The learning function has had a starring role during recent organizational and global change.
Hikmet Ersek has been CEO of Western Union for three hectic years, during which he made big investments to grow the company's consumer-to-consumer business and go deeper into international business-to-business payments. In 2012, the company moved more than $160 billion between consumers and businesses around the world. With long-term shareholder value always in view, Ersek has not been afraid to shake things up, nor to use employee learning to the fullest.
We spoke with Ersek at the Denver headquarters of Western Union.
Western Union has been through a lot of change during your tenure as CEO. When you're in a situation that requires tremendous change to succeed, what do you expect from the learning function?
We've been through a lot of change, driven by our customers, whose needs are changing constantly. Not many companies are as global as we are. We face changes happening in different parts of the world, at different speeds, in different ways. Adapting our business model to deal with those global changes is difficult, especially if you are growing like we are.
So we had to take some big, bold, risky steps to help the company survive and to drive long-term shareholder value. The challenge was how to make Western Union a customer-centric company when historically it had been a transaction-based company. One thing I said to my learning organization was that this couldn't be driven from the top. Becoming customer-centric had to be understood and embraced by everyone.
Every employee, every year, has to have at least one customer experience, and many do a lot more than one. Even our leaders have to experience real transactions in the marketplace. I'm on the road 200 days a year. Sometimes I jump out of my car and go into a Western Union location to talk to the frontline associates and customers. I do this to set an example about putting the customer first. We teach this at WU University as well.
Many CEOs start their meetings by having the CFO review the numbers. That's normal, but I don't do that. I start every meeting by having one of my top executives tell about last week's customer experience.
Recently I sent my most senior team to Turkey to experience what it's like to send money from a different part of the world.
The most famous customer in this company is my father. He lives in Turkey. Every time I send him money, I ask him to go to a different location to pick it up. He's a 90-year-old guy and he is my best mystery shopper.
So how do you know that the learning function is succeeding—are there any particular metrics you evaluate?
I'm a metrics-driven person. Before I joined Western Union, I studied at GE with Jack Welch. I've also had Six Sigma training, so I'm very metrics-focused. These initiatives we've implemented to change the company must have a financial impact. They must drive shareholder value.
Our organization is structured around business lines and growth enablers. I tell HR, which is a growth enabler, "You are going to be measured just like any of the business lines. One of my key concerns is top-line growth, so your training and development focus needs to be on revenue generation."
The changes to our company also have been implemented in our scorecards for all 9,000 of our employees. Targets and bonuses are determined by whether the changes we need are happening or not. It's hard to make a serious change without such metrics. You need metrics for every action that affects the change. I look at these metrics daily and I dig into them.
Today, our stock is back at about $18. There is also more trust among the shareholders. So success is already happening.
Can you isolate the influence of training on other major initiatives?
One example is compliance. When I first took over, the general counsel was walking into my office every five minutes to tell me about another compliance issue. I quickly realized that compliance could be an opportunity instead of a challenge. If we invested in creating a culture that excelled at compliance in over 200 countries, that investment might have a short-term impact on results, but it would ultimately improve results in the long term.
All 9,000 employees went through a learning curve to understand regulatory compliance, how it impacts the company, and most importantly, how it is an opportunity for us. We had 11 training sessions on compliance.
We also brought our top 100 leaders to Washington, D.C., for a two-day training program on compliance. We brought in experts from our industry and other industries—from the competition, from banks, and from the government. These were not just U.S. experts but global experts. This was a big step in helping us create a culture that supports compliance. Some of our people used to think of compliance as a necessary evil but now they see how it's going to differentiate us from our competition.
I hate bad money. I want only good money. One bad transaction can destroy our reputation. And we do 28 transactions a second.
I feel very confident that long term, our compliance will be best-in-class.
Western Union is moving into more technology-based ways to transfer money. Although the digital business is only about 3 percent of the company's $5.6 billion total revenue, it is the fastest growing. What are the training implications of this change?
In our business, every transaction has two customers: a sender and a receiver. That means each transaction might involve two different technological environments, two different regulatory requirements in two different countries, and two customers with very different needs.
Someone from Gabon working in Silicon Valley might want to send money back to his family in Gabon using his iPad. But the person receiving the money in Gabon might want cash to pay for a doctor. Figuring out how to meet those two different needs became an important thing for me, and it's another thing that differentiates us: offering our customers choice in how they want to move money.
To help make progress toward that goal, we opened an office in San Francisco. Every company that uses technology opens an office in San Francisco. That's a slam dunk; the best technical talent is there. However, I asked the head of our African operation, a Moroccan who built our business in Africa, to go to San Francisco and build our technology innovation center. It was very important to have a person there with international leadership skills. That office now has almost 200 employees. It generated more than $150 million in revenue last year, and transactions were up 60 percent in the first half of this year.
What lessons from the technology center did you take back to headquarters?
The San Francisco office is almost nothing like the classic offices we have in Denver. There are almost no walls. Everyone can see and hear what's going on. The open plan creates a special dynamic. When I visited, people were very engaged in their work. One guy was so engrossed that when I said hello, he just reached out and gave me a fist bump while he kept on working.
We decided to bring some of those ideas back to the headquarters environment. But headquarters offices are the hardest to change. There is the bureaucracy. There are processes that people want to follow. There are people like me who say no to things and ask for additional documentation.
So we started by changing one floor in Denver where we combined marketing, products, and technology to create the synergy to take products to market more quickly.
We also are going to open a learning center here in Denver. It will use many forms of new technology to help us deliver learning to our 520,000 locations around the world.
What lessons have you learned from the experience of leading Western Union through some major changes in just a few years?
The first lesson is that everything starts with the customer and you must understand what the customer needs. It's more than a theory. You have to live it.
The second lesson is to empower your people to deliver what they are supposed to deliver and then trust that they will.
Lesson number three is to surround yourself with people who are smarter than you are. This is a good tip for CEOs who have big egos because if you surround yourself with people who are better than you are, they make you shine.
I think that knowing your weaknesses and talking about them openly is a leadership skill for a CEO. I am not shy about admitting my shortcomings. For example, my English is not good and I'm not the best communicator. But our chief communications officer, Luella D'Angelo, coaches me. We don't have formal mentoring programs, but I am constantly coaching people on my team about how to stretch themselves. And they in turn can coach me.
I have to say that I'm not an easy person to coach. I wouldn't want to report to me. I'm tough and I know the business, so when people come to my office they're pretty well-prepared.
The fourth lesson is to believe in your heart that the work of your organization has value in society. I'm fortunate to run a company where every transaction has the potential to change a person's life. Every time we send money for someone, there is the possibility that it may be life-changing. That has opened my view of our work. If you understand that, the rest is easy.
Another lesson I've learned is to keep things simple. Although people say our business is very complicated, I try to keep it simple. You can't put a product into the field that you think is cool but is so complicated the customer has no idea what it is.
What else about learning's impact on the business do you think is important?
I believe in promoting people from within. And I also believe that internal promotion can only be achieved by learning. The learning curve takes time. It's not a matter of taking a few courses. It's about implementing learning on a day-to-day basis and measuring the results that learning produces.
Learning cannot be isolated. It has to be integrated into business processes. Many companies get that wrong. They consider their training budgets in isolation from the integration of learning into work. Good training pays for itself in results.
Do we have a culture that offers perfect learning experiences? No. Are we getting there? Yes.
What behaviors does a large, global company need to bring about big cultural change and business growth?
Most corporations create behaviors from the top. The leaders say, "Here are our values. Here are our preferred behaviors. Implement them everywhere." But everyone has to live them to make them work.
It is particularly hard to do that in a large global company. How are you going to implement the same behavior in India, Morocco, Istanbul, London, and Panama, for example? You need leaders with extreme cultural competence or the capacity to learn. Our cultural competency is very high compared to other companies, but are we there? No. Are we sometimes seeing the world with a U.S. view? Yes. Do we believe that behaviors created in Denver will work in China? No.
That's why we spent time working with our employees around the world to create a set of behaviors that reinforced one of our most powerful assets: our globally diverse people.
We launched the "WU behaviors" last year, and they have had significant impact on driving culture change within the company.