The Key to Sustainable Organizational Change: Aligned Systems and Values

Speaker A But what we'd found generally, and Sir Roger Carnegie said it very, very clearly, we won't really make a big difference. And until the truck driver changes his behavior, I mean, he's her behavior, but it was mainly his in those days, changes his behavior. And that was a really prophetic statement. It was very clear and very sharp. And a lot of the changes, the restructuring, common levels, common compensation systems pretty close right across the corporation which I think saved that organization and produced a lot of synergy between the very different business units. Was helpful, but it actually wasn't changing the bottom line hugely because the products produced by people in one roles by truck drivers, by operators, by tradespeople and led by supervisors and really they had not changed significantly. So the work that Carl Stewart was doing with the Hammersley Iron OD team because each of the business units had an OD team which was looking at how they were restructured and Carl Stewart headed up the Second Hammersley Iron OD team, really did some groundbreaking work there. And they said that basically the structuring is not sufficient, and started working in those days, which we're now talking about mid 1980s, saying we need to look at systems and values and started that thinking. That's how I got connected in first the Hammersley Iron OD team and then with Carl when he became head of OD back in Melbourne. And that's where we developed, well, the first phrase about systems driving behavior and saying it's not purely the structural relationships that drive behavior. There's a whole load of systems in the organization that are influencing, well, more than influencing, are directing constraining and in some cases very much restricting people's behavior in the workplace, which were not altered by the structure because they were part of the employment agreement. So if you looked at the systems, the key difference in the systems were the employment systems. That in Australia you had the staff systems and you had the award systems. And if you looked at a whole set of metrics and said well, let's have a look at absenteeism, sickness, a lot of subjective measures, and you compared the staff with the award, it was clearly on every metric, the staff's behavior was much more productive. So then you had to say, well, are these a different species of people? Probably not. Then why is it that one group behave in one way and another group and the confounding, the hypothesis that somehow they're inherently different is the fact that when people moved from one to the other. So if a person got promoted from the award group to the staff group, well, their behavior changed, so they stopped taking sickies, so they behaved as their culture came to the rather radical conclusion. And it really was in those days a very radical conclusion that if you wanted the staff behavior in quote, then why not make everyone staff? Which seems very logical until you realize the Australian mining industry is at the heart of Australia. The miners and the wharfies that's it, isn't it are the union. And the idea of them becoming staff, it was just unheard of. But what it would do at a stroke, instead of having all of these negotiated systems and work practices, a lot of which were clearly restrictive, you would go on to a staff contract which said that you could do anything, be asked to do anything as long as you were trained and it was a safe practice. So essentially there is no restriction on what you might do. And at the time spending, I spent a lot of time literally at the coal face, working with miners, working with smelter operators, working with open cut iron ore miners. And so I'm just talking to them about their work and it was very we're going to give you one little story about that. I was in a shovel at a bench, an iron ore mine, and there's the bench where they drill and blast, blow up the bench. Then the shovel oper picks that up, drops that into the trucks and takes it to the crusher and so on. And one of the things that they quite like to do, the shovel operators, was to get out of their shovel and jump on a little bulldozer and clean up the bench, the toe of the bench as it called, and this is a little bit of variation, but they weren't meant to do that. They were meant to call for somebody else to do that. And I was there in the shovel one day and the guy said, I'm going to clean up the bench, I'm going to go down and do that. And I said, oh, I thought you weren't meant to do that. And he said, oh, it's okay. The union reps not around. And it was quite clear that the leadership of the organization and the people that a lot of those operators looked to for permission to do things. And the way they did things was the union or the union officials, union reps and so on, rather than necessarily their supervisor or superintendent. So that led to a real rethinking in Carl's operation, which is Kamalco Smelting time, a look at a move to an all staff workforce which occurred in New Zealand, and then Terry Palmer took that up with Hammersley Iron and then it went through the rest of Kamalka in Rio Tinto. And in the book Systems Leadership, which is co authored by Carl Stewart, myself and Katie Burke, there is some extraordinary evidence, there some actual results, hard results of the business improvements that occurred. Now I'm not particularly pushing the notion of ideologically that all organizations should be all staff, that union, the involvement of a union necessary, therefore means restrictive practices. What it was was a huge demonstration of the importance of systems in changing behavior and it didn't change people's personalities, it didn't fundamentally change who they were as people, but it did change their work behavior and changed it quite dramatically. And particularly which was very rewarding, was not just the change in productive work behavior, but the gains that were made in terms of people satisfaction with their work, their sense that they actually now could use their discretion, they made decisions that they didn't make before, they could change things that they couldn't change before. And with the introduction of other systems changes such as real performance appraisal systems some linking therefore of performance with pay which had hitherto not being allowed and a redesign essentially of all the people systems in the organization coupled with the fundamental change of the employment system was just hugely dramatic in terms of the results both in business results and human results. Very very satisfying. But the most important thing also to stress is that there was another piece of that puzzle which was essential, which was the training of the leadership prior to the move, training of the leadership and an analysis of all the organizational systems prior to the move to the fundamental employment system changed, moving to all staff. And so afterwards, I would look at it this way. Afterwards I was asked and the organization, the McDonald associates, we were asked several times by other organizations to come in and quote, get rid of the unions, which we just refused to do because a, ideologically, I would refuse to do that anyway. And b it showed a complete misunderstanding of what we were doing. And I think it was best summed up by Terry Palmer who said we're not trying to get rid of unions, we're trying to make unions irrelevant. In other words, we're trying to set up a system that an organization that is so well run that people do not feel that they have to have the protection of a union, but fundamentally they must always have the right to make that choice and to organize if they wish to. So, although that work is very well known in our terminology, a mythology grew up, and still remains to this day, that this was about getting rid of the unions, which it wasn't. It was about applying capability models, giving people proper training, changing the fundamental systems to create a context whereby people could use their capabilities, give of their best, which they did. And the results are there. And in the book, the systems leadership book, one of the things that I'm really happy about there is the results are there. You've got the data both in the main body of the book and in the CD at the end of the book. And one of my major concerns here is that a lot of our material, we talk about results, but there's not always a clear reference to actual results that can be linked to the organizational work. And often it's just not clean anyway. But people can argue other things that have intervened and other variables and so on. But that was an opportunity there. And that's why, although it's quite a long time ago, it's a very interesting set of data because there were no other interventions at the time. There was no technological change, no reintroduction of financial systems or accounting systems and so on. It was just the improvement due to the change in productive behavior of the workforce.