Archive for April, 2008

There is a continuum along which organizational changes can be planned. On one end are top-down approaches with planning done by small groups behind closed doors. The organization implements what it is told to implement. At the other end is including as many employees as possible in designing pieces of the new organization, and then tasking those same people with implementing the changes they designed. The former is exclusive, the latter is inclusive.

This company took a more inclusive route as it mirrored their culture. Directors and senior managers designed their organizations, level by level, and were then responsible for implementing the design. This choice was intended to take advantage of line managers’ more intimate knowledge of their areas and people, while at the same time building their buy-in to the change process.

The approach’s down side was employees feeling it was taking too long. Impatience led to paralysis.

The team had underestimated and under-communicated the impacts. At the same time management was dealing with business issues (their day jobs) and counseling their teams through the unsettling period of change (which encroached on their daily job performance), they had an additional burden of intensive reorganizational work upon them (a night job).

In short, the team miscalculated the burden on line management. By being inclusive, they passed a burden on to people ill-prepared to accept the challenge.

On the flip side, a more exclusive approach would have taken just as long, and perhaps longer. (All the kinks associated with any reorganization still needed to get worked out.) But, since employees would have had less visibility to the process and less day-to-day involvement with the work, it may have felt shorter.

In the end, the team concluded, “in the future we must carefully weigh the pros and cons of a range of approaches, choose the one that suits us best, build a fully fleshed-out plan, and then aggressively and continually communicate the methodology and its benefits to all employees.”

In other words, there is no correct answer – but whatever choice you make, set people’s expectations accordingly.

Recently, we worked on a reorganization of a business with several thousand employees. The company was splitting itself into smaller organizational units. Our team didn’t set the business strategy or the change plan. But we were the arms and legs to help the project team get the work done.

At the end of the project, the team documented their learnings and some will be shared over the next couple posts. We share them for a simple reason – it is highly likely that other reorganization teams will face similar challenges. The challenges themselves aren’t “secrets;” what created the challenges, where the challenges occurred and how they were addressed are. In any case, here are some real live challenges to plan for as you work on a reorganization.

#1 – Crystallize the Vision and Case for Change

While there were several important themes supporting the reorganization (like “accountability” and “customer focus”), these themes didn’t effectively crystallize into a clear and compelling picture of the envisioned future. Because the vision wasn’t clear, the team struggled throughout the project with several issues:

• Decision making became more complex since there were no clear “stakes in the ground” on which to base priorities. Everything was an ad hoc decision. Nothing was principle based.
• The team was left in a reactive and responsive mode vs. being proactive with a clearly defined strategic goal.
• The team was unable to effectively communicate an appropriate understanding of management’s vision of the future. (The team wasn’t quite sure themselves). When the team did communicate, there were conflicting messages:
  • “This is not a cost-driven exercise,” and “Design an organization that reflects some level of reduction,” or,
  • “Business process management and execution is critical to our long-term success,” and “We can design our processes after we set the organization;” or,
  • “Do it right,” vs. “Do it fast.”

The team’s #1 lesson: “When considering large-scale change, nothing should be more important than crafting an iron-clad and understandable case for change and an engaging vision for the outcome of the change. This includes creating specific examples of how employees would experience the change as enhancing their work lives. Use focus groups to test the vision for how understandable and engaging it is.”

In our last post, we wrote about the large demographic shifts underway in the U.S. Baby Boomers are queuing up for the exits. That post was about the labor pool’s age groups. In other words, who will be available to work.

This post discusses the shifts in who will be working by age group – in other words, the level of participation in the labor market. In November 2007, The Bureau of Labor Statistics published their Labor Force Projections to 2016. 

Over the ten years between 2006 and 2016,

• There will be an average annual decline of 0.1% in the overall labor force participation rate.
• There will be an average annual decline of 0.6% in the 16-24 year old labor force participation rate. This decline is a continuation of a long-standing trend in lower levels of participation among teens and young adults. In short, analysts believe this group is spending more time in school.
• There will be an average annual increase of 0.1% in the 25-54 year old labor force participation rate. Increases in this group are projected to come from women spending more time in the workforce.
• There will be an average annual increase of 1.2% in the 55+ year old labor force participation rate. This increase is being driven by older people being healthier than in years’ past, longer expected life spans requiring additional savings to fund retirement, increasing costs of medical care, and increases in the Social Security retirement age.

In upcoming posts we will write about the implications of those changes and how organizations are acting in the near term to address the implications.

Our clients are worried about the coming “tsunami” of workforce retirements. Baby Boomers are queuing up for the exits, and with their departures they take invaluable knowledge about how to perform work effectively and efficiently. The people entering the workforce operate under a new behavioral model. Large-scale disruptive change is in the air.

In this post we will write about the projections for the workforce of the future. In upcoming posts we will write about the implications of those changes and how organizations are acting in the near term to address the implications.

In November 2007, The Bureau of Labor Statistics published their Labor Force Projections to 2016 with the sub-headline, “more workers in their golden years.” The phrase is an understatement.

In the ten years between 2006 and 2016,

• The 16-24 year old workforce will shrink 0.7% per year or nearly 7% over the ten-year period.
• The 25-54 year old workforce will expand 0.2% per year – or 2.4% over the ten-year period.
• The 55 and older workforce will expand 3.9% per year – or more than 46% over the ten-year period.

A recent comment on this blog regarding resistance to change led me to try to prove an intuition about the subject. (Meyers Briggs’ intuitives can look like geniuses frequently, but can also look like idiots when those intuitions are wrong!)

According to SHRM’s 2007 study on Change Management, about 70% of major organizational changes encounter employee resistance. The comment stated that typical levels of employee resistance run around 15%. Is there a way to reconcile the two? In short yes. They aren’t mutually exclusive. 70% of reorganizations can encounter resistance – but the resistance can come from only a small number of people.

A 2005 benchmarking study of 411 companies by Prosci identified where resistance to change was most commonly cited. Middle management won the prize by a long shot.

Their study provides common sense insight on why managers resist change:

1. Loss of power and control
2. Overloaded with current responsibilities
3. Lacked awareness of the need for change
4. Lacked the required skills
5. Fear, uncertainty and doubt

The managers’ reasons are far different from the reasons why front line employees resist change:

1. Not aware of the business need for change
2. Layoffs were announced or feared
3. Unsure if they had necessary skills for success
4. Comfort with the current state
5. Believed they were being asked to do more with less, or more for the same pay

Thinking back over the many initiatives I have been involved with, the front-line employee concerns were more easily handled. Provide information in a professional and compassionate way as it is available and you will earn trust, respect and engagement in the change process. The middle manager, however, has always been more difficult to address. Frequently their concerns are well-founded. They are going to lose power or they are going to become more overloaded.

As you work with them to gain their participation in the change, however, it is best to remember the leverage they represent. Getting one middle manager on your side means a whole lot of their people will follow him or her. It is a whole lot harder to convince the employees of a middle manager to not follow their leader’s resistance than it is to get the leader on your side.

I found a recent Business Week article about what happens after the corporate layoffs to be a good example of why Dilbert continues to be such a popular comic.

The article discussed, in a rather glib tone, how interior designers are persuading executives “to do something—anything—with the space where employees used to be” after their downsizing efforts.

Now, I’m all for ensuring the remaining employees stay engaged and recognize the need for extra special care during this time. Heck, I’ve been there. And I’m all for recycling – whether it be paper, plastic bottles or office furniture. But seriously…recommending the newly empty space should be used for quiet rooms, massage chairs and plasma TVs seems a little insensitive. Would employees left behind really find it appropriate that their colleague of 15 years has been replaced by the new plasma screen in the hallway?

Perhaps it depends on what stage of coping the remaining employees might be in at the time these initiatives begin. Anyone familiar with the Kubler-Ross grief cycle understands there are seven stages a person goes through during any type of traumatic change, whether it be the loss of a loved one or the loss of a job. The stages are shock, denial, anger, bargaining, depression, testing and acceptance.

More power to the interior designers who can improve our work environments through creative uses of space, lighting and furniture. But timing is everything. Making these types of changes while employees are in the shock, anger, denial or bargaining stages would most definitely cause negative consequences.

But perhaps it might make sense if done during the accepting stage, especially if the employees are given a voice and participatory role in the reconfiguration of their workspace. This ownership would involve them in shaping a new future, and not in Dilbertizing their situation.

It is fairly predicatable: change teams have challenges developing role clarity. What are the organization leader’s responsibilities? How do leadership responsibilties differ from the management level responsibilties? What is the communicator’s role? What should the communicator expect from leadership?

Here’s a quick review of those roles and their related responsibilities:  http://tinyurl.com/5ov3s5

In 2007, the Society of Human Resources published a study on Change Management during major organizational changes. At the risk of over-generalizing, just about everybody is reorganizing, but less than half of the organizations are doing so with a clearly defined approach. Approximately…

• 89% of large employers (500+ employees) had planned or implemented major organizational changes in the 24 months prior to the survey.
• 40% of organizations used change management consultant services during the change.
• Nearly two-thirds reported no particular model was followed during the change.

The survey also shows how the obstacles and challenges being confronted in major organizational changes.

It is no surprise there is resistance to major organizational changes. It also is no surprise that communication breakdown occurs. Sometimes breakdowns occur because the change being implemented has not been thought through. Sometimes communication breakdown is due to a failure of execution. As I watched one executive say to her team, “In times like these, you can never communicate enough, and it would appear that I failed to follow my own principles of leadership.”

Other challenges appear in different ways, but they all come from a common mistake: a tendency to under-resource initiatives. Whether it is people, time or money, the team charged with bringing about the change does not realize what it takes to execute a major organizational change.

We have faced the same challenges in our work. In our experience, there are two strategies that best address these issues:

• Measurement – Measure the number and types of communication. Measure attitudes. Measure attendance at lunch and learns. Measure everything, show how the measurements trend, and report on those measurements. The best way to get senior management involvement or additional resources is to show the measures that back your case.
• Leverage – The laws of physics are clear. With right sized lever, huge movements can be made easily. What are the levers for you to push and pull in your organization? Putting the COO on a speaking tour with employees? Publicly and broadly communicating status of progress by individual groups? You would be amazed to see the performance created when VPs agree to post the performance of their group relative to other groups.

There are many definitions of “change management,” and Wikipedia’s is as good as any: “change management is a structured approach to the change in individuals, teams, organizations and societies that enables the transition from a current state to a desired future state.”  The contributors to Wikipedia then suggest that change management is then sub-divided into individual change management (addressing the approach of moving a single person through a change), and organizational change management (moving a group of people through a change.) 

Change management is an approach or a set of activities.  If one uses Stephen Covey’s habit #2, begin with the end in mind, one focuses on the expected outcome.  With that in mind, I believe the most important part of creating transformational change is preparing the organization to move, hence the term, “organization readiness” or “org readiness” for short.  The activities are of course very important, but it is critically important to never lose sight of the objective.

Organizational Change Management helps impacted people feel and do the right things through tactics such as communication, training and knowledge management.  Organizational Readiness is different in that it uses those tactics as well as strong leadership, robust participatory programs and a focus on designing efficient and effective work practices.  Organizational Readiness is the operational effectiveness and workforce alignment that results from change management.

Many U. S. workers compete in the global market for talent.   Jobs can be moved to countries where comparable quality work can be performed for less or where there it is easier to find a skilled workforce.  A 2005 study from The National Academies illustrates the point:

• For the cost of one chemist or one engineer in the United States, a company can hire about five chemists in China or 11 engineers in India.
• In 2004, more than 600,000 engineers graduated from institutions of higher education in China.  In India, the figure was 350,000.  In America, it was about 70,000.
• Of 120 chemical plants being built around the world with price tags of $1 billion or more, one is in the U.S. and 50 are in China.

If you manage in a company that competes globally, or are employed by an organization whose work can be sourced globally, you know that constant change is necessary to either stay ahead or catch up.  Choosing to change slowly is a choice to lose eventually.  Choosing to change quickly is choosing to compete aggressively.