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Dare to Be Digital

Eastman Kodak's Robert Berman helped the company come back from a sticky racial discrimination case, all the while assisting during the organization's ongoing transformation.

Monday, October 16, 2006
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HR professionals should never be surprised when they are confronted with a thorny personnel issue, and expected to find a way to resolve it. But few have been in the kind of delicate spot Robert Berman, chief human resource officer and senior vice president at Rochester, N.Y.-based Eastman Kodak Co., found himself in several years ago.

In the late 1990s, a number of employees charged the company with racial discrimination relating to treatment in pay and promotion. While it was up to Kodak's legal team to deal with the lawsuit that followed, it was Berman's job to address the HR issues.

Address them he did, implementing sweeping changes designed to make the company more overtly inclusive. For this success and other achievements, Berman has been selected to join the Human Resource Executive® 2006 Honor Roll.

"In HR, we were focused on making sure that we understood the concerns, and on stepping back and taking a look at where we needed to make changes," Berman says.

It was Berman who was at the forefront of a comprehensive compensation review of nearly 800 supervisory and management staffers, looking at, among other factors, their abilities to lead in an inclusive way. The result: the turnover of nearly one-third of all supervisors and managers, through a combination of reassignments, resignations and terminations.

"That was a significant change in the organization," he says, "but we were committed to creating a leadership team that would be seen as highly credible at all levels."

Berman also oversaw the deployment of nearly 300 specially trained cultural-change advocates.

Culture Change

During this difficult period, Berman was also called on to contribute to a fundamental change in company culture.

If you've bought a camera recently, chances are it was digital, not a traditional film camera. Kodak long ago saw the impending change in its core business, and is now in the midst of a transformation from a traditional chemical-based imaging company to a digital-imaging company. But the transformation involves more than just product lines. Kodak officials have made the evolution a metaphor for wide-ranging changes to the entire company.

In a traditional company, "a new generation of new products is developed every five to 10 years," Berman says. "It's every six months at a digital company, and employees and managers have to drive changes at that order of magnitude.The implications for leadership are pretty profound."

Berman distilled HR's answer to the digital challenge into a strategy that became known as "the four greats" -- great hires, great feedback, great moves and great assignments.

"Historically within Kodak, we relied on search firms almost completely," Berman says of the "great hires" portion. "We wanted to create a different expectation for our managers, where one of the hats you're wearing all day is the hat of a recruiter."

Great feedback included an overhaul of Kodak's 360-degree assessment process for leaders, driving a new development-planning process for all executives in the company and new mentoring opportunities for senior executives. In addition, the company, which had previously made use of outside assessment firms to evaluate and provide feedback to key talent, brought that practice back in-house.

Under "great moves," Berman sought to erase company silos. "We identified three types of boundaries within Kodak: geographical, business and functional. Now, whenever high-potential talent is moved, we make sure [those workers] cross two of these boundaries."

Under great assignments, Berman's team is constantly seeking to assign teams tasks of accelerating the development of new products or processes.

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Policy Drift

In addition, Berman instituted new executive-development and employee-assessment strategies, with the goal of counteracting decades of drift in those policies.

Among the problems: Company leaders saw the amount of money spent as an indicator of commitment to executive development, line managers weren't providing candid feedback to subordinates and the entire workforce was focusing on activities rather than outcomes.

As part of the improved strategy, two metrics are watched closely: "quality of feedback" (derived from an annual survey where all executives are asked to describe the quality of the feedback they are getting from their supervisors) and "quality of succession planning (as measured by careful examinations of the viability and diversity of agreed-upon successors)." Both are now reported to Kodak's board of directors annually.

"In order for us to deal with the magnitude of change, we required real leadership capability, so we put a system in place to not only develop our current talent, but create a robust pipeline of future talent," Berman says.

Under Berman, compensation practices also got a thorough overhaul. Until a few years ago, like many other companies, Kodak used stock options as a key component in its compensation plan. However, new accounting rules requiring the expensing of stock options changed all that.

Berman and the company's compensation committee established a performance-based, long-term incentive program known as Leadership Stock, in which payouts are determined by the company's performance against specified long-term business goals. This program now covers more than 700 executives globally.

Berman gives his HR team credit for the execution of these policies.

"I've been impressed by their incredible resilience," he says. "The team has been going through astounding changes at a pace I would have considered impossible. They're so committed to what it is we stand for and what it is we deliver. They love the brand and they've been working tirelessly to execute Kodak strategy and preserve Kodak values."

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