Assignment: Applied Neuroscience

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Assignment: Applied Neuroscience

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Performance Improvement, vol. 49, no. 7, August 2010 ©2010 International Society for Performance Improvement

Published online in Wiley InterScience (www.interscience.wiley.com) • DOI: 10.1002/pfi.20164

LEADING THROUGH CRISIS: APPLIED NEUROSCIENCE AND MINDSIGHT

Jo Ann Heydenfeldt, PhD

Are neuroscientific principles relevant in efforts to manage change successfully? This article

provides a case that demonstrates how persistent and purposeful attentional focus, as described

by neuroscience, can help overcome human resistance to change and generate creative and

successful solutions. A change management perspective growing out of fresh neurological

insights into human behavior is also discussed.

HOW DO LEADERS GO about nurturing or inspiring minds incapacitated by emotions such as fear or anger to appraise the situation realistically and create workable solutions? According to neuroscience, resolution depends on the ability to be open in the face of what may seem like unbearable, painful feelings and yet maintain integra- tion. The current business environment is fraught with sobering degrees of uncertainty. Some risk-averse insti- tutions may fare better than others, but few are exempt from managing ongoing crisis in the current economic upheaval. When leaders face the challenge of a devastat- ing reality and have the skill to focus attention purpose- fully on new objectives, they are ready to begin, according to some organizational theorists (Rock & Schwartz, 2006; Siegel & Hartzell, 2003).

Assignment: Applied Neuroscience

When this level of uncertainty and organizational pain exists, theorists ask how best to maintain a highly com- mitted and high-performing workforce (Eisenstadt, Beer, Foote, Fredberg, & Flemming, 2008). Some consultants suggest that companies that nurture socially intelligent behaviors such as flexibility, awareness, empathy, and resilience are more likely to survive the crisis and prosper (Bryan & Farrell, 2008). Other researchers conclude that organizational survival can be seen as a choice between delivering superior value to an unforgiving global mar- ketplace with an exclusive focus on the shareholder or maintaining the firm’s people, culture, and heritage. Still others maintain that some leaders manage to maintain this tension between people and performance without sacrificing either, all the while implementing change that may be wrenching and dramatic (Eisenstadt et al., 2008).

This article describes a difficult and painful response to change that successfully employed neuroscientific princi- ples by focusing attention on new insights and solutions, closely enough and often enough and for a long enough time, to change the way employees think and behave (Jha, Krompinger & Baime, 2007; Rock & Schwartz 2006).

A SUCCESSFUL CHANGE INITIATIVE AT SAFEWAY: NEUROBIOLOGICAL PERSPECTIVES An extraordinarily successful change effort was imple- mented at Safeway. In 2003, Safeway CEO Steve Burd estimated that the retail grocery chain business model would not be sustainable through 2010. Part of the rea- son was that health care costs were rising at an annual rate of 10% and the grocery chain could not continue to pay these increased health benefits costs demanded by the union. Safeway management, together with Ralphs, Albertsons, and Vons, reached an agreement to maintain health benefit costs at the 2003 level in all chains. Clearly something radical had to be done to gain union accep- tance of this change. Employees reacted to this joint decision to contain health care costs with anger and a prolonged strike involving protest marches and picket- ing. Nevertheless, Burd’s compelling story addressed head-on both the negative (“the current model is unsus- tainable”) and the positive (“we can survive”). Safeway also managed to overcome objections because humans are risk averse (Nicholson, 1998): Employees were more

Assignment: Applied Neuroscience

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34 www.ispi.org • DOI: 10.1002/pfi • AUGUST 2010

willing to take risks to avoid losing what they had than they were to gain something unknown. Employees chose to focus attention on continued employment.

Out of the 2003 strike came the Safeway Health Initiative Task Force. Its members were stakeholders from the risk management, benefits, strategic planning, human resource, legal council, and other departments within the organization. In 2005, Safeway embarked on a health care reform plan based on market-based solutions that rewards healthy behavior. This response directly addressed the need to curtail benefits costs and at the same time addressed employees’ focus on health care concerns. Two key insights are the basis of this plan. The first is that 70% of all health care costs are the direct result of behavior. The second is that 74% of all health care costs are confined to four chronic conditions: cardiovas- cular disease, cancer, diabetes, and obesity. Furthermore, 80% of cardiovascular disease and diabetes is prevent- able, 60% of cancer is preventable, and more than 90% of obesity is preventable. Safeway’s Healthy Measures Program has changed employee behavior by building a culture of health and fitness. It offers pronounced differ- ences in premiums that reward each covered member’s healthy behaviors. The program is completely voluntary and currently covers 74% of the nonunion employees (Kosterlitz, 2009; D. Vielehr, personal communication, August 2009).

Assignment: Applied Neuroscience

This initiative shifted energy to focus on a new goal: improving the health status of employees rather than maintaining unsustainable benefit plans that subsidized avoidable illness. To purposely and repeatedly focus on new objectives, employees agree to be tested annually on four measures: tobacco use, healthy weight, blood pres- sure, and cholesterol levels. Skills training, gym member- ship, and discounted healthy food choices are offered to help them reach their goals, and they receive insurance premium discounts for each test improvement. As a result, Safeway health care costs have held constant for the past 4 years. Obesity and smoking rates are currently roughly 70% of the national average, and 78% of the employees rate the plan as good to very good or excellent (Burd, 2009).

CHANGE MANAGEMENT THEORY WITH NEUROSCIENCE Aiken and Keller (2009) have outlined some important insights about how employees interpret their environ- ment and choose to act. They reviewed the rational holistic change management model by Price and Lawson (2003; as cited in Aiken & Keller, 2009) that suggested four basic conditions are necessary before employees will change their behavior:

A compelling story.1. Employees must see the point and agree with it.

Role modeling.2. They must see the CEO and colleagues walking the talk.

Reinforcing mechanisms.3. Systems, processes, and incen- tives must be in line.

Capacity building. 4. Employees must have the skills to make the desired changes.

As appealing as this model was because it made sense intuitively, only one in three change efforts is successful. Aiken and Keller (2009) suggest that managers waste time and energy implementing this prescription because they may be disregarding certain elements of human nature that are sometimes irrational but nevertheless predictable. They outline nine insights into how human nature gets in the way of successful change and how to manage them:

Create a compelling story, but realize that what moti-1. vates you may not motivate most of your employees.

You are better off letting them create their own story. 2. Choosing their own creates a powerful incentive.

It takes a story with both pluses and minuses to create 3. real energy.

Leaders believe that they are the change, but they are mis-4. taken because they do not think they need to change.

Influence leaders are not the panacea for making 5. change happen; the whole society is.

Reinforcing mechanisms are important. Money, the most 6. expensive mechanism, is not always the most effective.

Assignment: Applied Neuroscience

The process and outcomes have to be fair.7.

Employees’ performance is driven by what they think, 8. feel, and believe in regardless of their capabilities and skills.

Good intentions are not enough. Follow-through is 9. essential.

These insights support the neurobiological view that people’s behavior is as greatly affected by neuroaffective, or “irrational,” elements as they are by rational ones.

Employees’ performance is driven by what they think, feel, and believe in regardless of their capabilities and skills.

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Performance Improvement • Volume 49 • Number 7 • DOI: 10.1002/pfi 35

Irrational elements the Safeway plan takes into account are the following:

Create a compelling story but realize that what motivates • you may not motivate most of your employees. Burd had a compelling story that outlined unsustainable benefits costs. However, employees were not motivated to accept the reduction of benefits. They reacted with anger, picketing, and a prolonged strike.

You are better off letting them write their own story; • choosing for yourself creates a powerful incentive. Safeway corporate created a voluntary plan—employees can choose to participate in a culture of fitness. Employees’ behavioral changes are rewarded monetarily, and they also enjoy better health. If employees stop smoking and bring hypertension or obesity under control they receive a reduction in benefits costs for the following year as well as a refund for the higher amount paid the previous year. They write their own story and choose for themselves.

Assignment: Applied Neuroscience

It takes a story that contains both pluses and minuses • to create real energy. This was certainly true of Burd’s realistic presentation of the Safeway situation with bankruptcy a definite possibility.

Influence leaders are not the panacea for making change • happen; the whole society is. Seventy-eight percent of enrolled employees rate the plan good, very good, or excellent. Safeway health care costs have held constant for the past 4 years, and Safeway employees’ obesity and smoking rates are currently roughly 70% of the national average.

Leaders believe that they are the change but are mistaken • because they do not think they have to change. When the fitness tests were offered, Steve Burd was first in line and has become a national spokesperson for health economics.

The process and outcomes have to be fair• . The program is voluntary. Employees can choose their own plan or eat burgers and fries in the cafeteria if they want, but healthy foods are prominently displayed and sold at a discount. If they fail a fitness test, they can take it again in 12 months.

Employees’ performance is driven by what they think, • feel, and believe in regardless of their capabilities and skills. Employees are given the opportunity to trans- form themselves by taking personal responsibility and, in the process, gain financial incentives as well. Employees are not subsidizing unhealthy behavior nor are they discriminated against for preexisting conditions. The figures support the fact that they believe in this approach.

Good intentions are not enough. Follow-through is essen-• tial. Safeway designed the Healthy Measures plan in 2005 and has made improvements each year.

Safeway’s initiative embodies the application of focused attention and the consideration of irrational but predictable elements of human nature with stun- ning success (Boyatzis & Goleman, 2008; Kosterlitz, 2009). Its culture is one of cost control; it seeks to influence situations for the better by finding the most appropriate cost levers. Safeway leaders articulate their success in terms of market-based solutions, declining per capita health care costs, and a sustainable business model in the global economy (D. Vielehr, personal com- munication, August 2009). It is also true that CEO Steve Burd demonstrates the desire and ability to lead and has maintained focused attention on solving this problem. Safeway has become a nationally recognized leader in health care economics and an influential player in the debate over health care (Kosterlitz, 2009). Although empathetic relationships may have been a result, leader- ship in this example was not so much about developing positive feelings as it was about thinking strategically about employees’ socioemotional needs and creating a program that met them in a tangible and practical way that takes into account predictable human reactions. It illustrates the claim that when so-called irrational ele- ments are part of the equation, they add value and work in concert with sound economics in ways that serve change initiatives well.

WHY CHANGE IS PAINFUL Rock and Schwartz (2006) wrote that “Change is pain. It provokes sensations of physiological discomfort. Successful change requires changing the day to day behavior of peo- ple throughout the company. . . . But changing behavior is hard even for individuals and even when new habits can mean the difference between life and death” (p. 2). People resist change stubbornly even when it is in their best inter- est. They resist because encountering new information engages the energy-intensive part of the brain. It is much easier for people to operate on automatic, using behaviors that have been shaped by extensive training and experi- ence, than it is to learn new habits. Trying to change any hardwired habit requires a lot of effort that most of us try to avoid if possible. Changing routine habitual thinking also stimulates a strong message in the brain that some- thing is wrong, and these messages can overpower rational thought, causing stress and discomfort (Rock & Schwartz, 2006). Boyatzis and Goleman (2008) describe socially intelligent things that leaders do (exhibit empathy and become attuned to others’ moods) that play a vital role in

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overcoming this discomfort. In fact, research has demon- strated that empathy and resonance or attunement with others turns out to be especially important when guiding institutions through rough times and maintaining high performance in crisis situations. Here, however, I suggest

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