Sandy Beitel, Vice President of Human Resources at Koniag, Inc., recently won the Human Resources Leadership Award of Greater Washington for leadership development in companies with under 1,000 employees. Koniag, Inc. is one of 13 Alaska Native Regional Corporations established by Congress under the terms of the Alaska Native Claims Settlement Act (ANCSA) to settle the aboriginal land claims of Alaska Native people. Koniag was incorporated on June 23, 1972, to manage the land and financial assets on behalf of the corporation’s approximately 3,800 Alutiiq shareholders who originated from the Kodiak Archipelago.
“Recently, there have been behind the scenes and very public changes at Koniag,” says Beitel. “The corporation is retrenching and is going from a diversified business strategy to a focused, deliberate period of change. We’ve divested one of the major subsidiaries, and are rationalizing some of the remaining holdings. We’re focusing on what makes sense in terms of profitability and strategic value for the future.”
Since it was established, Koniag has had a long-term vision of growth. In its recent past, it has diversified by buying into or acquiring organizations in different industries including aerospace, IT, and naval services to the Federal government. It also invested in a long-term vision of developing the natural resources of Alaska. However, in the past 12 months, the company has experienced considerable cost pressures and poor financial performance.
Because of the current financial situation, there was a change in the top leadership of the organization. The President/CEO was asked to step down and Beitel is currently in the midst of an executive search for a President/CEO to lead the organization, return the company to stability, and work with the Board of Directors on a strategy for moving forward.
One of the problems facing Beitel when she joined Koniag in 2011, was the variety of HR practices in the numerous companies owned by the corporation. “The first thing I did was to listen. I came into the corporation not really understanding how HR was delivered, what practices had been established or, in some cases, not established.”
The majority of the HR professionals working for Koniag’s holdings are based in Chantilly, VA, along with Beitel and another HR professional in Anchorage, Alaska. “The first step is always inquiry and learning,” says Beitel. “I met with my team and the CEOs of our various subsidiaries to hear what everyone’s needs were and what they wanted in terms of HR services,” she says.
“One request I heard often was to improve talent acquisition. There was a request by the board that I review the compensation structure and institute a policy and a process to help the organization incentivize and properly compensate the executives.”
Improving HR
Beitel gained insight talking to a few key HR professionals, including Julia Moreno, in charge of Benefits and HR Administrative Services in Chantilly. “My staff was very insightful in pointing out the areas we could improve. Some of those were health and welfare benefits, retirement benefits, the state of our HR information system, and HR policies. I then tried to understand the vision and strategy documents that had been developed by the board to figure out how the HR team would add value to the corporation.
“It was immediately clear I didn’t have all the right people in the HR function. I took quick action to dismiss several people, who did their best at what they had been hired to do, but didn’t have the capability to lead or participate in change efforts. I was successful in hiring a senior HR manager, Denise Bailey, and also a talent acquisition manger, Amy Stark. With those new hires, along with Sharon Alred, HR Manager, and Julia Moreno, Director of Benefits and HR Administration, we were set with a very tight HR team, aligned on goals, setting priorities, and executing and delivering what we wanted to do. With the right talent you can move mountains, and we did.”
Beitel and her team first developed a strategy to identify the key elements in HR that needed to be integrated across the organization. The integration strategy consisted of a common performance management approach, as well as a shared approach to compensation; a strategy involving HR services; a review of all HR policies with a focus on employee development; and a focus on leadership development.
“We were able to implement a common performance management approach across the entire corporation. We developed a compensation system that helped us tremendously, because none existed before. In addition, we were able to make tremendous inroads in terms of health and welfare benefits. We changed our broker after a month and hired a new one. With their expertise, we have been able to establish strategies that have resulted in no cost increases for this benefit area for three years – an incredible result given the requirements of health care reform.
Seven retirement plans!
“When I arrived, this small corporation had seven different retirement plans. Julia Moreno’s expertise, along with my input with the senior executive team and the board, helped us decide to simplify to two plans which was a much more logical and cost-effective approach for the corporation. In order to accomplish this complex effort, we set up a more stringent governance process, hired a new investment manager, and selected a new vendor for our plan administration.”
Beitel feels strongly about the wisdom of a project team to accomplish the goals set for the retirement project. “What we thought was going to be a year’s project was completed in six months. We were aligned on the mission. I got the board to buy into what we needed to do, and was able to get the executive team aligned on the job as well. We basically demonstrated we could add value by reducing plans and saving money.
“When project teams are know what they want to do and have the right people and the right service providers involved, it’s magical. The realignment came in on time and under budget. In essence, we were able to implement a management performance system; implement a compensation system; set the right strategies for health, welfare and retirement; and save the company $1.8 million, which is significant in the size of our corporation.
Changes continue
“Koniag’s HR team works collaboratively, as well as with our business partners, and with other functions including IT, finance, and shareholder services. In the midst of all the efforts to improve HR, we had major leadership changes at the corporate level, which my team supported. The President/CEO left, and the structure of our corporate office continues to change. Several other executives are no longer here, and we had a major divestiture of one of our companies this year,” Beitel continues.
The work accomplished in the last two years, along with building leadership capabilities and credibility within the HR function, helped support the corporation throughout major changes in terms of profitability, outlook, and a refocused business strategy. The work also helped the corporation move from highly diversified strategy to a more focused approach.
“We’re on another journey now as part of this corporate reshaping. Basically, costs were out of alignment with business reality. Three functions have proposed strategic changes for how they are to operate. We were in a highly centralized model, and we’ve taken the decision to decentralize. With that, came some major decisions. The IT organization is going to use an outsourced model for delivering IT services to the corporation. Many of the finance staff have been decentralized to the subsidiaries, and the corporation is rationalizing many of the complex systems and processes they have used in the past.
“In the HR function, we’re also continuing to restructure. Several of the HR managers, who reported to my position, are reporting directly into the subsidiary leadership. Talent acquisition, benefits and HR administration will remain centralized. My position is going away. I am proud that we’ve made such tremendous positive changes in the last two years. The HR department has the right capability to support the organization going forward,” says Beitel.
“Over the past two years, my abilities as a change agent have been demonstrated. My team is excellent and I am so proud of them as they are highly respected. We have built a commendable reputation together. My leaving is yet another opportunity for them and the corporation and makes sense in the current business context -- it’s the right thing to do for the corporation.”