For any business, being acquired is a big deal. Now, imagine going through that adventure eight times.
That’s how PDRI by Pearson has spent the past two decades.
“We have been owned by venture, we have been owned by publicly traded companies,” says Elaine Pulakos, CEO of the talent management solutions provider. PDRI’s current owner: educational publishing and services giant Pearson, which bought it last year.
But here’s the really interesting part. All along, PDRI has kept largely the same leadership team and continued growing its business.
How? Remaining a wholly owned subsidiary has helped PDRI maintain its culture, says Pulakos, who’s been CEO since 2010. But she also credits leadership’s focus on building “a high-performing culture, with engaged employees that can withstand a whole lot of disruption and change and still keep our key players in-seat and performing positively.”
Much of that comes down to trust.
A high-performing culture requires a foundation of trust, says Pulakos, who has a PhD in industrial and organizational psychology. For the leader, establishing trust with employees is just the start. They must also drive certain trust-building behaviors into the culture and get their teams rowing the same way around those behaviors, Pulakos maintains.
PDRI, whose clients include Fortune 500 companies and the U.S. government, has explored how to build trust in several studies. One avenue of research led the company to develop a formal performance management system, only to realize that such an approach could backfire.
“High performance and engagement actually come from good communication, trust, and partnership between leaders and team members, not pre-canned, scheduled activities,” Pulakos says.
In its research, PDRI found that two trust-building behaviors rule. The first: informal feedback in real time—recognizing people for good work and calling out issues that need addressing.
The second key behavior? Helping team members solve problems. For a leader, that means “leaning in, sharing the problem, taking responsibility as appropriate yourself, and really showing team members that you have their backs,” Pulakos says. “Conversely, blaming, finger-pointing, hiding from problems, engendering fear, and defensiveness—those things actually destroy trust, as do micromanaging and second-guessing what team members are doing.”
Pulakos coauthored a 2019 study of how organizations and teams can become agile and resilient in a rapidly changing world. The paradoxical conclusion, after examining 300 companies worldwide: You can’t be agile unless you’re stable first.
“And a large part of building stability comes down to leader and team behaviors that build trust,” Pulakos says. “The very same behaviors that we found in our performance management work emerged as being critically important for building agility.”
When such behaviors were integral to the culture for both leaders and employees, the impact on financial performance was huge, Pulakos notes. “On average, the companies that were better at this earned 150% higher return on invested capital and 500% higher return on equity.”
So, how has this all played out for PDRI and its 100 employees?
Some acquisitions were tough, Pulakos admits, mostly because each new owner brought a shift in strategy. For example, one wanted PDRI to focus on the government market, while another urged it to go all-in on the private sector, she recalls. “It’s been jarring.”
But PDRI has navigated those shifts by being opportunistic, Pulakos explains. It’s a characteristic of building stability “to get out there, look for opportunities, actively seize them when they occur,” she says. “Because that builds confidence, which is stabilizing.”
Confidence is one thing, but PDRI doesn’t expect success every time. “If we try something and we fail, we fail quickly and we move on,” Pulakos says.
PDRI appears to have found ownership stability in Pearson, which insists it has no plans to sell. If that changes, Pulakos and her team have their playbook. “We just work through it calmly, try not to get flapped, and just tell our people, ‘We’re going to take it a step at a time.’”
And they say only cats have nine lives.
Nick Rockel
nick.rockel@consultant.fortune.com
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TRUST EXERCISE
“Last month, in remarks to a crowd of supporters, former President Donald Trump added a new dynamic to November’s election—and reignited debate about the future of the digital asset industry in the U.S.—by declaring, “…if you are in favor of crypto, you better vote for Trump.” It wasn’t subtle, but it was acknowledgement of crypto’s growing importance as a hot-button political issue. Other elected officials and candidates for office should pay attention.
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Cryptocurrency is a potential asset for Donald Trump—and a huge missed opportunity for Joe Biden and the Democrats. So argue Anthony Scaramucci, founder and managing partner of SkyBridge Capital, and Kristin Smith, CEO of the Blockchain Association.
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