Anna Elgh on self-managing teams and shifting conflicts at Svenska Retursystem

Ep. 56


Anna Elgh is the CEO of Svenska Retursystem, a Swedish circular economy logistics company. We talk about the transformations she has led at the company since joining in 2014, from Lean to nearly three years of moving towards self-managing teams. She shares what she has learned about transforming conflicts, distributed decision making, disbanding the management team, as well as leadership and the power of letting go.



Lisa Gill: So, Anna, thank you so much for coming on the Leadermorphosis podcast. I thought maybe we could start with if you could tell us a little bit about Svenska Retursystem and what you looked like as a company before you started to go on this journey towards self-management or towards a new way of working.

Anna Elgh: Thank you and I do appreciate to have the opportunity to speak on this podcast. I think it's a fantastic podcast that you are producing. And well I started as a CEO in 2014 and Svenska Retursystem is a truly circular company providing the Swedish food industry with crates and pallets for the entire supply chain, and we are fast growing company and the company has been growing for all over the time for the 20 years that we have existed. But at the time that I started at the company, our employee motivation index was really catastrophic: it was looking so bad, I'd never seen anything like it. And it has always been my mission in different companies where I've worked to work for a way of engaging all employees and working together. So I thought this was really a challenge and also a situation where I thought that I could really add some good things to the company.

So really, the main purpose of this journey was to create better conditions for everybody to engage in the development of the company and that everybody could feel free to take day to day decisions and through doing that, we could increase the motivation and engagement from from all employees. So that was really the starting point. And the former CEO, he retired when I came to the company, and he was actually taking most of the decisions. So it was a huge change that the company was in need of.

So we started off establishing a new way of working. We wanted to establish a system and a way of working with systematic improvements based on the Lean Thinking Principles and I've worked with that in many previous companies, and I've seen the positive effects of it and it really creates involvement to a lot of the people. And so we started to establish improvement teams and cross-functional teams and involving more and more people. And we also started to work with the self-inside amongst people and we started to work together with The Enneagram Institute, and that is a model that is based on nine different strategies that we as individuals use in our daily life. And through that, I think we've built an understanding on how different we really are, and why we react the way we do, and how we can relate to each other in a better way with a higher degree of understanding why we behave the way we do.

And so we started really training all people in this method and we did the analysis on all our staff. And we also, throughout these years, we had discussions on how could we actually support our managers in a better way, how could we support them to be more involving less controlling? Because I think, and I haven't had the experience from previous companies where we have worked with the Lean Thinking Principles and continuous improvements, that it really depends on how the managers adopt this and how the manager behave in relation to the stuff and to get really all people involved.

So things are going pretty well I think: we saw huge improvements in our employee motivation index. But sometime around 2017, we didn't see the improvements anymore and we saw actually, only behaviours coming back: old conflicts were actually reappearing again and it was like this is just reproducing itself; the way of behaving and the silo thinking and hierarchical culture. And it was hard because I didn't really know what to do, because doing what we had done had worked quite good in other companies that I have worked with. But I was really frustrated; well, what should we really do now. And it was actually at that time that we met with Leadership Training and they felt like a very good partner, because we were speaking the same language, and what I appreciated very much from their side was the approach of very hands-on training, focus on shifting time, sort of up with everything on the table and start to deal with it. And that was really what we needed. So the journey that we are going to talk about a little bit more, really not start with the ambition of creating self-organising teams and started from something really different.

Lisa Gill: That's really interesting - the evolution of Lean Principles and Enneagram and then meeting Tuff and seeing what that partnership could look like. When you started that next phase or chapter of the journey, I guess you could say, with Tuff Leadership Training, what were you hoping for in terms of what support were you looking for to help you on this journey?

Anna Elgh: I think what we were looking for was to increase the cooperation in the company: to create the climate and an environment that supported cooperation instead of conflict and also to get the coaching and help from Tuff to work with the conflicts that we had at that time. So that was really the aim: shifting the climate - that was what we actually talked a lot about. I thought at that time, really, it was like a wet blanket all over the company: trying to do things, but nothing moved. It was hard to know how to deal with it and my feeling was that Tuff could provide us with tools that we were not in the position of.

Lisa Gill: Yeah, it's like the image I have is, as you described it, that things were working well and then they seemed to be sliding backwards somehow, and it seemed like there was something intangible that was in the way for you to push through to the potential as a company.

Anna Elgh: Yes, we had changed - there were a lot of people that had gone from the company and new people that had come into the company, but then suddenly, the behaviour of the people who left the company was starting to reproduce itself amongst the new people. It was kind of weird.

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Lisa Gill: Yeah, human beings are messy creatures aren't they? So it's now year three, I think, of this collaboration with Tuff, and I'm curious to know what were some of the starting points and what have been some of the milestones along the way in this shift?

Anna Elgh: Well, I, I think the the starting point was actually when our partners at the Enneagram centre, they saw potential within SRS and they recommended us to read the book 'Reinventing Organisations' by Frederic Laloux and I know you interviewed him. And that was a real eye-opening for me because I didn't even know that these kinds of companies existed. And I realised that most of my career had been really different from what it has been if I had worked in this whole self-organising company and I think that I, myself have actually worked in that way in many companies and taking my decisions, but it hasn't been really approved from my managers of course, because it's not the way you do it. And it's actually forced me to change jobs and companies several times due to the fact that I felt too constrained. So I got this, from reading that book, and then meeting with Tuff, it gave me a strong conviction that this was really something to hold onto, and also, due to my personal experience. So that's how I became interested in going that part.

So when we started off with Tuff we decided to start with two teams: the management team and the IT team. And I think the IT sector is more advanced in this field because the IT team had already decided to start their journey for a self-management managing team. And our CIO left the company in 2017 and at that time, I sat down with the IT team and we discussed where they were and what their needs were. And they actually felt that they had a job to do to make it more clear about responsibilities and roles within the team before they felt that they could proceed. And finally, after having done that process, they came to the conclusion that they didn't want to recreate a new CIO and manager, but when Tuff came along, we felt that they could really support this team and give them some good coaching. So that's why we chose to start with with the IT team.

And on the other hand, working with the management team was much tougher and it was a much more difficult story because I think the idea of giving more control and more mandates to the organisation and together that we were actually creating more cross-functional teams - where the decisions were made more and more that was something that, for some members of the team, it wasn't their cup of tea. So we had several conflicts within the management team and so it was a quite a tough year, I must say - 2018, and by the end of that year, two members of the management team actually left the company. And I think, looking back, it was something that happened because they didn't feel that this journey was in their interest.

So when they left I actually did the same as I'd done with the IT team: I sat down with their own teams - it was the Operation team, Production and Logistics and it was the Sales and Marketing team. So it was actually two teams that are really crucial for our deliveries in the organisation - and had a discussion with them on what they wanted to do and if they wanted to try out this same way as the IT team had decided to go. And they both decided, actually, that they wanted to try it out and not recruit a new manager, which was really fascinating, and this was something totally new for me.

And I think this was really the starting point on the natural dissolution of the management and that actually happened around May 2019 that we actually finally said that all the decisions are made in other groups and other meetings, why should we have a management team? It's just adding more meetings, more reporting, and so on. So we took that decision, and we said we can always go back if we feel that this doesn't work. And I think that at that time, it wasn't a difficult decision but I think it was tough for the organisation because there was a lot of frustration in the rest of the organisation, and they had just gone into the this messy middle. And I think the rest of the organisations were asking more questions about what are they doing? No management team.

Lisa Gill: Yeah I think it's really interesting to think about something that Miki Kashtan shared when I interviewed her for this podcast - that the shift has to happen in two directions from those who have management positions or have formerly been managers, to unlearn a lot of controlling behaviours. But also, there's a huge journey for people who are on the other end of the scale who are used to there being managers or a management team to make decisions that they can go to with complaints or problems and rely on, and so it can be painful in both ways, and I hear that in what you're sharing as well - that for many of the management team, the idea of giving away my authority and my mandate, that's not so appealing to them, and also for people on the other end - "what do you mean we're not going to have a management team?" - suddenly that opens up a whole world of uncertainty and completely unfamiliar.

Anna Elgh: Yes. And questions: where are we heading? What is the hidden agenda?

Lisa Gill: Yeah, there's got to be some catch, right? How did you navigate that as CEO and as the person championing this transformation? How did you hold the space for people to ask those questions and to handle that tension, I guess?

Anna Elgh: Well, I think I have very good help from Tuff Training - I had very good help from from Karin Tenelius of course. I think personally for me, it has really been a challenge to have the patience and not to step forward when the organisation is asking for structure and decisions. And I mean, this is really something that I have done in all my previous jobs and I think I'm pretty good at it. And suddenly what you are good at, you are not supposed to do, because the organisation, if we want to really reach our goal, and I do, but I think what helped me it was that I was convinced that this was really something we had to do, even though it was hard. So it helped make my conviction that this is the right way to go that helped me, but it was still very stressful not to go in and interrupt them and take decisions. I think that was the most difficult part.

And by the end of 2019, or during that fall, I think I had the worst period I've ever had in my entire career, because there were some employees that started sending anonymous letters to our chairman and to the board of directors and for stating that this is terrible, the company is heading towards chaos, and nothing is working, the results are going to be a disaster. And I'm very very glad that I had the support from the board at that time to continue because they didn't see that the company was in chaos, and they saw very good results. And after this period, we did this new employee motivation survey that showed that was not the case amongst the majority of the staff. And we have also since then delivered our best results in history. So we proved things have not become chaos. Instead, the cooperation, I hear people stating every week, we have never had such good cooperation between us as we have today. So today, I can say it was worth it. But it was a terrible period.

Lisa Gill: What were some of the things that got you through that difficult period? Because as you say, I can imagine it must be really difficult as a CEO, especially as you said, coming from a long career of doing things in a particular way, and being really good at doing them in that way. It must have been very tempting to want to step in and solve things and add things, and so to have had that experience of almost like your hands are behind your back or something and to have this unrest from people must have been very tough. What got you through that?

Anna Elgh: No, I think, as I said, my own conviction that we can't reach a state of working in the company where everyone takes responsibility if we don't wait for everyone to do that. So I think that mentally I knew that if I were to step in again, I would ruin months of work by setting us where we were. And I think from my side, all this journey is very valued rhythm and it comes from what I believe in. So I think that was what helped me and also having the support from Tuff to really support that it will eventually get better.

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Lisa Gill: Yeah, I really like what you say there about waiting for everyone to step into responsibility. And you mentioned before about patience. And I think a lot of times I talked to CEOs or senior leaders who are frustrated there are pockets of the organisation that are really on board and moving really fast. But then there are teams and parts of the organisation that are really struggling or resisting or slow. And it's so easy I think at that point to give up and think well, maybe some people just need to be told what to do or maybe this isn't working. And I think holding on and having that faith that it will happen and having that patience that it takes different amounts of time for different people - there's so much unlearning to do and new ways of being to practice, that if you could just hold fast, then, as you've experienced, you come out the other side.

Anna Elgh: And I must say that being part of the company has actually come out on the other side. But some are still in a messy part. But there's a bigger and bigger majority coming out on the other side just giving a lot of energy into the daily work.

Lisa Gill: I'm curious to talk a little bit about this piece you mentioned about shifting the climate. And you mentioned also about there being conflicts in the management team, for example. What have you learned from this experience about working climate and how important that is and how you can shift it together?

Anna Elgh: We have adopted the methods that we have learned with Tuff Leadership Training about "putting the moose heads on the table" and also everyone has gone to training, some have not yet done it, but we have a cooperation over three years. So that helps us in creating the same language. But I also think that we have a pitfall in our organisation that we are very kind, we are very warm to one another, we are very caring, which is good. But when it comes to giving very clear and direct feedback, we are in a learning phase to really see that we do that because we care. We don't do it because we want to be mean to one another. And that is really something that we have been working very hard on and continue to work hard on.

When you get the feedback from someone, you also can feel that this is because this person is caring about me and want to help me to become better. And we really need a lot of training, we continue to train to make this happen. It's hard, but we are we are talking about this a lot more today and also addressing things in meetings.

Lisa Gill: Can you give an example?

Anna Elgh: For instance when we are in a meeting, when we are talking about how we should prioritise different projects within the companies today, anyone can actually do that - address in that meeting, if they have a feeling that there is a hidden agenda or why was this decision not made in this meeting, and we can start talking about those things, and it didn't used to be that way. Then people went out of the meeting and then they started to talk afterwards about this: it was thought they discussed this behind closed doors. So that has changed, I think.

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Lisa Gill: What are some of the other changes or shifts that you've noticed? And what are some of the things that you're most proud of?

Anna Elgh: I think what I'm most proud of is actually that we had the courage to let go of the management team. It was a big step. But I think that we actually could walk the talk. I think you have to have that feeling every day that you fall in, down in your pitfalls every day. And I think that it has made me a more humble manager because I feel that there are new key learnings to do every day. I think I felt like a more experienced manager when I came to SRS than I do today. I have many new experiences but I had to relearn a lot of what was old truth to me exercising a managerial role. So I think that has given me a lot of energy and I think that's why I'm still CEO in in Svenska Retursystem. I've never been in a position for as many years as I have been here but I think that is what giving me also a lot of energy - that I'm learning new things every day.

I think it's often difficult - the higher up the organisation you go, the less feedback you tend to get from people. It can feel really risky and dangerous to give feedback upwards. Have you noticed a shift in that culture? Do you find that people are more willing to give you feedback now?

They could still give me much more feedback. If you go to the Enneagram, I have number eight - the Challenger. And by nature, I think a lot of people feel that we can be dominant and not easy to go and say what you think. So, it's become much better and I have very good colleagues that give me feedback, but I could use much more feedback.

Lisa Gill: How do you see your role now, now that the management team has dissolved? And I'm assuming those three teams you mentioned (IT and the other two teams) that they're still self-managed, that they haven't reinstalled the manager. How do you see your role as CEO now and I guess, what does leadership look like generally in SRS now?

Anna Elgh: It's fantastic because I've released and gotten so much more time and I think that I'm actually spending my time on things that I should spend my time on much more and spend my time more on the strategic agenda, be a support to the organisation where I'm needed, and I think I have more time to do the right things. And I think it's good because we have several positions that used to be in the old management team and I'm no longer their manager, they don't have a manager as the self-organised teams don't have a manager - so work more in groups where we need to work. So I think, more and more, that the organisation is using me more as a support and someone to discuss things when needed.

Lisa Gill: And the other managers in the management team - did they reshape their roles? They found a different way to contribute to the organisation?

Anna Elgh: Yes, but we are still in the phase where some of the company is some of the teams have managers. So some of the managers from the management teams, they are still manager for their team and that's working fine. But of course, I think there is this question in the air: where are we going and are every team supposed not to have a manager? But we've never taken that decision. It has to evolve and it has to be driven from the organisation - what the next step is for different teams.

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Lisa Gill: Yeah, it sounds like you've started with teams where there's the most or natural energy towards experimenting with this way of working, like the IT team, the Management team and then those other teams, and the managers left. So I think that's a good approach to not enforce this or to rush it, but to allow it to evolve in the organisation and as you say, now it's more of a groundswell - a majority of people who are starting to work in this way and naturally, the others will, take notice and see what it means, what it really looks like in practice.

Anna Elgh: Yeah, absolutely.

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Lisa Gill: I'm curious. I'm wondering if there are some people listening who are interested in some of the results. As we've talked a little bit about some of the human things, noticing people talking about different things more honestly and openly in meetings, for example. But you mentioned also that one of the things that's helped, even when it's been tough times, is that the results were good and now record results. So what have been some of the tangible benefits that you've noticed?

Anna Elgh: I noticed that we have reached a high degree of transparency within the company. We were quite transparent but we are even more transparent today and we try to share information and communicate within the whole company. We are 160 employees and we're trying to find ways so that everyone can get the same information and communication at the same time. And that has helped, I think, for more people to take decisions. And also, along the way, I think when we have found a problem or an obstacle in how should we do now - I can take an example. But how are we supposed to take decisions in the new organisation? One of the teams got this task to look through - well, how can we do? How are we supposed to think when we take decisions? And also to clarify, we have some different forums and which forum is supposed to take what decision? And also to clarify that each and every one can take decisions as long as you take advice from those who really know something about it. So that is something that we have worked with, and I think it's getting better and better.

Also, well, how do you set salaries when you don't have managers or half of the organisation have managers? How should we do this? And we also set up a cross functional team that worked with this and I think that was very, very good. But we have never had a really good process even before with the managers because a lot of the people felt that it was unclear how do we set goals? What are the premises? Who is deciding? And a lot of people felt that it was very unfair the way they got their salaries. And I think also we're by doing this and working in a cross functional team, it became very apparent for much more people in the organisation how hard this is - this is not a quick fix, it's really difficult to set a good process. But they did a fantastic job, I must say. They ended up in a process that is 100 times better than the way we used to do things and they managed to set up a process that could work both for teams with a manager and teams without a manager.

Lisa Gill: Would you be willing to share something about what some of the principles of the salary process are?

Anna Elgh: Yes, what I decided is that you will get a feedback from at least two of your colleagues and if you have a manager, you should get feedback from your manager. And then they have set up different criteria so you are measured in different kinds of areas - say five different areas. And then actually you will know before what the percentage of raise will be depending on your feedback or your evaluation. So it's not like, "well, I think this is a good guy, so give him fine results". It's very well defined and advanced.

And then you will also receive and you will by yourself choose who will give you feedback. So you can choose that. And then you will receive feedback in person also from the ones who you decided you wanted to get feedback from. So that's why we're also doing a lot of feedback training now together with Tuff Leadership Training and that's good because we're really getting everyone to train on this during quite a short period. I think that would help us on the journey.

Lisa Gill: I'm interested as well to explore whether you have noticed this new organisational culture and this new way of working, whether that's had an impact on how you as an organisation have responded to the Coronavirus pandemic.

Anna Elgh: Yes that's an interesting question. I think it has been a great help to us. When the virus started we gathered our crisis team in the beginning of March. We have a situation because the entire food industry is depending on our deliveries, we could not just shut down our plans. But it started mostly in Stockholm - the virus - and where we have our room office in Stockholm, the majority could work or all of us could work actually, from home. So we decided that we never closed the office, that if you need to come into the office, you can do that. But we followed the recommendations. And it has worked fantastically. Everyone has really taken responsibility and delivered in a period where we have doubled the growth that we had anticipated this year, which means that we have been in a very very tough situation just to make our deliveries. The entire organisation has worked fantastically to deliver this. This has never been an issue - that we are not in control or people are not doing it. It has just happened and everyone has taken very good responsibility.

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Lisa Gill: What are your hopes now for SRS in the future? What's your vision for how you hope things might continue to unfold?

Anna Elgh: We have a goal to become one of the most attractive midsize companies in Sweden, according to Great Place to Work. We have taken, as I told you about, big steps. We were certified according to their standard last year. But of course, we have many more steps to take. But I'm confident that we will make it. And we also talked about that currently, we are an organisation that is organised in different ways. So it natural that there are still questions are asked about where are we heading, what's decided - and nothing is decided. So somehow we have to continue this journey. And every key team has to take on responsibility of their journey and decide when it's time for them to take the next step, and what is the next step for the different teams.

And what what is clear is that many of the self-organised teams that we have in the organisation, they don't want to go back to the old way of working. So you're very clear about that. And then we have other teams that are not really, but also are self-organised, that feel that it's not really efficient right now - we need to do some changes. And the hard thing now is not to fall back and start taking top down decisions, to really continue to be in this even though we see such positive effects that some teams, other teams must find their way.

I can just go to myself, I'm no longer the same to your managers that I used to be. So if the organisation should take a decision that "no we must go back, we must have more hierarchy", I don't think I'm the CEO for that company. So that's where I stand but it's not my decision on where we go but I would surely see consequences for my own part if they decided to go back. So I think we continue working with them and they are helping us with this huge change and continuous training and I think if we can just manage now to start to giving even more feedback, not be so kind to one another, less polite, we can really help each other to develop But we are on a good way. And I think it's very fun and a lot of people are saying that it's good fun at work right now.

Lisa Gill: Yeah, that's really inspiring. I'm wondering, Anna, perhaps people that you've spoken to - other CEOs or leaders have asked you this, but for people listening who are on their own journey towards self-organised teams or towards more Lean or Agile ways of working, having gone through this journey yourself and, of course, it's ongoing, but what advice would you give to people who are on this journey as well?

Anna Elgh: I think it's really hard to give advice because the key thing about this is that every organisation has to find its own way. I mean, it would be so much easier if we could just go to a book and get some recipe and then follow the recipe and then it was over and done. This is just the opposite, I would say. I mean, the hardest part of moving towards a self-organising company is the fact that it is the organisation: the employees itself, not me as a CEO that have to lead the way. And if you don't stay in that, and realise that I think you are back in the hierarchical way of thinking.

So if I have to give an advice, it's really about staying calm and to be brave, and to have the patience and trust the process. And eventually things get better - I've seen that myself, and to relate to the people as competent and adults to take the decisions and lead the way. And it's, believe me, very difficult and very frustrating. And as I myself experienced, you will be questioned, so you have to have inbuilt trust on beforehand - a capital of trust, I think - before doing it, because there are a lot of people around you that say, "What is this? What are you doing? This is crazy." So one's inner belief, I think, is a good thing to have. You need that to try this path.