Document 6508077
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Document 6508077
How to Keep The People From Crashing When the System Goes Live: Ten Success Factors for the Change Leader Marcia Ruben, CMC, Principal Ruben Consulting Group 520 Pacheco Street San Francisco, CA 94116 (415) 564.7135 (phone) [email protected] (e-mail) http://www.rubenconsulting.com (website) Introduction I had just begun work as the external change management project leader for a large-scale SAP implementation for a Fortune 500 company. This company had assembled a full-time team of top performers from each of their functional areas (sales, finance, operations, marketing, etc). These employees were pulled from their day-to-day responsibilities to work on this project. Joining them were a team of 15-20 technical consultants who flew in from their respective hometowns on Monday and left Friday, returning week after week for a period of several months. The total team, which also included several from the company’s information technology department, occupied an entire floor of the corporate headquarters. Both the internal and external teams were led by experienced project managers who knew a lot about bringing in projects on time and on budget, but not as much about how to plan for and manage the impact such large-scale change would have on people within the company. Needless to say, the company’s investment both in terms of enterprise software, external consultants and the cost of internal talent, ran in the tens of millions of dollars. At about the same time, March 1997, a Wall Street Journal article compared the implementation of enterprise resource planning software (in this case SAP) to the corporate equivalent of a root canal. The comparison of enterprise resource planning (ERP) projects to a corporate root canal resonated with many on the team. During my first root canal, I experienced excruciating pain as the dentist hit what felt like a raw nerve. Implementation of ERP packages, which coordinate all of the business activities of a company, has the capacity to cause massive pain because it impacts how people do their jobs, who they work with, and even the corporate culture. Corporate executives salivate at the promises that ERP packages will deliver, chiefly, information that allows a company to run faster, more efficiently and with greater flexibility (Cangemi 1999). However, in order to Copyright 2003 Ruben Consulting Group All Rights Reserved 1 realize these promises, companies usually discover, after assessing their current work processes that a streamlined, or even radically different process will produce better results. Making such massive changes at the organizational, division, department and individual level means that there is a very real possibility of disruption in the workplace as the company moves from one way of operating to another, while still demanding that the product get out the door. The purpose of this article is to share ten success factors and specific steps in each for making certain that when new technology “goes live,” the people not only don’t crash, but are on board and are ready to work in a new way. Root canals can be tolerable if the patient is prepared and properly anesthetized. Likewise, large-scale change implementation can be successful with extensive forethought, planning and leadership. What is Change Management? Large-scale technology initiatives cost millions of dollars to purchase and implement and failure to reap those returns poses a significant risk to corporations. It was out of the need to mitigate these risks that what has been variously called change management, change implementation and/or change leadership was born. Change management is the proactive process of anticipating and effectively preparing for the organizational and people impacts of large-scale change in a way that ensures that desired business outcomes are realized. Change management relies on a variety of tools, practices and techniques that take into account the leadership and cultural realities of the organization. Typically, companies either have the talent and expertise in-house, or hire external consultants with skill and experience in large-scale change processes. Such consultants can provide an understanding of the human and organizational dynamics at play, the ability to influence and teach without taking over the project, and exceptional strategic thinking, communication, and interpersonal skills. Danger Signals That the People Will “Crash” Before the System Goes Live There are a number of indicators that signal danger for a large-scale change implementation. It is precisely the lack of awareness of and disregard for these signals that causes an ERP project, for example, to feel like a root canal. Listed below are some of the most typical danger signs: • • • • Corporate culture not prepared for a massive change No forethought given to potential impact on people, processes and productivity Project sponsors do not demonstrate continued support Key business leaders are skeptical about project and don’t release people Copyright 2003 Ruben Consulting Group All Rights Reserved 2 • • • • • • • • Project is driven by Information Technology rather than the business leadership Key Stakeholders not only don’t support change but actively block it Proposed change requires transformation in culture and past cultural change efforts have failed Dollars not allocated for training Leadership has track record of not communicating to the workforce Reward systems reinforce old behaviors rather than desired ones No thought is given to new roles and responsibilities or how to transition workforce Changes are made but the organization structure remains the same, making it difficult to realize a return on investment The following are ten success factors that if followed, will ease the pain of largescale change and will ensure a successful implementation. Ten Success Factors For the Change Leader 1. Conduct Upfront Assessment and Planning 2. Ensure Demonstrated Leadership and Sponsorship Commitment 3. Involve and Engage Stakeholders 4. Build an Expanded Project Infrastructure that includes Business Representation 5. Assess and Monitor Cultural Impact 6. Provide Training and Development 7. Provide Honest and Straightforward Communication in a Timely Manner 8. Rework Reward Systems To Align With Change 9. Identify and Plan for Workforce Transitions 10. Redesign and Align the Organization 1. Conduct Upfront Assessment and Planning I vividly recall making a presentation to the executive team of a major corporation that was on the brink of implementing SAP. The process was going to cost them upwards of $40 million dollars. The consulting firm I was with at the time proposed that the company invest in a change management planning process that would ensure that the people in the company were adequately prepared for this enormous change in how the company was organized, how they worked, and possibly with whom they worked. We clearly described the pain and disruption that had transpired in similar implementations when the people issues were not attended to. One of the executives, when told that one of the biggest derailers of these types of projects was the people aspect remarked, “ They’ll get over it.” Copyright 2003 Ruben Consulting Group All Rights Reserved 3 Fortunately, wiser heads prevailed and the company did invest in identifying potential impacts of this technical investment before they began the project. It turned out that there were some clear danger signals that, if not discovered and planned for ahead of time, would have seriously derailed the project. Thoughts about the impact of how the technology will impact people and how their work will get done are often an afterthought. The implementation is much more likely to go smoothly when companies include a dedicated change management team as a key partner with the technology and business reengineering process. It is important to recognize that gathering specific information about the recipients of the change during the design phase will help better inform the change management strategy. It is imperative to involve the business in gathering this information. In one particularly successful project, during the early technologyplanning phase, we held a series of data gathering sessions using large mind maps and had people “vote” using dots. Using this kind of early data gathering, a company can collect invaluable data, get business unit support and buy-in, and know exactly what issues to focus on when planning the change implementation strategy. It is also important to consider whether the company is even prepared to make such a change. Even if the benefits are compelling, if a business has an experience of failed change efforts, is thinly staffed, engaged in multiple large-scale initiatives, or if the business leadership is informed of the effort and sacrifice but don’t have the ability to “stay the course,” it is best to cut losses early and not proceed. 2. Ensure Demonstrated Leadership and Sponsorship Commitment By far, the most important element in any large-scale change effort is demonstrated leadership commitment. Senior level teams may deliberate over the wisdom of committing significant dollars for a change effort. They may make the appropriate speeches as the project is kicked off. However, as priorities and conditions change, it is easy and natural for leaders to be distracted. For example, in one major implementation, the project team had been sequestered for months planning for an SAP implementation. Things seemed to be stalled. After facilitating a leadership session for all of the project leaders, we discovered that certain functional areas said that they were in favor of this organizational change, and indeed they were on an intellectual level. However, if it meant actually altering how the salespeople worked, the Sales VP was not willing to make any changes. By far the biggest problem was the perception of the team that their executive sponsors were not “walking their talk” in terms of commitment to the project. Other priorities received needing funding and resources and important messages regarding this technology initiative were not being communicated to the workforce. This effort ultimately failed. Change implementations that have succeeded do so because of the specific and repeated behaviors demonstrated by the leadership team, even when the going gets Copyright 2003 Ruben Consulting Group All Rights Reserved 4 tough. Specific change strategies and behaviors for leaders are discussed at the end of this article. 3. Involve and Engage Stakeholders Stakeholders are those internal to your business and external customers, suppliers and shareholders who might be impacted either directly or indirectly by the change. There are several layers of stakeholders: those directly impacted, those somewhat impacted and those slightly impacted, and those not impacted at all. A vital part of any upfront project planning process in a technology implementation is to correctly identify each stakeholder group and anticipate possible impacts as well as the current and desired level of support needed to ensure success. A best practice is to facilitate a stakeholder analysis meeting with the sponsoring executive team, asking them to identify key stakeholders by group and name, and then to come to consensus on where they believe those stakeholders stand with regard to the proposed change. Stakeholders can be divided into a number of groups. Based on Dick Beckhard’s work (Beckhard and Pritchard 1992), the most common categories are: • • • • • • Strongly supports change and will champion on your behalf Strongly supports change, will not champion on your behalf Supports change Neutral Strongly opposes change but will not obstruct Strongly opposes and will make efforts to obstruct progress Once this analysis is complete, the executive team is assigned contacts and their role is to meet frequently with stakeholder influencers to explain the change, understand their concerns, and bring back to the project team vital information that might impact design and/or implementation process. Many a project has derailed when this process is not followed and engaged in with dedication and commitment from start to finish. 4. Build Project Infrastructure that includes Business Representation When the Information Technology group is the single driver of a large-scale ERP project, without the voice, input and championship of the business, it is doomed to fail. Why? Because the system ultimately has to do what the people who run the company needs, not what the technology people think that they need. In one successful project, a team of known communicators was chosen to be on the team. Their participation, as well as the enlistment of other champions within each business unit, helped to make the project a success. It is important early on to identify people within each function who have influence within their own Copyright 2003 Ruben Consulting Group All Rights Reserved 5 organization, who can clearly articulate these needs, and who also are willing and able to communicate progress and their implications to their functional organization. 5. Assess and Monitor Cultural Impact In order for the promise of an enterprise resource planning software package to be realized, changes in how the company operates and how work gets done must occur. If the changes are significant, existing company norms, i.e., “how things get done around here,” won’t support the newly required behaviors. For example, in one ERP implementation with a Fortune 500 company, the cultural ramifications in implementing the process were significant. This particular company, like many others, operated with a top-down management style, in silos. If a task was not in someone’s functional area, e.g., operations, it was “thrown over the wall” to another function. This “it isn’t my job” mentality meant delays in things getting done. The implementation of the ERP system would allow the company the capability of putting critical business information at everyone’s fingertips. In a company in which information was power and knowledge resided only in one function, the cultural ramifications of giving everyone access were staggering. In order to get maximum benefit, the leadership of the company would need to embrace, demonstrate and model a new leadership style, one in which an internal competitive attitude was replaced with a collaborative mindset. In this particular example, work with the executive team to change leadership mindset was critical and helped set the stage for a successful implementation. Linda Ackerman Anderson and Dean Anderson define mindset as “…one’s worldview, the place or orientation from which you experience your reality and form your perceptions of it. The cornerstones of your mindset are your fundamental assumptions about reality and your core beliefs about self, others, and life in general.” (Anderson and Anderson 2001). Changes that require a transformation of how work is even conceived and completed must start with the leadership team driving the necessary cultural changes. In another large-scale technology implementation, an upfront cultural assessment revealed that certain corporate functions like sales and finance had developed their own ‘homegrown’ software solutions to help them run their business. Their company’s entrepreneurial style encouraged divisional leaders to do whatever it took to get the work done. There was a certain amount of pride in developing and perfecting technology solutions that became the way an entire workgroup did business. Adding software at enterprise level meant standardization, and standardization was against the grain of a freewheeling, do whatever it takes spirit. As in this case, working closely with divisional leaders to understand the concerns they have in running their business will help the technical team made the necessary technical adjustments to ensure that there are no disruptions. Additionally, Copyright 2003 Ruben Consulting Group All Rights Reserved 6 articulating to the workforce what will change, what won’t, and the benefits of the new system and process are essential to a smooth implementation. 6. Provide Just-in-Time Training and Development Whether the technology implementation involves enterprise wide software, or a new email system, there is likely to be a change in how employees work. Planning ahead for targeted training is essential. While the technology and business process team are planning the specific technical elements, it is critical that the training resources are included so that training can be developed and ready prior to implementation. The most successful training efforts were those in which the media of training was matched to content and audience need. For instance, some technical training can easily be accomplished online via the company intranet. Other training requires face-to-face instruction, practice and feedback. Training must be ready to roll-out prior to implementation, which means that pilots of the training program should be designed and completed well in advance. Developing and providing targeted training that prepares the workforce in skills for new tasks is essential to implementation success. 7. Provide honest and straightforward communication in a timely manner Without exception, when asked in upfront change readiness assessments what was most important in organizational change, employees cited the need for ongoing communication. Paradoxically, project teams working long hours on tight timeframes under constantly changing conditions and parameters want to wait until “everything is tied down” before developing messages and channels of communication. In the most effective large scale changes, a communications expert is attached to the team, designing and delivering an ongoing stream of project updates that answer the basics: who, what, when, where and how. I worked on a successful large-scale change effort in which the communication team developed succinct communication packages for each corporate leader. As the change progressed the company held a series of large-scale meeting with the top leaders of the company. The top leaders left the meeting with a communication packet that they used in a series of meetings with their entire staff. This same presentation was cascaded throughout the organization. This ensured consistent communication. Even when clear answers are not known, communicating what the team does know, what they don’t know, and plans for when and where gaps in information will be communicated go a long way in quieting the ever-present rumor mill. Copyright 2003 Ruben Consulting Group All Rights Reserved 7 8. Rework Reward Systems To Align With Change An essential part of any change management plan includes the reworking of the performance management system. Workers must be evaluated and rewarded for new behaviors that lead to increased effectiveness and overall efficiency. In one Fortune 500 Company, plant managers ran their plants however they saw fit. There was no standardized, disciplined approach. The implementation of the ERP system meant that workers, many of whom had never operated a personal computer, would now be required to accurately enter data on a daily basis. This information would be integrated with other company information to provide an overall picture of the company’s health at any one moment. The reward system was changed to reflect the need for the disciplined and timely entry of data by the workers. Managers as well were rewarded on the decisions that they made based on the data at hand. Reworking reward systems is an integral part of any change management plan because without it, employees have no incentive to support the change. 9. Identify and Plan for Workforce Transitions One of the unfortunate consequences of large-scale change is either the redeployment or laying off of the workforce. The way a company handles redeployments and layoffs can greatly impact the morale of those who remain in the company. A part of the critical upfront planning of a large-scale technology change is an assessment of the work processes, roles and skill sets required in the new organization. In one successful example, the company assembled a team of human resource professionals to plan for the inevitable disruptions deployments and layoffs cause. Every effort was made to redeploy existing employees to new jobs within the company. When this was not possible, the company planned generous severance packages and outsourcing services. Managers were notified ahead of time and given a complete package of how to communicate in a way that preserved the employee’s dignity and self-esteem. The rest of the company received communications in a timely manner. In this particular case, people were not necessarily happy about being let go, but felt that the company had treated them in a fair and humane way. When new openings came up later with the same company, they were much more likely to accept a job with that company. Planning ahead for workplace changes, then, requires thinking about the impact of the change on individuals, work units and the organization as a whole. It also Copyright 2003 Ruben Consulting Group All Rights Reserved 8 requires planning for costs associated with those changes. An outside change consultant who is experienced in these matters can be very helpful. Large-scale change also requires more expansive thinking about how the very organization is structured. 10. Redesign and Align the Organization Large-scale technology implementation that involves a change in processes and workflow must most likely also require a change in the way the company is organized and structured. A company organized by functional groups, e.g., sales, finance, operations, R & D, may find that this structure impedes the smooth flow of information. David Nadler and Michael Tushman define “organizational capabilities as ” …the unique ways in which each organization structures its work and motivates its people to achieve clearly articulated strategic objectives.”(Nadler and Tushman 1997). In one successful technology implementation, the consulting team assembled a cross-section of the organization for an intensive five-day organization design planning process. With all of the key stakeholders in the room, everyone heard the same data and was involved in redesigning an organization that would work more effectively than the current one. In another example, the consultant worked with the project team to map out the current and desired work processes, introduced a variety of organizational designs, e.g., functional, by product, by geography, etc. The consultant facilitated a process that ensured that the resulting organization design aligned with the organizations’ goals and strategies and would ensure a smoother business operation. The question any change leader must ask is whether the current organization design and structure supports the new business processes and enables maximum benefit from the technology. If the answer is “no,” the change leader must be willing to make the changes that ensure the best return on investment. These changes are best done in a way that captures the hearts and minds of the workforce. This can be accomplished by giving those most impacted input and involvement in the process. Copyright 2003 Ruben Consulting Group All Rights Reserved 9 Summary "Technology will introduce change and turbulence into every industry and every job. In particular, the necessity for constant learning and constant adaptation by workers will be a certain outgrowth of technological innovation." William B. Johnston and Arnold E. Packer Workforce 2000, 1987 Changes in process wrought by new technology can also mean a change of roles and power within organizations. As technology evolves, it "moves the locus of knowledge and hence the power in the organization, it changes the time dimension of processes and decisions, and it enables new organizational constructs to be implemented." Sloan Management Review, 16& 17.Summer 1992 The explosion of technology implementations in the mid-to-late 1990’s led to more streamlined and efficient organizations, when these technologies were implemented thoughtfully. More technology innovations continue to be introduced, the latest being interfaces with the customers via the worldwide web. Each innovation that involves changes from the current to a new way of operating will require a plan to ensure that the “people don’t crash when the system goes live.” Ultimately, it is the business leadership that must lead, direct and drive any large-scale change. Based on work with a number of large-scale change projects, the following is a list of behaviors that clearly express leadership support. The change management consultant’s role is to educate leaders regarding these behaviors and provide ongoing coaching and support. • Clearly and repeatedly articulate future vision and its benefits to the organization through one-on-ones, staff meetings and company wide meetings. If the organization can visualize a clear and compelling future they are much more likely to become champions for the change in order to more quickly make the future vision a reality. • Assign appropriate resources to ensure successful change implementation. Find substitutes to handle their day-to-day responsibilities. This is a good growth opportunity for both the people on the project as well as for those doing the day-to-day work. • Make decisions and set priorities that support the change. People are often skeptical of corporate changes and regard them as the “flavor of the month” that will go away if they just wait it out. Only when employees see leaders stick to their guns over the long haul will they take it seriously. Copyright 2003 Ruben Consulting Group All Rights Reserved 10 • Work “behind the scenes” to ensure continued support of key stakeholders. Leaders play a key role in making sure that all impacted parties are onboard and champions of the change. • Implement a “consequence management” system to reward change. People will do what is inspected, not what is expected. Leaders who are resolute in making changes make sure that reward systems change. • Monitor the change to spot early issues and make sure that they are resolved. Change by its very definition is messy and unpredictable. A change plan is only a framework and guideline. People and work processes must be constantly monitored to prevent unintended consequences from disrupting the process. • Release people to be educated and trained. As simple and obvious as this sounds, leaders often overlook this important reminder. By learning from past lessons, many of them painful, corporate root canal dramas, companies can short-circuit the pain and disruption of large-scale change. Engaging professional management professional expertise to help guide these largescale change efforts has many advantages, including the benefit of knowing where the “potholes” are and what works to avoid them, objectivity, leadership coaching and strategic thinking. Ultimately, however, it must be the leadership of the company itself that makes the change happen. About the Author Marcia Ruben, principal of Ruben Consulting Group and a Certified Management Consultant, is an organizational consultant who helps individuals, teams, and companies achieve higher performance. Her firm focuses on organizational change management, leadership and team effectiveness and executive coaching. She has worked with leaders of a variety of mid-size and Fortune 500 companies in a variety of industries for over twenty years. Marcia’s change work is grounded in training in Appreciative Inquiry, Facilitating Large Systems Change, the Lominger Organization Architect, and Dannemiller-Tyson’s Whole-Scale Change model. Ms. Ruben graduated Phi Beta Kappa from the University of California, Berkeley, and received her Master’s of Science degree in counseling from California State University. She is currently engaged in doctoral studies in Human and Organizational Systems at the Fielding Graduate Institute. Copyright 2003 Ruben Consulting Group All Rights Reserved 11 Bibliographic References Anderson, D. and L. S. A. Anderson (2001). Beyond Change Management: Advanced Strategies for Today's Transformational Leaders. San Francisco, Jossey-Bass/Pfeiffer. Beckhard, R. and W. Pritchard (1992). Changing the Essence: The Art of Creating and Leading Fundamental Change in Organizations. San Francisco, Jossey-Bass. Cangemi, M. P. (1999). "The Evolution of Computer Systems-ERP." IS Control JournalTechnology Developments 1: 2. Nadler, D. A. and M. L. Tushman (1997). Competing by Design: The Power of Organizational Architecture. New York, Oxford University Press. Copyright 2003 Ruben Consulting Group All Rights Reserved 12 Change Management: The Ruben Consulting Group Approach Ruben Consulting Group works with organizations to help implement large-scale change initiatives. We have significant experience and tangible results in providing change management services to companies in a wide variety of industries. We have been a part of and/or led teams that implemented enterprise wide technologies, supply chain reengineering and mergers and acquisitions. Our Approach To Large-Scale Change We recognize that getting a return on your investment is your highest priority. While we do not have a standard methodology that we use with every client, we work in partnership with you, building upon a few general principles and guidelines for successful change. Our approach is grounded in training in Appreciative Inquiry, Facilitating Large Systems Change, the Lominger Organization Architect, and Dannemiller-Tyson’s Whole-Scale Change model. General Guidelines for Successful Change The following are the guidelines for successful change: Match the specific type of change with the appropriate strategy to accomplish that change (i.e. the strategy for developing better project managers is very different than the strategy for transforming from a manufacturing focused to marketing focused company Take a systemic approach. A change in one area will likely result in unintended changes in other areas Be certain “plan” addresses leadership and sponsor commitment, stakeholder involvement, training, communication, organization alignment and design, transition of employees and new ways to measure performance Integrate change management plans with process and technology change plans Recognize that a change “plan” can at best be a plan to discover and readjust versus a fixed plan Implement change in many areas and set up ways for people to learn from each other Identify the most practical ways to involve people in different ways Find ways to engage the hearts and minds of those being most impacted by the change— the wisdom is always within the system Types of Services We Offer • Change Readiness Assessment to pinpoint what change strategy will be the most effective for your company Implementation Planning and Execution to ensure that you have a roadmap for creating a shared vision, the required leadership mindset and behaviors, stakeholders who will champion the change, an organization design that matches the business strategy, and employee engagement in the change process. Project Leadership to ensure that the right change project deliverables are completed effectively and on time Process facilitation to ensure that you have captured the best thinking of your sponsors, key stakeholders and project teams Strategic Communication to ensure that communication efforts are integrated with the entire change management process, that key messages are consistently and effectively delivered to each target audience Coaching to ensure that executives, managers and the project team are on board and making the requisite changes in mindset and behavior Leadership Transformation Workshops to ensure that leaders willingly make needed changes in mindset, which leads naturally to changes in leadership behavior Pulse checks to make necessary course corrections Copyright 2003 Ruben Consulting Group All Rights Reserved 13