Four Perspectives on Change Management

Four Perspectives on Change Management

July 2014

Emer O’Kelly, Regional Director Europe, Chazey Partners

Ann-Marie Massenberg, Chief of Sta�, Program Support Center, U.S. Department of Health & Human Services

Kayzad Hiramanek, COO, Avantha ERGO Life Insurance

Richard J. Rowan, Jr., Director, Global Shared Services, TRW Automotive

Chazey Partners Practitioners’ Corner │ Change Management

INTRODUCTION Why do projects fail? A simple enough question. If you analysed a hundred answers, you’d find the common denominator to be “ill-‐planned and ill-‐implemented change.”

But despite the lip service given to change management as a “core enabler” of project implementations like Shared Services, the evidence supporting its deployment is still weak.

We’ve asked some of Chazey’s clients and fellow practitioners, all of whom have led, and continue to lead, Shared Services implementations or transformations and who have first-‐hand experience of operating at the frontline, to comment on key mistakes made in planning, tips on managing customer resistance, and advice on how to get it right, first time.

THE PITFALLS OF “CHANGE” o Change Management is all too frequently underestimated or insufficiently accounted

for in corporate transitions. Why is this important?

o Failings in Change Management boil down, time and again, to overlooking a few keystepping stones. What are the most common mistakes?

o Customer resistance is one of the biggest obstacles to change. How can you workaround this constructively?

o What are 3 core factors to consider that ensure Change Management supports yourobjectives?

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Change Management is all too frequently underestimated or insufficiently accounted for in corporate transitions. Why is this important?

Emer O’Kelly Regional Director Europe Chazey Partners

Any significant change to a business’s operations, including a transformation of its support services, requires a clear vision and strategy in order to have a fighting chance of succeeding. This vision needs to be clearly linked to the challenges facing the business, make realistic allowance for the circumstances but, above all, be demonstrably supported by the key leaders in the business. Actions must mirror words and many an initiatives has been “damned by faint praise” by those senior people in the company, who others look to for leadership, and have faded away as a result.

Major organisational changes require business leaders to show their mettle and this includes giving true commitment and guidance which others can focus on, follow and build on themselves. This applies especially to a transformation or migration to a shared services structure, where there is a natural fall-‐back position of continuing to do what was done before, regardless of what is happening at the front-‐end of the business in terms of market changes, product development and customer expectations.

Transmitting the vision, internally and externally, is critical to successful change and under-‐committing to communicating this can slow down, or even de-‐rail success of an otherwise well planned initiatives. The ideal is to build a guiding coalition of people who are evangelical about the project and who will foster emotional engagement and ownership of the solutions.

Ann-‐Marie Massenberg, Chief of Staff, Program Support Center U.S. Department of Health & Human Services

SSO implementations by their nature involve a certain amount of angst on the part of the organization that is transitioning from a self-‐serve model to an outsourced model. Typically, there tends to be a feeling of loss of control, concern about responsiveness and quality, and a general sense of uncertainty. Couple that with the mechanics and coordination involved in shutting down one’s own operation and transitioning that to a shared service provider (e.g. transitioning data, performing business process improvements, and configuration) and it can be incredibly overwhelming. In this situation, when change management is lacking, the impact to the implementation can be costly. Without change management, SSO implementations stand the risk of poor

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adoption by the receiving organization. Stakeholders who are confronted with change, and not supported with a comprehensive change management strategy that includes a clear vision of the end state, informative and consistent communications, and inclusive involvement in the change activities, are more likely to produce undesired results. These include, delays, errors that require extensive re-‐work, and poor morale.

Kayzad Hiramanek, COO Avantha ERGO Life Insurance

The basic human nature is resistance to change. Therefore to say that any form of transition or change will cause upheaval within and outside an organization is stating the obvious. The most common issues reported in poor change management and the resultant consequences include an atmosphere of uncertainty, talent attrition, staff de-‐ motivation, inter department politicking and one-‐upmanship. All new initiatives will be still born and the overall organization agenda will be derailed owing to poor communication from the management on the intent regarding the changes to follow.

Eventually, people like working in a stable environment where changes, if any, are introduced in small doses and keeping all affected parties informed on the timelines and long term organization goal around the same. The moment people perceive a threat to their jobs, the resultant push back through the grape vine and corridor conversations will swiftly obscure the real motive of the change.

Richard J. Rowan Jr., Director, Global Shared Services TRW Automotive

While there is a broad and growing shared services and business services presence in the board rooms and operations of companies worldwide, there remains -‐ even among practitioners -‐ variation in the definition, scope and structure of shared services. In light of that, to expect a targeted area of a business to understand what shared services or business services is with little to no introduction and no listing of expected benefits to both the target area/function and the broader company is a recipe for: at best, a difficult implementation and at worst, a failed shared services implementation. Commitment/support from the top is critical but paying attention to all levels is vital.

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Failings in Change Management boil down, time and again, to overlooking a few key stepping stones. What are the most common mistakes?

Emer O’Kelly, Regional Director Europe Chazey Partners

“Too little, too late and not often enough” could sum up the challenges to avoid in achieving effective change management through communication.

It is too often perceived as something to do later, or to be done by someone else. To be effective, there needs to be consistent, regular, clear flow of communication with working structure to allow for this communication to be genuinely two-‐way, and this needs to commence at the earliest reasonable time. For a transformation, this is likely to be after a business case has been established and the commitment is made to performing a transformation. (There is, of course, communication required during a business case phase but this does tend to be a more limited audience).

The communication network also needs to cover all levels which need to be aware of the proposed changes and their impacts, some of which are obvious (e.g. “what’s in it for me?”) to others which are less so (e.g. the company’s ability to attract suitable talent through its reputation in the market-‐place). This calls for the use of many different channels of communication – e.g. town-‐hall meetings, smaller groups, 1-‐to-‐1’s, breakfast briefings, walk-‐abouts, confirmed be email as appropriate and backed up by project web-‐site / blog / FAQ’s.

Whatever channel or timing is followed, the message needs to be consistent and regularly reinforced, and presented in a positive light.


I think that change management is frequently confused with a communication plan. Some leaders focus on providing training, and executing a communication plan. Many fail to see that the most important element of change management is that those affected must be involved in the change rather than having change imposed upon them. They need to buy in to, or at the very least understand, the vision and the end state. And they must be involved in all aspects of the change in order to enable and facilitate the change. All parties involved need to understand the reason(s) for the change and have a chance to be involved in the decisions of how the change will be managed, planned, and implemented.

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Kayzad Hiramanek, COO Avantha ERGO Life Insurance There are several mistakes leadership can make in this area. There is no magic formula to predict whether the prescribed change will actually result in betterment of the organization. World over, we have seen innumerable take-‐overs, mergers and transitions fail owing to the lack of anticipation of forces that are playing in the background. Some of the common reasons for such failures begin at the thought level: is this change really required? Is the organization in the long term going to be solely focussed on its core competencies? Is the leadership team sufficiently convinced that this decision is for the betterment of the organization? Can our customers stand by us through this journey of transition? Do the laws of the land permit me to make such a transition? Many a time, if the key leadership is not convinced of the decision, they play a vital role in derailing the overall change and its implementation schedule. Even if key leadership is convinced, sometimes a synchronized communication strategy is essential to ensure that all parts of the organization are talking the same language to the affected parties. Not speaking in one voice is also detrimental to the overall change agenda. In addition, not identifying key resources that manage large customer relationships and ensuring their retention is vital to ensure that the internal challenges do not manifest themselves to the external eco system. Richard J. Rowan, Jr., Director, Global Shared Services TRW Automotive Change management is often perceived as a nice to have instead of the critical to success item. As such, many shared services implementations spend too little time -‐ at all levels, especially the grass roots level -‐ working to understand the vantage point of those closest to the targeted work. The late Stephen R. Covey in his book The 7 Habits for Highly Effective People wrote about seeking first to understand, then to be understood. Taking the time to do this helps build the relationship and ensure that you understand the concerns held by those impacted by shared services. As Covey would say, being efficient with people is not effective. Spend the time.

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Customer resistance is one of the biggest obstacles to change. How can you work around this constructively?

Emer O’Kelly, Regional Director Europe Chazey Partners Maintaining the level of customer service, performance and accessibility is a prerequisite to protect the business’ activity as it goes through a major change process. This extends to presenting why the change is required i.e. to further strengthen the business and its ability to continue to deliver good quality products and services. Customers must be reassured there is no significant risk to their supply and that the elements which cause them to trade with the company in the first place are recognised and valued by the business, and will be maintained or enhance by the transformation. Thus, there needs to be a flow of communication to customers which makes them aware there is a change, why and what impacts are envisaged. This may extend to specific briefings with key customers, depending on the nature of the business. This need to disseminate information also extends to other stakeholders such as suppliers and others who may potentially be affected, including banks and regulatory bodies. This whole process can be categorised as listening to the “voice of the customer”, finding out what’s important to them and ensure they are given the appropriate degree of attention. Ann-‐Marie Massenberg, Chief of Staff, Program Support Center U.S. Department of Health & Human Services Managing a customer’s resistance to change requires understanding the reason for the resistance. In some cases, it’s fear of the unknown. In others, it’s a lack of confidence that a provider can provide the level of service that the organization is used to. We engage our customers right away and involve them in the planning and implementation at all stages of the process. We establish quick wins to show progress and gain customer’s confidence in our abilities. This sets the tone for what they can expect as we progress with the transition. We ensure that the vision and end state is clearly and thoroughly communicated to all affected people and provide multiple opportunities for clarification and explanation along the way.

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While the real challenge in the management of change is internal, it eventually manifests itself to the external customer if key stakeholders decide to leave the organization and the relationship with external customers thus weakens. Therefore, identification of key accounts and their respective relationship managers is a vital activity to be undertaken. In addition, senior leadership should take charge of the overall organization portfolio and build one-‐to-‐one relationships with the decision makers in these key accounts to mitigate the attrition risk.

In addition, subtly sounding off customers of the impending changes within the organization also goes a long way in building a relationship of trust and giving the customer the comfort that the provider is taking this decision for the betterment of all parties involved. Nothing could be worse than customers finding out about big bang changes in the media and then seeking clarity on whether the existing relationship will still enjoy the same level of priority it did.

Richard J. Rowan, Jr., Director, Global Shared Services TRW Automotive

Some effort should be extended to map the current process. Carefully listen to issues raised as well as spend some time explaining how things will change. Highlight the benefits and any offsetting detriments from the new process. Stephen R. Covey’s seek first to understand, then to be understood habit is extremely beneficial. This is truly an art. If too much time or attention is allotted to discussing the angst of change, the project risks being thrown off schedule. Alternatively, if not enough time is spent, progress on the project will likely be more slow and painful.

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What are 3 core factors to consider that ensure Change Management supports your objectives?

Emer O’Kelly, Regional Director Europe Chazey Partners

Identify why the change is required and why it is worth doing, then create a coalition of people to guide the initiative, and promote and drive the change message consistently. Positive changes must be led and sponsored – they do not happen themselves; they require energy, enthusiasm and passion.

(1) Clear vision / consistent message Identify why the change is required and why it is worth doing, then create a coalition of people to guide the initiative, and promote and drive the change message consistently. Positive changes must be led and sponsored – they do not happen themselves; they require energy, enthusiasm and passion.

(2) Communication Create a communication plan which addresses the major issues, concerns and audiences, which also allows for feed-‐back, queries and challenges.

Then double it. J

(3) Managing Stakeholder relationships Ensure that all significant stakeholders, internal and external, are addressed regularly in such a way as to minimize the number of surprises experienced by anyone with an interest in the progress of the initiative.

For example, there should be no cases of “I didn’t realize that’s what it meant” or “that timescale is unrealistic”, encountered at crucial points, often later in the project. It is important to maintain consistency within the new processes as far as possible and to avoid unnecessary workarounds arising from such potential misunderstandings.


While there are so many factors that influence the course of successful change, in my opinion the top three success factors would be: a) Clarity in leadership thought process on why the change is essential and

beneficial for the future course of the company. In conjunction, buy in of all senior leadership to this course of action is a must.

b) Two way communication with the employee base on why the change/transition will not affect people’s jobs at least for the initial period. Eventually, every transition is accompanied by some amount of attrition. The key is to keep it within a reasonable limit (globally recorded standards

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are around 10-‐15%). Ability to accept employee feedback/ suggestions and a visible implementation of the same will go a long way in ensuring that people to not sand bag the initiative.

c) Management of the eco system is the third critical element in this piece. Noorganization wants a trial by the media or its retail shareholders regarding its motives. In addition, foresight in managing regulators and vendors is key to ensure that all change follows legal standards with regards to pending payments and tax laws. Finally, management of key customer relationships should be thought through well in advance to ensure survival of the business through-‐out the critical path of the project


1) Clear Vision – there must be a clear end state that must be explained2) Involvement – of all the people affected by the changes in the planning

and execution of the changes3) Communication – consistent, accurate, and thorough communications to

all affected people

Richard J. Rowan, Jr., Director, Global Shared Services TRW Automotive

(1) Change leader, change thyself -‐ I recently read a McKinsey & Company article entitled, Change Leader, change thyself. I think it is very important that as we ask people to look at a process and change, we at the same time look at our proposed processes and remain open to finding an even better way to forward – change leader, change thyself. Being candid about this item with your customers/impacted parties will build credibility.

(2) Follow The 7 Habits of Highly Effective People, especially habit four through six:

• Seek first to understand, then to be understood.• Think win-‐win.• Synergize

(3) Communicate, communicate, communicate – remembering all aspects ofthe communication process: sender, receiver, feedback and “noise”.And, don’t forget that listening is a part of communication.

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CONCLUSION

Change Management is crucial to leading a project to success – whether this is a Shared Services implementation, a subsequent process improvement or transformation initiative, or an expansion of scope of service. Every shift from “business as usual” should be preceded by a change management plan.

If you would like to discuss your existing change management framework, or take a first step towards embedding solid change management processes in your operations, our practitioners would be pleased to guide you through this.

Email us at [email protected] or visit our website at www.chazeypartners.com

More Change Management Articles:

TOOLKIT: 3 Key Factors to Effective Change Management in Shared Services

Change is a constant – in fact, it's often a simple matter of survival. But the best-‐laid transition plans can and will fail if you overlook the "how" and the "when". Our six-‐step methodology will keep you on track, as long as you remember three key factors.

BLOG: What Business Services Leaders Can Learn About "Change" from Parenting Guides

Business Services is a bit like parenting – just when you think you might have cracked it, a spanner is thrown in the works. David tells it as it is.

VIDEO: 7 Minutes with Chazey's Change Management Expert

Robert Towle, Managing Director of Chazey Partners North America (East) tells us why the most common mistake he encounters is the assumption that one piece of communication will get "buy-‐in"; and reminds us that "change management" is not the same as "eliminating change".

http://www.chazeypartners.com/sites/default/files/CMToolkit.pdf

http://www.chazeypartners.com/blog/parenting-your-global-business-services-be-world-class-operation

http://www.chazeypartners.com/7-minutes-chazeys-change-management-expert

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