Part 2: The Scope of Change Management
As more clarity is given in regard to change management to clients and organizations it speaks to improving how change resources are leveraged and increases the likelihood of success. That is crucial in regard to the implementation of the remaining elements of Program Partnering, Change Mitigation, Business Transformation, and Change Review.
Program Partnering
“It is critical for change managers to be partners during Project Initiation, so change requirements are incorporated into how the project is organized.”
Did you know that successful organizational transition may depend just as much on how the project was organized as well as the implementation of change activities? Additionally, particularly for more complex initiatives, change management may be required throughout the project rather than just at Execution.
Change strategy is based on environmental factors (such as organizational structure, company culture, leadership style, etc.) as well as change criticality, impact, and timing. For instance, a top-down organization may require leadership to define, enable and enforce the change. This is significantly different from a team-oriented culture which needs a more collaborative approach, requiring input and ownership from all levels of the company.
The project approach to enable these strategies is also different: the former requires ongoing leadership engagement and preparation, while the latter requires involvement from the impacted stakeholders themselves. It is critical for change managers to be partners during Project Initiation, so change requirements are incorporated into how the project is organized.
Example:
A recent high-priority software implementation, sponsored by executive leadership,
ran into serious resistance during its launch and was put on hold. Despite careful change assessment, planning and execution, users exposed to the new SaaS solution were doubtful about it satisfying their specific business needs and escalated their concerns to leadership. Executive management, the same leaders who had initiated the work, stepped in and stopped the implementation. The change management preparation had been done correctly, so what went wrong?
The problem was that the way the project was managed was not compatible with the authoritarian change strategy required for this transition. The organization had a very top-down culture and needed visible leadership support throughout the project to inspire confidence in the new system. Even though the executives had sponsored the initiative, they did not understand its implications and had not been coached on how to drive the change. This failure could have been averted if change considerations had been included during the Project Initiation phase and the change strategy had been incorporated into the project design.
This goes back to the earlier question about identifying a change strategy during the Planning Phase: by that point it is often too late since the project approach has already been defined. It’s also why setup impacts change success: since each strategy calls for different tactics, executing change activities at odds with how the project is organized can increase the chance of change failure.
Change Mitigation
How many change managers have been excited by the prospect of managing change for an enterprise-wide, high-priority initiative, only to find that it is one of many others hitting the organization at the same time? Often there is so much change overload that it is hard for change efforts to cut through the noise and reach overwhelmed stakeholders.
Managing and mitigating changes across initiatives requires change management input into roadmap development activities even before project initiation. Having a seat at the table when proposals are being evaluated can help improve implementation success by ensuring that change impacts are considered along with other assessment criteria. While few details are known at this point, even a high-level change assessment can help prevent a traffic jam of changes launching on top of each other.
Another way that overload can be managed is in the sequencing of the change itself, which needs to be agreed upon before the project is defined.
Example:
I was involved in a massive global SAP implementation at a major multi-national oil & gas company. This rollout changed people’s roles, introduced new policies and procedures, and modified SAP functionality in all their businesses around the world. Based on the amount of change, we decided to manage the transition in phases: people changes first, then process changes and, a year later, the technology changes were implemented.
This approach was enabled by assessing the change impacts and agreeing on the mitigation strategy prior to Project Initiation, and phasing the entire project accordingly. Yes, it was a protracted change effort and it caused a two-year project to be extended to six years. But it was the right approach – if we had done it all at once the venture would have failed under its own weight.
Business Transformation
Transformational changes are the ones that most deeply affect the DNA of an organization. These are the initiatives that require the greatest planning and it is critical to include change management at the forefront of how the transformation is designed. This is like Change Mitigation on steroids where it is not just about softening the change impact, but influencing what that impact will be.
“It is critical to include change management at the forefront of how the transformation is designed.”
Unfortunately, many companies continue to bring change support in too late to influence transformation efforts. Here are some examples of how two different companies handled similar transformational change with completely different results:
Here is the rub: the ability to create complex materials is not part of the required skill set for change managers, nor are we the experts at developing those materials. Being brought in at Project Execution to solely develop materials is not the best fit for Change Managers. While change managers can and do create communications and training materials, our value lies in analyzing the impact of the upcoming change and determining the best way to transition the organization.
Example (Failure):
Change managers were brought in to transition a newly purchased business to the policies of the parent company during a corporate acquisition. The acquired business compensated its plant personnel with 10 percent monthly bonuses while the new parent issued 12 percent quarterly bonuses. Even though this was a net gain, preliminary feedback indicated that the transition would be painful as the workers counted on their monthly bonuses to cover fixed monthly expenses, such as rent and car payments.
Since change support was brought in during Project Execution however, they could only walk the plant personnel through the math which showed that the new quarterly bonuses gave them more money. This unfortunately did not satisfy the workers’ immediate needs, causing resentment toward the parent company, and resulting in a staggering loss of over 70 percent of the plant workforce within a year of the transition. The total price of this change failure far exceeded resource replacement costs: the loss of knowledge and expertise impacted productivity for many years.
Example 2 (Success):
Another company faced a similar situation where managers at the acquired company were paid a 25 percent annual bonus while the parent company paid managers at the same level only a 15 percent bonus. This client ended up retaining over 90 percent of the acquired managers by including change considerations in the transformation program itself. What was done differently?
The managers were first guaranteed that their compensation structure would stay the same during the first two years of the transition. When the bonus percentage was changed in the third year, the bonus decline was balanced by bumping up base salaries by 10 percent to make up the difference! Not only did this approach maintain the acquired managers’ compensation, but it also generated immense goodwill and support for the incoming management team.
In both examples, the client’s objectives of changing the compensation structure were achieved. The end results were dramatically different, however, based on the extent of change management involvement and how the transformation accommodated the change impacts.
Change Review
This is the final scope element that is often overlooked or fast-tracked during change management. Whether it is a simple delivery of communications or a life changing transformational endeavor, it is important that change managers are held accountable for what they deliver and have time to take corrective action if needed, during the Project Monitoring phase. Unfortunately, they are often removed from a project soon after launching the change activities, with perhaps a few feedback surveys on training effectiveness as the only change review.
Projects are under a lot of pressure to manage budgets and timelines. There is a tendency to disband the project team as soon as possible to minimize resource costs, keeping only a skeletal staff for post-implementation support. It is a mistake not to keep change managers through the Project Monitoring phase as change sustainability can only be assessed after the stakeholders have experienced the transition. Without adequate post-implementation change support, the initiative could fail because concerns or gaps are never adequately addressed.
Example:
In the global SAP project that I mentioned earlier, months of post-implementation support and corrective actions were required to get the business users over the transition hump. This entailed both change related activities such as supplemental training, as well as some process design rework to address gaps (which required additional change management). The extended support stayed in place until the business demonstrated proficiency in the new system, ensuring operational sustainability.
Conclusion
The Change Management discipline is still evolving and the opportunities to apply our skills will only increase with the accelerating pace of change. While some change colleagues groan about being misused or underutilized in their initiatives, I also hear from others that they have been brought in too early and have “nothing to do”. This speaks to the need to educate ourselves as well as our clients on how to add value at every stage we are brought into the initiative.
Granted, not every program requires the full scope of activities, nor does every project require “a senior change manager”. In fact, and this may be sacrilege to some consultants, many simple transition efforts don’t even need a change manager. At the same time, there are other efforts where change managers should be involved sooner and stay in place longer to increase the chances of change success. Since it isn’t practical to bring in a team of change managers when an idea is merely a glint in someone’s eye, how do we address this need?
Here is my recommendation: have a change expert involved in the stages before Project Planning, when ideas are being assessed and projects are initiated. A team isn’t required as multiple projects can be evaluated at the same time during these early stages.
- Before Project Initiation: A high-level change assessment should be conducted (such as the type of change, extent, timing, and criticality) to understand the potential impact and to incorporate (and mitigate) change considerations in business planning roadmaps.
- During Project Initiation: An environmental assessment (culture, structure, leadership style, etc.) of the organization receiving the change should be done to help identify a suitable change strategy. This should be input into how the project is set up and how many change resources (and what skills) are required.
The intent is for the projects that are kicked off to be aligned with a viable change approach. Also, since the strategy provides the framework for the change activities, it will facilitate the development of a more focused change plan. All of this should help achieve what everybody wants: an increased level of change success.
This blog post is part of a two-part blog series aimed at clarifying the role of change management and how to recognize and understand the best applications for a multitude of situations. Click here to read part 1.
