Carl Dalstrom will tell you that when big changes come about at a company, the CEO’s role is to rise above the uncertainty and show the way for his or her employees.
Dalstrom speaks from experience, because in the summer of 2000, he learned his company, United Student Aid Funds Inc., would no longer be affiliated with the much larger USA Group, which had been acquired by SLM Corp.
He had to align the vision and mission to the newly independent company and sell the change to employees who were used to being a cog in a much larger machine. There were new systems to put in place and cultural changes that needed to be made to enable the company to survive on its own. Dalstrom, president and CEO of USA Funds, needed to coordinate a business plan that included the creation of divisions focusing on finance, legal matters, customer relations and technology for the newly independent guarantor of student loans.
This left many employees in a state of shock. “We went from being one company among several in a very big organization called USA Group to a much smaller independent guarantor without any affiliated entities like we had prior to 2000,” Dalstrom says. “That really put us in a completely different paradigm in which to do business.”
When people are nervous about a change, they often look to their leader to get a sense of how he or she is reacting to the situation.
“I try real hard to keep a positive attitude,” Dalstrom says. “I look for opportunities and try to turn the challenge into an opportunity. ... Get people focusing their energies on looking at the opportunities and exploiting them rather than sitting around bemoaning the change or thinking it’s all negative.”
Dalstrom’s ability to construct a team of employees at the new company and align them to the company’s mission and vision has helped USA Funds to prosper under the new structure with $418.5 million in revenue in 2006, up from $386.3 million in 2005.
“A leader has got to keep an organization focused on the mission,” Dalstrom says. “By doing that and by getting all the people in an organization so sharply focused on the mission, things flow a lot easier and it’s a lot easier to make decisions and to make things happen.”
One of the most important roles a CEO can play in guiding a company through major changes is to serve as the spokesperson, specifically when it comes to talking about mission and vision. This includes dialogue both internally with employees and externally with clients, business partners and others that have ties to the organization.
In almost every case, the people looking for information about the way in which the company is changing want to hear from the person in charge.
“Everywhere I go, it always seems to bring more attention to the issue when I deliver it,” Dalstrom says. “They want to hear the facts and data. They don’t want to hear things that are rose-colored. They want to hear how it is. ... If you have any tone in your speech that sounds like a sales pitch, they are not going to listen to you.”
Experience has also taught Dalstrom that while written communication and reports posted online are helpful, it’s still not the same as a face-to-face meeting.
“The most effective communication was me standing up in front of an audience of schools at a sponsored breakfast or a general session or whatever it might be and just looking them in the eyes,” Dalstrom says. “When I can do that, I see the light bulb go off. ... It’s not the kind of thing you can explain very well in print.
“There’s something about the attention span for a person standing in front of you talking to you and giving you information that seems to be better. They don’t have anything else to focus on at the time other than to sit and listen to you.”
Empower your employees
In leading the way through change, Dalstrom says a good leader often reflects back on past experiences in hopes of revealing a lesson that can prove useful in dealing with the current challenges. But it is important to remember that things change over time.
“I use them as a way to say, ‘We’ve got through it before, it will be OK,’” Dalstrom says. “I don’t, however, look at the past challenges and say, ‘What worked for that challenge is going to work for this one.’ Every one does have a different wrapping around it, and every one requires a bit of a different twist. ... There’s no cookie-cutter approach. It’s just, ‘We did this before. We handled it before. We ought to have the confidence that we can continue to do the same thing now.’”
USA Funds also established a committee called the encouragement strategy council to help work through ideas and get everyone, both inside and outside the organization, aligned to the company’s mission.
The council provides a means to tap into the talents of employees and put those skills to use in getting through the transition. It is up to the leader to observe employees on a regular basis to get a sense of what they can do.
“Observe the results they achieve,” Dalstrom says. “When you work with people, you really get to understand their personality and what makes them tick and what motivates them.”
Dalstrom says his ability to identify talent became particularly useful as he assembled his new team of employees at USA Funds.
“I try to focus people into positions that they are good at and that they like to do,” Dalstrom says. “Usually, the two go hand in hand. Rather than saying, ‘You can’t do that job, I’m going to have to let you go,’ it’s more, ‘What is this person good at? Where can I put them to the best use?’ Recognize what people are good at and make sure they are in a position to take advantage of that.”
Like his meetings with those outside the company, Dalstrom says he doesn’t learn a whole lot about his employees through e-mail correspondence or even a phone conversation.
“I go and physically visit them in the office,” Dalstrom says. “I do a lot of management by walking around. As I’m on my way to somebody’s office, I will stop three, four, five or six times and talk to people about what’s going on with their day and answer any questions they might have. I try to keep as much face-to-face contact with my employees as I can.”
Technology does have its place, however. The company uses an intranet site and a daily dispatch of news and information that is available to employees online to keep everyone apprised of what is happening.
But it is the face-to-face meetings that provide the true insight and the opportunity to engage in meaningful discussions.
“I’ll have the opportunity to explain to that particular employee what my perspective is,” Dalstrom says. “It’s easier for us to pick up that somebody is becoming nervous or unhappy about something that is occurring and then we can address it.”
Dalstrom says a good leader is not one that simply gives orders and issues commands on how he or she wants a task to be done.
“I’m here to support them, not the other way around,” Dalstrom says. “I make sure they understand the mission and vision and values of the organization. I give them the tools to succeed, and I get out of their way. It doesn’t mean I totally disconnect, I just try real hard not to get in their way. If you can give people that freedom with the right amount of direction upfront, you really see what people are good at and what they are not good at.”
It’s also important to get a wide range of opinions to help you make the changes necessary to go to the next level.
“I try to find people who are not like me,” says Dalstrom. “I really don’t want group think. I want to hear varying opinions. Diversity of thought is very important to me. I try not to look for clones. I want people who can bring to the table skills I don’t have or a thought process perhaps I might not take. I look for people that I can trust to be good at what they do and then to have the kind of commitment and energy to lead others and to carry forward on the mission. I look for people that I can legitimately trust to do the job.”
Dalstrom says leaders need to encourage input from employees, no matter what they have to say.
“Sometimes, crazy ideas in the beginning end up being really good ideas in the end,” Dalstrom says.
One of the things that employees want most, in addition to fair compensation, is a chance to feel that their work means something.
“It’s not so much compensation, as long as compensation is fair and it’s not benefits, as long as that’s fair,” Dalstrom says. “Maybe it’s not even working hours as long as they are flexible and fair. It’s more about do they really like what the company is doing? Do they come to work saying, ‘We are making a difference’?”
Making changes in an organization almost always creates higher stress levels. Dalstrom says one of the most important leadership traits he has found to alleviate that is his sense of humor. The key is to know when to use it.
“It sort of relaxes everybody,” Dalstrom says. “It puts people in a mood that I think makes them more effective. That doesn’t mean the whole day has to be a Jerry Lewis marathon. A lot of these issues are very intense. The way you get people to relax about it, to take a step back and take a deep breath, is to insert humor. I encourage that at our meetings. I’m not the only one who displays it. I’m certainly not skilled enough to be humorous all the time.”
“If I see two of my staff really disagreeing on something and I get the impression it’s getting a bit tense, which is rare on my team, I’ll insert humor to get them to calm down. I’ll find the humor in the situation and make a comment.”
The power of trust
The key to making successful changes is trust. Trust is something that Dalstrom has cultivated over the years through open communication with his employees.
This has spawned a culture of collaboration and cooperation that allowed Dalstrom to be convincing when he told employees that they should look beyond the challenges and find the opportunities for the organization.
The employees have continued to adapt and offer new ideas as the organization has grown.
“In the very beginning, we didn’t have a lot of employees to consult,” Dalstrom says. “As we moved along, each division figured out how to set up (its) infrastructure. The division heads were pretty inclusive getting ideas from the staff about what would work and what wouldn’t work.”
“While folks that came over here were disappointed that USA Group had to split apart, because we really had a good thing going and they enjoyed that working environment, I think over time, they have begun to appreciate what they have in the new paradigm.”
HOW TO REACH: United Student Aid Funds Inc., (888) 272-5543 or www.usafunds.org