Posts Tagged “Change Management”

I’m trying to get published and need your help getting votes on a web-publishing venture. I know it is a little hokey, but getting published was a New Year’s resolution I did not achieve in ’08, and I am really pushing myself in ’09.

As all of you know, I work in change management. I frequently come across people who don’t believe they have what it takes to drive change in their organization. During several speaking engagements in the fall, I was able to illustrate to people that many of us already use effective change management in leading their own families – they just need to apply those lessons at home. There is a web-publishing venture called Change This that publishes what their readers want, and I am up for consideration this month. If this works, it will turn into a book and then millions of dollars and I will buy dinner next time. If it doesn’t, you will still get to know about Change This.

Thanks for clicking on the link: http://changethis.com/proposals (I’m on page 2), pulling up my proposal and voting for my proposal.

Monday’s post on the need for leaders to communicate during the economic crisis has been buttressed by some recent research. An October survey of over 500 working Americans by Weber Shandwick showed that:

• 62% were expecting difficulties in meeting corporate goals.
• 71% believe their company’s leadership should be communicating more about the economic situation.
• 54% had not heard from their company leaders on the impact of the crisis on their company.

Now is the time for leaders to be most visible. Visible leadership enables stability, stability turns into productivity, and productivity turns into dollars. Abdication to the company rumor mill is a wasted opportunity.

Disclosure statement: Monday’s post quoted from the CEO of Weber Shandwick. Today, I quote from one of their research documents. I have no affiliation with the company, but find it interesting that they got the same message to me through two different channels. Kudos to the public relations company - you seem to know something about executing PR.

The current economic crisis offers plenty of change, but little in the way of change leadership. Harris Diamond writes in an Op-Ed in the October 14, 2008 edition of The Washington Times…

“What we’ve got here is failure to communicate.” The immortal line from the movie “Cool Hand Luke” is especially apt these days.

The systemic failures plaguing our banking and financial system are real and have caused genuine pain to millions of Americans. But the problems have likely been made worse by the public’s reaction, or overreaction, to the systematic failure of our nation’s political and financial leaders to communicate effectively with us since the crisis began.

At every step along the way, we have been told that the most recent government initiative taken to resolve the problem was sufficient and would be successful. And, within a matter of days or weeks, the claim was proven wrong. As a result, the banking crisis has morphed into a crisis of confidence in our leaders, our institutions and, in no small measure, in the free market system itself.

There are many rules to follow in the practice of crisis communications, but two are inviolate: when in crisis, communicate; and don’t do anything to undermine your credibility. The people who run our government and financial institutions have violated both.

(The whole piece is available at this link: http://washingtontimes.com/news/2008/oct/14/a-crisis-of-confidence/)

I saw the effects of this leadership crisis on Saturday night during a dinner with several friends. One of these friends is a nationally-known investment manager. (Our children go to school together and you may have seen him on the television.) He told a story about eating dinner with somebody even more well-known - a general of the financial industry and a political appointee of the highest level. It wasn’t a good story.

Much like we were waiting for some form of comforting wisdom from our friend, he had had wanted to hear similar wisdom from this uberexpert. The general’s answer to the question, “how do we get out of this,” was relayed to us with just one degree of separation, two days of aging and three measures of nervousness: “pause…. pause…. clear throat…. pause…. I’m not sure if anybody knows.”

We were crushed. If anybody could have provided us wisdom and comfort, it would have been our friend. Instead, he gave us cause to worry well beyond his own pedigree.

Whether it is a dinner among friends, or a meeting where a VP says, “I don’t have time to worry about preserving productivity, I need to cut heads quickly,” our leaders are showing fear these days.

I’d suggest a “cool hand” is far more necessary in times of crisis. People who look up to you are basing their actions on yours.

John Kotter, one of America’s most influential business gurus, has hit the presses recently with a piece on urgency. I always find Kotter’s material a very clear reminder of the basics that make change successful.

In this Change Manifesto, he speaks about:

• The environment we find ourselves in today is changing faster than ever. Although this is not a new observation, it can’t be emphasized enough.
• Change is no longer episodic, it is continuous. As a result, the ability to manage change well - and quickly - is now a fundamental requirement.
• Managing change well is all about creating and managing the right kinds of urgency: focused urgency and not wasteful cycles of activity.

His piece is worth reading.

Transformational change results in lower productivity. People are worrying about jobs, who is getting which job, how they will work in the new job, and a gazillion other things. Every level in the organization is wondering, “What’s in it for me?”  The wondering and worrying translates into lost productivity - and large opportunity costs. What value would employees create if they weren’t worrying about the big change?

It would probably take a doctoral study to analyze the numbers comprehensively, but some directional assumptions point toward a scary story. The spreadsheet below takes some average numbers for revenue and costs per employee, and estimates the value created by each employee.

The logic continues that if the average employee’s productivity falls 10% during the change, the company has foregone $2,070 in value. Because the employee contributed 10% less, less value was created. People aren’t creating new products, selling to new customers, analyzing trends for opportunities, negotiating better prices, etc… They are too busy wondering and worrying.

Carrying the logic all the way out, if the change program lasts 12 months and the company has 1,000 employees, the company has an opportunity cost of nearly $25M. 

$25M is a big number, and one would naturally ask, what can be done to reduce it?

The two options are “faster” and “better.” Faster says: get the 12 month project done in 11 months. Better says: get the project done in a manner whereby productivity is preserved. (This productivity preservation requires change management approaches.) Based on the assumptions I used, “better” is clearly - well… better.

A couple comments in closing:

• To repeat - these numbers aren’t an analysis. These numbers are directional estimate based on some reasonable assumptions. Using the mildest of assumptions, however, shows that productivity losses extrapolate into some large foregone value.
• If you would like to try your own numbers, you may download an Excel version of the Change Initiative Cost Estimation Worksheet.
• The figures regarding revenue and costs per employee in the spreadsheet come from PriceWaterhouseCoopers - Saratoga’s 2007 / 2008 US Human Capital Effectiveness Report.

I was recently asked by a Human Resources professional how he could help their company become better at managing change.

I felt a little bit like the doctor answering the question, “I have a bad headache, what’s wrong with me?”

Without a lot more information, the answer will be simple, “Take two aspirin, and call me in the morning.”

Resisting the urge to encourage him to call my office, I gave my diagnosis-free prescription: “Improve senior management leadership capabilities.”

Without a doubt, the approach will help. As detailed in a prior post, CEOs believe senior manager skills and experience stand in the way of implementing change. Not only are senior manager skills an opportunity, but improving their capabilities will give you leverage in future initiatives.

The better diagnosis would come after some frank conversations in the C-Suite. Six topics should be covered:

1. Please tell me about the largest change initiatives you have gone through in the last five to seven years.

2. What went well with those initiatives, and what did not go as well?

3. How likely are we to go through large-scale change in the next three years?

4. How likely are we to repeat the positives and negatives of your previous experiences?

5. How well prepared are our senior and middle managers to lead future changes?

6. What should we do now to best prepare for the future?

After having this conversation with each member of the C-Suite, I would identify the common themes and report back to them as a group. The report would have three elements:

• What did they say?
• How does their collective view compare to best practices and experiences in other organizations?
• My recommendations to address the opportunities.

Those recommendations could cover a wide range of options, but people-related opportunities are likely to dominate. The best part of approach is that the go-forward plan will be largely of their creation. They will give you a charter to prepare for change and become your guiding coalition in that journey.

Perhaps I should give my acquaintance a call and give him some new advice. He needs to go have a frank conversation with the C-Suite.

Monday’s post was about the types of change occurring in large companies. Today’s is about what stands in the way of organizations implementing large-scale change.

PriceWaterhouseCoopers’ 11^th Annual CEO Survey asked: “Which of the following people challenges were critical barriers for your organization in terms of achieving the desired benefits?” Frankly, the answers are fairly depressing.

The depressing part is that all five of these barriers are within the CEO’s control. The CEOs are talking about their own people.

Some observations:

• As Bill Gates said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” He was likely not referring to the pace of change within a company, but the quote is still appropriate. The C-Suite is typically looking for transformational change to occur much more quickly than it actually takes. What might be seen as a two-year project is usually a three-year project. Sometimes the factors above play a role, but sometimes it is just plain old, overly optimistic, bad estimating.
• The Human Resources function has a responsibility to address. If speed, flexibility and agility equal competitive advantage, and senior management skill sets are a significant barrier, HR should be forcing change management skill development.
• The CEOs never mention that they themselves may be part of the issue. They aren’t saying, “Failure to hire appropriately skilled senior managers,” or, “Inadequate time spent on leading change initiative.” The cure for some of these issues could very well be the personal demonstration of change management skills.

Based on casual conversations with just about anybody in the business world today, large-scale change is commonplace. The Society for Human Resources (SHRM) published the Change Management Survey in 2007 and quantified those types of change. Over the two years leading up to the survey, companies with more than 500 employees had the following types of change: 

The key takeaway: change is occurring for any and all reasons. In the words of Benjamin Disraeli, “Change is inevitable. Change is constant.”

The question invariably comes.  “How long will this ‘transformation’ take?”

The client is thinking that, like the children of Lake Wobegon, the employees of this company are above average, so it won’t take long. But whether it is a merger integration, a change in direction or a large-scale reorganization, it almost always takes longer to achieve the vision than the client would like. The reason is simple: it takes time to move a group of people to do anything, and moving a group of people takes work.

Take this example from my vacation: seven people deciding on lunch. The conversation started at 11:30 and covered the following topics: choice of food, best place to obtain, who would drive, relevant allergies, how the choice would mesh with the dinner choice, what would be for dinner, confirmation of location, take out or pick up, getting a menu, what the kids would eat, the need to make a quick phone call, the need to change shoes, cleaning the back seat of the car, forgetting the cell phone, and who would sit in the front seat. The cars left the driveway at 12:10. It took 40 minutes to accomplish the simplest of tasks.

Granted, part of this debacle was the effects of Parkinson’s Law: work expands to fill available time. Given that it was vacation, time was aplenty, the adults weren’t truly hungry, and the kids weren’t screaming. The debate stretched on because it could. Unfortunately, decisions at work can drag on as well - and so does the transformation.

So what is a change leader to do? The answer is simple: cut the available time. When establishing goals for a transformation, a leader cannot just set the long-term, visionary goal. A leader also must set milestones along the path, and hold people accountable for achieving the interim goals along the way. The change leader must create a sense of urgency by helping people move from milestone to milestone as quickly as possible. The leader must break the long visionary journey into a series of discrete, focused trips.

Summer vacation has ended, and so has the big trip to see family. During our trip, my brother unintentionally provided a great observation on change.

He has had a lot happen recently. He finally found and married the woman of his dreams and ended his wild and crazy single days. He bought his first home; became neighbors with his mother-in-law and brother-in-law; became an uncle to a severely autistic boy; changed jobs from a big company to a start-up; began working out of the spare bedroom; turned 40; and became a father himself. On top of all this, his wife broke her foot three weeks after giving birth. The poor guy is definitely going through change.

In the middle of a long conversation about all that has happened, his wife called from the bedroom: “David…  John needs to be changed.”

My brother, physically tired, but filled with fresh memories of his recent lifestyle, arose from the couch, and observed, “John likes to be changed a lot more than me.”

His cynical observation is worth putting into a change management context. Unless the current situation is outright unpleasant, nobody will want change. The leader’s job is to show why the new way is better than the current.

In defense of my brother, he couldn’t be happier. He is just going through the process of change, and realizes denial and anger won’t help. He also realizes he can’t really bargain with a woman with a broken foot. If possible, he is happy and depressed at the same time. (Either that, or he needs to be less subtle in bargaining with me to change the diaper!)