Posts Tagged “Organizational Change Management”

In the midst of a major transformation initiative, senior managers are frequently surprised by what employees say in response to open-ended survey questions. As a result, we are big fans of making sure senior management hears these comments. We are also big fans of ensuring senior management acts visibly and appropriately in response to what they hear.

A while back, our company was retained by a client in the midst of a reorganization. The 7,000 employee business was moving from a single corporate entity to a divisional structure along product lines. It had been widely stated that the moves would not cut headcount except for a few senior-level positions. The economy was healthy and this company was meeting its objectives when this was underway.

We ran a survey to assess the situation, and here are a few of the comments we received:

• Give the big picture. As people become aware of this, then you can start drilling down into levels of detail.
• It appears we are doing a lot of explaining without a lot of information being revealed. Rumors, speculation and anxiety grows while we wait. I would have done more “behind the scenes” work and made the changes less visible to the organization until we were ready to make the change.
• I would like to see more “personal” meetings with senior levels. Although the communications are effective, they speak to a broad audience. I would like to see members of the executive team go to each site and personally speak to smaller groups of people to explain the rationale and changes.
• The communications have improved from senior management. There should be a weekly bulletins.
• Be open and honest. The rumor mill is rampant about 20% head count reductions. The change was not communicated this way in the beginning. There is even less communication now than ever. Associates want to know the dates when they will find out about their destiny. The vision about accelerated growth has disappeared. There is next-to-no communication about process changes unless you are directly involved.
• Keep up the good work.
• Set an exact timetable. We keep hearing conflicting dates.
• My manager has done an abysmal job of explaining this to our group, has shown no compassion and seems disinterested in our concerns. The process is too slow and is killing our culture. We hear very little from the executives and they don’t do any “walking around.”
• Will these moves really change the company and break down silos? Or is really a financial restructuring that will enable us to sell off parts of the company?

What are the takeaways:

1. Rumors fill vacuums.
2. Leaders can’t over-communicate. Be visible. Some people want more detail and some want less. There is no way to make everybody happy.
3. Have a plan and communicate your plan. Set expectations and then meet them.

I’ll post more soon.

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.

As a business discipline, meaningful and effective measurement sometimes proves to be elusive. But, it is an absolute must in transformational change, certainly if there is to be continuous improvement.

Consequently, “Evaluate Effectiveness” is the sixth step in The Brookside Group’s ASPIRE Change Leadership Model^TM, and builds on the measurement work from earlier steps. In this step, you measure the effectiveness of your tactics. Because, typically, you’ll be looking for both business and behavioral results, you’ll need the right balance of quantitative and qualitative insights.

Quantitative surveys can statistically validate what tactics were most effective at creating awareness, understanding and participation in the program. They also can help you assess such factors as the degree of individual commitment to the initiative.

As a partner to quantitative surveys, you also should implement qualitative surveys because they can give you valuable insights on your employees’ thoughts, attitudes, perceptions and emotions that might figure into engagement issues.

However, best practices tells us there is some foundational work to be done before starting any research project, whether it be quantitative or qualitative. This foundational work focuses on a smaller group of employees and will give you the insight to develop a more scientific research and statistically valid survey.

The foundational research should follow four simple steps:

1. Develop a list of three to five open-ended questions. Open-ended questions can’t be answered by a simple “yes” or “no,” and, thus, elicit a more detailed response.The questions should attempt to tap into the basic thoughts and feelings of employees regarding the change. Some possible questions might be:
   

   What do you think about the company’s plans to change?
   What do you understand about the need to change?
   What goal is the company trying to reach with the change?
   What concerns do you have about the change?
   How confident are you in the company’s future?
   What do you think will happen if the company doesn’t change?
   How do you think the change will affect your personally?

2. Target a manageable number of people.For an informal survey as this, aim to contact five to 10 participants. However, do so over a broad range of job levels.
3. Document the responses as best as you can. Pay special attention to words indicating emotion.
4. Analyze the responses and use them as the basis to develop questions for your quantitative or qualitative survey instruments.

In today’s business world, no competency is more crucial for a manager than the ability to spearhead change effectively and expeditiously – and in a way that fully engages all stakeholders.

As we’ve already established, change management is a systematic and coordinated approach that can be implemented on an organizational, operational or even personal level to create, lead and manage change. However, to successfully lead any change, one needs to follow a series of six comprehensive steps. These steps are manifested by The Brookside Group’s ASPIRE Change Leadership Model^TM:
 
For the successful implementation of any large project, and especially a change initiative, it is important to perform project steps in the correct order. Thus, the ASPIRE model begins at the top of the circle, with Assess the As-Is.

The Assess the As-Is gives you with some critical components to launch your change initiative:

• The awareness and understanding to explain why change is needed based on current business issues.
• A clear picture of your current state. You might have an idea of how your organization is performing, but thoroughly investigating the as-is state ensures you have the facts and not just guess work.

All this results in a platform for change that helps you establish the sense of urgency – one of John Kotter’s key reasons for failure (see posting Why Transformation Efforts Fail) – to rally support. Support is critical because for change to happen, according to Harvard Business School, 75% of managers must believe that maintaining the status quo is more dangerous than making a change.

In future posts, we’ll discuss the other steps in detail. But one final comment for now: You’ll notice, that The Brookside Group’s ASPIRE model is a closed loop. That’s because it needs to be a repeatable and sustainable process of continuous improvement that brings about meaningful change and continues to drive your organization ever closer to optimal performance. This is an important point to remember as we discuss the other steps.

A 2006 study from the European Users’ Group and the University of Mannheim provides some insight into spending on Organizational Change Management during SAP implementations. The big takeaway: half the respondents are spending more than 5% on people-related topics.

In our experience, as organizations grow in size, people-related issues expand even more quickly. Although the study did not provide specifics, it would be fair to assume smaller businesses are spending less than 5%. To get the necessary people and technical alignment, larger businesses spend more than 5%.   

Last week was a busy week. We began work with a new client and I was battling a mini-depression over an assessment that my profession might add no value to society.

My battle started with an article I read about Wall Street wizards, hedge funds and derivatives. The author, an Andy Rooney-type, claimed if a person couldn’t explain what they did for a living in two sentences, they weren’t adding value to society. Farmers, doctors, plumbers and janitors were all on the good list. “Liquidity tranche default analysts” were definitely on the bad list.

So if I can’t define “organizational change management consultant” in two sentences, does this mean I am not adding value to society? Does my mother-in-law have any idea what I do when I say I:

“Help clients’ managers lead their people quickly through organizational changes. I help by being a project manager, strategist, writer, teacher, coach, scorecard keeper, presenter, analyst, tactician, assessor, trainer, and graphic artist.”

The answer is no. Those two sentences, although accurate, really don’t get the meaning across. I’m afraid I have failed the author’s test. I need more than two sentences.

If unbound by the two sentence definition constraint, I frame a conversation about the work to be done with questions about an organization’s relative potential for success:

1. Does it have the right goals and plans? Are the right goals established for the situation? Will the plans enable the organization to reach the goals?
2. Do people understand what they are to do? Great plans that aren’t understood have no value. How does the leader ensure people understand the plan? Are they organized to succeed and have all the enablers necessary to achieve the goals.
3. How engaged are people to achieve the goals and work the plans? The right plans, even if well understood, will not be successful if people don’t want to make the necessary effort.

Depending on the answers, the organizational change management consultant’s job changes greatly. At the most general, the consultant’s job is to help the organization answer yes to all these questions. The specific work changes based on the nature of the challenge, the scope of services being retained, and the tactics required.

Regardless of the author’s perspective on whether certain jobs add value to society, there is value to an organization in moving past change and returning to its mission. The faster the move, the more value is created. If a consultant can speed that move, the consultant helps create value.

As an aside, I decided on Sunday the author was wrong – which just happened to be Father’s Day. Sometimes more than two sentences are needed. To prove the point – try defining “father” in two sentences. Or – obviously – “mother.”