Given the current business volatility & disruptions driven by technology, digitalization, business-model innovation, industry dynamics, globalization, regulation, or other factors, business transformation has become an imperative. Forward-thinking companies are launching transformations even when they dominate a market, retooling themselves so they stay ahead. Companies that implement change effectively give themselves a significant competitive edge by focusing on the factors that are essential to success. Successful transformation requires visibly engaged C-suite leaders who communicate clearly about the changes at hand. A transformation’s success also requires that people across the organization have a specific role to play and that everyone knows how to carry out his or her part. Senior managers seek radical organizational change to improve performance by changing behavior and capabilities throughout the organization.
The leader's role is to turn separate transformation initiatives into a balanced, integrated program of people, process and technology changes. It is not lost on many executives that the critical component among all transformation initiatives, are those that relate to the people transformation, also called organizational change. However, successful organizational change will require combining separate transformation initiatives to include three types of organizational change work streams that are balanced and integrated in a framework for a coherent overall program. Real transformations in performance come only when efforts along all three dimensions are coordinated and engaged; The 3 dimensions are:
Top-down direction setting & culture shift to create focus throughout an organization and develop the conditions for performance improvement.
Cross-functional organizational change to enable linking activities, functions, and information in new ways with process, people and technology changes that would achieve breakthrough improvements in cost, quality, and timeliness.
Bottoms-up performance improvement & organizational engagement to get people at all levels to take a fresh approach to solving problems and improving performance.
If top-down initiatives are lacking or faulty, managers will be left to guess where to aim new skills, activities and energy. If horizontal core cross-functional organizational change management is ignored, function-specific efforts will never add up to the critical mass of change required. If bottoms-up involvement with real engagement is absent, motivation will falter, momentum will flag, opportunities for improvement will be overlooked, and the new skills and behavior will not be built or change will not stick.
D2. Cross-functional Organizational Change
The design principles become the imperatives to be addressed while identifying the opportunities from the perspective of people, process and technology. Incorporating the opportunities into the operating model determines the definition for the future state of the business. The gap analysis between the current state and the future state determines the initiatives, programs and projects to be pursued. These become the basis for transformation map, high-level timeline, milestones & dependencies.
The goal for organizational change management phase is to translate the change vision into a much more specific set of performance objectives and to design processes that involve all three dimensions of change in order to engage the organization in achieving these goals. Senior managers almost always underestimate the importance of this structured planning phase. But it is essential if the change program is not to degenerate into a hodge-podge of well-intentioned individual initiatives.
Organizational change management is a systematic approach for enabling an organization to transition from a current state to a desired future state. Inadequate change management increases risk of failure for any new strategy implementation or organizational transformation. Successful change management not only targets leaders but also engages people across the organization, while adjusting key enabling processes such as performance management. Change management is not a communications plan – communications is a vital component of an effective change management program, but it is not a substitute. Nor is it an HR initiative, though HR plays a critical role in implementing change. A typical organizational change management initiative will have 3 major work-streams:
1. Change Leadership:
People Risk and Impact Management - Change implications must extend beyond technical and procedural change into changes in behaviors and capabilities. Understanding the people related risks is a key component of understanding and addressing change issues
Leadership Alignment and Stakeholder Engagement - Identifies the individuals or groups of people that need to be engaged throughout the change process – identifies people with authority, power and influence who will visibly lead the change. Examples: Directly affected employees, Executive, partners (e.g., application teams), suppliers
Communications - A targeted communications plan is needed to ensure that employees, managers, leaders, and other external stakeholders are engaged in the change initiative through compelling communications
Culture - Aligns stakeholders with organization values by driving behaviors that are consistent with the future desired culture of the new organization
2. Organization & HR
Organization Design and Governance - Develop appropriate structures and governance to support new processes and optimize resources to support the change.
Workforce Transition - Develop and implement a detailed plan to maximize transition benefit with minimal disruption to productivity throughout the change life cycle.
Talent Management and HR Programs - Align HR strategies, programs and practices with, and proactively address the organization’s changing talent needs as a result of the change transformation.
Capability and Knowledge Transfer - Provide knowledge, tools, and training to help employees operate successfully in the new environment as a result of the change and future state.
As we go through the organizational change management work-streams, we sequence the activities into the following stages of the timeline:
Stage 1 – Create a change agenda - Build a case for change; Articulate desired vision, culture and behaviors; Ensure alignment and commitment of leaders; Establish employee, operational, and financial baselines
Stage 2 – Mobilize the organization - Prepare leadership to visibly embody change; Set up governance to enable activist leadership; Engage and excite stakeholders
Stage 3 – Hardwire the change - Align organization structure and processes as needed; Adjust infrastructure and performance management as needed; Capture commitments and initiatives on roadmaps for change
Stage 4 – Manage the results of Step 2 & 3 - Manage initiatives/programs with discipline, rigor and oversight; Arm executives with forward-looking visibility to bottom-line results; Reinforce desired behaviors
Stage 5 – Sustain and reinvent - Structure for ongoing learning; Build and exploit change capabilities
Stage 6 – Communication - Create, monitor, and adjust ongoing communications strategy; Tailor messaging to the needs and risks of specific stakeholders; Utilize continuous feedback loops; Craft common language; Coach managers to be effective communicators; This step spans from the start to the end of the organizational change management.
In addition, it is also important to have organizational change management be well integrated with the process and technology transformation initiatives as well. Here are some aspects that must be addressed for a coherent program:
Process identification – Processes are identified based on strategic and competitive imperatives. When appropriate, key processes within customers and suppliers must be identified too. Ensure appropriate attention is given to cross-functional processes.
Performance objectives – One or two strategic objectives for each process must be quantified for parameters such as throughput time, output quality, service levels, new product success rates, or total costs. Targets reflect breakpoints based on value to the customer.
Re-engineer processes – Clean-sheet redesign of process at macro level across functional boundaries, while questioning fundamental assumptions on how work is done.
Change management – must have clearly defined capability building program, including skills (recruiting, selection, training, career path management)
Shared values – high-value near term changes (quick-wins) motivate and fund more sweeping and long-term changes. Aggressive communication by senior management must be taken up to reinforce new values and behaviors.
Measuring and monitoring - tangible milestones, benchmarks, and performance-improvement indicators must be measurable / observable and incorporated into the evaluation procedures.
Throughout the organizational change management program design, implement and run, make sure that you keep asking these questions: Have you made a compelling case for change that inspires people to join the journey? Have you pinpointed the critical few behaviors and built the necessary reinforcements? Have you identified people who will be most affected by change and built the leadership spine to support them? Are you coaching your leaders to be effective change sponsors? Do your people have the capacity to focus on the initiative? Finally, have you identified the big implementation risks early on and put in place the necessary mitigating actions? When you are able to answer in the affirmative to each of these questions, you can safely be counted among the organizational change management successes.
Also read -
Dimensions of transforming people - Part 1 of 3
Dimensions of transforming people - Part 3 of 3