Stein Kruse, CEO for Holland America Group discusses maintaining integrity during times of change.
By Stein Kruse
How do you maintain an organization’s culture of ethics and integrity while also carrying out major structural change? My own organization recently went through substantial change. Late this past year, we created a new management structure to oversee four well-established cruise brands: Princess Cruises, Holland America Line, Seabourn, and P&O Cruises (Australia).
Each has a unique brand and market position that must be preserved. Also, each had “back-of-house” operations that we saw could benefit from streamlining overlapping structures. This, in turn, would drive the use of best practices and common platforms, and help manage costs.
In the midst of this change, maintaining our ethical culture was—and is—of singular importance to me. My goal in this article is to share some of our reflections and lessons learned as we worked through this process.
Recognize the risks
Culture requires constant reinforcement from the top. All levels of management must model the message and engage with their teams. Even mature organizations with well-established procedures and processes have some level of risk that employees will take shortcuts or omit important tasks for the sake of expediency under pressure. The commitment and engagement of leadership is arguably the single most influential factor in reducing that risk.
We also know that the risk of shortcuts increases when an organization experiences a major change such as an internal restructuring. During such periods, management can become focused on managing through the change and forget to communicate to their teams. Reporting lines and risk management processes may become unclear. When management is distracted, and the lines of communication and the rules of engagement are blurred, even the best people may make poor choices while trying to be efficient and effective. These decisions can lead to ethical challenges. So what can we do to lower this risk?
Communication, part 1: Provide clarity
In my experience, the most critical component to supporting an ethical culture through change is clear communication. This includes a range of essential elements from setting and communicating an unwavering standard of honesty and integrity to ensuring employees have access to information as basic as the new organizational structure. When we communicate our expectations and share information, employees are empowered to make better decisions.
As an example, we cannot presume that the current lines of communication will remain intact. Even an employee whose reporting line has not changed is still learning new ways of communicating across departmental lines or even in their direct reporting relationships because the employee’s scope of responsibilities has probably altered. This creates confusion over what the new expectations are and where an employee can turn when faced with a new challenge. Creating clarity in the midst of this change is a responsibility that starts with me, and is the responsibility of every leader in the organization.
One of our lessons learned is the extent of time and resources required to give people this clarity—and that it is an investment that is well worthwhile. We’ve staffed up a dedicated internal communications team who ensure our messages are clear and broadly disseminated. We also learned that it takes more time than one might think to fully combine policies, procedures, and even organizational charts. Nevertheless, employees need answers. So HR rolled up their sleeves and found ways to provide interim answers to the most important questions, even where there was considerable manual intervention and revision required.
Communication, part 2: Bring people together
Printed policies and organizational memos are no substitute for face-to-face communication. We engage the broad base of our employees through quarterly “Town Hall” meetings, where the leadership and I share the broader picture and engage the team with Q&As. We have sessions at multiple sites and record the proceedings for those unable to attend in person.
In fact, most of our employees work on ships, so we need to do even more to bring them into the fold. For example, we just wrapped up a major conference bringing together the captains, hotel directors, and other senior officers for a series of presentations, followed by breakout sessions with land-based executives from the brands and group services. (In case you’re wondering, the land-based executives ran multiple sessions so that the ships could send their officers in stages, always ensuring adequate staffing on board). The presidents and EVPs took the opportunity to spend time with this leadership group and connect on a personal level, reiterating our commitment to excellence and charging them to do the same with their crews.
Communication, part 3: Listen
As much as we need to speak and communicate our values, we also have to listen. Especially for those who come from a hierarchical world like shipboard life, this may not always come naturally. Nevertheless, it is absolutely essential to establish and maintain open and frank communications throughout the organization.
When your people talk with you, problems can be prevented, and if issues occur, they are discovered earlier and addressed sooner. No matter how well you plan for an organizational change, you cannot account for every process and procedure remaining intact or new processes and procedures being seamlessly established. Employees may know that the stated goal is to act with honesty, but they may not know what that means or how to find out under pressure. By establishing open lines of communication throughout the organization, we empower and expect our employees to ask questions. In this way, we help them avoid making poor decisions.
In addition to each leader’s own meetings with his or her team, my executive team and I regularly hold small-group “Coffee Connection” sessions and lunches that are open to all (with first-come, first-served registration). That said, meetings alone are not enough. Each of us is responsible for creating the open and frank environment we need by demonstrating that we are listening, considering, and acting judiciously upon what we hear from our people.
Organize for excellence
The results we deliver are significantly driven by how we structure our organization. When we developed our organizational structure, we kept the brands focused on their core functions: marketing, sales, the onboard product (dining, hotel, entertainment, etc.), and public relations. We then created “group services” for the back-of-house functions so that these could benefit from common systems and best practices.
One very relevant example of this is the new Safety, Environmental, and Regulatory Services (SERS) team. While each and every one of us is accountable for our own ethical behavior, we created SERS to support a culture that underpins organizational integrity. People sometimes see compliance as something that is “done to” them. The vision of SERS is to drive compliance through cultural expectation rather than relying solely on rules and discipline. SERS strives to support this vision through coordinated and clear definition of policies, proactive engagement, training, and consultation across the organization.
This level of focus, across both shipboard and shore-side responsibilities, has significantly strengthened our organizational capabilities across ethics and compliance.
Results so far
While I do not want to give the impression that we hit the target every time and experienced no problems, the initial results are noteworthy. We have maintained our brands’ market leadership, in part by allowing them to focus on creative initiatives and commercial execution. And on the group services side, we have already seen significant benefits from the restructuring.
One example, relevant both commercially and from a regulatory compliance perspective, is dry dock refurbishments. This is where ships are, on a periodic basis, pulled out of the water for everything from engine maintenance and environmental enhancements to the addition of new cabins and entertainment venues.
This year, we faced the convergence of an unprecedented number of required dry docks. In large part thanks to the standardization of team leads, planning processes, and contracts across the brands, the team completed 15 ships in two months—on time and on budget. This not only refreshed the guest experience on the ships, it helped us maintain our critical regulatory operating permit, called the Document of Compliance, for each of the four brands.
The road ahead
We are fortunate that our organization brings together brands that already have solid values. Each has been recognized for outstanding ethics, environmental leadership, and other organizational achievements. And while each brand has a distinct statement of values aligned with its heritage, we share a common commitment to doing the right things, and doing them right.
To succeed, we must maintain that quality in our redefined organization. So in addition to each brand’s similar sets of values, we are developing a set of shared principles across all the brands. These lay out clear and shared expectations for how we connect our values with our actions.
Through our ongoing work to be diligent, clear, and receptive communicators, as well as an organizational structure that explicitly focuses on ethics, we continue to reinforce our unwavering commitment to honesty and integrity in how we deal with our customers, employees, vendors, and other stakeholders.
Author Biography:
Stein Kruse is Chief Executive Officer of Holland America Group, a division of Carnival Corporation & plc. Holland America Group operates 39 cruise ships with more than 50,000 employees worldwide, and includes Princess Cruises, Holland America Line, and Seabourn, as well as Holland America-Princess Alaska land operations. Mr. Kruse is also Chairman of the Board of MANCO, a UK-based entity that oversees the operations of Carnival Australia, including P&O Cruises Australia. A native of Oslo, Norway, he holds a Bachelor of Science degree from Purdue University and is a graduate of Harvard Business School’s Advanced Management Program.
This article was featured in the Q3 2015 issue of Ethisphere Magazine. To subscribe and learn more about Ethisphere Magazine click here.
