A Burson-Marsteller Point of View

The Corporate Immune System: What it is and how to manage it when

it gets in the way of change

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A Burson-Marsteller Point of ViewThe Corporate Immune System:

What it is and how to manage it when it gets in the way of change

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By Diana Russell Shayon, Managing Director

Over 350 colleges and universities in the United States and many more around the world of-fer undergraduate and graduate degrees in anthropology, the study of human behavior and cultures. The wide range of academic research and degree programs available reinforces the idea that cultures can indeed be studied and cultural behavior can, in part, be predicted or anticipated.

Having more than twenty years of experience working with corporations of diverse sizes and across industries, I’ve learned that each organization not only has a distinct culture (just as societies do) but also has a distinct immune system. “Corporate immune systems” much like their biological equivalent, often work to help companies make good decisions and avoid un-necessary risk. However, in times of change this same immune system can hamper and some-times destroy an organization’s ability to respond to new demands. The landscape of cor-porate history is littered with the debris of companies undone by their own internal immune systems gone into overdrive. This applies even to those companies which are led with the best intentions and foresight. One can only take the biological metaphor so far (after all, the very survival of our own species depends on healthy immune systems), but when it translates into corporate cultures during times when the marketplace requires real agility, it can be deadly.

So what is this negative side to the “corporate immune system?” How does it work? How can leadership understand it and manage it when change is necessary for survival?

This Burson-Marsteller Point of View explores the issue of the corporate immune system and suggests actions companies can take to overcome the damaging side of the immune system response.

Let me start by defining the term corporate immune system as I use it.

The “corporate immune system” is the organizational dynamic that sees people resist change in favor of sticking with what is familiar. This is due to the fact that people fear the uncertainty that accompanies change. In a normal business environment, it can reduce risky decisions and bring care and caution to the development of new corporate initiatives and investments. But at a time of major change in the marketplace or during periods of serious competitive or economic challenges, it preys on peoples’ fear of change. It creates roadblocks to progress on vital change initiatives.

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Without active recognition of this often elusive phenomenon of corporate culture as well as specific actions to manage around it, even the best efforts to introduce a new mindset or busi-ness direction can be defeated without an organization’s leadership ever knowing why.

In the late 1990s, I had a conversation with the CEO of a global energy and mining com-pany. He shared his frustration over changing the way his leadership team thought about the new stakeholder initiative he wanted to make a priority. In particular, he wanted his leadership team to take action on the findings of the company’s stakeholder consultative process. He explained, “We leave meetings with what I think is agreement on a course of action, and then six months later, no one can tell me why the actions we all agreed to have not happened.”

This is the immune system in action.

Around the same time, the CEO of a large American telecom-munications company was struggling to move his organization beyond the monopolist mindset the company had functioned under for so many years. Several years of consultants, team-building exercises and other costly change initiatives had not helped change the organization. In a display of extraordinarily bold thinking, one Friday, the CEO fired several vice presidents—an almost unheard of move in this industry. Not only did he fire them, but instead of the traditional departure acknowledgement of, “We thank him for his years of service and wish him well in his new pursuits,” the memo basically said, “He did not understand the importance of the changes we are trying to make.” Not only did he fire these vice presidents, but on several subsequent Fridays — they became known as “Black Fri-days” — he fired a few more with the same commentary. Change followed quickly.

Although we do not suggest such draconian measures be standard procedure, they do highlight the lengths it can take to overwhelm that internal resistance to change.

Today, the realities facing large companies present distinct challenges in defeating this cultural resistance to change. With more than two decades of observing companies in transition and studying the obstacles that obstruct change, we have come to the conclusion that surmounting this elusive but real phenomenon requires two distinct but interrelated actions:

• First, leadership has to lead with an awareness of the immune system and its downside during times of change. The top 10 to 15 people – those who make up the senior leadership team and manage the business – have to be truly of one mind in terms of strategy and business direction. They must be very public and consistent in how they articulate their messages, and they must place a high value on their roles as communicators of the new direction. All too often that top leadership group man-ages more than it leads. The political intrigue that often occurs at this senior level can be material to both the success of the business and the health of the immune system. One would be hard pressed to document that assertion.

• Second, leadership has to hold individuals accountable for consistently engaging in discussion and dialogue with employees about the direction of the business, the need for change and adaptation and what it means for those employees who work for them.

By Diana Russell Shayon, Managing Director

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Leadership has to lead with an understanding and awareness of the downside of the im-mune system during

times of change{ {

The Alignment Continuum

Awareness

“I am aware of new directions”

Understanding

“I understand what it means”

Relevance

“It is relevant to me in my job”

New Behaviors

“I do things differently or my manager sets

priorities differently”

The Linked Phases of Alignment

Good Internal communications

achieves high levels of employee aware-ness new business

directions (between 60%-80%)

About half of those with high levels of awareness have

an accurate under-standing of new

business direction (40%-50%)

A little more than half of those who

are aware and understand ac-

curately find new direction relevant

(20%-25%)

A quarter of those who are aware, un-derstand accurately and find relevance

actually change behavior or indicate their manager sets

priority(5%)

It is this accountability, with consequences for not delivering, combined with equipping company leaders to recognize the characteristics of the immune system and managing it that brings success.

An evidence based approach for managing the immune system:

Extensive research with both employees and internal leadership audiences from major companies over the past 10 years has provided Burson-Marsteller with rich content from which to draw in-sights on the distinct issues connected to introducing new business directions to employees. This need for a new strategic direction can be driven by many different forces: merger integration, sig-nificant changes in the competitive landscape, economic challenges, new business strategy or brand renewal. A new and different culture is often critical to achieving success.

Our research suggests that what we call an “Employee Alignment Continuum” (see below) exists within companies going through change. It illustrates four distinct phases that employees appear to experience as they move from simply being aware of a new business direction to where managers are setting new priorities and employees are actually behaving in new ways and doing things dif-ferently. The model also indicates what happens when no active intervention manages the natural resistance to change that most people feel.

The Continuum has four distinct phases relevant to engaging employees with a new direction and managing the ‘immune response’:

Source: Summarized data from 1997 - 2007 Burson-Marsteller research study of employee alignment with major new business direction.

A progression occurs from Awareness to New Behaviors.Introducing new behaviors to support the brand decreases without

manager involvement, targeted messaging and context.[ [3

First is ‘Awareness.’ A good internal communications program can drive high levels of employee awareness of a new business direction. When culture change is a goal, awareness should also include what is different about the way people are expected to behave, why the business is changing, what will be different and the benefits. We find successful messaging of these issues comes down to the simple approach of why, what, how and the benefits. A good employee communications campaign focusing on a new direction can achieve high levels of awareness – around 60 to 80 percent.

The second phase is ‘Understanding.’ Understanding the new direction accurately is a different story. When you ask employees who were aware of the new direction if they understood it (with ques-tions posed to validate the accuracy of that understanding, not just what employees might think it is), you find that only about half of those who indicated they were aware of it fully understood it.

The third phase is ‘Relevance.’ Caring about where the business is headed, and understanding how its direction is relevant to individual employees in everyday activities is a requirement in any change process. In our research we found that when probed, about half of employees who indicated both awareness and proper understanding of the new direction found it relevant. Therefore, being aware, and even understanding the new direction, does not necessarily signify that the new direction has resonated with each employee. Without that understanding of relevance, any culture change ini-tiative to support new strategy is challenged from the start.

The fourth and final phase is called ‘Alignment.’ In this phase the employee translates what she or he understands and finds relevant about the new business direction into a perspective of “I am doing things differently” or “I see my manager doing things differently.”

Any communications effort to drive business in a new direction and to create the culture that supports it strives to achieve this result. But as you can see from the chart, the initial numbers of people who are, at this point, in the early stages of a new direction, drop to about a quarter of those who even find the new direction “relevant” to them.

• In short, without the strong leadership of a senior team and those middle-level managers who lead their teams in integrating messages of the change and new direction with their teams in everyday discussions, efforts to implement change will be hampered.

So what makes people actually adopt new behaviors?

In considering the implications of this model for managing the corporate ‘immune system,’ we have done further research to understand the factors that actually drive different behaviors in that small number of people who do see their managers doing things differently or who are doing things differ-ently themselves. We find that there are two elements:

• First, their managers integrate the messages of change into their daily conversations in ways that help employees see what the new directions mean for them. We call this ‘Connecting the Dots,’ and the way managers do this in everyday conversation is critical to fostering personal relevance with employees.

Most employees prefer hearing information about a company from their own supervisors. The more that managers and supervisors engage their teams in dialogue and discussion about the new directions, the more people actually understand what they need to do and how they need to behave differently.

Additionally, the “manager communications cascade” is very important in this dynamic as well. We have found that when senior managers engage their teams in this kind of dialogue about new di-rections, the managers who work for them are five times more likely to conduct similar conversations with their direct reports.

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• Second, the “mass channels” of the organization, such as electronic and written publications, intranet, and any company-sponsored social media, should support the messages of the new direction. Stories that show what success looks like are the norm and the overall editorial focus is one of ongoing support for the new direction. The stories reinforce the messages of change with real-life examples of how it is being implemented and make clear what they mean on a day-to-day basis for employees.

The obstacle to achieving this level of communication and alignment is that many managers do not consistently conduct this kind of dialogue with their teams. Some managers will excel at this type of communications while others lack experience and sometimes interest in making strategic business messages relevant to everyday activities.

Achieving a “tipping point” to enable change to become a reality

When employees are engaged in a dialogue and discussion about the why, what, how and benefits of the new direction and the ‘mass channels’ focus on reinforcing what new behaviors and success looks like, the final alignment phase percentages can be increased from only five percent to between 30 and 35 percent. Those increased percentages can help the organization reach critical mass and eventually a ‘tipping point’. Only then can change take root and begin in earnest.

As with lawmaking that changes public policy, it is far easier to derail a new piece of legislation than it is to actually enable it. So it is with enabling change within a company. The immune system – the actions or non-actions of leaders, managers and employees – is the ready response to doing things differently. As the ‘Alignment Continuum’ illustrates, active intervention that combines strong leader-ship with an effective management cascade and aligned mass channels is required to overcome that cultural dynamic.

Using the evidence-based foundation that we have developed for more than a decade, we believe that these tools of leadership and effective communication, reinforced by real standards of accountability, are the tools for circumventing this elusive but real phenomenon of organizational immune systems. And while few CEOs would ever be comfortable with thinking of themselves as ‘viruses’ setting about to defeat their organization’s natural immunity to change, it’s a worthwhile metaphor to make change a reality.

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