Major Change, Fast Results

When Bill Leighty became commissioner of the Virginia Retirement System (VRS) in 1995, he inherited an agency in turmoil. It had been investigated for three years because of a scandal. Legislative support was plummeting, media reports were negative and employee morale was terrible.

It's often said that changing the culture of an organization takes seven to ten years. Leighty didn't have that kind of time.

VRS is a small agency with a huge mission. The agency offers pension benefits, life insurance and related services to over 270,000 public-sector employees. VRS was the 29th largest public or private fund in the U.S., managing over $30 billion at the time. So the stakes in making change quickly were high.

Locked Doors, Information Silos

When Leighty arrived he couldn't get into certain units. They literally had locks on a number of doors, and unless you knew the code, you couldn't get into that section of the building! The locked doors were symbolic as well as real. Information wasn't shared laterally in the agency.

"People had very narrowly-defined jobs," Leighty recalled. "The culture had been 'old school' for decades: you learn a job, do it better than anyone else, get promoted, then you learn that job, and so on.... Deep technical knowledge is power in that culture, so knowledge was hoarded. I knew we had to make major changes, fast."

One of the first things Leighty did was to get rid of those locks. As he put it, "We had to radically change the ways communications worked in the agency." Leighty also began to "manage by wandering around" in order to learn the culture, the operations and the people. He wanted to get to know the people first, and the best way to do that is to walk around. Most employees hadn't seen the agency director come anywhere near their office in years.

To break down silos, Leighty took groups of VRS staff to meet with employers in the state. The purpose: Help staff learn employers' expectations, what problems they encountered with the agency and how VRS could help employers make life better for their employees. This was a whole new world to his staff, who was accustomed to sitting at their desks and churning out paper.

Leighty also created a strategic planning process to give the staff a broader understanding of their environment and to provide clear priorities. Staff from all functions and levels were involved. The employees suggested several agency priorities, all of which were adopted.

The strategic plan identified six concrete issues that needed improvement. Leighty and his executive team developed "process improvement teams" or "PIT crews" for each issue -- the very name implies speedy change. People on the teams came from all levels and units -- from mail room clerks to division chiefs. Many team solutions were implemented. Moreover, employees learned about the agency's processes and the people who managed those processes.

In addition, Leighty instituted two kinds of formal communications methods: Monthly director's meetings for the entire staff, where he discussed important factors affecting the agency; and quarterly meetings with each work unit, where they discussed their work performance. These were two-way sessions; Leighty wanted feedback.

Fast Results

The changes at VRS are now legendary in Virginia government. The impact was visible by the start of the second year. The results, according to VRS staff and observers, included:

• A big increase in information sharing and collaboration;
• Much broader thinking, more creative ideas;
• The identification of future leaders;
• A major focus on customer needs and perceptions;
• And improved performance.

Two surveys documented the impact of the VRS changes. In every category but one, VRS employees were more positive than other state employees and employees nationwide. For example, only 56 percent of Virginia employees indicated they had "confidence in leadership," compared to 76 percent of VRS employees. The survey also found that while on average only 28 percent of employees across the nation were satisfied with the level of communication, at VRS 46 percent were satisfied. In addition, 89 percent of VRS employees felt they had access to the information they needed, compared to just 61 percent nationwide -- a clear indication that VRS leadership was making a difference in opening up the agency in terms of information flow.

In one of the most telling signs of the extraordinary change at VRS, some private-sector firms began asking Leighty to share the VRS "formula" for success.

What Made the Difference?

Leighty did things that any leader could do: strategic planning, process improvement teams, getting staff to meet with customers and managing by wandering around. Nothing new there.

No, it's not the novelty of any single change that explains the transformation at VRS. Rather, it's the fact that Leighty did all of these, and that they were part of an integrated package that focused on clear agency goals.

Equally important was the way Leighty communicated about change. He continually let people know what was going on, how the pieces fit together and sought ongoing input. According to a survey of leaders who led major changes in their firms, the one thing they would do differently would be to communicate more widely. Bill Leighty understood that. Any public leader seeking a quick organizational turnaround should as well.

This column is excerpted from Russ Linden's latest book: Leading Across Boundaries: Creating Collaborative Agencies in a Networked World.