Positive Leadership in Action: Applications of POS by Jim Mallozzi, CEO, Prudential Real Estate and Relocation
5/15/2012 --
The following is a portion of an article published in a special edition of Organizational Dynamics, April-June 2012, Volume 41, Issue 2, edited by Professors Kim Cameron and Gretchen Spreitzer. Cameron, associate dean for Executive Education and William Russell Kelly Professor of Management and Organizations, and Emily Plews, MBA/MS '10, interview a top executive to explore how he applied principles of Positive Organizational Scholarship to improve his company. Cameron is a co-founder of the Center for Positive Organizational Scholarship.
In this interview with Jim Mallozzi, CEO of Prudential Real Estate and Relocation Company, Mallozzi describes the variety of ways in which he has implemented principles and practices emerging from Positive Organizational Scholarship . He was exposed to POS in the mid-2000s as a senior officer in Prudential Retirement, and after becoming chief executive officer (CEO) of Prudential Real Estate and Relocation Company in 2009, he actively engaged POS to address the challenges and difficulties faced by his firm. Among the POS practices Mallozzi implemented were utilizing positive energy networks to create a "change team," developing a reciprocity network among company employees, articulating Everest goals, fostering positive leadership in the senior team, celebrating strengths, successes, and achievements, reflected best-self feedback, and demonstrating caring and compassion with customers and potential customers. As a consequence of these initiatives, he achieved the successful merger of two culturally different organizations, dramatic improvements in financial performance, improved customer satisfaction scores, and markedly enhanced employee engagement. This interview provides provocative examples of how a leader can make a major impact in his organization's performance by creatively applying positive organizational scholarship.
Could tell us about when you came to Prudential, the challenges you faced, and how POS fit in as tool to help you face those challenges?
I was brought into Prudential Retirement in the spring of 2004 as the head of integration. The company had just acquired a big division from the Cigna Corporation, and we were trying to merge the two cultures together. In the beginning it was like trying to merge the Red Sox and the Yankees; we had two distinct cultures — one from New England and the other one from the New York/New Jersey area. Both were very strong, very passionate, and very powerful. As you can imagine, trying to put these two cultures together was a challenge. The president at the time happened to be a graduate of the University of Michigan. He had just come back from a session there where he had met Bob Quinn and Kim Cameron and learned about positive organizational scholarship. He brought them into the company to help us create something that was really different and outstandingly unique. We embarked on a journey that fit with a lot of things I had always wanted to do and was consistent with my own outlook on life. It helped us very successfully integrate the cultures, and the company went on to produce some record earnings. I think that POS helped us create the benchmark for how you take two distinct companies and put them together.
How long did that process take, and how did you implement it?
It was a conscious two-year effort that involved not only the senior leadership who led from the front, but virtually everybody in the entire organization needed to be part of it. It was fun to see all the different groups put their own little twist on POS. There were a variety of tools and techniques that we implemented. One was the reflected best-self feedback process, which we became really good at. Another was the use of the competing values framework, which is how we demonstrated respect for each other in terms of what unique attributes each person brought to the table. A third was the development of an Everest goal, or what we aspired to be and what we stood for. A lot more change tools were also put in place at the time, which I leveraged in some of my later responsibilities.
What were the outcomes of this implementation?
The primary outcome was the assimilation of the two companies. We kept 95 percent of our clients. Our annual employee satisfaction scores and employee opinion survey results increased. We had less voluntary turnover, and the earnings of the company started going up at about 20 percent per annum on a compound rate. It was a real success story. In addition, when the president left to take a job in a different company, the culture and the practices actually stayed in place. Often times, change efforts do not sustain themselves when you have a change in leadership. I would argue the real test of change efforts is whether they are sustained when the leader leaves. In our case, they were.
You were then appointed as the CEO of Prudential Real Estate and Relocation. What were the challenges and obstacles you found?
In the summer of 2009, as the financial markets were coming out of one of the worst recessions since the great depression, I was asked to take over Prudential's Real Estate and Relocation business (PRERS). The real estate side sells residential and commercial real estate franchises across North America. The relocation side helps families move throughout the world. It serves both U.S. government employees and large corporations. When I took over in the fall of 2009, we were facing a $70 million loss per year. The company had lost $140 million the year before. So as I came into the company, I had the opportunity to travel around and see what the morale was like for the associates. Before I arrived, they had shown the beach scene from Saving Private Ryan in an attempt to motivate our associates. If you remember, there is a scene on D-Day where people are being killed all over the place. Body parts are flying and bombs are going off. The trouble is, our associates interpreted this as: "Anyplace but here." Some of the folks in my company actually had encouraged me to play it again to show that I was symbolically in alignment with the previous CEO in terms of cost-cutting. I rejected that. I could see that the organization just didn’t have confidence in itself. Morale in our company and among our customers was not high.
So, how did you address these challenges of major red ink and poor morale throughout PRERS?
I harkened back to my Prudential Retirement days and what I learned about Positive Organizational Scholarship. The message was, let's look at what we have, as opposed to what we don’t have. Let's look at what we can do as opposed to what we don’t do. How do we start to take the limits off our company, not in terms of just going back to where we were two years or five years ago, but how do we achieve something that is truly great and never seen before in our industry? I called my good friend Kim Cameron and asked him to help me with the change effort. We started by bringing in Kim to work with our senior management team — what we call the "Gang of 30." Some of them were very reticent; others were curious. Fortunately, they were all patient.
What specifically did you do with your senior team? How did you start the process to turn around the company?
We started with a variety of exercises to show them that when you start with the positive, when you ask people to genuinely help you achieve what you’re trying to do, fabulous things can happen. One very simple exercise — and it's an exercise I’ve now done, oh goodness, dozens of times — is a great positive energizer. In the next three minutes, select three people, one at a time, and tell those people three things you value about them. In corporate America, and in most places in life, people usually tell you, "Here are the three things that you need to change." Rarely do they tell you, "Here are the three things that you’re fabulous at." When you do that, the energy just goes up. So that was the start. Okay, we’re off the beach. Nobody's dying any more. The body parts have been buried. We’re now saying, "Okay, let's start with what we have, because we have some fabulous attributes." So we started with that very simple but powerful exercise, and it got people's attention.
Positive feelings are one thing, but turning around the firm is another. How did you translate positive emotions into positive actions?
Well, after talking about positive strengths, we said, "OK, let's translate this into action." We engaged in an activity that was a variation on Wayne Baker's reciprocity ring exercise. Each of us had to take a sticky pad and put up a current problem we were trying to solve. Mine was trying to recruit some new senior leaders into the company. At the time I didn’t have a head of HR. I didn’t have a head of marketing. I needed a new head of business risk and I needed a new head of sales. We needed all sorts of things in the company. So, I put up my problem on the board, and we invited 30 people to do the same thing — "Here is the current business problem I’m trying to solve." Then we invited the 29 other folks to positively contribute. In my case, I got several really helpful ideas from the group. Our general counsel was a little bit skeptical at the time, and he approached the exercise, essentially, by saying, "OK, I’m going to stump the crowd here." So he offered this challenge: "I’m trying to hire excellent legal advice for our office in France." He was sure that no one could help him, since most of the folks in the room were from the U.S. But, sure enough, out of that group of 30 people, he got four great ideas. Somebody had a brother-in-law who had gone to law school in France. Somebody else had a good friend that was part of a big Paris law firm. He got a lot of different ideas. It really is one of those POS examples of reciprocity. The point is, when we invite others to help in a positive way, we can never predict where fabulous ideas come from. We started to see the energy in the group increase. They recognized that when they readily shared their challenge and openly asked others for help, they couldn’t predict where help would come from. They could see by working together that they could solve their own problems faster and better.
Did this activity translate into the rest of the organization?
About four months later we held our big annual convention. We invited 2,500 real estate agents from all over the country, and you can imagine they were a pretty energetic crowd. We met in the Austin Convention Center, and this was my first presentation to this group as the new CEO. I wanted to engage the crowd and ask for ideas about how we can make our company better. Well, the professional speechwriters advised against it and literally deleted this part from my speech three times. They said, "No, you shouldn’t stop the show. It will distract people. It's the wrong thing to do. You don’t want to get people engaged in a conversation when you’re giving a speech to a large audience. They are there to listen. You are there to talk." Well, I decided to try something different anyway. In the middle of my keynote address, I asked for the houselights to come up. I asked everybody to take out their Blackberries and their iPhones and turn them on as opposed to turn them off. I asked them all to text or e-mail one great idea — how to get a new client, how to close a sale, how to keep a customer for life. I said, "Take your very best idea, your absolutely best one, and share it. You will be sharing it with the person three rows behind you, down the convention center, across the hall. Let's do it right now." I had somebody bring my Blackberry on stage, and I participated as well. We did that for about four or five minutes, and then I invited them to continue to do it for the next 36 hours — until the end of the convention. Do you know how many ideas we came up with? Over 2,200. When we sorted all the duplicates and a couple of those that, well, were just nonsensical, we had 900 unique ideas. One person sent 197. We’ve been using those ideas for the last 15 months. One office sends out one idea to each of its sales associates every day, and they said, "It gave us ideas for three years." In 36 hours, we generated an idea a day for three years. That wasn’t about me. It was about creating a positive network.
So, did you share the 900 ideas with the company?
We did, but we went further than that. This year our annual convention was in San Diego. We launched an on-line network called NextWork — what's next and what works. Think of it as kind of Facebook for grownups where we are sharing ideas, sharing best practices, helping each other on a 24/7 basis. We’ve set up chat rooms where people can go in and explore different categories together. It allows people to have a voice when they normally wouldn’t have one, when they do not know who to talk to, when they may not know how to get their ideas heard in a larger community. We’re seeing a lot of younger people, a lot of people with less experience, now being coached by people who have more experience. So we’ve taken that very simple idea of reciprocity — just ask for help and you never know where help comes from — and we are building it into the very culture of our company using technology and social networking to keep it alive 24/7.
Were there other examples of this kind of intervention in PRERS?
Yes. One of the things we needed to do was to start to reinvent ourselves and our processes, or to give us the latitude to experiment on being "positively deviant," as I like to say. We turned to another Michigan professor — Jeff DeGraff — for some help, again building on the principles of POS. Jeff helped us look at doing a lot of small experiments with positive deviance rather just the traditional big corporate development projects that take sometimes years to measure. Borrowing from the hockey saying of "you can’t win if you don’t shoot," we created the "Shots on Goal" program. We allowed line managers to try different experiments aimed at delighting our customers and supply chain. Our client services scores in our Relocation Company had taken a beating during the downsizing of the recession, and, quite honestly, many of our customers were not very happy with us. So we started with some experiments and looked at examples of where we did well with clients. We looked deeply at not only who but also what and how this was being accomplished. Then we used these folks as positive examples, trying to clone them in the eyes of others. They became the unofficial mentors to others in these departments. We experimented with different staffing models, getting folks closer to the ultimate customer, and celebrating when we did things well. It was so fun to watch and measure! Believe it or not, things started to improve in all sorts of ways. Our client satisfaction scores stared to increase, and with every increase, people where encourage to strive for even more "positive deviance." It almost became like a game. After 18 months of trial and error, our services scores have never been higher. Some units actually achieved 100 percent satisfaction with some of our toughest clients. The best part of the whole program is that each and every idea implemented came from our associates. Not one was from me.
What role did you and your senior team play?
I believe that to truly implement POS, you must be willing to be visible and vulnerable at the same time. If your team thinks you have all the answers to their problems, they will bring you every problem to get an answer. Well, I know I’m not smarter than 1,200 associates, so it really was a case of setting an example in a very public way that it is OK to set positive goals, to look for inspiration around us, and to be open to help from anywhere in pursuit of that goal. As I said, when I took over in 2009, the company wasn’t doing very well. We had lost a lot of money. After taking a small amount of time to travel around to listen to our associates, our clients, our franchisees, and our real estate franchise agents, I laid out my objectives and invited all of our employees to help me. Our objective was straightforward: to reconnect to our core mission to be Welcoming and Welcomed. Simply put, we needed to be welcoming in our approach and welcomed for our expertise, as we helped people who are at very vulnerable times in their lives. They are often disconnected from the near and known as they try to connect to the far and often foreign. And yes, these objectives included the measurable targets such as growing revenues, keeping expenses flat, increasing customer service, and ultimately getting us back on a profitable basis. For us to accomplish any of this, we needed to draw on lots of sources of inspiration. The idea I wanted to communicate was that we could draw inspiration and ideas not just from the biggest and most obvious places but from the small or obscure places as well.
Read the entire interview.
Copyright © 2012 Elsevier B.V. Reprinted with permission.
For more information, contact:
Terry Kosdrosky, (734) 936-2502, terrykos@umich.edu
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