Reynolds C. Bish’s newest position began with a pretty overwhelming week.
For starters, he never imagined he’d be CEO of the company that became Kofax plc (LSE:KFX) mainly because he founded and served as president and CEO of Captiva Software Corp., its largest competitor.
Bish sold Captiva in 2005 and then took a 16-month sabbatical. Around the time he was re-entering the job market, Kofax still known as DICOM Group plc and based in Basingstoke, Hampshire, U.K. was looking for a new leader.
In October 2007, after several meetings with the board, Bish agreed to join the provider of document-driven business process automation solutions. Still, he hadn’t met anyone else inside the company.
“The first thing I had to do on my first day of work, which was Saturday, Nov. 5, was introduce myself to the executive management team,” he says. “Then on the following Monday morning, which was Nov. 7, I had to introduce myself to all the employees on a large, companywide conference call we had arranged. In doing both of those things, I really had to try to (alleviate) a lot of potential anxiety or stress that people would have not only because they had a new CEO but also because I had previously been CEO of their No. 1 competitor.”
To top it off, Bish knew serious changes were in store. Revenue wasn’t growing, market share was dwindling and more than 25 acquisitions had left the company in need of unification.
Bish’s challenge was to build trust with 1,161 employees to make the series of changes smoother for them.
“Certainly, there was a lot of speculation and fear, uncertainty and doubt about my motives and some of my decisions,” Bish says. “I had to focus on getting people to understand that, coming in, I was a rational businessperson and was going to exercise good, prudent judgment in all my decision-making.”Check the pulse
Whether you’re new to a company like Bish or just keeping your finger on the pulse of yours, change starts with communication.
In his first two months as CEO, Bish traveled across the U.S., Europe and Asia-Pacific to meet employees and hear their perspectives. It’s more than a feel-good move when you ask them why the company is in its current state and what potential solutions they see. In reality, you need their input to help you understand the company and decide how to change it.
For that exchange to happen, you need to create an open environment.
“I would begin the dialogue with reintroducing myself to the group, talking a little bit about my background, sharing about what I was going to be doing in the first few months and also beginning to share some of my personal observations about what I had seen so far,” Bish says. “And then open it up to dialogue.
“[It was] asking people for their opinions about what was working, what wasn’t. Questioning some of their assumptions about the business and their views of the marketplace. Just having a very open, honest, frank, candid conversation about some of my perceptions, their perceptions.”
But those were big questions, especially for a reluctant audience. Bish began noticing something at these meetings a signal that he needed to do more to engage employees.
“I usually point it out to the audience that nobody likes to sit in the front of the room,” he says. “And when I open things to questions, there are very few questions and people are always hesitant to ask them. Most people tend to be a little reserved and shy, particularly when they’re interacting with somebody in a position of authority. Sometimes, you really have to drag information out of them and assure them that it’s OK to be open and frank, that you’re not going to have an adverse reaction to something that they say that you don’t necessarily agree with.”
If it’s still quiet after that invitation, Bish throws out his own answers.
Because the basis of a conversation is give-and-take, you need to contribute. By then, Bish had already formed his own knowledge of what was going on largely from his experience at Captiva. He also conducted additional research through DICOM’s published financial information and market data from various industry analysts, learning that revenue wasn’t growing and market share was dwindling.
“When I was standing up in front of a group and there was any kind of reluctance to talk, I would throw out some statistics from one of these industry analysts or refer to the financial data and tell people, ‘You know, here are my initial thoughts on why that might be happening. What do you think about that? Are these real issues?’” he says. “People are … not completely immune or blind to what’s going on in a company. Once you start that dialogue, they tend to all open up and come forward and engage in it because they see a lot of the things that you do.”
By approaching discussions as a peer of your employees rather than an executive you begin building trust and opening the flow of feedback.
“You have to talk to people, not at them,” Bish says. “When you do that in a peer-like manner as opposed to from a position of authority, the dialogue and the openness of people tends to develop pretty quickly and then they feel comfortable.”Hire agents of change
Sure, you communicate to everyone and try to get all of your employees on board but not everyone will respond the same way. When you’re driving big changes through an organization, not all employees will survive the shift.
“No. 1, not everybody’s going to make it through that change,” Bish says. “There’s going to be some people that simply aren’t capable of it and don’t have the strength or the experience or the talent to function in the new culture. They’re either going to be terminated or they’re going to quit.
“In addition to that, there are going to be people that certainly could adapt and contribute, but, for whatever reason, they don’t really want to. They’re also probably going to leave you, and usually that’s because they feel more comfortable in a different kind of culture.”
Identify the feet-draggers as soon as you can. Usually, it’s apparent early on who’s adjusting to the change and who’s bucking it.
“Either they’re adapting to it and buying in to it and enthusiastically dealing with the change and modifying their behavior in their day-to-day work or they’re not,” Bish says. “Either they’re doing it in a productive manner or they’re slow to adapt, they’re voicing negativity, they’re coming in late, leaving early and all that.”
When you acknowledge not everyone can make it or should you’ll be better prepared to manage the shifting work force.
“You have to recognize that you’re probably going to experience a higher than normal level of turnover in the employee base as you go through this change,” Bish says. “Certainly, you don’t want the wheels to fall off the car as you drive forward and make these changes, and you’ve got to be sensitive to that. But at the same time, you have to be realistic and recognize that … not everybody is capable or wants to make that kind of a change.”
The sooner you accept that, the more quickly you can focus on hiring change-savvy staff to replace those who leave.
When adding several experienced senior executives to the Kofax team, Bish learned the difference between staffing a static company and a changing one. Instead of plugging candidates into an existing strategy, he needed people who would help reinvent the company.
First, he looked for backgrounds that involved organizational change.
“You have to look at their resume or their career, their experience grid and what they’ve been through at previous jobs,” Bish says. “Does that give them the kind of experience that will be valuable in them relying upon as they come into the company and help you effect all this change or not? And secondly, and probably even more important, is: Are they comfortable with effecting significant change in a company?”
Of course, you can ask those questions in the interview. But for an even more accurate picture, conduct heavy reference checks. Because Bish had contacts in the marketplace before he came on board, he used his network to find extra resources.
“Attempt to talk to not only references that they provide but also some people that they haven’t referred you to,” he says. “You can maybe through networks and other people that you know find your way to a more open, honest and candid opinion of their abilities and their experience.”
If you want candidates to be honest with you, be honest with them. There’s probably uncertainty in a changing company, and there are certainly challenges. Be up front about those during the interview.
“You need to be completely honest with them about the state of the company, the challenges it’s facing, some of the strengths that it has and also the changes that need to be implemented,” Bish says. “Go through that in detail so that they know what they’re coming into. They know where they’re going to have to focus their efforts. They know where some of the challenges are going to be, so they come into the company very well-positioned to hit the ground running.”Report on progress
Bish instigated a significant domino effect of changes across Kofax. But the key, through it all, is that he kept communicating.
“Throughout that whole process, you really need to optimize communications with all your constituencies which would include, certainly, your employees, your board of directors, your shareholders, your channel partners and also your end-user customers,” Bish says. “Report back to them on a very regular basis about your progress in terms of effecting all that change and where you’re succeeding, where you’re facing some challenges, and changes that you’re going to make in light of that.”
Bish meets with employees at least quarterly. Well, technically, everyone at Kofax’s new operating headquarters in Irvine gathers in a room, then the rest of the company dials in. In other time zones, they can access the PowerPoint and a recording of the call via their intranet later.
Bish’s presentation is pretty simple and straightforward.
“You tell people what you’re going to do and when you’re going to do it,” he says. “As you execute on each of those initiatives or each of those actions, you report back that we hit one of the milestones so that they know what’s getting done and what isn’t.”
To better illustrate progress to employees, track it with some concrete numbers. Bish uses benchmarked metrics to show how Kofax is faring in the big picture of the marketplace.
“Set up some key performance indicators that you can track and measure against,” he says. “In our case, for example, it was referring to the industry analyst data or information about competitors: Are we growing faster or slower than our competition or the marketplace? Are we gaining market share as a result or losing market share? Are our revenues growing across various segments of our business or declining on a year-over-year basis?”
As he continued to keep employees in the loop of change, Bish began chiseling away at their skepticism. Now, they can focus fully on making the company successful not worrying about their leader’s motives.
Bish built up the trust necessary to rebrand and rename DICOM as Kofax, restructure it around global business functions, realign and focus the sales resources, hire experienced senior executives, and relocate the operating headquarters across the globe along with a flurry of other changes. Kofax reported revenue of $298.2 million for fiscal 2009, ending June 30. Industry analysts project fiscal 2010 revenue of about $330 million.
“The important thing is to communicate on a regular, consistent, open, honest and frank basis with the employees,” Bish says. “If you can establish that level of open dialogue and trust that comes as a result of that, it’s a much easier process to go through. If you do that over time, I think you build that level of trust and convince people that you’re really sincere in your motivations.”
How to reach: Kofax plc, (949) 727-1733 or http://www.kofax.com/