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Out of Chaos, Opportunity

March 1, 1994
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Related Topics: Change Management, Reengineering, Featured Article
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Like many other companies being liberated by deregulation, San Francisco-based Pacific Gas & Electric Company (PG&E) is facing an immediate need for massive culture change. The increase in alternative sources of energy—independent power producers and gas suppliers—has turned the concept of competition into reality. In addition, the company faces growing diversity in customer needs and demands, as well as continued shareholder expectations for strong financial performance.

Although PG&E has a reputation of being stable and reliable and has a healthy mix of resources and a solid conservation and environmental record, it lacked the ability to compete with younger, more entrepreneurial organizations. To enhance competitiveness, PG&E needed a leaner and flatter structure, broad skill sets and the leadership to design and place these skills quickly into the changing business environment. Agility also required greater individual empowerment, a goal that top management quickly embraced.

Human resources was to play a key role in the revitalization process. In fact, it was a larger role than we envisioned initially. In the middle of our efforts, however, a companywide restructuring threw everything into chaos. Because the revitalization couldn't wait for stability to return, HR had to answer the question, "How can we move the organization forward through cultural change in the midst of chaos?" We were surprised to learn that chaos can sometimes be a positive force for change. In our case, it was a necessary stage in the company's continuing transformation process.

HR reinvents antiquated internal placement system.
Of all the programs or processes that the HR staff could change, PG&E's outdated internal placement system was an obvious candidate. Disliked, mistrusted and often ignored by supervisors and employees, the system also was proving to be a barrier to competitiveness. It was so slow and labor intensive that PG&E couldn't use it to place skills where they were needed, when they were needed. Information in the computer data base was old, incomplete and irrelevant to jobs outside a predetermined line of progression. Job posting and succession-planning systems operated parallel with the computerized job-matching system, but there was little linkage among these.

Moreover, the placement procedure was completely out of sync with the company's evolving vision and values, which stressed the need for individuals to take charge of their own careers. Supervisors were responsible for entering and maintaining data about employees. Because they found the process time-consuming and unrewarding, managers placed it low on their list of priorities. In 1992 alone, only 62% of the required performance ratings were completed. When a supervisor needed to hire someone, he or she had to request a candidate list from HR. Employees didn't always have an opportunity to nominate themselves for a position. They were quite cynical about job posting, believing that supervisors usually had a candidate already in mind.

HR was in the position that put it in the middle of the process—a role that not only failed to add value, but actually impeded progress and cost far too much. It was little wonder that HR was given a mandate for management to do something about the placement system.

Human resources' staffing section, which oversees the placement system, deployed two project teams to tackle the problem. These teams were advised by a policy group of VP-level managers and a team of HR managers from each business unit.

The Phase I project team, which included a cross section of HR professionals, was responsible for:

  • Gathering internal and external data
  • Designing the characteristics of the new system
  • Determining the desired role and structure HR would need.

The Phase II project team, which included line managers as well as some HR representatives, was responsible for:

  • Refining the system design
  • Guiding the implementation phase
  • Leading the changes in organizational policy and practices.

We started out with the idea that we could make just simple linear changes, tweaking or enhancing the present system without rocking the boat too much. But almost immediately, the Phase I team realized that in view of PG&E's evolving vision and values, simple linear changes wouldn't be adequate. What was called for here was more of a paradigm shift—a complete reinvention that would propel the organization toward individual empowerment, information sharing and the encouragement of an entrepreneur mentality.

As a result, in the first meeting with the Phase I team, we suggested that the team pretend that because a major earthquake destroyed the company's ability to use its current placement system, it could create a new system from ground zero. That being the case, we told the team to think about what characteristics the system would need to have to be helpful to the team, the organization and human resources.

This assignment generated a great deal of enthusiasm. It was an opportunity to unleash the team members' creativity and an acknowledgement that the project the team was about to undertake represented a significant change. It was empowering because it gave the team members the sense that they could design change rather than have it forced on them.

The enthusiasm, however, was mixed with some trepidation. As the Phase I team metaphorically smashed the old system and invented the new system, members realized they were taking bold steps that required risk taking. These human resources people not only were restructuring work for their colleagues, they also were eliminating some of the work. In addition, they were developing new concepts for employee and supervisory roles as well.

Although they agreed that certain changes were necessary, there were murmurs that "this won't work in the PG&E culture" and "the supervisors will never go for it." This was a perfectly normal reaction to the idea of radical change. As we kept talking about the differences between linear change and paradigm shift, and the need to be competitive, the discomfort began to ebb and commitment began to build.

HR creates a vision for the new placement system despite a reorganization.
In creating the new system, everyone agreed on the need for such attributes as user friendliness, flexibility, links to other systems, time and cost effectiveness, and conformity with business vision. Sadly, all of these characteristics were lacking in the current system. Focus-group discussions, questionnaires and phone surveys, as well as a commissioned benchmarking study to determine what other companies were doing well, enabled the team to zero in on specific requirements. For example:

  1. Employees should have online access to all job descriptions and complete information on jobs, career paths and opportunities.
  2. Rather than supervisors entering performance evaluations into the data base, employees should maintain their resumes and qualifications online and be responsible for updating their own files.
  3. Supervisors should receive guidelines for selection, feedback to candidates and interview practices. HR should act as a consultant for technical expertise and policy advice. The hiring supervisor should be able to contact the interviewee directly, rather than going through human resources.

These and other characteristics of the new system would streamline the hiring process and at the same time further PG&E's goal of enabling supervisors and other employees to assume leadership in their work and their careers. In fact, it would require them to take leadership. The team not only was exemplifying the evolving corporate values of empowerment and personal responsibility, it was giving them a push.

One key goal shared by human resources and PG&E as a whole was to make better use of existing technology. Although the old data base and phone-query systems had been lauded as cutting edge when they were introduced, they were one-way systems. Employees could ask for information, but they couldn't use the systems to move their careers ahead proactively. This passive-paternal concept was soon to become a victim of the new system.

However, on February 22, 1993, a different sort of upheaval occurred. PG&E's senior management announced a major reorganization and downsizing. HR itself, which was clearly overstaffed, was scheduled to shrink along with other departments. Suddenly the plans for orderly change to a new placement system were thrown into question.

Although the placement system needed an extensive overhaul immediately, a completely new system couldn't be implemented until the company's new structure was determined. Moreover, the vice president who had chartered the placement system project retired and was replaced. The Phase I team had completed its task on schedule, but the staffing section became so busy with the surge of placement volume that there was little time to move ahead with Phase II. The period between February 22 and March 8, 1993, when the interim placement system had to be in place, was fondly referred to later as "Two Weeks from Hell."

Clearly, the complete paradigm shift had to be put on hold for the time being, but that didn't mean that we gave up on the idea. Rather, we put in place some changes that were designed to meet the crisis while supporting the end vision.

For example, we began posting jobs daily rather than weekly and extended the range of posted jobs. We combined the formerly separate input forms for posting, essential function analysis (ADA requirements) and job evaluation into a new Job Summary Form. We changed the employee application form to require a statement of employee success factors, including experience, accomplishments, and results for each critical requirement specified by the hiring supervisor. We added the capability of sending applications and resumes by electronic mail.

Formerly, if an employee wanted a job in another department, human resources had to request permission from the current supervisor for the employee to go to an interview. Now the hiring supervisor contacts the employee directly for an interview, and the employee informs the current supervisor. Permission no longer is required. This streamlined process reduced the time between job vacancy and new jobholder report date from 72 to 25 days. The time HR spends per position was reduced from 14 hours to nine.

All these changes were significant. Although they responded directly to the downsizing crisis, they also dovetailed with the process of streamlining HR and extricating it from its no-value-added role in the hiring process.

Crisis expedites development of internal placement system.
Rather than obstructing the desired changes in the placement system, the chaos of reorganization actually propelled them along. For example, the impetus for allowing supervisors to call prospective employers directly came from the avalanche of internal job applications. There simply was no time for HR to get involved in the process.

Another example includes the combining of three old supervisors' forms into a new Job Summary Form. Normally, this process would have taken months to complete while the various functions squabbled over the particulars. In this case, we accomplished the job in one week with everyone's cooperation. No one could be bothered with turf or politics at a time like this.

In the staffing section, we began to realize that even during the "Two Weeks from Hell," we actually were having a good time. We wondered how this could be possible when we were dealing with exhausting pressure, volatile emotions and an uncertain future for the HR department from one day to the next. The reason, undoubtedly, was that we felt free to take action without bureaucratic interference, even to experiment so long as we stuck to the vision. Our actions were based on top management's stated principles, but we did not—could not—get bogged down in analysis or wait for management's approval of every move.

For example, we incorporated the ESFs (employee success factors), which senior line management developed in 1991, into the job applications without going through the traditional approval process. When these ESFs suddenly became real, employees immediately began changing their attitudes about their careers. They felt empowered and so did we. This was the culture we were aiming for. We also were encouraged by line employees' enthusiastic response to the changes that we were implementing. In this crisis, they could see clearly how much these changes were needed, and we knew that we wouldn't have to do a major selling job.

Once the reorganization workload subsided, the Phase II team continued on its track, armed with information not only from the Phase I activities but also from the crisis activities. A dramatically reengineered placement process called PowerPost will be implemented early this year. PowerPost is technology that empowers employees to prepare resumes and to pre-apply for jobs online. In addition, it empowers supervisors at their own work stations to search for the best candidates for jobs.

For PG&E's staffing section, the reorganization prompted a period of linear change, after which we resumed the total reinvention of the placement system, and with it, the corporate culture itself. Although there's still a great deal more work to be done, taking advantage of the chaos period put us ahead of the game. Future change isn't something one waits for. It's created from leadership with every opportunity. Today is the first day of the future for the organization.

Personnel Journal, March 1994, Vol.73, No. 3, pp. 83-88.

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