AVAYA: Culture Transformation through Alignment

Sometimes to understand an organization’s culture, you have to understand where they came from. Avaya is a global leader in enterprise communication systems providing unified communications, contact centers, data solutions and related services directly and through its global channel partners to leading businesses around the world. The product of AT&T and Lucent, Avaya’s mission is to enable their customers and clients to excel by providing them with the best communication solutions possible. Operating in 55 countries, Avaya has over 10,000 Partners, 32 global delivery support centers, and 18,000 employees.

Over a ten-year period, Avaya dramatically repositioned themselves in the marketplace, going from a communications provider of phone and voice hardware to a full business collaboration provider offering integrated voice, video, web, multi-media and more (PBX to VIOP to Unified Communications to Business Collaboration). They have grown in capability and in reach through organic growth as well as acquisitions. Partnerships with organizations like Motorola, Polycom and HP allowed them to offer “best of breed” solutions to their customers. Numerous acquisitions have helped them accelerate their technology offerings in contact centers, unified communication, conferencing and collaboration markets, and to expand geographic reach in EMEA and Asia Pacific.

Avaya had enormous success repositioning themselves in the market place.

However, that repositioning did not translate to changes within the organization. “We were driving the technology to the outside world but not driving the changes needed within the company, and thus a great need for a culture transformation became apparent to us,” explained Roger Gaston, Senior Vice President of Human Resources. With these expansive changes have come incredible challenges.

When Avaya began in 2000, it was cast off as the “ugly stepchild” from Lucent. Over the next few years, they experienced a series of five layoffs, four different CEOs and a complete turnover of their Executive Committee. Staff was reduced from 35,000 to 18,000 while the workload remained the same. These changes took a toll on the remaining employees and on the culture of the organization, and led to some behavioral patterns that were counterproductive to Avaya capitalizing on their new market position.

Roger Gaston and Steve Fitzgerald, Vice President of Human Resources, were integral in leading the charge to transform Avaya’s culture. They began their journey to break counterproductive behaviors by helping the organization identify the kind of culture it wanted to have. That gave them the target to shoot for. “From a strategic point of view, Avaya knows where it wants to be. The key for us was knowing where we were starting from, understanding the gap and then working to close it,” said Fitzgerald. They used the Denison Organizational Culture Survey (DOCS) to assess their baseline culture. Their goal was to identify the roots of the culture, the stories that kept it there and the behaviors that needed to be changed. Based on those initial survey results and additional qualitative data, they began working to close the gap and transform themselves to reinforce only the desired behaviors.

Through the survey, feedback sessions and observations coming from all levels, functions and geographies of the organization, they learned some very important positive things about their culture. Things such as: loyalty is valued in the organization, as well as integrity and trust. Employees care about Avaya and about their co-workers. Innovation is also truly valued in the organization.

They also realized some negative things. Though Avaya had been separated from parent companies AT&T and Lucent for some ten years, employees were still referring to those older groups as “we.” This had far reaching implications for the organization.

Since AT&T was effectively a monopoly for a long part of its existence, it had not had to deal with marketplace challenges and competition. Now, despite the corporate independence, Avaya employees were averse to taking risks. They felt they needed to ask permission or check in before making decisions. Employees were reluctant to take ownership of tasks or projects. A lack of urgency in the company led to poor execution. Plus, with the numerous restructurings and other changes that occurred during the first eight years following the separation, a victim mentality permeated. Employees tended to “keep their heads down,” hoping they would survive.

• EVERYTHING starts and ends with the customer
• Corporate priorities = individual and team priorities
• Poor performance is no longer tolerated
• Everyone knows the competition and our strategy to win
• Transparency is the rule, especially when it comes to results
• Competitive energy of employees is focused on competitors, not internally
• Teams are our building block
• There is a place for risk-taking innovators with a compelling idea or argument that is ­­“against the grain”
• Those who are fact-oriented, direct, results-first, execution-oriented risk takers tend to like our culture most

“This roadmap came from a very quantitative and qualitative, introspective look at ourselves and an understanding of where we needed to go from a business standpoint. This is how we decided what we needed to emphasize,” said Fitzgerald.

They understood that reinforcing these behaviors throughout the organization would take more than a few all-employee or departmental meetings. They also knew that changing their culture would be a multi-year effort. Avaya actively integrated the behaviors in their business from top to bottom and made them part of everyday life.

The scores from their initial DOCS survey had revealed strengths including Team Orientation, Core Values, Organizational Learning, Agreement, and Goals and Objectives – strengths they would leverage on their journey to improvement. While they were pleased with these strengths, they were largely on the lower, Internal Focus half of the model (the Involvement and Consistency quadrants). Given their business goals of growth, Avaya focused their improvement efforts on the top, External Focus half of the model (the Mission and Adaptability quadrants).

They started with taking straightforward action, such as improving their corporate governance. They had formal monthly business reviews and re-structured their goal setting process so that it cascaded throughout the organization. New senior leadership took initiative by being exemplary role models.

Next, they identified a set of behaviors needed to create the growth-oriented culture they were aiming for. They communicated these behaviors, or “B-FACETs” as they branded them (see chart, below), to all employees, along with three levels of performance for each behavior: the role-model level, the average performer level and the poor performer level. This set the expectation for performance within the organization.

The next step for Avaya was to actively integrate these positive behaviors throughout the organization. They did this in a number of ways; first, by including them in their competency model. This model contained specific definitions and behavioral anchors for each competency at each level of service, from Individual Contributor to Executive Leader. In this way they created the building blocks for developing superior leadership.

At the very base of the competency model, Individual Contributors were expected to behave according to the B-FACET model: Bold, Fact-based, Agile, Cross-organizationally effective, Empowered and Transparent. As employees moved up in the organization to People Leaders, then Organizational Leaders, and then Executive Leaders, the competencies built upon the maturation expected of an employee moving from one level to the next.

Avaya further reinforced the expected behaviors by incorporating them into everything they did. They accomplished this not only through communications and role modeling, but by making certain that all of their systems, processes and decisions consistently rewarded the expected behaviors. Goal setting tools, promotion evaluations and the behavioral portions of performance reviews were revised to incorporate the desired behaviors and emphasize the message again and again. Avaya designed a number of systems that aligned and reinforced the new culture in a tight and coherent manner.

To keep the desired behaviors always at the forefront, Avaya created a rubric for dialogue between employees and their supervisors called the Five Conversations. Supervisors and employees were expected to have five essential types of ongoing conversations throughout the year, including:

• Talking Strategy – Discussions about Avaya’s strategy and goals and how they link to what that individual does in their daily work
• Talking Results – Discussions about Avaya’s performance as a company, as a team, and as individuals
• Talking Rewards – Discussions about rewards for achieving Avaya’s desired objectives
• Talking Capability – Discussions about improving Avaya’s capability
• Talking Talent – Discussions about making sure Avaya manages its talent well

Some specific events were planned around each element of the Five Conversations. More importantly, however, the conversations were consistently taking place throughout the year through one-on-one, face-to-face interactions. These conversations helped to build alignment, engagement, retention and satisfaction among employees. Since implementing the Five Conversations practice, Avaya has seen that units whose managers implement them well dramatically outperform units where they are ignored.

While the path has not been without challenges for Avaya, the changes in their culture have shown tangible results. “We’ve been through an interesting journey that has had many ups and downs along the way—some of which have been created by us and some of which have been created by the external environment,” said Gaston. “It was a matter of perseverance, and we stayed true to the fundamentals and principals of the behavior sets. That was the big lesson for us and has gotten us where we are today. Over the course of the last two years, we’ve made progress in just about every one of our fundamental financial metrics.”

As they implemented the changes, Avaya saw a steady growth in total revenue and gross margin over six quarters. They also realized cost savings of $1.6 Billion over two fiscal years. It is perhaps even more remarkable that their rate of innovation resulted in the largest product launch in Avaya’s history and their highest patent registration submissions year ever. Avaya launched 44 products in a single year, had 401 patent submissions, and had 112 patents issued. True to Avaya’s belief that this is a multi-year journey, the company continued to integrate their culture and strategy in order to actualize their high performance culture in the years to come.

Special thanks to Roger Gaston, Senior Vice President of Human Resources; Steve Fitzgerald, Vice President of Human Resources; and to the people of Avaya for sharing their story with us.

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