Strategic alignment at LafargeHolcim

LafargeHolcim / The Ivey Academy

– FINALIST OF THE 2020 EXCELLENCE IN PRACTICE AWARDS –

How do you reinvigorate a multinational company facing several years of underperformance after a challenging merger? That was the dilemma facing Jan Jenisch in 2017. As incoming CEO of LafargeHolcim, he was tasked with positioning the organisation back on the path to growth.

Headquartered in Zug, Switzerland, LafargeHolcim is the result of a 2015 merger between France’s Lafarge and Switzerland’s Holcim. As the industry leader in building materials and solutions, the company employs more than 75,000 people in almost 80 countries.

When Jenisch stepped into the role of CEO, LafargeHolcim had not met financial targets in years. Morale was low and the company needed transformational change.

A simplified strategy to strengthen performance

Combining the two parent companies had led to increased centralisation for decision-making and increased reporting requirements for local business units, impacting the company’s ability to respond quickly to changing market conditions. Execution and performance were floundering.

Jenisch reset the corporate strategy through a revised strategic plan. In March 2018, he presented “Strategy 2022 – Building for Growth” built on four value drivers: Growth, Simplification & Performance, Financial Strength, and Vision & People.

Jenisch began with the Simplification & Performance pillar. In a bid to boost responsiveness, growth, and performance, he removed a layer of corporate management, increased local accountability for market strategies and results, and simplified key performance indicators.

But Jenisch knew that making changes on paper would not be enough. For the strategy to succeed, business unit leaders had to behave differently with both customers and their teams. He would have to communicate what it meant to be a P&L leader, and to encourage, motivate, and empower unit leaders to make strategic decisions and be held accountable for them.

A strong believer in the role of learning to create change, Jenisch chose to drive that transformation through a comprehensive executive education programme.

A partnership with The Ivey Academy

In April 2018, Jenisch met with The Ivey Academy’s Martha Maznevski – an expert in leadership, coaching, and organisational transformation. With members of his executive team in attendance, Jenisch presented four design parameters to The Ivey Academy:

  • Develop the top 200 LafargeHolcim leaders, knowing that they would cascade the learning down into the organization.
  • The programme would be three days with an emphasis on strategy execution and leadership.
  • The programme would include a half day with the CEO.
  • Each cohort would include approximately 25 leaders, representing geographic and business diversity.

All agreed that the programme should be launched quickly, with the top 200 leaders graduating by the end of 2018.

Jenisch wanted a tight focus on strategy alignment and execution. The programme should help managers understand the importance of simplification and performance and empower them to take accountability and lead decisively.

He hoped to see clear prioritisation of the new strategy, with specific actions taken to improve the four key performance indicators, as well as alignment among the countries’ top leaders on these priorities. From a human resources perspective, the programme should help leaders develop their direct reports’ and others’ capabilities and initiative-taking. With each cohort representing geographic and business diversity, a robust network would be forged among geographically dispersed leaders, enabling a culture of cross-boundary sharing and support that did not rely on hierarchy.

LafargeHolcim and The Ivey Academy agreed to partner on the development of a series of executive development programmes, beginning with the Senior Leaders Programme launched in August 2018. This would be the first of two or three annual cycles of learning and development, with each successive cycle taking the company’s leaders through new strategic growth phases.

The LafargeHolcim Betterland Case

A central feature of the initial Senior Leaders Programme was LafargeHolcim Betterland, a custom-written case about a LafargeHolcim country business facing a variety of performance challenges.

The 12-page case was written collaboratively with input from Jenisch, LafargeHolcim’s executive team, Maznevski, and LafargeHolcim L&D leaders.

The LafargeHolcim Leaders Programme

In August 2018, the first cohort of LafargeHolcim senior leaders gathered at a conference facility near the company’s headquarters to take part in three days of learning.

Day One – Executing Strategy: Simplification & Performance

Using the Betterland case, participants worked in small groups to identify, categorize, and prioritize the problems facing Betterland. Next, they developed a turnaround strategy which was presented to the class, including members of LafargeHolcim’s Executive Committee.

“The magic of the case was that so many people – almost everybody in the room – thought it was written about them. No matter how much we reassured them it was fictional, everyone could find themselves in it,” said Tony Frost, Ivey Academy strategy professor and member of the LafargeHolcim Leaders Programme faculty team.

The day concluded with participants applying the lessons to their own business units. In triads, they shared the challenges they faced, and provided guidance to each other about what to do.

Day Two – Leading for Implementation: Directing, Aligning and Empowering

Day two began with a framework for thinking about leader behaviour. A session contrasting the leadership styles of Hercules and Buddha helped leaders reflect on their own leadership and develop greater self-awareness of the impact of different behaviours.

The framework also provided guidance for balancing directing behaviours with empowering behaviours for gaining commitment and developing ideas and people.

Using the Betterland case, participants then worked in small groups with executive coaches to identify and role play the difficult conversations they needed to have to further their transformation priorities.

“The role-play enabled participants to really engage and motivate their teams to take ownership for solving the specific underperformance issues stated in the case,” said Anders Fleischer, Lead Executive Coach, LafargeHolcim Leaders Programme. “Then in the coaching session we could help participants transfer those lessons to take them back to their own situations.”

Day Three – A conversation with the CEO

The program concluded with a half day session led by CEO Jan Jenisch.

Jenisch provided company progress updates, then shared his ideas about performance management and leadership. This was followed by an open Q&A, organised by themes. The format created a safe environment for in-depth discussion of sensitive topics including divestments and acquisitions, organisational restructuring, responding to difficult markets, and company morale.

The Impact of the LafargeHolcim Leaders Programme

Just seven months after the initial program design, 200 leaders had graduated from the fully-customised, strategically-aligned LafargeHolcim Leaders Programme, with the CEO involved in each delivery. This condensed, focused, and structured approach created a sense of urgency and provided a powerful and immediate impact and organizational shift.

“There was evidence of transformational impact already by early 2019. I see it in the discussions we have in our country visits,” said Feliciano González Muñoz, Head of Group HR, LafargeHolcim. “Some of the leaders would bring up an anecdote from their experience in LafargeHolcim Leaders Programme. What they learned has become embedded in their day-to-day behaviour.”

Supported by the LafargeHolcim Leaders Program, the implementation of Strategy 2022 drove a significant turnaround for LafargeHolcim:

  • Less than 18 months after the launch of the Leaders Programme, all of LafargeHolcim’s financial targets for 2019 were met.
  • Both Moody’s and Standard & Poor’s upgraded LafargeHolcim’s outlook to “stable.”
  • Although only halfway through “Strategy 2022 – Building for Growth,” LafargeHolcim has achieved almost all 2022 targets.

As a result of the LafargeHolcim Leaders Programme, the organization is now aligned to the strategy while operating within an established performance culture. This has been more than just training – this has been a truly transformational programme.

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