Centrelink: The Power of the Guiding Coalition
This case focuses on how the CEO of Centrelink (a newly-created government social service agency in Australia), Sue Vardon, utilized Dr. John Kotter’s 8-Step Process for Leading Change to not only integrate two different organizations, but to establish a new, sustainable and accountable culture anchored in values and performance. The case contents are adapted from the article “Cultural Change Case Study: Centrelink” by John Halligan.
Vardon chose Kotter’s 8-Step model for the Centrelink transition on the basis of its comprehensiveness and applicability. The model was almost tailor-made for the Centrelink transition and beyond, and Vardon used it to great effect. It contained highly relevant guidelines for a CEO faced with the external and internal environments of a public service agency in transition.
Vardon’s corporate philosophy also distinguished clearly between management and leadership, accepting the prevailing wisdom that managers—particularly in large organizations—were required to cope with complexity through judicious planning, budgeting, organizing, staffing, controlling and problem solving to ensure organizational maintenance and survival. On the other hand, leaders deal with change by direction setting, aligning people to the vision, motivating and inspiring to ensure not only longer-term survival but effective competition and growth. These concepts and intellectual frameworks were critical in shaping Vardon’s approach to management change and developing a new organization.
Faced with a myriad of consolidation, transitional and reform issues, Vardon decided that traditional management structures and ways “would not give me the capacity to create a sense of urgency and to bring real change to an organization of 23,000. I needed to create a different type of organization, an amoebic organization, one that could readily move and change to meet a rapidly changing environment,” she said.
The main internal mechanism chosen was that of the guiding coalition, a group of senior managers advocated by Kotter as one of Vardon’s precepts for successful change. While executive teams supporting the CEO were part of normal internal governance practice, the introduction of the Centrelink guiding coalition was unique to public agencies at that time. The guiding coalition was a top team that had to address a number of initiatives concurrently, such as formulating strategy, managing performance and stakeholder expectations and renewing talent pools. This executive gathering was expected to welcome external challenges and set high performance and effectiveness standards for themselves. Finally, the group was to work to improve the organization by instituting short-term cycles of action and reflection by accelerating the pace of change and applying their combined business experience and judgment to problems as a team. Another symbol was the reduction of hierarchies within the organization and the use of new cultural language, such as the collective phrase “the guiding coalition.”
The guiding coalition was also intended to reinforce the shared vision and accountability of its managers and the vision of the agency. Vardon saw the body as communicating the corporate vision as well as generating short-term wins from a myriad improvement projects and “anchor[ing] new approaches and behaviors in the organizational culture.” Within the parameters set by the board of management, the guiding coalition took on setting the direction and taking key decisions, while establishing a culture for the future and acting as an educative forum.
The management group met about every six weeks for two days to manage the agency’s internal governance and strategic agenda and to discuss business-level issues. The meetings provided a forum for operational feedback from area staff on the implementation and management of programs, and allowed national support officers to report on forthcoming events and the status of development projects. The wide-ranging and forthright discussions involved a sharing of responsibility and ownership based on achieving the strategic goals of the organization. Everyone was expected to participate. These occasions represented a group dynamic that reinforced the leadership ethic of the agency while updating its knowledge.
In an early evaluation of the guiding coalition concept, Vardon asked members what they thought of the operation of the idea and its functional performance. The responses were mixed in terms of its role, the role of the CEO, the coalition’s relationship with the board and the efficiency of such a large decision-making body. The coalition began with 55 staff and expanded in time to about 80, then to almost 100. Some members thought that the issues being discussed were not significant and that participants were either unprepared to contribute or reticent in this type of forum. Others valued the inclusiveness and the building of a corporate sense of network that forced senior officers to come to grips with strategic and operational issues.
Vardon credited the guiding coalition with setting key agendas for reforming the organization as well as fostering a shared understanding of its new roles and responsibilities. She saw the team as a significant factor in building Centrelink’s success and was heartened by healthy changes in the coalition itself, such as a greater maturity of members, manifested in part by the fact that people were starting to disagree. In her view, critical disagreement contributed to strategic decision making in the organization, but also strengthened group collegiality. One member observed, “It took us nine months to turn this big and geographically dispersed group into an effective team, but payoffs have been substantial. We’re creating an entirely new organization.”
The process of development of this innovative structure paid off in the formative years of Centrelink. By 2003, the annual report noted that this body was responsible for guiding the organization, setting direction and leading change, establishing a culture for the future, providing an educative forum and communicating decisions.