Dimensions of Transforming People – Part 3 of 3
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.
D3. Bottoms-up Performance Improvement & Organizational Engagement
Organizational change management is complex and should not be taken lightly. This complexity can easily overwhelm an enterprise, dissipating energy before the effort achieves its objectives. Organizations cannot change unless the people in them change. Ineffective efforts exhort the organization to "fix everything at once." It is far better to choose just a few objectives at any one time (improve customer response, reduce order lead times) and devote all energy to them until measurable progress is achieved.
Although top-down efforts create the focus and the necessary preconditions for transformational change, they alone are not sufficient to achieve organizational change. One of the biggest challenges to overcome is the widely held management view that "all we have to do is tell employees what we want, provide some training and rewards, and change will happen." This approach may work when the desired results lie well within the existing capabilities of an organization—for instance, developing a product extension. But it falls far short when the change requires fundamentally new ways of doing business—like moving from a product to a customer orientation. In these cases, embedded skills, systems, and attitudes are usually so at odds with the new requirements that a much more intensive process is needed to retool the organization to effect lasting change.
What's needed, therefore, is to get large numbers of people throughout an organization (in operations, support units, and business management teams alike) aggressively and creatively working to improve performance. This, in turn, depends on the availability—or the creation—of disciplined processes for identifying opportunities and developing plans to close clearly identified performance gaps. Many such problem-solving processes exist, most of which are rooted in the Quality movement and share common principles: set goals, determine gaps, understand root causes, brainstorm and try out solutions, monitor results, and making adjustments.
To be truly effective, however, these approaches must be tailored to the specific challenges, skills, and change readiness of a given part of the organization. This requires, among other things, designing a methodology for setting appropriate goals and performance objectives, developing analytical templates to guide problem solving, and determining specific information needs that, of course, will vary by level and unit.
The net effect of launching such team-based problem-solving efforts is much like getting a flywheel spinning. Initially, tremendous inertia exists, and the first cycle can be lengthy and difficult, requiring substantial energy from outside the group to get it started. But if the process continues to be supported and rewarded by management, momentum gradually builds, improvements are achieved, the problem-solving cycle runs a more regular course, and the promise of "continuous improvement" becomes a real possibility.
Tapping the brains and energy of thousands of people is powerful in itself, but there is a second reason for using bottom-up problem solving. In many cases, you already know what needs to be done, but you don't believe that people can change their behavior just because they are told—with good reason—to do so. What does it actually take to create new behavior?
For many reasons, bottom-up initiatives go far beyond the familiar "pilot testing and implementation." This is largely a function of their...
Scope. In most cases, intensive problem-solving efforts ultimately have to spread across an entire enterprise. With pilots, by contrast, the normal pattern is to try them in one or two isolated locations, watch them for a year or so, and then re-evaluate the effort.
Objectives. Bottom-up efforts go beyond simply implementing a new solution. They have wider objectives: rapid and sustained performance improvements, development of new skills, increased change readiness, and deeper insights into how an organization must adapt to sustain the improvements.
Process. These efforts depend on effective "problem solving for process"—that is, developing creative ways to involve people in improving performance and redesigning their work. Again, this goes well beyond the top-down implementation of a solution defined by others.
Iteration. Bottom-up activities are not one-off initiatives. They call for successive rounds of effort to improve performance and build skills.
Performance-improvement efforts inevitably bring to light the size and shape of organizational barriers. They also help clarify how an organization must evolve to institutionalize or "lock in" the new capabilities that have begun to develop. Here the leadership role is to identify the needed changes systematically and take the required actions to institutionalize them.
Structure. Line and staff roles will be redefined as managers become more focused on adding value (and less on controlling), and clearer on the role they must play to keep change going. Elements of many traditional staff functions (such as planning, hiring, training, and purchasing) will often be absorbed into line-based teams. Autonomous, self-managing teams will be created, as individuals master multiple skills and roles. Layers will be removed as self-management takes hold.
Systems. Information systems will be redesigned as the information available to the front line changes dramatically and as teams better define their own information needs. These new systems will give a much clearer view of how a team's performance contributes to the whole, and will have a strong focus on customer-oriented value. Compensation systems are usually restructured at this point too. Broad-based profit-sharing approaches often give way to much more focused incentives, such as pay-for-knowledge and gain-sharing.
Staff. A much clearer definition of the types of people and skills needed will be developed through the performance improvement efforts. Hiring and promotion requirements, as well as the balance between technical and managerial skills, will be redefined.
One interesting note: companies that wait until the end of the process to restructure these three Ss of organization are often better able to align them properly because they can calibrate against the new organizational "reality" created. Here are some aspects that must be addressed for a coherent program:
Performance Targets (what to focus on) – Corporate objectives must be clearly broken down into targets the business units can understand and influence. Consistency and coherence of targets with corporate objectives will result in excellence.
Goal setting (how much) – Fact-based goals, that is drawn from the understanding of the underlying economics, based on internal & external benchmarks, and with clear milestones, make for ambitious goals that deliver results.
Benchmarking – Setting goals, based on internal and external benchmarks, with clear understanding of underlying drivers of differentiation and size/source of gaps, must become part of the ongoing management process.
Problem-solving methodology – Structured and tailored methodologies, supported by a wide array of tools, must be in place. They must be flexible enough to be applied to various needs.
Involvement – Clear plan must be laid out for involving various business units based on expected impact and organizational readiness. Performance-oriented involvement must be pervasive and built into the management system.
Work redesign – Integrated redesign of jobs, roles, incentives, and information systems, with clear linkages to performance improvement efforts, must be carried out by incumbents.
A right culture cultivated in the organization can accelerate the journey to the strategic objectives. High-performance organizations set, manage and monitor their culture closely to achieve their strategic objectives. Culture is the way things gets done in an organization and reflects the employees’ behavior and attitude towards work. It is possible – and necessary – to cultivate a specific culture. Employee engagement on the other hand, is the willingness of the employees to go the extra mile for an organization, not merely out of obligation or for a paycheck but because work matters both personally and professionally to them. At a very high level, engagement is built through two equally important dimensions: personal motivators, such as recognition, and performance disciplines, such as performance management metrics.
An engaged organization is the one that is motivated and equipped to embrace the organization change effort with sustainable behavioral changes. An organizational change program relies heavily on the buy-in of its employees. The starting point in creating and maintaining employee engagement is thoughtful and effective communication. All participants, at every level, must clearly understand the rational and design of the change program, its role in driving the organization’s strategy, and their roles and responsibilities within the program. The messages may need to be repeated and reinforced regularly, particularly while in the valleys of low enthusiasms. Most importantly, since communication involves bidirectional messages, listening is as important as talking. So the messages should not only cascade down the organization, but also flow upwards, with feedback collected regularly, to ensure transparency and resolve emerging issues before they become major obstacles.
The organizational change is a disciplined cascade that ensures that the leadership group is aligned to the goals and the change initiative, and they deliberately transfer that alignment to employees layer by layer throughout the organization. Successful change programs set up a spine of change agents/leaders that play a critical role in cascading the change. They set clear expectations, go watch behaviors, role model new behaviors, accept feedback, deliver feedback, and remove barriers for the employees. It is notable that employees generally respond better to immediate or near-immediate supervisors than distant senior leaders. Leading organizations recognize the importance of these change agents/leaders and invest in their success, and actively monitor and work to strengthen their engagement and skills.
Leading companies measure and cultivate engagement and culture to generate discretionary effort and energy from their employees to accelerate and institutionalize the change. They keep a finger on the pulse of their people, regularly measuring engagement levels and actively managing engagement through difficult times, during reorganization or large-scale change effort.
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