John Hancock Change Mgt.
...or change.” Brown’s clearly stated strategic intent was that he wanted John Hancock to concentrate on the bottom line by being more cost effective, more externally focused, and more consumer-oriented. Such a vision statement is precise enough for employees to understand, yet broad enough not to be threatened by long-term obsolescence. Hard and soft changes Beer, Eisenstat, and Spector note that managers often work to change individuals with the expectation that changed individuals would then bring about change in the organization. They argue that process is precisely backwards. In order for change to occur, the individual has to be placed in a new organizational context first. Norhia and Khurana also make a similar point when citing Jack Welch’s success at GE. Brown followed the Welch model and began with the hard changes. He sold off or closed businesses that were unprofitable, and realigned the compensation system. Easily attainable, modest bonuses were replaced by more difficult to attain, but more lucrative packages. Previously bonuses were tied to companywide performance, now they were tied to individual business units. Eventually he added a phantom stock program that rewarded senior executives based on how well the company performed against competitors. The new compensation system changed managers’ organizational context. Now unit heads were looking at the bottom line and focusing externally in order to meet goals. By implementing hard changes, Brown triggered cultural changes. Cultural change was further aided by Brown’s hiring and promotion strategy. He wanted leaders, not managers. Additional best practices The compensation system can be seen as a microcosm for the total change process at John Hancock. It began as a rigid, top-down process with fixed bonuses bases on specific criteria, but as it evolved managers were given a greater degree of discretion in awarding bonuses based on individual performance. Successful change often has to take such a route. Nohria and Khurana point out that radical change often must start with top-down directives, otherwise entrenched stakeholders are in a position to put up successful resistance. This top-down to bottom-up evolution also fulfills Kotter’s requirement of empowering employees to take broad based action. Jean Livermore’s quality initiative also serves as such an example. Rather than hire a large staff to train units in best practices, she chose to work with the units to develop their own practices. Looking forward By 1997 Brown was five years into his change initiative. The process, as presented in the case, was successful. As he...