Transforming adversaries into allies: Lessons from past

A principle that has survived for centuries is the fact that human resources, if managed efficiently and effectively, will always be an organisation’s greatest asset. Unfortunately, it is the most undervalued and taken for granted in today’s world

In the years between 2007-2009, global economies experienced the Great Recession – a general decline across national economies, one which was concluded to be the most severe economic and financial meltdown since the Great Depression during the 1930s.
At the same time,  Sri Lanka too experienced a similar melt down with the financial collapse of a leading group of companies, which was highly published followed by a leading commercial bank being threatened by an unexpected corporate crisis, which was a combination of loss of public confidence followed by loss of reputation. The innocent public had already lost their lifelong savings with financial collapse of the said group of companies with no chance of recovery. They were not willing to take another risk with such crisis, thus rushing to withdraw their deposits.
The sight of long queues at the outset followed by the instability and lack of confidence that the common public had in both the government and financial services industry, threatened the very existence of 20 years old, systematically important finance institution.
With the timely intervention of the Central Bank of Sri Lanka, at policy level, a team was set in motion with the objective of resurrecting the situation. With me as the helm, a new board of directors comprising of senior professionals was inducted immediately. As Chairman, I was vested with executive powers to provide leadership, rescue the operations and restore people’s confidence. It was the need of the hour at that time. 

Importance of problem recognition
It is said that for any problem, one must treat the root cause rather than the symptoms. It was a principle that was implemented from the first day I took on the reign.
From a bird’s eye perspective, the existing problems were many. Some actual and some exaggerated. The key issues that I felt were as follows:

• Absence of strategic direction, including non-availability of a strategic plan and the lack of strategic thinking.
• Negligence of policies related to corporate governance, risk and compliance  in addition to non-compliance of regulatory requirements.
• High operating expenses, lavish spending and financial indiscipline.
• Lack of proper procurement procedures, which not only created a commission culture but also paved the way for a series of malpractices.
• Issues related to human resources, which included  heavy top with poor management practices, superfluous staff, who operated the organisation with a lack of professionalism. A culture, team spirit and motivation towards achieving a common objective was lacking.
• Immense challenges such as dwindling income and assets in addition to loss of reputation not only burdened and affected future growth prospects but the sustainability and mere survival of the organisation was questionable. 

Strategic direction is mandatory
In a crisis such as this, it is mandatory that the onus to resurrect the organisation should be taken from the top, with a top down approach in terms of accountability and responsibility rather than the contrary.
In this instance, the board of directors met regularly, almost once a week, spending long hours discussing and deliberating problems and implementable solutions. New approaches to stabilise the organisation  was   developed and implemented. Regular audits and control mechanisms were implemented to enhance future growth prospects, profits and  most importantly sustainability. 

People are always greatest asset
A principle that has survived for centuries is the fact that human resources, if managed efficiently and effectively, will always be an organisation’s greatest asset. Unfortunately, it is the most undervalued and taken for granted in today’s world. At that time, we understood the root cause of the problem. It was the asset of human resources that sadly was the liability. 
Based on my initiation,  a reputed HR agency was engaged to carry out a work-study to determine the appropriate staff requirements. The observations of the agency in comparison to the closest competitor are relevant even in today’s context. Details are as follows:

1. Lack of structure and culture 
A forward thinking achievement-oriented culture was lacking 

2. Excess staff
The organisation had excess employees of 25 percent, who could not be redeployed across other areas. For example, the  staff ratio for a respective branch was 32 against the 23 of the closest competitor.

3. Employee motivation
Training, development and personal growth didn’t exist. This led to the lack of motivation and happiness across the organisation,  which affected the productivity of employees. In addition, excessive employees were treated as liabilities by the respective branch managers since their expenses affect branch profits. 

Tough situations call for tough decisions
After reviewing the report submitted by the agency, the root cause to all problems was identified - it was indeed an issue with human resources. Managing this was imperative for the survival of the organisation. The solution was to implement a voluntary retirement scheme (VRS) to rationalise staff. A tough decision but a mandatory one and we were not going to take any uncalculated risks. A task force was appointed to abide by the labour laws of the country, obtain the necessary approvals from the Commissioner General of Labour and implement the scheme under the guidance of an experienced professional, who was hired for this purpose.

It is important to take on a ‘hands-on’ approach  and have a top down methodology to every situation. It is also paramount to get people involved in the whole change process – engaging them in solving related issues enthusiastically

Destruction is noise 
Sensing the fact that a VRS was to be launched and with the lack of knowledge, the two trade unions, which consisted of rival groups, created a stir, arousing panic and uncertainty amongst staff. They commenced lunchtime pickets, boycotts and other trade union actions, threatening the management not to implement any VRS. These disturbing trade union actions resulted in lowering the staff moral, which invariably had an adverse effect on customer service. 

Education helps convert conflict to collaboration 
The importance of  educating the union leaders, who were influencers and opinion leaders, was essential for the effective implementation of this project. In addition, understanding their feelings and emotions was also of paramount importance. The board realised that it was important to convert these conflicting groups into collaborators.  This was achieved by implementing the following:

• The popular 3R concept within the related areas of work was initiated in order to build trust and confidence across the organisation. The board felt that this would have a strong effect on neutralising the negative perception employees had towards the board and management. 
• This approach comprised of redirecting unions’ negative emotions by not reacting but rather recognising their concerns positively and introducing reciprocity by strengthening rapport and mutual understandings through continuous dialogue
• Awareness was created amongst all with regards to the importance of applying rationality by agreeing on envisaged benefits and probable losses. Their  suggestions were welcome and measures were taken to accommodate the implementable solutions that will facilitate the implementation of the proposed VRS.
• Employees were educated on the mutual benefits of the VRS scheme in the long term. 

Communication is key
The board understood the importance of communication between the hierarchy. Communication lines needed to be opened to facilitate free flow.

Written communication
A communiqué was issued to all staff detailing reasons and justification for implementing a VRS. The communiqué also stressed the need for the VRS implementation at that stage to be more competitive in the industry and to reap shared success. The organisation clearly didn’t want any employee to suffer, hence this was the only solution.

Verbal communication

• The independent consultant was advised to conduct one-on-one sessions with the members of the top management of the organisation to clear their doubts and iron out differences of opinions. This exercise not only paved the way for uniting the entire management towards early implementation and also converted them into endorsers and supporters of the project.
• A one-day workshop was arranged for union representatives to understand the proposed VRS. 
• Through different modes of communication, the Senior management was also held responsible for educating their respective departments on the benefits of this project .

Managing emotions – A workplace win
Implementation of a VRS seemed much easier than managing emotions and feelings of trade union leaders and misguided staff. This was quite complicated and complex. Hence, I decided to walk the talk. 

Transparency is essential
I chose to be transparent and tell them the absolute truth – even if it was brutal.

• I personally invited the key members of both unions separately for discussions on the issues affecting the organisation. I explained the dire situation of the organisation and requested them to support the board to overcome this situation. I deliberately avoided any discussion regarding the VRS. It was merely a meeting to understand all parties and build trust and mutual respect.
• Transparency was maintained. As such senior employees were able to ask questions, share their opinions and understand the vitality of the VRS for the very survival of the organisation.
• I also agreed to arrange an informal meeting with the members of the board to air out their views. As such, Tea with the Board of Directors was organised. 

Perception might not always be reality 
It was quite true as far as the tea party with the board was concerned.

• The meeting with the board was a positive surprise for the trade union leaders. The unions thus far had a fixed perception of the board as unreachable dictators often harassing them. However, at this meeting, the respective board members treated them as equals and discussed their personal issues avoiding any discussion on VRS. Everybody at the meeting was at ease respecting each other.

Acceptance is important
Immaterial of the role and responsibility, level or designation in the hierarchy, one human quality common to all was acceptability and appreciation. 

• The union leaders requested the board to formulate and implement a transparent staff promotion scheme, which was based on merit, design a staff transfer policy and career development plans. The board was thankful to the unions for bringing out these vital issues and agreed to implement them without delay.
• At the end of the meeting, the union leaders raised the issue on VRS implementation. The members of the board expressed their views that they will not implement such plans without obtaining their consent. This made them feel important and valued.
• The board  also asked them whether they could meet the outside consultant to discuss their doubts on the proposed plan. The union leaders readily agreed to meet the consultant

Win-win situation

• Immediately after the meeting with the board, both unions issued communiqués to their membership elaborating the demands they had won. In addition, the unions claimed that supporting VRS and implementation of new HR policies as their own achievements. This was the first step in building trust and cordial relationships with the board by unions. 
• By this point, they did understand the benefit of implementing a VRS scheme. For example, they understood that according to the VRS formula, a senior staff, who either opted to retire or was close to retirement, would receive  close to Rs.4-5 million as compensation. This was positive news.
• In addition: 

Walk the talk
As the leader of the organisation, in addition to proving direction and guidance, I decided to walk the talk. A few initiatives I personally designed, implemented and managed are as follows:

• A grievance handling procedure before it was suggested by the  unions. I invited them to nominate a representative to the working committee which helped in effective implementation of the project. 
• I also requested both unions to make representations at all HR policy development committees. The union leaders accepted the new task willingly and contributed in all HR policy development matters.
• Personally, I took the initiative to meet and discuss the grievances of individual staff. I dedicated Thursday mornings to listen to the aggrieved parties. I ensured that relief measures were taken and implemented within three working days.
• The committee members of both unions had the freedom to meet me and air their personal grievances and  I took immediate action to solve them. Their problems were basic but had a ripple effect. 
• One concern was the possibility of losing expert staff in specialised areas if they opt to retire under the VRS scheme. I clarified that the Commissioner General of Labour has given us approval not to offer VRS to such expert staff; hence such staff cannot exercise option under VRS and will remain with the organisation. 
• nThe union leaders also wanted to know the benefits that the remaining staff will get on completion of the VRS. I assured that within 12 months of the successful completion of the VRS, the board may decide to increase the salaries of all staff by 30 to 33 percent. All of a sudden, the VRS looked like an opportunity. The following day, both unions unanimously agreed with me to support in the launch of the VRS. 

With the support of all our adversaries and the entire management was able to successfully complete the VRS by offering compensations to  nearly 750 redundant staff members. 
All these steps resulted in revolutionising the thinking and feeling patterns of all employees. In fact, both unions openly commended me for launching people-friendly procedures even without demanding. This is what paved the way for building trust and confidence they had in the management. 

A task well-done 
I was handed over a task, if not managed properly  would  have been catastrophic. The organisation would have been a liability on the country. However, timely decisions and swift action along with the support of both customers and investors was quickly restored and normalcy was achieved without the need for a bailout from the Government of Sri Lanka or CBSL. Besides that, jobs of over 4000 employees were saved, those who left, walked home as winners. Depositors and shareholders’ hard-earned life savings were saved. The untiring efforts of the board of directors saw progress and currently the organisation is one of Sri Lanka’s leading organisations contributing positively towards the economy of Sri Lanka.  

Experience is valuable and must be valued
At a time, when I was quite comfortable in my current affairs, I was given this ‘problem child’ to nurture and transform, a task that I accepted with open arms. I had a proven track record of over 30 years of experience managing and transforming  organisations in addition to having sound technical knowledge and industry acumen in the finance industry. A network that was built over the years, which comprised of contacts around the region, was always willing to support me in my endeavours to resurrect this. I had a  demonstrated vision, self-resilient, unbiased leadership and expertise, to successfully navigate the new organisation. The faith and trust that the top management and employees had in my abilities were earned and gained not forced.

Transforming adversaries into allies ... today
Incidents of this nature are quite common in today’s context with the pandemic changing our lives and the way organisations are managed. Not only does it change the status quo but also create workplace rivalries, which can hamper the growth of any organisation and ruin the expectations of all stakeholders. In situations such as these, we tend to forget that employees are also human. They have families, emotions and lives just like us. They can break an organisation or if managed properly, help transform an organisation.
Empathy is key in situations such as these. If adversaries are identified in early stages and swift action is taken to address their key concerns and demonstrate genuine interest, such rivalries can be transformed into allies. 
It is important to take on a ‘hands-on’ approach  and have a top down methodology to every situation. It is also paramount to get people involved in the whole change process – engaging them in solving related issues enthusiastically.  A set of values, which include transparency, acceptability, appreciation and recognition, supported by a sense of ownership, has to be inculcated into the DNA of the organisation.
This case study is relevant even in today’s context. We don’t have to reinvent the wheel  but learn and understand the past, remould and implement for the present, so that the future is bright.  

(Eastman Narangoda, a veteran banker, was former Executive Chairman of Seylan Bank PLC, General Manager/CEO of National Savings Bank, former President of the Association of Professional Bankers of Sri Lanka, former Commissioner of the Presidential Commission of Inquiry into matters relating to failed finance companies and former Director/Vice Chairman of Financial Ombudsman (Sri Lanka) Ltd. He has also held various Chairman and Director positions in private and public sector organisations in Sri Lanka. He can be reached at [email protected])
 (The original article was published in Prime Work – a free magazine (issue June 1, 2021) published by the Human Resource Development Division, Labour Department, Sri Lanka, with the objective of developing workplace cooperation)