Strategic Restructuring and Culture Change: An Interview with HI USA’s Russ Hedge

In the second installment of this two-part interview, Hostelling International USA CEO Russ Hedge speaks with us about the organization’s transformative experience of unification and leadership lessons learned.

(Part 2 of 2)

Russ Hedge has been CEO of Hosteling International USA (HI USA) since 2000. In this interview, he speaks with Makiyah Moody, Senior Consultant at La Piana Consulting, about HI USA’s transformative experience of unification and leadership lessons learned.

In our observation of federated or networked nonprofits, there’s often a tension between national and local offices, particularly in strategic restructuring scenarios. How did this play out for HI USA?

I think, when we were talking about unifying 27 separate entities, you’re talking about 27 varying cultures. All of our former councils came into the unified organization voluntarily, but of course individual staff and volunteers have had different reactions to centralization. For some it’s been a relatively smooth process and for others it’s been more difficult. We created a regional structure in order to preserve a commitment to the uniqueness of each property while realizing the advantages of consistency across all properties. So we’ve tried to make sure the centralization of HI USA didn’t have a negative impact. And I do think overall it’s been generally positive, though it’s something we’re still working through.

How did the unification impact board members and your overall governance structure?

The old governance structure was one where separately incorporated councils had their own local boards, and each year they elected a delegate to send to a national meeting where delegates elected our national board of directors. With unification, because councils no longer exist and the national conference no longer has an elective role, the new governance structure requires that four board members (out of a total of up to 20) be elected by our members every three years. (Members are individuals that have purchased a membership card for a year or longer). The majority of the board is now self-perpetuating through a nominations process that includes both board and non-board members.

What advice would you have for other federations/networks pursuing major change? And/or for leaders and senior management teams, specifically?

This is a contrarian position, but I think the reason why our unification vote succeeded is that as CEO, I stood back. I am well aware of the literature that advocates for a quite assertive CEO role. But my belief is that for a unification vote — certainly of 27 separate organizations — to work, the volunteers need to be front and center articulating the need. Staff should be actively engaged in developing research, sharing insights based on experience and data, and supporting the volunteer leadership. But it should not be “the CEO’s idea” or “project”.

My own experience is that by taking a more facilitative stance, the CEO enables wider ownership of the change idea, which in our case resulted in a positive vote and afterwards a deeper commitment to implementation success. Of course, back when HI USA was going through the decision process, there was some significant discussion within HI USA as to what my role ought to have been — should I have been more assertive and, in deciding to stand back, what did that say about my leadership. Delivering a successful result is the best way to answer those questions. Once the unification vote was decided, I stepped forward with vision and strategy, and a broad mandate for change.

I also think transparency is incredibly important. Giving confidence to those stakeholders who are about to vote on a consolidation or unification decision and providing them with assurances around accountability is important. One of the most important papers staff developed in the unification was about how accountability would continue absent the council structure.

Accountability, transparency, empowering volunteers, staff standing back, and communication are all critically important.

Do you have any specific examples or advice around best practices in communication, especially post-unification?

On the communication side, my observation is that good communication is as important after the unification vote as before, to maintain the confidence and active engagement of those who supported change. Actually communication should be geared up, rather than rolled back, after the vote.

Before the vote, I set up a monthly call and invited all interested staff nationwide to call in and participate: I shared news, and they had the opportunity to directly ask me questions. With dozens of hostels across the U.S., the audience included everyone from general managers to housekeepers, and the questions could be submitted either anonymously in advance or during the call. That degree of open communication, and the ability for individuals to bypass what was a changing administrative structure to get right to me, I think was critical both in terms of substance and messaging. Those CEO monthly calls continue today, in addition to more traditional monthly all-staff meetings.

We also developed a stakeholder newsletter before the unification vote to address concerns and needs. It also is continuing, now in the form of two separate communications tailored to the needs of volunteers and of employees.

What’s next in your post-unification process?

We’re in the process now of working with Heather (Heather Gowdy, Senior Manager at La Piana Consulting) to evolve an even stronger common culture within HI USA that is consistent with our mission, purpose, and values. Related to that is our focus on making matrix management work better and clarifying the meaning of dotted line relationships. It’s all part of an organizational development process that is both exciting and important, and certainly doesn’t happen overnight.
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For more insights on issues related to networked organizations and their affiliates, see our new Federated Nonprofits resource page. And to read more about effective post-merger integration, explore these insights on governance, culture, and communications.