The honest truth Featured

8:00pm EDT May 26, 2009

Marty Kahn had reached the top just as ProQuest LLC had hit bottom.

It was February 2007 when Kahn took over as the CEO of the information technology firm that provides products and services to educational, government, medical and research entities. But at that point, products and services were not at the front of most minds at ProQuest.

The company was in the midst of a complicated merger and reorganization, due in part to a 2006 financial reporting scandal involving ProQuest Information and Learning, a division of what was then a publicly held company. The scandal was sparked by what Kahn says were intentional misstatements on financial documents. The fallout included an earnings restatement, a drop in the company’s stock price and shareholder lawsuits, among other problems.

“As a result of that, the public company ProQuest decided it needed to sell off the ProQuest Information and Learning division,” Kahn says. “They sold it to a private company, where it was then combined with another business. That’s where it got really confusing, because the private, merged company took the ProQuest name, while the now smaller, public company took the name Voyager Learning.”

The scandal, sale and news of the merger formed a triple threat that damaged the corporate culture of the revised, privately held ProQuest. The lack of trust employees had in management was palpable. The merger and reorganization forced downsizing, creating a companywide feeling of uncertainty about the future. And Kahn had to face it all from his first day on the job.

“I had a company which was now the result of a merger, which is something that always has its own issues,” he says. “The company had been through a severe financial reporting scandal and, as a result, had to be significantly downsized, which was a major blow to our morale and esprit de corps.

“The challenge I had was to carry out a merger, restore the energy and direction of the company, and I was a new CEO on top of that.”

Perform triage

In a dire situation, your first actions aren’t necessarily going to change the game. They’re likely going to prevent the situation from getting any worse or, at the very least, slow the sinking.

Kahn acknowledged right out of the gate that he would have to place supreme emphasis on communication with employees at all of ProQuest’s offices.

Initially, the message wasn’t even the main point of Kahn’s communication. It was simply the fact that he was taking the time to communicate openly with employees.

“I went and spoke to all of the employees in person and basically told them what we were going to do,” Kahn says. “I told them that we were going to carry out a merger, which by definition would result in redundant operations being combined. I told them that we were going to look for operating efficiencies and that, at a minimum, we would try to do that with a great deal of fairness. If it became necessary that jobs would be eliminated, we would do so in a respectful and open fashion. After that, I gave people a sense of when this all might happen.

“We also committed that while we would be looking for cost savings, we were also going to be investing in the future. We weren’t going to be making these changes as kind of a quick flip where we were going to eliminate costs, polish up the bottom line and then sell the company. We told them we were making a commitment that while we would reduce expenses, we would also invest in the company’s future.”

Through his initial visits to the company’s offices, Kahn learned that employees were looking for more than reassurance concerning their job security. Many were dissatisfied with the state of the company’s infrastructure, which included outdated technology and obsolete accounting and customer service systems.

The speeches and office visits established a future direction, but employees were looking for actions, not just words.

“Employees are smart, and many of our employees have been here a long time,” Kahn says. “They can see when we are going after the real problems, not just the appearance of problems. That’s one way we convinced them of our intentions through actions instead of words. We started out not by investing in the fancy stuff upfront, but by investing in the deep infrastructure of the company, our customer service systems and our computer systems. We showed that these were things that we were serious about improving.”

To calm the waters and build trust after a period of turbulence, you need to focus on two things — communicating openly and seeing to it that your actions follow your words.

“I’m 58 years old, and over the course of my business life, the one thing I’ve learned is the need for transparency from management,” Kahn says. “Give information to people straight, and that includes telling them what the problems are. You need to be almost painfully blunt, because you’ll find out that employees know what is going on. Our employees knew we had an aging software infrastructure that was causing all kinds of problems with our customers. They know what the problems are, and you have to explain what you are going to do about it.

“Explain the how, explain how long it’s going to take you to fix the problems, explain why it’s going to take this long and explain how much you’re going to invest in it. And meanwhile, tell them that we’re all in this together, and we’re all going to have to pull together to prevent these problems from causing us all sorts of trouble in the marketplace. In a nutshell, you need to be straight with your employees.”

Build on your progress

Once ProQuest’s employees started to realize that the new management team was going to follow through on its promises, Kahn took the opportunity to build another level of trust by focusing on progress.

Progress can come in the form of something major, like landing a new account. Or it can come in the form of smaller gestures. Each demonstration of progress can help solidify the new culture.

At ProQuest, everyone at the company’s headquarters moved into a single, four-story building last year, a move aimed at, among other things, promoting interaction and teamwork throughout the company’s ranks.

Kahn wanted to celebrate the move as a victory, so when the flags were raised in front of ProQuest’s new building, Kahn gathered all the employees at the office together.

“We had new flagpoles installed on the grounds,” he says. “On the day we decided to raise the flags, the U.S. flag, Michigan flag and ProQuest flag, we had everybody get together, served ice cream, we made speeches and honored some of our longest-serving employees. We really wanted to celebrate the fact that we were now all in one building together as a success. When you have success, you need to bring everybody in on the success and let them celebrate with you. It’s something that solidifies a feeling among your employees that your company is making progress and that they are working for a winning organization.”

Beyond working for a winner, employees need to believe in the mission of their company. In the end, that is why you need to celebrate successes.

“You need to really encourage people to believe in the mission of the company,” Kahn says. “We serve students, scholars and researchers, and we make a big deal about the fact that this is an important mission. It’s not something that very many companies do. We talk a lot about what we do for the scholarly enterprise on a global

basis, and we encourage people to feel like what they do, and what all of us are doing, really makes a difference.

“People need to have the feeling that what they’re doing is important and what the company is doing is important. All businesses are doing something important, and you need to show your people that you’re proud of what they’re doing. You need to drive that home to them through your actions and celebrations.”

Learn your lessons

More than two years after the merger and initialization of the cultural rebuild, ProQuest is a healthy company with 2008 revenues of $365 million and more than 1,400 employees systemwide.

In the time since his first turbulent months on the job, Kahn has had a chance to reflect on the lessons he has learned. Many of the lessons keep coming back to the same common theme: Communication is critical during a time of change.

“I was more worried about communicating than any other part of my job,” Kahn says. “That’s what we spent most of our time thinking about. The day the merger was going to be announced, we had checklists of who we had to call — lenders, partners, competitors — who was going to call whom and at what time. After the announcement, my No. 1 priority was to get around and start communicating with our employees and partners. On any given day, getting out to our locations was my highest priority.

“The answer to communication is that you can only do it right if you put it before everything else. I attend to communication before I attend to budgets. I have other people to worry about those things.”

But you also need people who focus on communication — internal communication in particular. Kahn says that as your company grows, you need to hire and develop employees with the sole responsibility of handling communication throughout the company.

“First off, as a CEO, you can’t think that you can manage the communication process yourself,” he says. “Make sure you have someone or some group whose primary responsibility is employee communication.

“Secondly, employee communication is different from customer communication. Employee communication covers different subjects, and it needs to be more candid. It shouldn’t be handled by the marketing people. Marketing handles customer communication; human resources should handle employee communication.

“The third lesson about communication is honesty, honesty, honesty. If you become just a cheerleader, you lose credibility. You have to give people the straight story, even if the news isn’t positive. Then tell them why you’re doing the things you are doing. People might not like it, but they’ll respect you and will appreciate the fact that you’re telling them the truth.

“If you tell people the truth, I don’t think you’re going to damage morale. People want to know when management is telling the truth and behaving responsibly. They want to know that we as leaders are doing the right thing, even if the right thing necessitates that we take difficult actions.”

How to reach: ProQuest LLC, (734) 761-4700 or www.proquest.com