Leadership and Change Management
Over the past decade, organizations across the world have implemented programs to improve corporate organizational performance. They have met with limited success, but yet such programs are being increasingly pursued.
The success of these programs depends on transforming the ways of work of hundreds or thousands of groups and individuals; about persuading them to think differently about their jobs.
Before embarking on such intense programs, CEOs must identify the extent of the change required to achieve the business outcomes they seek. They have several choices.
(A) As a first choice, companies can choose to act directly to achieve outcomes, without having to change the way people work; one example would be divesting noncore assets to focus on the core business.
(B) As a second choice, companies may choose to adopt ways of stimulating the existing mind-sets of their employees – but only in a limited way. Employees may need to adjust their practices or to adopt new ones in line with their existing mind-sets in order to reach, say, a new bottom-line target. An already “lean” company might, for instance, encourage its staff to look for new ways to prioritize better and improve productivity, or a company committed to innovation might form relationships with academics to increase the flow of ideas into the organization and hence the flow of new products into the market.
(C) The third choice is the most challenging. This is normally required if the only way a business can reach its higher performance goals is to change the way its people behave across the board by changing its culture fundamentally-from being reactive to proactive, hierarchical to collegial, or introspective to externally focused. Such a transformation would mean changing the minds of hundreds or thousands of people.
In such cases, CEOs will likely turn for help to psychology.
Although breakthroughs have been made in explaining why people think and behave as they do, these insights have in general been applied to businesses in a limited way, but the applications are growing.
For organizations, who have embarked on the third choice; have seen that some of their programs have brought about startling changes in the behavior of employees- changes rooted in new mind-sets. However, experts caution that performance-improvement programs that apply all of these ideas in combination can be very chaotic in the short run and may discourage and break a lot of existing performers in the organization. This in many ways becomes disastrous.
Changing behavior:
Employees will change their mind-sets only if they see that certain conditions are realized independently. These conditions add up to a way of changing the behavior of people in organizations by changing attitudes about what can and should happen at work.
(A) A sense of purpose:
For an organization, employees should believe in the overall purpose. Only they will they be happy to change their individual behavior to serve that purpose. They must understand the role of their actions and their effects on the performance of the organization. It isn’t enough to tell employees that they will have to do things differently. Anyone leading a major change program must take the time to think through its “story”-what makes it worth undertaking-and to explain that story to all of the people involved in making change happen, so that their contributions make sense to them as individuals.
(B) Fairness of systems:
CEOs broadly agree that reporting structures, operational processes, and measurement procedures-setting targets, measuring performance, and granting financial and nonfinancial rewards-must be consistent with the behavior that people are asked to embrace. But though they agree, they fail to analyze these aspects deeply and usually end up relying on advises given by ‘old hats’ in the organization, who do not believe in subjecting themselves to change!
When a company’s goals for new behavior are not reinforced, employees are less likely to adopt it consistently. If managers are urged to spend more time coaching junior staff, for instance, but coaching doesn’t figure in the performance scorecards of managers, they are not likely to bother. CEOs need to understand that performance of managers – qualitative or quantitative- in the seeding phase cannot be washed under the carpet. Each employee is counting his years of progress and it is unfair to expect him to give up some years just because the management did not have the tools in place. How many times we have heard the dialog from a senior manager: “I cannot change the past, but henceforth, we will take care of you with a new compensation system.”
There are more examples. For instance, organizations having the same level compensation plan for employees who embark on new, not-so-tested initiatives compared to employees who continue with old tested business initiatives. Some organizations tie the success of an employee entirely to his performance in a new not-so-tested initiative knowing well the fact that new initiatives meet first time challenges that may spoil the earning potential of the employee and therefore his focus.
(C) Past culture and new skills:
Many change programs make the error of expecting employees to behave differently without giving them direction. The company may urge them to be “web marketing centric,” for example, but if it has never done so earlier, they will have no idea how to change or won’t know what a successful outcome would look like.
In practice, organizations can’t teach everything there is to know about a subject in one session. It is advisable to break down the formal teaching into chunks, with time in between for the learners to reflect, experiment, and apply the new principles. Large-scale change happens only in steps.
(D) The importance of ‘Role Models’
In any organization, people model their behavior on those they see in positions of influence. Employees in different functions or levels choose different role models-the CEO or the HR chief or the best performing sales rep. So to change behavior consistently throughout an organization, these role models at every level must “walk the talk.”
Most of the organizations today encourage entrepreneurial decision making at medium to low levels. Some managers may try to coach junior employees to spot a new business avenue; another might leave this up to them. Both would be acting in line with the entrepreneurial principle, whereas a CFO who encourages favoritism in allowing expenses of different workgroups, or an HR head that refuses to understand the needs of employees in new initiatives, would not be.
It is neither easy nor straightforward to change the behavior of employees by changing their mind-sets. Organizations should not try to do so without first exploring less disruptive alternatives.
Sometimes tactical moves will be enough; sometimes new practices can be introduced without completely rethinking the corporate culture. Whatever may be the approach, it is the test of the leadership of the organization. No stakes can be higher!
Related posts:
- Managing Change
- Defining Leadership
- Leadership in Professional Firms
- P & L Management
- Changes & Transition
Tags: change management, Insight, leadership, organizational performance, productivity, psychology
