Change Management - What the experts say - Reorganization

[Andy Bassett]

Source Economist July 13th

COMPANIES, as every management consultant tells them, live in an era of incessant change. But some are clearly better at changing than others. Two new surveys suggest some reasons. One finds that only one in five change-management projects succeeds. The other shows that companies that are bad at change are far more likely to use outside consultants to handle it than those that are good at change.

When, late last year, A.T. Kearney (yes, a consultancy) asked senior executives in 294 medium and large European companies to rate their change programmes, only 20% were considered a success. An astonishing 63% had made some temporary improvement, but failed to sustain it. The remaining 17% had achieved no improvement at all.

This is an expensive outcome, given that 90% of respondents said that cost reductions were one of the main goals of change. A far smaller proportion (27%) gave increasing revenue as an important goal. Craig Baker, who leads A.T. Kearney’s European “enterprise transformation” practice, sees the outcome as part of a long succession of research results suggesting that organisational change is hard to achieve. He points out that two-thirds of re-engineering projects seem to fail; and, in Britain, less than half of all “total quality management” programmes show any demonstrable results at all.

Yet firms keep trying. The second survey, conducted late last year by Atticus, a British consultancy, claims that companies that are “able” at change show striking differences from those that are “inept”. Atticus contacted 3,000 companies around the world and got replies from some 400, marking themselves on a scorecard that measured their ability to change. The results showed that, for companies in the top 5%, top managers were more than twice as likely to be involved in change projects as they were in the bottom 10%. The top 5% were also three times as likely as the bottom 10% to have pro-active policies on communicating change.

Even more dramatic was the contrast in the use of external consultants. Asked to say whether “change expertise” was “embedded as a functional capability”, four out of five of the most “able” companies said yes, compared with one in five of the “inept”. But none of the “able” companies said they had handed the task to consultants, which a quarter of the “inept” businesses did.

A.T. Kearney’s findings chime with these. The largest gap between companies that were good and bad at change, says Mr Baker, arose because some learnt from change and institutionalised their knowledge, building it into their culture and performance assessment. Companies that are good at change are, he finds, more sophisticated in the way they use consultants, who are hired to work with senior managers rather than to supplant them. Because such companies learn, their changes are more likely to be sustainable.

At GTE, a telephone company based in Dallas, Texas, that is merging with Bell Atlantic and is near the top of the Atticus “able” table, Bruce Rosenstiel, the quality-service manager, describes one mechanism for continuous change. The company has a tradition of “quality-improvement teams” that design and implement changes. Employees get incentives to join a QIT: “You get a mug for the first one you are on, a clock for 11, an oil lamp for 41, a crystal star for 51,” he says, proudly. Last year, 90% of GTE’s employees participated in at least one such team.

QITs tend to drive bottom-up change. GTE also sets up lots of taskforces to manage top-down change. This network, says Mr Rosenstiel, means that “if we identify a new product, we can roll it out very fast.” As for outside consultants, “not since the late 1980s have we used them on managing a project.” They are for training and technical advice, not management.

Another company scoring well on change, Glaxo Wellcome, is also in the throes of a merger. Its British division emphasises the need for communication with staff through events dubbed “open lunches” and (for staff outside the office) “tea-time chats”, to explain changes before they take place. As for consultants, says Anne Prichard, personnel director of Glaxo UK, they are used mainly to develop specialist capabilities.

Even so, a company keen to do better at change might be unwise to ban consultants from its premises entirely. But once it was capable of doing the job with only limited outside help, it would know it had arrived in the “able” category and left the “inept”. That is certainly a change worth making

No big surprises their!!! Or What do you think?

Regards

------------------
Andy B

[Marc]

What DO you think about Change Management? I read an article recently which dealt with reorganization and it discussed how organizational change is an excuse where failures are at the fundamental systems level. I didn't bring it here because it addressed politics and the failure of govermental 'reorganizations' to effect 'real' change.

From the company perspective, do you believe reorganization - quite popular - effects serious company problems? Or is upper management blowing smoke?

[Charmed]

Dear All:

Interestingly, I just read the following article on how to become the guy.gal who can make a change.

http://msn.careerbuilder.com/Custom/...home1&GT1=4530

Charmed

[RCBeyette]

Originally Posted by Marc

From the company perspective, do you believe reorganization - quite popular - effects serious company problems? Or is upper management blowing smoke?

There can be no true "Yes" or "No" response to this...it depends. It depends on the problem. Sometimes, leadership (or the lack thereof) is truly the problem. If I want or am told to implement a Six Sigma programme at work, but leadership refuses to send me away on the proper training, how can I effectively accomplish my task? Give me a leader who understands what the resources required are and is willing to give them to me and now, suddenly, we have a Six Sigma programme in full swing.

At the same time, if the problem and corresponding root cause are not communicated back up to the leader, how can s/he take the appropriate actions? Changing the leader in this case is meaningless and simply frustrates those of us in the trenches (suddenly we have to "train" a new boss ).

I do believe that most of the time a reorganization is done because (a) Management wants to wake us up in trenches and they feel we care about what goes on up in the clouds of Corporate heaven or (b) they are trying to hide the fact that we have the "wrong people in the wrong seats and on the wrong bus." (Jim Collins, Good to Great).

[Wes Bucey]

Originally Posted by Marc

What DO you think about Change Management? I read an article recently which dealt with reorganization and it discussed how organizational change is an excuse where failures are at the fundamental systems level. I didn't bring it here because it addressed politics and the failure of govermental 'reorganizations' to effect 'real' change.

From the company perspective, do you believe reorganization - quite popular - effects serious company problems? Or is upper management blowing smoke?

I do a lot of presentations on the topic "Change Management"

Mostly, I dwell on the cultural change which is almost more important than any of the mechanical changes (forms, processes, etc.) because ultimately, it is the people, from the top down, who perform the processes and complete the forms. Often, I find the mechanicals need just a little "tweaking" while the culture needs massive change.

Whether the word "reorganization" has an appropriate meaning or not, in the USA, the term is reserved for a legal process that is part of Chapter 11 Bankruptcy. "Re-engineering" was a good term that got loaded with baggage and has fallen out of favor. Practitioners and "change agents" are currently stuck with "major change" to identify the kind of change you mean, but which is not connected with bankruptcy.

[Rob Nix]

Wow, what a coincidence that the side bar >> directs us to "Change Management" sites.

I agree with Wes, in that the poll question, "Does reorganization [Change Management] address root causes of problems?", is a "tail wagging the dog" question.

If there are problems, proper root cause analysis will first uncover them (without any predetermined guesses as to what IT is). Oftentimes it IS a cultural / organizational failure. That MAY result in structural changes that are made under the principles taught in "Change Management" theory.

You don't start with reengineering and see what problems go away, IMO.

[Randy Stewart]

Good Points.
I do believe that change is used as a "wake up and smell the cat food" example. Many times due to callused eyes (can't see the forest for the trees) and the need for "new vision". Or because the old ways don't work anymore and the people being used to drive change can't get it done.

I feel the second use is what Wes is speaking of. There needs to be a change in "Corporate Culture" in order to improve. The "old boy" network needs replaced and new avenues of information flow must be put into operation.

One thing I have seen is that "Change Management" is often confused with "Crisis Management" so it becomes something to stay away from.

[Randy]

Change Management is nothing more than the old "Win their hearts and minds" program. One of the best analagies of managing change is a book titled "Bury My Heart at Wounded Knee". Another good one would be "Street Without Joy".

Kinda in response to Rox, take out the politics and all the other gibberish and look at the present "Management of Change" in the former "Chaldean or Babylonian Empire". The leadership changed, but has the change provided a redirection for the "organization" according to the plan? Was the problem in the organization actually one of leadership or maybe leaderships flawed goal-setting practices? Could a change in how organizational goals were defined and achieved prevented the necessary change in leadership which has resulted in lower level personalities establishing their own short term goals at the cost of long term organization benifit?

I think the Management of Change process has to be "managed" in such a way as it is win (+)-win (+), because any loss(-) on either side of the equation will tend to unbalance and destabilize the entire process.

Did I go ?