360 BEST PRACTICES IN LEADERSHIP DEVELOPMENT AND ORGANIZATION CHANGE customer who participated in the customer focus conferences has inquired how they might run a conference for their own customers. And the PDI distributor network has expressed similar interest. Although it is difficult to quantify the impact, improving business results are clearly related to employee and managerial actions. Sales are running below planned growth, due to the recession in the North American manufac- turing economy. But operating profit is on or close to plan. Employees are show- ing evidence of understanding the business realities and are committed to doing their part to control costs, reduce customer turnover, and win new business. Going forward, PDI will monitor progress through a variety of measures: Future Measures for Monitoring Success • Tracking progress against the baseline data gathered at the beginning of implementation • Monitoring employee survey results • Tracking the adoption of new customer contact behaviors via customer scorecards • Following the turnover rate among employees, which is expected to drop as a result of changed management practices • Monitoring the rate of customer churn, which is expected to slow as new customer contact behaviors build stronger ties to customers • Measuring the new customer win rate, also expected to improve as new product and service offerings, coupled with differentiating actions and attitudes, create a more compelling offering LESSONS RELEARNED Someone once observed that “experience is recognizing the same mistake when you make it again.” PDI’s experience with large-scale change has proven again some familiar truths for managing change. What is noteworthy about PDI’s change initiative is how it is engaging its people as a source of sustainable competitive advantage. Market advantage gained through technology, product functionality, geographic presence, or financial positioning is easily matched by competitors in ever-decreasing cycle times. The one competitive advantage that is difficult to duplicate is that gained through people. Wayne Yakich and his team of senior man- agers realized that the packaged gas business is a people business. In order to turn around a stalled strategic rollup plan, he needed the commitment of all 750 man- agers and 3500+ employees at 435 locations. Rather than making the same mis- take as his predecessors, Yakich opted for a different approach. He knew that a business strategy based on different products and services, while desirable, could cart_14399_ch15.qxd 10/19/04 1:17 PM Page 360 PRAXAIR 361 eventually be duplicated, but that a leadership strategy that differentiated employ- ees could complement the business strategy and quite possibly add a sustainable advantage that would translate into market leadership. NOTES 1. Kocourek, Paul F., Chung, Steven Y., and McKenna, Matthew G. Strategic Rollups: Overhauling the Multi-Merger Machine (Strategy Publication Issue 19). New York: Booz Allen Hamilton. Available at http://www.strategy-business.com/export/ export.php?article_id=16858 2. See “Executive vs. Leaders: Is There a Difference,” Rich Rardin, Manchester Review, Spring/Summer, 1999. 3. Four-step leadership strategy design tool. Step 1: Identify those customer contact behaviors that would truly differentiate PDI employees from all others suppliers. Step 2: Identify current and desired leadership philosophy within PDI using the leadership philosophy map. Step 3: Make explicit the new leadership values that are implicit in the desired leadership philosophy. Step 4: Redesign current man- agement practices to reflect the new leadership values. These management prac- tices, when implemented, will give substance to the new values, which in turn will reflect the new leadership philosophy, which when followed will reinforce the new customer contact behaviors. 4. PDI’s leadership philosophy map reflects the current leadership philosophy among managers as well as their desired one (see Exhibit 15.2). The definitions to each of the four parts follow: Mental Model—the culturally accepted understanding of the leader’s role Motive—the driving force behind the leader’s actions Manner—the way in which employees are treated Methods—the overall characterization of the processes or procedures leaders use 5. Leadership culture assessment model and tool adapted from Roger Harrison and Herb Stokes, Diagnosing Organizational Culture (San Francisco: Jossey-Bass, 1992). 6. Process steps for conducting customer focus conferences: Preconference • Launch employee participant nomination process: three to four people from each of four to five customer contact groups • Invite local customers to participate • Prepare local meeting space and related logistics Conference Design • Welcome, introductions, and ground rules • Customer presentations cart_14399_ch15.qxd 10/19/04 1:17 PM Page 361 362 BEST PRACTICES IN LEADERSHIP DEVELOPMENT AND ORGANIZATION CHANGE • Employee small groups to review their own customer contact behaviors; prepare presentation to customers • Dialogue between customers and employees; employees revisit attitudes and actions and recommend five each • Lunch • Employee small groups discuss and report barriers to being more customer focused • Employees report actions needed from managers to enhance customer focus • Employees report on ways to train colleagues in new attitudes and actions and on how to monitor successful implementation Postconference • Explain conference outcomes to all employees • Design training on new customer contact behaviors • Budget and conduct training • Create and begin using customer scorecards for feedback on effectiveness Exhibit 15.2. PDI’s Leadership Philosophy Map Past: Get results, no excuses Desired: Get results through motivated people Past: Expendable assets Desired: Trusted partners Past: Self-preservation Desired: Help others succeed Past: Controlling and inconsistent Desired: Consistent and growth-oriented Leadership Motive Methods Mental model Manner cart_14399_ch15.qxd 10/19/04 1:17 PM Page 362 PRAXAIR 363 7. Here’s a sample of attitudes and actions for one role group, counter sales: Counter Sales: Attitudes and Actions • Attitude: safety first Demonstrates a safety-first attitude Advises customers on safe handling of products Helps load product safely into customer’s vehicle The store is free from tripping and other safety hazards • Attitude: “can-do” problem solver Displays and uses flyers, Solution Guides, and other resources Probes, listens, understands customer needs, and offers best solution Demonstrates knowledge of our products and business Answers questions and explains related products and services Someone from Praxair has called to see whether all is well after I have made a significant purchase (for example, a welding machine) • Attitude: responsive and reliable Provides accurate and reliable information Fills orders quickly and accurately Returns phone calls promptly Follows up on orders Stocks items I frequently use • Attitude: honesty Tells the truth, does not hide mistakes Finds out correct answers when not sure Keeps commitments to get back to customers • Attitude: professional and positive Acknowledges customer even when tied up with someone else Greets customer by name, smiles, makes eye contact Comes out from behind the counter, shakes hands, and gives name Treats all customers as though it was their first visit Keeps store clean and appealing Helps customers take product to vehicle Takes pride in personal appearance • Attitude: team player I get high-quality service at all Praxair stores Offers to share technical expertise Draws on other Praxair resources to solve my problem cart_14399_ch15.qxd 10/19/04 1:17 PM Page 363 364 BEST PRACTICES IN LEADERSHIP DEVELOPMENT AND ORGANIZATION CHANGE ABOUT THE CONTRIBUTORS John Graboski is director, human resources, at Praxair Distribution, Inc. He has worked in the corporate world for twenty-five years, in marketing and sales, as well as HR, in three very different industries (telecommunications, health care insurance, and industrial gases). Still a marketing guy at heart, he looks at his role as one of helping employees sell not only the company’s products but also themselves successfully to customers. He lives with his wife, Ginny, and two teenage daughters, Caitlin and Lexi, in Cheshire, Connecticut. Ruth Neil is manager, training and development, at Praxair Distribution, Inc. She has a thirty-four-year track record in organizational change initiatives, espe- cially through training and development, employee relations, and employee communications interventions. Her focus has been on grassroots implementa- tion of strategic change leading to service excellence in organizations and to increased employee competence and commitment. Rich Rardin is president of BenchStrength Development, LLC. He helps orga- nizations develop leadership strategies that align with and drive their business strategies in order to achieve marketplace objectives. A skilled facilitator, Rich empowers teams, as well as individual executive leaders, to overcome barriers to organizational change objectives while living out their core values. He has worked in leadership and organization development with a variety of Fortune 500 and nonprofit companies for over twenty-five years. He has presented his proprietary executive coaching model at human resource conferences world- wide. Rich and his family reside in Newtown, Connecticut. cart_14399_ch15.qxd 10/19/04 1:17 PM Page 364 CHAPTER SIXTEEN St. Luke’s Hospital and Health Network This case study describes how this hospital and health network implemented a leadership development program that achieved breakthrough results in patient satisfaction, improved quality of care, overall service, efficiency, and top status in the industry through a series of quality improvement initiatives, behavioral change programs, and an emphasis on a five-point leadership model that is focused on results. OVERVIEW 366 HISTORY 366 INTRODUCTION 367 DIAGNOSIS 368 DESIGN 369 DEVELOPMENT 369 IMPLEMENTATION 372 KEY TO (CONTINUED) SUCCESS 375 FORUM EVALUATION 375 ORGANIZATIONAL RESULTS 376 LEADERSHIP COMMITTEE OUTCOMES 382 ENDNOTES 383 Exhibit 16.1: Strategic Plan Goals and Objectives 384 Exhibit 16.2: Management Philosophy, Vision for Patient Satisfaction, PCRAFT Core Values, Service Excellence Standards of Performance, and Performance Improvement Plan 386 Exhibit 16.3: Leadership Steering Committee Mission, Vision, Goals, and Member Roles 388 Exhibit 16.4: The Five Points of the Star Model 389 Exhibit 16.5: Sample Forum Evaluation 390 365 S S cart_14399_ch16.qxd 10/19/04 1:19 PM Page 365 Exhibit 16.6: 2000–January 2004: St. Luke’s Hospital and Health Network Major Accomplishments by Five Points of the Star Model 391 Exhibit 16.7: Press Ganey Report 392 Exhibit 16.8: Accountability Grid for Best “People Point of the Star,” Fall 2003: Linking Education to Changing Behavior 393 Exhibit 16.9: Management Performance Evaluation 394 ABOUT THE CONTRIBUTORS 400 OVERVIEW This case study illustrates the unique methodology taken by St. Luke’s Hospi- tal and Health Network in assisting its managers become stronger leaders. Led by the leadership steering committee, a deliberate approach with a creative delivery strategy has been used for nearly three years in efforts to continuously develop the leadership skills and abilities of the over 260 managers in the health network. The strategy stems from a five-point model that embodies the foundation principles that are required for managers and leaders to realize the St. Luke’s mission and vision. The implementation of these principles is primarily realized through the delivery of regular leadership forums. This casual learning envi- ronment is where managers can frequently interact, ask questions, and chal- lenge themselves by learning from other colleagues in different clinical, fiscal, and operational environments. These forums, and subsequent associated events, provides additional outlets where managers can use new methodologies and ideas to better maximize their resources in accordance with the Five Points of the Star model. While this program is in its infancy, St. Luke’s has already realized the ben- efits in areas of fiscal, clinical, operational, managerial, and human resource performance. HISTORY St. Luke’s Hospital and Health Network has a rich history of providing quality health care to generations of families. Since it was chartered in 1872, St. Luke’s has grown from a community hospital to the region’s most nationally honored integrated health care network; it comprises tertiary, nonprofit hospitals, more than 1,400 physicians, and numerous other related health organizations. The 366 BEST PRACTICES IN LEADERSHIP DEVELOPMENT AND ORGANIZATION CHANGE cart_14399_ch16.qxd 10/19/04 1:19 PM Page 366 network provides direct services to people in the Lehigh Valley, surrounding counties, and, in some cases, neighboring states. The network includes more than 800 licensed beds, 72 medical specialties, more than 5,500 employees, and 40,000 annual patient admissions and is the second largest employer in Lehigh County. As it has evolved, St. Luke’s has always stayed at the forefront of med- ical technology. Today St. Luke’s is known for its nationally recognized heart and ICU care, its preeminence as a teaching institution, the excellence of its physi- cian, nursing, and other clinical staff, and its superior customer service. In its 130 years, St. Luke’s has stayed true to its mission to provide excellent care. INTRODUCTION At St. Luke’s, the board of trustees provides the stimulus, vision, and resources to develop and successfully implement an effective strategic plan. The plan pro- vides an overall foundation within which the network and its entities operate and form their own strategic plans. The goals and objectives of the plan also align targets and interests of the network’s constituents, whose success is inter- dependent (see Exhibit 16.1). As noted in the excerpts from the strategic plan, St. Luke’s has a strong foun- dation and a clear commitment to its people as evident in its mission, vision, and guiding principles. In addition, St. Luke’s builds upon that foundation through the management philosophy, vision for patient satisfaction, PCRAFT (pride, caring, respect, accountability, flexibility, teamwork) core values, service excellence standards of performance, and performance improvement plan (see Exhibit 16.2 for all elements listed above). St. Luke’s mission, vision, and guiding principles are communicated through- out the network in varied written and verbal ways—such as framed, hanging copies of the mission, vision, values, and management philosophy; the mnemonic PCRAFT visually presented in creative ways; the Wall of Fame; the employee handbook; the standards of performance booklet; customer service and management tips; Essentials (the annual mandatory education newsletter); the network web site (www.slhhn.org)—stated as part of new employee orientation, and reinforced in educational programs and at employee meetings. Richard A. Anderson, president and CEO of St. Luke’s Hospital and Health Network, is often heard to say, “St. Luke’s is more than bricks and mortar . . . it is people.” Through its people, the network is steadfast in its commitment to a mission of healing, realized through a sustained effort to create a lasting culture of service excellence. The administration throughout the network, led by Mr. Anderson, embraces some basic concepts that foster a culture of service excellence. Those concepts include ST. LUKE’S HOSPITAL AND HEALTH NETWORK 367 cart_14399_ch16.qxd 10/19/04 1:19 PM Page 367 1. Employee satisfaction yields patient satisfaction yields a successful business (Build your people . . . they build your business) 2. Employee satisfaction begins and ends with effective leaders who provide • Vision • Clear expectations regarding care and service • Development and education • Effective communication • Role modeling • Constructive feedback • Recognition 3. Effective leaders can and need to be developed 4. Leadership development and education is based on educating to change behavior Evidence of this is reflected in the interviewing (and hiring) practices, job descriptions, performance evaluations, and ongoing assessment of competence. Employee involvement is actively and perpetually encouraged at St. Luke’s. Many workplace processes and systems exist to reinforce that involvement. DIAGNOSIS Leadership “owns” the responsibility to create, support, and sustain an environment that values St. Luke’s employees, physicians, and volunteers. —Richard Anderson, president & CEO, St. Luke’s Hospital and Health Network In late 2000, senior administration began to realize that the health care envi- ronment was becoming increasingly challenging to all hospitals in the United States. From reimbursement to privacy, a wide array of large issues consistently presented itself to the senior administrators across the health care landscape. Being cognizant of these early challenges, St. Luke’s was assertive in already implementing plans to handle the operational, clinical, and fiscal challenges of its immediate environment. However, management uncovered that although it had action plans to take on all challenges in these three areas, it was not tak- ing the same assertive approach to meeting the needs of its managers. St. Luke’s was not fully providing its own team with the ability to grow and expand their management and leadership skills in parallel with the environmental challenges that surrounded them. In embracing the concepts noted above, the St. Luke’s Hospital and Health Network Administration recognized the need to provide consistent, effective 368 BEST PRACTICES IN LEADERSHIP DEVELOPMENT AND ORGANIZATION CHANGE cart_14399_ch16.qxd 10/19/04 1:19 PM Page 368 leadership development across the network. In order to accomplish that end, a leadership steering committee, chaired by Robert P. Zimmel, senior vice president of human resources for the network, was formed in June 2001. The leadership steering committee includes representation from the different network entities and, by design, teams people with varied backgrounds, communication styles, and skill sets. The mission, vision, goals, and member roles of the committee were initially established and remain as guides to all that is planned and implemented by the committee (see Exhibit 16.3). Completion of the initial foundation work allowed the leadership steering committee to move into the process of design. DESIGN The beginning steps to this change effort began by looking around, getting “out of our woods,” if you will, and seeking out other models of leadership in health care. The leadership steering committee performed the obvious literature search; however, not many substantial and successful models were found. Following the research assessment, members of the leadership steering com- mittee visited several sites that were considered qualitative performance indi- cators. The target group was specific hospitals highly ranked in numerous categories of the Press Ganey survey. While the visits were helpful and some knowledge was gained, committee members also left these sites with a strong belief that St. Luke’s was on the right track with many of its existing practices. A key learning for this leadership group was the recognition that these organi- zations were intentional in their leadership development. They designed set times throughout the year when they brought leaders together to educate. These set times seemed to serve as the “milestone” days when growth opportunities would be deployed to employees. DEVELOPMENT Prior to forming the committee that currently exists, a few charting members of the leadership steering committee traveled to St. Charles, Illinois to attend a seminar hosted by Delnor Hospital. It was there that the leadership steering committee was introduced to philosophies and methodologies of Quint Studer. From Quint Studer and other industry leaders, the mantra, “As you grow your leaders, you grow your organization” was introduced to the St. Luke’s team. In addition to Studer’s influential philosophies, the St. Luke’s team was introduced to Studer’s “Five Pillars of Success.” From these pillars, the leadership steering committee designed the Five Points of the Star model. (A star has significant ST. LUKE’S HOSPITAL AND HEALTH NETWORK 369 cart_14399_ch16.qxd 10/19/04 1:19 PM Page 369 . 360 BEST PRACTICES IN LEADERSHIP DEVELOPMENT AND ORGANIZATION CHANGE customer who participated in the customer focus conferences has inquired how. track record in organizational change initiatives, espe- cially through training and development, employee relations, and employee communications interventions.