We hear every day of poor leadership decision making, so I thought I would share a story with you of dynamic and inspirational leadership at its best – even in very tough conditions.
Ingar Skaug took a deep breath as he stepped into his first CEO job. He’d be picking up new responsibilities. He’d be picking up experience in a new industry. And, he’d be picking up the pieces after the entire management team had been killed in a plane crash.
It was like a scene from a Hollywood screenplay. Wilh. Wilhelmsen, an international shipping company in Scandinavia, had just added a ninth large carrier to its fleet. It was time to celebrate. So on a cool September morning in 1989, its management team boarded a plane in Oslo and headed to Hamburg for the customary christening ceremony.
Suddenly, celebration turned to tragedy as the plane crashed, killing all 50 passengers and wiping out the top two levels of Wilhelmsen management.
At the time, Skaug was Chief Operating Officer of Scandinavian Air (SAS) and loved his job. Under his watch, SAS had achieved double-digit growth and had transformed its culture to where it was listed as the #1 place to work in Norway. Skaug thought he’d be at SAS for the rest of his career.
“It took me three months to decide whether to take the Wilhelmsen job,” admits Skaug. “But in the end, I realized that this would be a leadership challenge of a lifetime.”
And indeed it was. When Skaug took the reins from a caretaker who had been loosely watching over Wilhelmsen since the accident, he found a company in disarray. Skaug recalls: “When I realized how bad things were, my first thought was, what the hell have I done?”
Wilhelmsen’s financial performance was floundering. The offices and plants were disheveled and disorganized. And employees were trapped in mourning, unable to focus and make decisions.
“It was an organization paralyzed by grief,” says Skaug. “I’d be in a meeting discussing a business issue, and someone would start talking about the accident. I could feel the energy drain from the room as the conversation went in a completely different direction. It was hard for anyone to stay focused. I had to work at keeping my mouth shut and my ears open.”
Patiently Planning for Change
That first year, Skaug did a lot of listening. “I walked around and asked a lot of questions. And I’d look into my employees’ eyes. It told me a lot. I found that the younger people who hadn’t been there very long were desperate to move forward, while the people who had been there for a long time were stuck in the grieving process.”
Eager to get Wilhelmsen on a path to success, Skaug wrestled with how much pressure to apply, and when. He decided to spend the first nine months evaluating talent, meeting with customers, assessing the culture, strategy, business processes…all very quietly. Meanwhile, he began to talk publicly about the importance of a performance-based culture, sowing seeds for changes to come.
“I felt it was important to let the organization go through a full cycle of mourning while I earned their trust and helped them understand that change was coming,” recalls Skaug. “I let them go through all the holidays, all the annual milestones. On the one-year anniversary of the accident, we had a ceremony and invited the relatives of the deceased. As far as I was concerned, that was the moment of closure for the organization. It was now time to move forward.”
The Turnaround Begins
Skaug began to lean on his people, refusing to make decisions that belonged at lower levels. “At first, they thought I was being indecisive, but I needed them to know that they were accountable,” he says with palpable conviction. Skaug realized that certain members of his team were incapable of rising to the task, and he began making changes, promoting some from within and bringing in others from the outside.
He also did a formal internal culture climate survey. Skaug already knew that the culture had become dysfunctional, but he understood the importance of having objective data to pave the way for change.
Dismal results in hand, he brought together the first two levels of management, co-opting them to make improvements. “It was very difficult having those first conversations about what was broken in the organization,” recalls Skaug. “But when we got focused on putting together action plans, it became much more productive.”
Then, Skaug took the group off-site for three days to codify the company’s vision, strategy, values and leadership principles. “I know most organizations take longer to clarify such things,” admits Skaug, “But I had been thinking about them for a year, and although our outcomes may not have been perfect, they were good enough to take us to the next level of performance.”
With the leadership team in formal agreement about the company they aspired to reshape, Skaug now had license to put his foot down.
“It quickly became clear that not everyone was willing to live according to our agreements, so I had to let them go. Some were very good business people but didn’t model the culture we were trying to create. I needed to send a very clear signal about the values I expected the company to live by.”
Skaug instituted a cascading process, taking groups of employees (60 at a time) off-site for 2 days to ensure they were clear on the company’s direction, values, strategy and guiding principles. He did this until every employee had been included in the process.
He also committed to doing a climate survey every year.
Then, Skaug began correlating Wilhemsen’s financial results to the climate survey data. The profitability of the company began to track with the culture. “Once people saw the connection, they were totally bought in,” he recalls. “Commitment to a healthy, productive culture became part of our DNA.”
With a foundational culture in place and financial performance on the rise, Skaug began to focus on growth and started buying companies. “We were able to integrate our acquisitions fairly easily because we had a crystal clear process for culture and strategy deployment. We used the same process with each acquisition. Consistency was very important.”
The Report Card
During Skaug’s 20-year tenure, Wilhemsen successfully transitioned from a shipping company to one of the world’s largest maritime and integrated logistics operations. It grew from $250 million to $5 billion in revenue; from nine ships to 164; from a handful of offices to 500 locations in 100 countries; from 3,500 employees to more than 23,000 employees in 75 countries.
Skaug demonstrates determined leadership qualities and today, he serves on a myriad of boards and is the Chairman of the Board of Governors at the Center for Creative Leadership, one of the top independent leadership development organizations in the world.
When asked about the most valuable leadership lesson he learned through this experience, Skaug answers with an immediate swell of passion. “Culture drives your business, period. It’s not the other way around. Get your culture right, hold firm to your values, and the financial results will follow.”
Guest Post: Susan Tardanico is CEO of the Authentic Leadership Alliance, a leadership and communications consultancy. She is also Executive in Residence at the Center for Creative Leadership, as well as a professional speaker. A former corporate senior executive and broadcast reporter, Susan has a passion for authentic leadership and courageous career management.
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