Transformation Management – A Corporate Imperative
By: Karl J. Larson, PhD
Transformation Change Efforts can be forced upon an organization by pressure from an external environment for example:
a. Technological developments
b. Loss of traditional markets
c. Government regulation or deregulation
d. Environmental factors
e. Different social and cultural values
Or change can be initiated within the organization itself, in order to improve the overall organization’s effectiveness and its ability to achieve its objectives.
Whatever the initial stimulus, organization transformation change, in order to be successful needs a planned and systematic organization-wide approach. This approach needs to be based upon sound knowledge of organizational and management behavior, enriched by practical and applied management skills.
In this article I plan to examine the reasons why so many corporate transformation efforts fail, and to develop some guidelines which may be useful for those about to embark on an organization transformation effort.
I will now examine some of the more common reasons in some detail and. In doing so, I also will hopefully provide some guidelines for successful transformation efforts.
1. Lip-service commitment from the CEO
The key to any transformation effort is the degree of commitment and involvement of the CEO. Not only is it essential for him or her to be committed and involved, but he or she must be seen to be modelling the behavior that is called for in the effort. If the CEO talks about “changing people’s attitudes” without modelling the desired behavior, the transformation effort lacks credibility, and is most certain to fail. On the other hand, if the CEO invests time and energy beforehand with his or her senior managers in planning the stage, and shows what he means by example, those senior managers, in turn, should model the desired behavior and thus give early momentum to the effort.
2. Adherence to Traditional “win-lose” attitudes
The desired change will fail unless it reflects a “win-win” approach to change. Focusing on scape-goating or blaming individuals or groups for past mistakes severely impedes a transformation effort. People normally welcome the cessation of blame-placing, with emphasis being placed on working together to solve problems and develop opportunities.
3. Inadequate Involvement of all Levels of Employees
Employees will not believe in the effort unless they have an opportunity to help plan it, provide feedback, experience it (not just hear it), and develop a sense of “ownership” in the effort. Failure to involve employees can lead to a great deal of cynicism about the effort and statements on the grapevine such as “nothing really changed around here”, or “they won’t change.”
4. Insufficient Attention to Middle Management
These employees often see these efforts as “the latest thing or fad that the boss has brought back from the senior managers to whom they report, and they frequently feel confused if the direction of the change seems to bypass them and concentrate on direct dialogue between workers and senior management. Sometimes members of middle management are seen as lacking motivation, when the real problem could be due to failure to involve them in the effort.
5. Limited support of First-Line Supervision
The effect of the transformation effort is often most severely felt between employees of the younger generation and the older first-line supervisors who have been promoted, not so much for their supervisory skills, but for loyalty and hard work. Unless these supervisors are given some help in re-orienting their thinking, they may have difficulty in adjusting to a changed role in which they may be required to act more as advisors and internal change consultants, than as bosses.
6. Inappropriate pace to the transformation effort
In a large organization it can take three to five years to accomplish any transformation effort. The pacing of the effort is therefore very important. The error is to move either too slowly to build momentum and confidence, or too fast thereby interfering with the daily operations and become a taxing and untimely wearing effort.
7. Unrealistic Level of Expectations
Given that people basically do not believe they can change organizations, the need for leadership to truly believe that the organization can change is essential. On the other hand, changing an organization requires a systematic effort over time. Although signs of change should become evident at an early stage, it is unrealistic to expect bottom-line results in less than two to three years.
8. Lack of Interest to Internalize the Transformation process
The Internal change agents play a crucial role in the transformation effort. They provide an objective analysis of the existing organization, train the members in the concept and methodology of change and refine and model the application of the change strategies. However, a crucial element of the transformation effort is the assumption of the change agent(s) role by organization leadership and all members of the organization. If the change process does not become internalized and a permanent part of the functional organizations, the accomplishments of the effort will not be maintained.
9. Inability to Use a reliable Diagnostic before Embarking on the Effort
At the beginning of any transformation effort a diagnostic process focusing on the total organization is essential. Sometimes the apparent problems are only symptomatic of other issues within the organization. If the Diagnosis has been well done, it will provide a data base for planning the effort as well as a starting point for measuring progress towards achievement of the objectives of the effort.
10. Failure to Ensure that the Organization’s systems Reinforce the Transformation Effort
All the organization’s systems and policies including the reward system must be altered to reinforce the change in behavior sought as a result of the effort. People must be rewarded for acting in support of the change effort. When we speak of the “reward” system, I include the intangible aspects, as well as the purely material benefits. In this regard performance appraisal is a remarkably potent tool for reinforcing the transformation effort.
11. The Lack of Measurable Objectives for the Transformation Effort
Because there is so much skepticism about being able to transform organization culture, it is necessary to state specific measurable objectives which everyone agrees will, upon accomplishment, constitute satisfactory achievement and change. Progress towards the achievement of these objectives can then be monitored and feedback given regularly in order to provide support and confidence to those people who initially became committed and worked towards the transformation effort. This feedback can convert the many skeptics in most organizations who will usually not try to change until they begin to experience actual change.
12. Failure to Communicate the Purpose of the Transformation Effort
An essential element in creating a climate receptive to change is to ensure that the purpose of the transformation effort is clearly understood by all employees and stakeholders and that they are provided with accurate and complete information.
13. Inadequate Feedback on the Progress of the Effort from Stakeholders
Since it is never possible to predict accurately at the beginning of the effort which change strategies will work, and which will fail, it is essential to ensure that there is regular flow of progress feedback data to the organization leadership. This will enable senior management and the consultant to modify or discard a change strategy which is not working properly.
14. Failure to Select the Most Appropriate External Consultant
In addition to ensuring that the consultant is a professional who has the necessary knowledge, skills and extensive experience in the management of the transformation process in a variety of organizations, it is essential that the selection process take into account certain factors. Some of the more important of these are:
a. The chemistry is right between the consultant and those internal resources responsible for managing the transformation effort.
b. The consultant is willing to confront senior management with unpalatable information or opinions, rather than telling the client what he or she would prefer to hear.
c. The consultant models the same behavior that that he or she is prescribing for the client system
d. The consultant will help the members of the organization to find their own solutions to the problems, rather than provide “expert” solutions.
e. The consultant will be willing to transfer knowledge and skills to internal resources so that he or she is able to withdraw gradually leaving behind the capacity for ongoing renewal.
Out of all the reasons for failure listed above, there is obviously one which is most important is lip-service commitment from the CEO. On the other hand, if the CEO is leading the transformation effort, and he or she and the senior managers are enthusiastically modeling the behavior which is called for in the transformation effort success can be almost guaranteed.
The next most important reason for failure lies in the selection of the consultant. While the CEO can be expected to know all about his own business, it is unlikely that he or she will be an expert on the transformation and change strategies. This is where the CEO needs the support of a competent consulting resource, who not only understands the dynamics of change but has had considerable experience in the management of transformation in a variety of organizations.
Most of the other reasons for failure are incidental to, and dependent upon, the leadership of the CEO and acceptability of the consultant.
If these two are able to work together effectively, it should be possible to involve all employees of the organization in a successful transformation effort which will achieve its objectives and leave the organization with an ongoing capacity for self-renewal.
Dr. Larson is an OD guru and a world-renowned thought leader on Transformation and HR Management. He has over 35 years of professional experience in international consulting, and has had various client Organizations around the world, including the Philippines. He is the founder and managing partner of Kensington Consultants, a consulting firm with offices in the U.S., Manila, Sydney and Bahrain.
Human Resource Innovations & Solutions, Inc., (HURIS) will be executing two of his remarkable programs later this year: Driving Organization Transformation; and Strategic HR Shift: Optimizing the HR Role Towards Business Results.
For more information about these two executive workshops, please visit www.huris.com.ph.