Prime cuts

MANAGING THE CHANGE:The reversal from boom to slump means skills must be updated, and management of change is central to these skills - but achieving that change quickly enough is easier said than done, writes FRANK DILLON

FOR A YOUNGER generation of managers, achieving growth has been the mantra of the past decade as the economy boomed. Now, with Ireland's fortunes in decline, new skills are required. In particular, the capacity for change management has assumed a new importance. Given the urgency of the situation organisations are facing, managers have had to acquire many of the skills associated with this discipline on the fly.

Veterans of previous campaigns, such as Niall Saul (see page 26), have a lot of advice to offer based on their practical experience. These lessons have generally been learned in the heat of battle, and been gleaned from mistakes made, as well as successful plans.

Some common threads run through the experts' advice. They can be distilled as follows: plan for change on the upside of the curve, have tight management information systems, get a vision for where you want to go and communicate it well to all stakeholders and, above all, make a good strategic plan and lock it down in a short but realistic timeframe.

Achieving change is easier said than done, a fact underlined by international research. According to the Wharton School of the University of Pennsylvania executive education programme on leading organisational change, only 20-50 per cent of major corporate re-engineering projects at Fortune 1000 companies have been successful. Mergers and acquisitions fail 40-80 per cent of the time. More-over, the researchers on this study estimated that only 10-30 per cent of companies managed to implement their change plans.

Why do organisations have such a poor track record of managing change? According to the Wharton School, the primary reason is "people issues".

Consulting firm PricewaterhouseCoopers supports this finding. In its study, How to Build an Agile Foundation for Change, the authors noted: "Research shows that nearly 75 per cent of all organisational change programmes fail, not because leadership did not adequately address infrastructure, process or IT issues, but because they did not create the necessary groundswell of support among employees."

For Ireland, however, the stakes are sufficiently high now that achieving buy-in from employees is becoming easier.

"We're in the grip of a national change management process, so this is a subject that affects everyone," says Michael McDonnell of the Chartered Institute of Personnel Development. "We lost the run of ourselves. Many people were grossly overpaid, and this has destroyed our competitiveness as an economy."

However, the national mood at the moment makes this is an ideal time for a major realignment, he says. "Never before in our economic history were people so open to change. Everyone is conditioned for bad news for the next two to three years. There's a belief that if people have a job, they are fortunate, so expectations are different. We could actually turn this to our advantage."

McDonnell says in ideal conditions change is implemented on the upper part of the curve before an organisation achieves a solution. This is not as simple as it may appear.

"It's hard to rock the boat when things appear to be going well, but it is the time to do it. Very few people practice change management before it is forced upon them, however," he says.
So what is the best way to effect change?

The experts are all agreed that communicating the need for change and a vision of a better place is the first step. "I like the analogy of a river and two banks," veteran HR manager Niall Saul says. "You need to convince people that they need to get to the other side and to do so you have to build a good bridge. But you don't shout at them from the other side of the river. You work with them in building the bridge."

The process must combine degrees of rigidity with some degree of flexibility - the bottom line is that certain objectives, such as cost savings or changes in work practices, must be met.

The tools and techniques of change management are important, but they are only a means to an end, says Paul Pierotti of PA management consultants, who has been involved in a number of turnaround initiatives. "You need to instill a passion for what you are doing as well as a sense of urgency, and one of the keys is for leaders and project managers to get their hands dirty in operations and to be seen doing it rather than just ticking off boxes on a checklist."

The first two weeks of any change management process are vital, Pierotti says. "You need to create a sense of momentum and to try to achieve some early wins. If the issue is cost containment, you need to instill in people how their behaviours can impact on this. If people see their colleagues working towards this goal they are more likely to copy that behaviour, so management must align their own behaviours with this objective."

Pierotti says lock-down on objectives should be balanced with allowing people to air their views and contribute to the change process. "If the newly minted graduate is the one in the room with the best idea, then that's the one to go with. If there's a dissenting voice, listen to it, as it's probably representing a significant strand of opinion."

A technique Pierotti has practised over the years has involved seeking out often the grumpiest or seemingly most change-resistant supervisor in a factory or office and trying to find some common ground. "In many cases this is a person who has good ideas, but who hasn't been listened to over the years and has become disaffected or cynical. If you can get them on side, it can change the atmosphere in a department."

In some cases, the message for the audience will be an uncomfortable one. Pierotti is just one of several experts who mentions the fact that outsourcing has an especially bad name in Ireland, but that it is an issue which organisations here cannot avoid. "You need to ask what an outsourced provider would charge for a particular task, as this is the competitive environment in which we are operating. Outsourcing is a dirty word, however."

One of the key international thinkers on change management is John Kotter, whose books include Leading Changeand What Leaders Really Do. He has identified eight steps which he says are vital to a change-management process. To begin with, he advises creating a sense of urgency, forming a powerful guiding coalition, creating a vision and communicating the vision.

The second half of the process involves empowering others to act on the vision, planning for and creating short-term wins, consolidating improvements and producing more change, and finally, institutionalising new approaches.

The most successful change management processes are those that take the time to go through each of these phases. Skipping steps creates only the illusion of speed, and never produces a satisfying result. A second major lesson, he adds, is that critical mistakes in any of the phases can have a devastating impact, slowing momentum and negating hard-won gains. Even very capable people often make at least one major error in working their way through these stages, he says.

International change-management expert Jonathan Gilbert sees the process as essentially a three-phase life-cycle - identifying, engaging and implementing. He says executives who neglect the human transition required in change management will be less successful at implementing change.

"Successful change management comes down to improving the relationships between people in the organisation in the attainment of a mutually desirable end state. An organisation that is too focused on objectives runs the risk of losing sight of the importance of personal relationships," he warns.

The human transition that is required to move from a historically acceptable way of working to one that is completely new or radically different is not to be underestimated, he says, and good leaders will make the reasons for change personal for everyone, not just for executives or shareholders.

Michael McDonnell agrees that empathy is essential during a period of change or crisis. "It's important to create a climate where people can open up about the pressures that they are under and the worries and anxieties that they are experiencing. People may think, for example, that if they mention that they are experiencing stress, this will be noted on their personnel files and will go against their future promotion prospects."

Lamar C Smith, author of the book There's More to Life than the Corner Office, stresses the importance of not getting dazed in the headlights. He advises managers in crisis situations to take small actions every day towards a longer-term goal and to develop a trusted team of a handful of executives to share the problem with. He also advises managers to take time out with someone who is not directly involved in the process.

"Find a wise mentor who has more life experience . . . Not that it will provide all the answers but you'd be surprised how that kind of thing can be calming. When you are calm you think better, and thinking better is the key to surviving tough times and surviving combat."