“One never steps into the same river twice as the water is always moving on”
“Individuals initiate change, organisations prevent it”
The vital role of senior staff in change management
The importance of enterprise wide skills in change management
The role of formal research and development systems in change management
The importance of good planning in change management
The central role of project management in change management
The importance of action standards in change management
The role of outsourcing in change management
The role of complaints in change management
Digitization as a rapid route to achieve management of change for both customer s/ suppliers
Automation in change management
The role of location in achieving change
Improving decision making to reduce barriers to the management of change
The importance of MIS choices in change management
Structural impacts on change management
The role of defining authority/responsibility in change management
Motivation and change management
The role of communication in change management
Manpower planning and change management
The role of cost control in change management
Senior management. It is clear that the role of top management will be paramount in defining and maintaining direction and speed of development within the enterprise. Their role in the management of change will be influenced by many factors, which will include their expertise for their respective roles, their understanding of other parts of the operation, their links within the enterprise which will largely determine their independence of thought and deed (informal/formal networks and nepotism), and the diversity that they bring to the enterprise. Any staff in any position will tend to develop fixed approaches and attitudes the longer that they are in a particular role, and senior management are no exception. They will always provide a role model for the rest of the enterprise, with their attitudes and behavior crucial to achieve any effective change.
A range of factors will determine the effectiveness of senior management in driving change. They will include leadership, creativity and problem solving, corporate governance, mentoring, industrial relations, code of conduct, separation of powers, succession planning, PDP, appraisal, rule of eight, disciplinary code, whistleblowing, focused recruitment (7 Point Plan), training, job rotation, contract, job description, MBWA, random inspection, formal approval processes, wages ratio.
Measurement of effectiveness will include criteria such as labour productivity, employee satisfaction, labour turnover, skills, absenteeism, customer satisfaction , share churn rates, findings of exit interviews with ex-employees, supplier satisfaction, disciplinary actions, health and safety infringements, labour dispute days lost, gross profit, return on capital employed, new product development rates, AER, gender equality, litigation rates, complaints, diversity index, succession planning
Skills. The greater the level of enterprise wide skills, the greater will be the level of flexibility and ability to implement change.
Improving the overall level of skills will involve the interplay of four components: the plan which will determine the form of skills required over the medium and long term; the type of recruitment policy that is followed by the enterprise; in-work training, and formal externally validated courses. Four stages can normally be identified: the acquisition of technical skills, the acquisition of supervisory skills, management skills, and senior management skills. Each individual will have different requirements which will require some formal system of appraisal, personnel development plan (PDP) for key employees, regularly reviewed within the enterprise. Creating an employee based training approach at knowledge centre level within the enterprise is likely to produce the best results.
Measurement criteria will include skills, PDP numbers, industrial relations, employee satisfaction, labour turnover, labour productivity, absenteeism, exit interview results, days training, training budget, comfort zone and rule of eight, creativity and problem solving, mentoring
Research and development. Change cannot occur in a vacuum; opportunities need to be identified and projects managed. Many enterprises and organizations fail because they lack a focus that has the responsibility and authority to identify new projects and bring them to fruition
The creation of a product/service development knowledge centre within each strategic business unit will allocate authority and responsibility for this function within the enterprise and lead to a significant increase in new product/ service activity
Measurement criteria will include capex, r&d ratio, ideas, technology transfer, strategic fit, plan development, IRR/NPV, IPR, testing, commercialization, hurdle rate, budget ratio, project ratio, skills, creativity and problem solving, TBC, joint planning
Plan. Change is pointless unless it is put within the overall context of the plan. This will provide answers to three key questions: Where are we? Where do we want to be and when? How are we going to get there? The plan will allocate and balance resources to short , medium and long term requirements of the enterprise.
The creation of a balanced scorecard, competitive analysis, vision statement, portfolio analysis and review of key customers, key products, key regions, key suppliers, key stakeholders and key employees will identify areas of focus, core competence, creativity and problem solving will clarify planning direction.
Measurement criteria will include successes, failures, lessons learnt, golden circle, focus, allocation of resources, creativity and problem solving, key performance indicators, benchmarks, budget ratio, project ratio, planning team KC involvement, managing risk, reducing and coping with failure through contingency planning, plan approval
Project management. Talking about change does not make it happen. Translating the plan into action requires the identification of tasks, timelines, milestones, understanding of risk and an analysis of the critical path.
Critical to the success of projects will be the right staff mix, the right skills and the right resourcing, creativity and problem solving.
Measurement criteria will include stagegate/HCAP, budget ratio, project ratio, investment appraisal, hurdle rate, skills, temporary staff ratio.
Action standards. Enterprises are largely judged by their outputs. By focusing on these, new directions can be established and new operating mechanisms enforced. Six components of action standards will need to be reviewed and new levels of service established.
Speed – how quickly the organization responds
Accuracy – how accurate the information that is provided
Comprehensiveness – providing the enquirer with all the information necessary for an informed response
Quality – identifying the quality of the product/service provided
Cost – reviewing whether the cost of the action is proportionate to the benefit delivered
Real problem solving – ensuring that the organization solves the real problem that the enquirer poses
Follow up – that appropriate follow up occurs to ensure that the enquirer has received proper attention
Within each area of contact, the transfer and recording of information can be formalized by appropriate standard operating procedures (SOP), expert systems, digitization and or software.
Measurement criteria focus on key performance indicators such as customer satisfaction, sales productivity, complaints
Outsourcing. Using outsourcing to achieve change is superficially attractive, but comes with major risks. It involves the creation of relatively inflexible, long term contracts, often causes problems with quality control, often means that the enterprise loses key skills that will be difficult to replace, and may mean a loss of competitive advantage. Of most concern is the potential damage to the enterprise should a mission critical service provided by an outsourced supplier fail.
Focusing on digitization and automation initially can provide the enterprise with the cost benefits associated with outsourcing particularly in mission critical activities; ensuring that those core competences that create competitive advantage are retained and improved within the enterprise rather than outsourced; multiple suppliers will reduce vulnerability; short term contracts with clearly defined levels of performance will reduce risk; embedding company staff in the outsourcing supplier will improve control; joint planning and regular reviews will identify minor problems before they become major; small scale testing of outsourcing option prior to full scale commitment; random inspection will also help to reduce potential problems.
Measurement criteria will include customer satisfaction, action standards, quality, budget ratio, project ratio, new product/service benchmarks, employee satisfaction, litigation, security, data protection, joint planning, random inspection, MBWA
Complaints. Complaints (usually) are a sign the operations and systems of the organization do not meet the need of stakeholders. Reviewing complaints in a systematic way will assist in the improvement of key elements within the organization. The most important of these will be:
Code of conduct
Standard operating procedures
Regular reviews of complaints within the key performance monitoring (part of the monthly business control analysis) will focus the organization on specific poor areas of performance.
Measurement criteria will include customer satisfaction, supplier satisfaction, employee satisfaction, product returns, customer churn, labour turnover, absenteeism, skills
Digitization. The digitization of the provision of goods and services can provide rapid and effective change within the enterprise by installing a standard and flexible interface with customers and the supply chain.
Incorporating a digitization opportunity analysis into the development of the business plan and continually reviewing the potential for greater digitization will drive change.
Measurement criteria will include customer, supplier and employee satisfaction surveys which will all provide information as to the effectiveness and effectiveness of change, as will labour productivity, TBC, quality measurements, production and delivery cycle, complaints, skills, security, creativity and problem solving
Automation. Increasing investment in automation, when properly designed and integrated, should provide the enterprise with improved flexibility, speed and quality of output.
Incorporating an automation opportunity analysis into the development of the business plan and continually reviewing the potential for automation will drive change.
Measurement criteria will include production/distribution cycle, inventory ratio, gross margin, return on capital employed, labour productivity, skills, security, health and safety, return on plant, budget ratio, creativity and problem solving, TBC
Location. Reviewing location within the demands of the plan can potentially be a key driver of change.
New (or re-designed existing) locations may enable the enterprise to co-locate strategic business units (vital in change management), improve working conditions and co-locate knowledge centres, introduce new working practices including automation, establish fringe benefits which encourage communication and team building (canteens for example), improve industrial relations, and permit easier MBWA and random inspection.
Measurement criteria will include return on premises, employee satisfaction, labour turnover, absenteeism, health and safety breaches, complaints, security, health and safety, gross profit, return on capital employed, random inspection, MBWA
Decision making. Single individuals are likely to make poor decisions, very large groups no decisions at all, especially when the impact of group size is magnified by the impact of advisors and special units. Similarly, more and more centralization of decision making will both slow the process and increase the potential for non-realistic decisions to be taken.
Focus, rule of eight, meeting management, investment appraisal, hurdle rate project risk management, balanced scorecard, stagegate, advisors, special units, prestige projects, testing, reality check, creativity, software, SOP, successes, failures, lessons learnt
Measurement criteria will include TBC, POD, project management success rates, budget control, forecast error, complaints, skills
MIS . Change cannot productively occur in a vacuum, as the enterprise must be clear about what is broken and needs fixing, both currently and in the future. Effective management information systems should focus on SATURNS where information is:
Useful (much information is useless for decision making purposes and leads to information overload);
Researchable (background data will be vital for complex – especially “wicked” problems);
Network accessible (data should be accessible from all areas of the business);
Measurement criteria will include planning horizon, planning cycle, ad-hoc, daily, weekly, monthly, quarterly, and annual requirements, key performance indicators, benchmarks, knowledge centre responsibility, risk management, impact analysis, reference material, advisors, skills, customer and supplier input (especially joint planning), security, data protection
Structure. Centralized organizations are more resistant to change than decentralized; smaller groups are closer to the market and more reactive; smaller groups are more highly motivated.
Establishing an organization based on a bottom up analysis of span of control develops an enterprise that is ideally placed to deal with devolved authority and responsibility, and to solve problems and think creatively.
Measurement criteria will include KISS, SCORE, SBU, KC, vertical tribes, industrial disputes, Dunbar number, team building, special units, rule of eight, temporary staff, span of control, advisors, skills, labour turnover, absenteeism, industrial disputes, complaints
Authority/responsibility. The delegation of authority and responsibility will speed change and make it more relevant to the customer/supplier.
Questioning each component of decision making and determining its position within the hierarchy will be central to change management, with the broad brush of strategy reserved to higher level and tactics with implementation to the lower. Improved budgetary freedom will also improve speed of decision making and responsiveness to the market
Measurement criteria will include job description, contract, SOP, Deming rules, team building, contingency plan, software, budget responsibility, project responsibility, succession planning, internal competition, rule of eight (comfort zone)
Motivation. Supporting change through carrots as well as sticks is essential, with the greater the emphasis on carrots creating expectations that will drive outcomes.
Combining structural, planning and control initiatives with team based outcome assessment and rewards will associate change with reward.
Measurement criteria will include leadership, team building, group recognition, training, industrial relations, succession planning, appraisal, working conditions, design for operating efficiency, fringe benefits on social interaction, bonus systems, gamification, disciplinary code and grievance procedure, random inspection, MBWA.
Measurement criteria will include wages ratio, labour turnover, labour productivity, absenteeism, temporary staff ratio, discipline, budget ratio, project ratio
Communication . All stakeholders need to know where the organisation is heading, and the priorities for implementation. A useful mnemonic is CASTS
Clear – information should be clearly stated in easy to understand language
Accurate – information needs to be accurate without ambiguity using the minimum of intermediaries (such as advisors, special units)
Simple – information should be simple with a minimum of words, and where relevant the use of graphics
Timely – information should be available as quickly as possible
Systems – the use of information systems that encourage transmission of information (meetings, informal meeting places such as canteens, software to encourage group dynamics, web based information) joint planning with key customers, suppliers, employee groups (industrial relations) should be maximized
Measurement criteria will include KFR, employee satisfaction, customer satisfaction, supplier satisfaction, exit interview results, appraisal, random inspection, MBWA
Manpower. Organizations have a natural minimum personnel turnover rate of 5% per annum, often higher. A blanket freeze on recruitment will lead to a reduction in diversity, while a carefully programmed recruitment programme can do much to enhance change and the speed of change.
Using recruitment appraisal techniques, coupled with improved recruitment and development processes are vital for improved organizational performance.
Measurement criteria will include job description, contract, labour turnover, skills, industrial relations conflict, labour productivity, temporary staff ratio, labour productivity, exit interview results, appraisal, succession planning, employee satisfaction, absenteeism, administration expense
Cost control. Cost control, or consolidation is the central core of a golden circle strategy, with an emphasis on continual review of the cost base of the enterprise. Over time this will have the potential to significantly change operational structures and functions. A useful mnemonic is SCORE:
Establishing cost management as a feature of knowledge centre based planning systems, coupled with authority and responsibility for fixed cost management will ensure that each operating unit is continually reviewing cost; combining this with an element of bonus system reward will further reinforce its importance.
Measurement criteria include budget ratio, gross profit, return on capital employed, cash flow, return on plant, return on premises, return on plant, random inspection, MBWA, impact analysis, joint planning
Ibis and change management
The focus of Ibis has been to create a template system for the development of a business plan which incorporates best practice and becomes a working rather than a reference document. This working document enables the enterprise to manage change incrementally rather than in a “big bang” approach.
E-mail Ibis for their no-obligation review of your existing approach to the development and control of planning.