Arun Sudhaman

05 May 2012

THE HOLMES REPORT

 

It has been a busy 12 months at engineering conglomerate ITT, which last year opted to split into three separate companies. That process posed a communications challenge of considerable complexity, with ITT spinning off its defence and water units into ITT Exelis and Xylem, respectively.

ITT itself would remain focused on industrial engineering, and chief communications officer Jenny Schiavone recently discussed the divorce with the Holmes Report, along with the consequent need to communicate a major transformation process to ITT’s thousands of employees.

Schiavone was joined on the conversation by ITT employee engagement communications director Leila Siman, in recognition of the sensitive internal comms challenges that the company has handled over the past year. Also involved were Gagen MacDonald, the firm that supported ITT’s internal transformation, a process that culminated in the rollout of a corporate vision called the ITT Way.

You’ve mentioned that you studied other corporate breakups. What did you learn from them, in terms of what and what not to do?

JS: One of the companies we benchmarked was our own because we had done a three-way spin-off in 1995. We looked particularly at lessons learned in terms of internal comms. On the internal side, we still had employed a lot of people who were at the company in ‘95. We talked to those people and really thought of treating this as the launch of three great companies rather than as transactional. So we really focused on the internal comms. On the external side, we wanted to do one thing dramatically differently. Communicate all of the transactional stuff – but don’t stop there. We spent a lot of time meeting with reporters again and again and again, to hold that excitement throughout the year so we didn’t have that rise and fall of popularity.

The overall capitalisation of the three separate companies, versus the lower market cap of ITT, has been used as a key measure of success. What were the other metrics you used to determine the success of the communications campaign?

JS: Obviously when companies make strategy decisions, valuations are a core consideration. There were others. Key among them was, before the spinoff, ITT was a conglomerate-style MNC. Businesses that were so extremely diversified, with very little synergy. When you are making internal capital decisions, you have to make sacrifices in one business for the sake of the others. Each one can now compete more effectively. We’re finding in ITT that our employees feel a real strong connection to the company overall vs being connected solely to the business or the plant that they work in. For us, that’s one of the measures of success. Success with communications is whether you have the hearts and minds of the people.

How do you measure winning the “hearts and minds” of your employees?

JS: We had a new CEO take the helm, and a new strategy was introduced. It was a brand new company, brand new strategy, people in brand new roles. About six months after the spin-off, we brought together 150 leaders from around the world, who we surveyed at the beginning of the meeting and  after the meeting. At the beginning the scores were strong and the commitment was strong. But we knew that to make the strategy real they had to start to embrace and own it. At the start of the meeting – 77 percent said they understand their role in the ITT strategy. At the end it was 95 percent.

LS: That vision is called the ITT Way. We really moved the mark in terms of understanding of the strategy. We asked them, do they understand the strategy? At the beginning, only 61 percent said yes. By the end it was up to 94 percent.

JS: We are a company that makes highly-engineered products. We hire engineers predominantly. They are used to following the rules. The whole idea was for this to be a grassroots campaign – when they got back to their operating jobs if they had not started talking to their teams about it, their teams started asking them. The one piece of advice I would have is think about the internal comms – not just what’s changing, but look at your role as an agent of change and understand your company is going to change more than you know it. Most corporate comms teams don’t invest enough in employee engagement. One of the first things we did in comms post-spin-off is decrease our investment in reputation and increase it in employee engagement.

You mention four key audiences – investor, employees, customer and media. Which was the toughest part of that equation?

JS: A lot of my job was focused on the financial/investor media. That was not the hardest part, but it was the busiest part. What was most challenging was creating the storyline around a new company while the strategy was still being written for the new company. It was like retrofitting the engines for a new plane in the middle of the flight.

The whole process was a fairly unique challenge from a communications perspective. What were the skills you learned?

JS: I would recommend it to anybody. We were able to do so many things in the course of one year that most people don’t get to do in the course of ten years. We completely relaunched a new visual system for the ITT brand; invested in a different kind of PR, less around traditional thought leadership and more on targeted investor communications; launched mainstream media advertising to explain one stock becoming three. The skillset of agency management really comes in here – we had to make sure everybody was singing from the same songsheet and we had to take all of our audiences into account. Then we brought Gagen MacDonald in and identified where we had to bolster that with our employees, which led to the ITT Way.

Corporate divorces are becoming more fashionable across many sectors. What’s your advice for a CCO embarking on a similar project?

JS: Always be flexible and look around the corner. If your company has a good strategic function, make them your best friend. Demonstrate your trust and business acumen early so you always have a seat on the table.

Be able to anticipate what comes next. Don’t think of it as transactional, think of it as an opportunity for a transformation. Our job is transformation. We were once the world’s largest conglomerate. Here we are this $2bn quasi-startup – our ability to evolve ahead of the game is a critical part of our communication. If communicators think about their careers in the same way they will be more satisfied with their work.

As communicators are challenged in this type of environment, always be able to seek different types of advice. Joelle Frank was not our PR agency, but we felt very comfortable bringing them in and integrating their work with Edelman and making it flow seamlessly.