Why Wellspring
Managing through Change: Part I - Leading in an Uncertain Environment
AN INTERVIEW WITH SCOTT GILES, PRESIDENT AND CEO OF THE VERMONT STUDENT ASSISTANCE CORPORATION
The Vermont Student Assistance Corporation (VSAC), is a nonprofit public corporation providing citizens of the state with information and financial resources to attend college. The organization has awarded over $600 million in grants and scholarships, and has served over 400,000 students since its inception in 1965.
When Wellspring first worked with VSAC their role was to raise capital in the bond markets, and repackage the money into loans offered to students. After the Obama administration took office, the federal government moved to take over the management of student loans, calling it the Direct Loan Program. The federal government offered to make organizations like VSAC into "loan servicers," thereby managing communications and payments for loans they would no longer own. VSAC faced some difficult choices. Should they participate in the Direct Loan Program as loan servicers? Were there other lines of business they should move into?
Before these changes, VSAC's work had been well-funded and they had grown into a major employer in the area. They also ran programs that helped students make the best financial aid choices. VSAC questioned how best to respond to the changes in their external environment, and what their response would mean for the structure of their programs and organization.
Recently we spoke with Scott Giles, President and CEO of VSAC, who shared seven guidelines drawn from how VSAC successfully managed through this change and uncertainty.
Guideline #1 – Invest heavily in relationships with organizations who share your interests Scott Giles: "There were signs that people wanted to make this change [from federally guaranteed to Direct Loans], and we were engaged in a pretty heady political conversation about the two competing programs. We [VSAC and related organizations in other states] were members of several trade associations. We had invested the time and effort with political leaders in our state and in DC as important stakeholders. I think that working with other organizations facing the same challenges is particularly important during these times of change. We invested as much time in building and nurturing relationships with other organizations as we did with customers or more traditional nonprofit stakeholders. Therefore our state representatives, the Department of Education, and other political players knew the value that our organization provided, and why what happened to us mattered. But it was a big challenge to motivate our counterparts. Connecting with political leaders is work, and it can seem like it is taking away from the bottom line."
Guideline #2 – Develop multiple "fall back" options even as you advocate for your current programs Scott Giles: "At the end of the day, the legislation that eliminated our program happened within a week. But because we had made the investment in talking with our delegation, we had our "plan B" already in place, which was to contract with the federal government to service loans. At the same time, we were thinking about what to do if plan B didn't work out. We looked at diversifying and not putting all our eggs into one plan B. At the time, this approach was controversial, but in terms of where we are today, it turned out to be a good thing. The initial plan B was loan servicing, which we are in the process of exiting, and plan C was our nonfederal loan program, which has really taken off."
Guideline #3 – Set benchmarks and decision points to assess progress and navigate uncertainty Scott Giles: "Early on, VSAC thought Direct Loan Servicing was the path forward. But the work we did in strategic planning highlighted for us that there were significant uncertainties about the success of that program. At the same time we were working through how to do Direct Loan Servicing, we were exploring other possibilities that lay within our competencies. From a planning perspective, it was critically important to have decision points and set clear benchmarks to know if a plan was successful as it was being implemented. If we weren't achieving specific goals, we knew when it was time to question whether the investment made sense. The strategic plan helped us lay that framework."
Guideline #4 – Be analytical and thorough when making decisions in times of uncertainty Scott Giles: "To manage in times that are chaotic, do planning that is very analytical in the beginning. Clarify assumptions and data points, and build a strategy based on these, along with tactics to implement the strategy. We did this with our strategic plan. Then, go back and question those assumptions on a regular basis because the world is changing. We avoided problems because we re-examined our assumptions every six months. If we hadn't done that, we wouldn't have noticed problems until it was too late to do anything."
Guideline #5 – Dedicate time and effort to understand different scenarios "We used an interesting process to decide whether to continue pursuing Direct Loan Servicing. This was a major strategic question with major impact on our organization and our staff. We wanted to make sure we were making the best decision for the organization. I broke our staff leadership into 2 teams. I had people who were neutral or who wanted out of Direct Loan Servicing build a case for staying in. I had those who were more interested in staying build the case for getting out. They worked on their cases for a month, and we all contributed to make sure the data was right. Then, we came back together to fight it out, with each side poking holes in each other's arguments. After that, we looked to see if we had consensus, and we did. To us, except for the staff impact, the decision to exit was clear.
For the Board, we presented the two cases in full, but didn't tell them what our initial recommendation was. We let the Board argue it out. Our Board Chair asked whether I was nervous that they would reach a different conclusion from the leadership team. But the way I saw it, if you don't prepare your Board well enough, they can end up making decisions without all the relevant information. I wanted to give them all the information— if they reached a different conclusion, it would be because they saw something our leadership team didn't see. In the end, they were unanimous in their decision and agreed with staff leadership's thinking."
Guideline #6 – Be transparent and lead not only for the organization as it stands today, but also for the organization you will lead in the future We had been reviewing our benchmarks and evidence was suggesting that we might need to exit Direct Loan Servicing. We knew the organization wasn't ready. We committed to transparency and openly shared our milestones and our concerns. It was an uncomfortable way to lead—my peers thought we were crazy and we risked losing good staff. We laid out the issues in staff meetings—the challenges, the questions, that data we were collecting, the milestones, and what would happen if we didn't hit the milestones—both to the organization—and to staff. We even let them know when we thought a decision to stay or leave would be made. Everyone stuck with us. To go through that transition, we were not just leading the organization we had that day. We were also leading the organization we were going to create. The audience was both our current staff and our future staff. If we hadn't prepared our staff for a big strategic move like the one we were about to make, which required losing positions, the team that remained would have no trust. Once we left the Board conversation with a decision, we immediately laid out the issues in a full staff meeting—the challenges, the questions, the data we were collecting, the milestones, and what would happen next. This was a very emotional meeting but when we made the announcement that we were exiting Direct Loan servicing, no one was surprised, and no one questioned it. Doing things this way was uncomfortable for the organization and uncomfortable for ourselves as leaders, but it sustained the staff's trust in leadership because we didn't surprise them, our decisions made sense to them, and they had an understanding of where we were going and what their role would be."
Guideline #7 – Accept not having answers as a leader in the face of uncertainty Scott Giles: "I had to learn the hard way to allow a grieving process to take place and not pretend I had answers when I didn't. Most of us as leaders have gotten to where we are by solving problems and being able to present compelling visions of the future. The visions we prize the most have the greatest certainty. During periods of change, that works for you if you are right but against you if you are wrong. There is a line to walk. You need to be compelling and inspirational enough for people to pull in the right direction. But, if you act too certain, the next time you have to shift dramatically your vision gets called into question. The desire to go in and fix everything to give people confidence and security is a mistake."
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