 Christmas Gift cards for at least this season, team has learned to count on that for Christmas gift
- Have holiday party/celebration o Implement recognition program
- Process map each department’s work and work streams, eliminate waste and duplicative processes, provide transparency into workload
Next 90 Days
- Document standard work
- Evaluate headcount based on workload, supplement or cut as appropriate
- Improve SAP training
- Build FAE bench strategy for service, increase speed to value, opportunity cost is high today
- Provide revenue recognition training to all levels of organization, doesn’t have to been in depth, but need to share what it is and what it isn’t
- Build a performance culture, drive accountability
- Provide career advancement, personal and professional development (by in large most employees said they only get feedback during their review)
One employee summed this up well in a group discussion, We have “good products, good people, but bad leadership and bad processes”. The company has many committed team members but they are tired of sharing their concerns and ideas only to have them dismissed and ignored. Instead of being educated about resource constraints they are simply told that it is because Europe didn’t approve funding or headcount. Many are tired and dread coming to work each day. Several broke down in tears in their discussions with Vukosovich. They wanted to feel good about coming to work, they wanted to win. They were holding on for change, but were exhausted and losing hope. Addressing the needs in HR will be a great start to showing the team that they have been heard.