ECI - From a Multinational to a Global Corporation

ECI, one of Israel's three largest high-tech companies, has over 2,000 employees in Israel and nearly 1,000 at its 24 offices around the world.

The company provides its clients, large communications companies around the world, advanced communications solutions. In recent years the company, which was purchased by new owners not long ago, has experienced many organizational changes. We spoke with Atzmon Lipshitz, ECI's vice president of human resources, about the changes that have taken place and about the company's approach to employee management.

In recent years the company has experienced comprehensive organizational change. What were the reasons behind this?

The worldwide communications industry is undergoing a process of consolidation, both at the level of the customer and the competitors. The reason: If in the past regulation demanded that communications companies split up to avoid creating monopolies, instead creating competition which works to the consumer's advantage, today it turns out the splitting made it liable for there to be overlap in setting up frightfully expensive communications infrastructures. Therefore today there's a certain willingness to create cooperation and even mergers between competitors, to curtail this phenomenon as much as possible.

The changes in the communications world had a substantial impact on ECI, as a relatively small company operating in a large, volatile industry. At the beginning of the decade the company underwent a crisis followed by an extended recovery period. A process that eventually created a string of independent units. Every commercial division operated almost as an independent company. The organizational identity reflected this – employees identified primarily with the division in which they worked.
Also companies ECI acquired in Israel and abroad did not change the way they're run and were not really assimilated into the purchasing company. Every organizational system operated according to its own understanding and needs.

At that point it was decided to change course?
Yes. At a certain stage the ECI Board decided to operate like similar companies in the world market and to operate like a global corporation. Bringing about his kind of change is a complex task, particularly in the case of a company active in a large number of countries. Creating organizational units not just changes organizational processes, but must also overcome inter-culture problems.
For instance, ECI has activities in the US, France and China that require sensitivity to cultural differences, while creating common ground for all of the units.

Therefore in 2004 organization-wide change was carried out to transform ECI from an international company (a company commanding, from a center located in one country, the activity of other companies under its ownership abroad, and operating differently in each country) to a global company with a uniform organizational identity.

What benefits does this yield?
This change, which is currently at its height, is expected to allow ECI to operate as a global company, even in a market with major competitors, taking advantage of its relatively small size. On one hand the company is quick and able to respond rapidly, and on the other hand it can execute large-scale projects because it's not too small.

These goals can be achieved only by creating an organizational infrastructure and company culture that unites all ECI units around the world. This is the only way to allow the flow of communications and information needed to maximize the work abilities needed to achieve the strategic goals.

This represents a change in the organizational culture. How do you assimilate this approach at a company spread out in a number of countries?
Primarily by coordinating and conferring. The organization's cultural values are a result of the recommendations of the Steering Committee and a group of change leaders formed of employees from all company sites around the world.
One of the central principles that guided us is consolidating an organizational culture that places employees at the center. This means the company has to operate based on an "an attitude of respect, openness and attentiveness to the individual and groups throughout the organization. To place workers more at the center, strengthening the sense of belonging and contributing to the company's success." This declaration is one of the company's basic principles.

We're also attributing importance to including the workers in the change process, both by hearing what they have to say and by providing them regular information on what's taking place within the company. This approach has also made it possible to execute needed adjustments to various aspects of the corporate culture.

What organizational cultural values have you integrated?
Let me quote from the position paper, which spells out the organization's cultural values and their significance:
"Respect for the individual – Treating others with respect and decency, based on an appreciation of personal, cultural and national differences.
"Integrity – Commitment to act with honesty, fairness and according to ethical mores in all company activities.
"Team spirit – Operating as a part of a team. The team spirit leads to unity beyond organizational, functional and geographical bounds.
"Our clients – A commitment to create value for our clients around the world by developing and providing advanced technological services.
"Innovativeness – Constantly striving to redefine the threshold of innovativeness in every area of company activity."

This is all well and good, but now tell me how all of these lovely principles are implemented.
The team leading the change is not satisfied with a mere declaration of intentions, but has set practical guidelines for implementation.
Let me make special note of the value of respect for the individual.
It was decided that one of the values that would be realized in practice would be in the are of organizational communications. Emphasis has been placed on the way meetings are run and on modes of e-mail communication.
For instance it was decided that meetings would be run with strict adherence to the time schedule, attentiveness and polite discourse. At the end of meetings summaries will be prepared and there will be a binding obligation to execute the decisions reached.
These are not just declarations, but things going on in practice. People don't come late to meetings. If someone does come late the rest of the participants do not view it as something legitimate.

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I imagine this significant shift toward tightening the bonds between organizational units scattered across the globe requires substantial improvement of the organizational communications system.
Indeed. At the end of 2004 ECI conducted its first worldwide opinion survey, which endeavored to evaluate the level of satisfaction of company workers. The survey was conducted in seven languages via the Internet.
The survey also assessed the effectiveness of internal communications. The responses demonstrated a need for improvement. It was widely felt among the employees that there was a need to conduct a real dialogue between them and the company. For example, the survey indicated there are cases in which information related to the company comes to them from outside sources, because they are not considered a central enough target group from the company's perspective.

Organizational communication is a vital component, especially at a time when the company is trying to assimilate organizational changes. During the change all of the conditions that demand a suitable communications setup were in place – the size of the company, its worldwide dispersal, the desire to design a global setup and of course the change itself. All of these required a constant flow of information in order to reduce the level of uncertainty and the willingness to accept possible changes.

How did you enable this?
Organizational communications tools were designed (also, a unit involved in the field was set up through Human Resources), e.g. the magazine ECI Together, which is published three times a year in English and Hebrew and is distributed to all employees in Israel and abroad. The magazine includes reports and feature stories on people and activities from every company unit. A lot of emphasis is placed on organization-wide issues in order to create reciprocal familiarity, to convey a sense of the company's global character and to include employees in the successes and personal experiences of employees in various units.

Another example is the organization's Intranet network, which serves as a very substantial tool for managing information at the company. Through it many messages are transmitted to company employees around the world. The network allows employees to contact company managers and pose questions through the "I Have a Question" department. It also enables employees to raise questions anonymously. The questions and answers appear on the site with full transparency for all employees to see.

What about traditional communications tools, such as bulletin boards?
The bulletin boards, which are found on every floor, are run by the Human Resources Department. Besides the notices to employees they are used for announcements about company life, such as the employee-referral program, reports about landing a big contract, press reports, etc. On the wall of the dining hall is a plasma screen that displays additional notices.

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An important communications tools at the unit level, which also serves as a central management tool, is the performance evaluation system and the feedback that comes with it. Has this program also been adjusted to fit the organization's new culture?
Definitely. Until recently performance evaluation activity was managed in such a decentralized way that it seemed as if we were evaluating a group of companies that had no real connection between them. In certain departments the process wasn't carried out on a regular basis. In certain units it was computerized, in one, manual. Also there wasn't always a commonality among the parameters selected. The process is done at various times. Still, the information was stored, if it was saved at all, only in the units themselves. The main purpose of this important administrative process, which has already been executed in the units, was to improve performance.

This arrangement was changed significantly and, as a matter of course, became part of the process of reorganizing into a global company.
From the start it was clear that a set process had to be designed, a process that would take place in all company units based on uniform parameters.

Also, the usage aims were expanded. Today performance evaluation does not just assist in improving performance, but it also is a tool that can assist in setting the salary level, advancement tracks and professional development.

To accomplish this the accumulated data has to be managed. Did you computerize the system?
Of course. The evaluation apparatus has become part of the company's ERP [enterprise resource planning] system. Computerizing the system brought a series of advantages, such as the ability for every manager, from the CEO level down, to control the progress of processes at lower ranks, including control of the process itself. Computerization also allows us to preserve accumulated information on every employee, even when his supervisor is replaced.

How is the evaluation process carried out in practice?
The immediate supervisor fills out a computerized form and passes it on to his supervisor (the indirect manager of the worker being evaluated). The indirect manager then checks the breakdown of evaluations in his unit. The top 15 percent of company workers receive the maximum evaluation, "Beyond Expections," 80 percent "Satisfactory" and 5 percent "Below Expectations."

We've decided that this mandatory ranking should be executed only at the level of the indirect manager, because practically speaking it's not always feasible at the unit level. Sometimes the evaluator is only in charge of a few employees – there are staffs with 3-4 employees – in which case the ranking system is too forced. Evaluators have an average of 10 employees to evaluate.

The indirect manager approves the final evaluation before it's passed on to the employee. He approves the form and returns it to the direct supervisor. Now it's time for the feedback talk with the employee. The worker's remarks are also listed on the form.
The computerized form is completed and printed following the conversation, and then the employee and supervisor sign it.

Then it appears the performance evaluations are also executed in the spirit of the organizational culture you've designed.
That's right. The two signatures are an instance of the transparency, because at the company there is no information on the employee to which he himself is not exposed.

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