A SUSTAINABLE MERITCARE

This commentary appeared in The Fargo Forum on July 6, 2008.

MeritCare recently laid off 90 employees. Ninety others had hours reduced, and 120 open positions will be absorbed.

Being laid off is a big deal to people: lives, families, and communities are impacted negatively. When people are laid off from one of the area’s largest employers, a little bit of the community’s vitality and sense of security is destroyed.

I once led a 4,500 employee business unit at a major newspaper. Faced with a revenue shortfall, we had to reduce staff. Serious about our employee engagement efforts, we worked hard to reduce our staff in voluntary ways that built trust.

We offered early retirements, gave incentives to leave, eliminated open positions, retrained people to fill open jobs in other departments, and redesigned jobs and departments to operate more efficiently and with fewer, more fulfilled people. Extra people were used in new product lines that generated new revenues. We made our downsizing goals and grew trust and commitment too.

Dr. Roger Gilbertson, president and chief executive officer of MeritCare, said that cutting costs is the only way to keep the organization viable for another 100 years. “The actions of today are a way of safeguarding the organization,” he said.

I disagree.

The layoffs were a temporary fix to deeper dynamics—within and outside of MeritCare. No organization ever downsized its way to long-term sustainability.

What do we know about sustainable organizations?

Some companies endure for hundreds of years. Sadly, however, the average life-expectancy of a Fortune 500 company is only 40-50 years. This statistic cuts across nations and is even worse for smaller start-up companies—40% survive less than 10 years.

Arie DeGeus, former coordinator of worldwide planning for Royal Dutch/Shell, wrote in The Living Company: “Companies die because their managers focus on the economic activity of producing goods and services and they forget that their organizations’ true nature is that of a community of humans.” Layoffs destroy trust, loyalty, and the strong relationships essential for survival amid change.

How do organizations like MeritCare endure in a today’s turbulent world?

Sustainable organizations:

1. Continually adapt to the external environment. Leaders constantly imagine a better future and rally people to join together to make the vision come true.
2. Have a core identity of purpose (why they exist) and values (guiding principles) that provide stability and continuity as all else changes over time. Most organizations today have vision and values statements. Few make them real by holding people accountable to “walk the talk” of the enterprise.
3. Change everything but the core identity: culture, strategies, operating practices, and products as they learn continually and adapt to the world around them. They experiment with ideas to find what works. Employees do the work of re-engineering and redesign while consultants provide methods, experience, and facilitation.
4. Are inclusive of those who stretch their understanding of what is possible: critics, outliers, risk-takers, and different points of view.
5. Are fiscally conservative. In sustainable companies profits are necessary to sustain the enterprise but they are not sufficient; they are an outcome of leading engaged people. In long-lasting companies researched in the book Built to Last an investment of $1.00 in those companies on January 1, 1926 would have grown to $6,356 by 1994—over 15 times the general market—15 times by putting the “community of humans” first.

The health care industry thinks it is in the midst of transformation. They haven’t seen anything yet. The leadership challenge of the 21st century is to achieve outstanding and sustainable business results by creating conditions for employee engagement that bring forth the vast untapped human potential in organizations—the competitive advantage of our time. Sustainability will go to those organizations whose leaders have foresight, are creative, can engage the talents of all, and can lead others through change.