Change Management

Change Management (CM) is a structured and organized approach and methodology for ensuring that people, processes, and technology within a company or organization are able to transition from their current state to a defined future state. The methodology can be broken down into components that are specifically designed to manage certain areas of CM, such as just people or just technology.

Change management comes into play after the current state and future state are defined. There are many existing approaches to analyzing and defining these, such as business process improvement and business process re-engineering (BPR). These are special disciplines in their own right and absolutely must be done first before CM can come into play and really do its part.

Once the current and future states are defined, the first step in CM is to analyze all of the asset that must be adjusted, changed, or modified. Once all of these organizational assets are identified, gap analysis must be performed to see what gaps there are between how they are currently positioned or configured and what they need to be as defined by the future state definition. As you can see, this can get confusing when you are mixing technology, people, and processes – thus the reason to separate each approach into different pieces of CM: People, Technology, and Processes.

The people focused section of CM is called ‘Individual Change Management‘. This discipline focuses on transitioning employees through different phases of employment and management and allowing them to grow within their career as well as allowing their growth to benefit the organization as a whole.

There are five approved key pieces of Change Management. They are Awareness, Desire, Knowledge, Ability, and Reinforcement. This, often referred to as the ADKAR model, has been adopted by thousands or organizations as a proven way to handle individual CM.

Process CM involves everything around improving a process from the current state to the future state. This includes performing very detailed analysis of the current state process, performing process mapping, and then looking for improvement areas as well as remapping the process to the desired future state. There is overlap in this area of CM that duplicates other defined standards and methodologies included in BPR and Process Re-engineering.

Businesses are very good at changing behaviour.

They have to be to survive. They have to change customers’ behaviour to make a sale. They have to change new staff members’ behaviour to make their work productive, and consistent with the business objectives and culture. They have to change suppliers’ behaviour to obtain the resources they need when and where they need them. The primary function of all managers is to change the behaviour of people and they use many techniques to achieve this.

If you accept this proposition, read on to explore the way your selection of KPIs influences the behaviour of your company. I have included a very insightful contribution from Andrew Gastaldello from the Linked In group ‘RMIT Alumni’. My thanks go to Andrew for permission to include his thoughts in this article.

What you measure is what you get.

Measure sales revenue, and you will get lots of sales, but the profitability of those sales is likely to decline, particularly if the salesperson can influence price.
Measure production volume and it will rise, often at the expense of quality.
Measure quality of service and watch service productivity decline.
Measure individual performance once a year in the dreaded performance review and watch morale decline and resentment rise.
Measure everything and watch confusion grow and focus get lost as the latest issue becomes the target for the month.

Your measures have to send the right signals to your staff, if you want to see the right behaviour.

Most managers can track 3-5 KPIs easily.

If you try to track too many performance measures your attention will wander. You are likely to become distracted by the latest incident, and you will probably be able to find a performance measure that appears to explain the cause.

The MD introduced me to his Marketing Manager with the words ” I keep him very busy fighting fires.” I thought, but avoided saying “If you need to put out fires hire a firefighter, and let the Marketing Manager do his job.” A year later the company was in receivership. Coincidence?

The most important question is “What are the 3,4 or 5 measures that really guide management and staff behaviour to achieve their targets and contribute to the whole business performance.

Do these measures for a department link to and reinforce the measures for other departments?

Alternatively do they teat the departments as a single entity to be optimised and having no effect on the performance of other departments?

Selection of these performance measures for any function needs to consider the whole business system if you want to avoid conflicting goals and destructive competition. You need a set of KPIs that make a measurable contribution to business return on funds, not just achieve departmental targets.

If you develop a KPI model that covers the whole business you will find that, for each function, there will be a small number of KPIs that exert powerful leverage over business performance. You will be able to see how a small change in a KPI in a remote function of the business makes a real difference to the whole business performance.

Now your KPI structure will send the right signals to staff everywhere, and the odds of getting the desired behaviour improve dramatically.

Involve the team in developing the KPI Model.

One of the most rewarding sights in my work is to watch a team of people from all levels of management work at developing a KPI model on papers. The real insight comes when they need to integrate the parts of model. This is when they come to realise that optimisation at one point is easy to achieve if the adverse effect of handing off the problems to the next department ignores the effect on the performance of the whole system. This insight has a profound effect on their understanding of the interconnections in the business system, and it changes the way managers behave by improving the quality of the decisions they make.

Free Performance Improvement.

I worked on a KPI model for the owners of a hospitality business. It was easy to work out that the key determinants of performance were the cost of labor and the cost of goods in the restaurant, and the kitchen. We assessed historical performance of these % ratios and compared them with industry benchmarks. We found that the industry benchmarks were wrong for the business, far too high, and that the business could operate successfully on lower percentages.

We estimated a target range, based on high season and low season traffic loads, and explained the thinking to the head chef and the restaurant manager. We sat back and watched them change their process for rostering staff to optimise their labor use. Over the low traffic, winter period we measured the numbers monthly and watched the KPI numbers move into the target range, and watched profitability improve. The effort paid off the following summer when the business achieved record levels of profit. The result made the industry benchmarks look silly.

Rewards can be KPI based.

Some would say they should be KPI based, but I would add, “only if you know that your KPIs will drive the whole business in the right direction.”

Your reward systems are powerful motivators,(or demotivators). If rewards are linked to KPI achievement you can be more confident that you are rewarding desirable behaviour. You will actually get a free benefit from setting KPI targets that are achievable for your business, and you can sit back and watch your staff set out to achieve them. You can relax oppressive supervision, and trust them to make better decisions as they understand how their achievements affect the rest of the business.

Now here is Andrew Gastaldello’s insight on this topic posted as a response to a Linked In topic.

1. Most organisations fail to think through the “law of unintended consequences” which occurs when measures are poorly structured, or overly simplistic (e.g. rewarding sales staff on revenues does little to ensure customer retention, more profitable sales, etc.). The “number of seconds to answer a call” in a call centre is another (highly annoying) one – a customer can phone 7 times and each time the phone is answered within the “right time”, the Service Staff are “rewarded” for being “on target”. (What would be nice as a customer is to have my call answered and my query resolved in one call, not 7 – so first call resolution would be a much better measure).

Many rewards are thus based on poorly structured measures, and organisational dysfunction can actually worsen as a result of a poor “targeting”.

2. The concept of “Lean Measures” is far more important as a way of measuring performance, encouraging continuous improvement, and countering or avoiding the unintended consequences effects described above. First call resolution (described above) is a “lean measure”, as Lean thinking would identify the other 6 calls as “waste” (indeed, for certain categories of call type, it could be that all 7 were wasteful from the customer’s perspective at least).

3. Your article rightly identifies and mentions “behaviours” many times. However, many organisations also fail to properly balance both behaviours and quantitative outcomes or results. For example, as long as a target is achieved or exceeded, managers are typically paid their bonuses, irrespective of the “how” of their management style. This problem is amplified by high individual elements of the bonus as a proportion of the overall bonus potential. (There are usually three core elements – team /department/division; overall company; individual). The greater the individual proportion, the more this drives “silo” behaviours.

Behaviours need to be actively managed by means of regular conversations throughout the year, as part of continuous performance management. Many managers lack the skill, the will, the cultural framework, or in turn, the incentive, to do this.

Too often, many of us have seen “performance management” as a once-a-year conversation, that is pitched as an uncomfortable negotiation about a year-end rating, and yields surprises for both participants (”I never knew the boss would hold such a grudge for that project slip-up back in February”).

4. The other recent learning about incentives – particularly poignant following the sub-prime and credit crises – is that rewards can’t be structured on a “one way pay-off curve”. As Wall Street so painfully showed, bankers and traders took all the upside, and let the shareholders – and now taxpayers – take all the downside risk.

The influence of ’soft measures’.

Many managers worry about dependence on ‘hard measures’. In my experience hard measures, being ratios of $ to activity numbers, is not risky as long as they are well chosen with a whole business perspective.

Soft measures are more difficult because the cause and effect relationship is not measurable. Soft measures can be critically important too.

How can we derive soft measures that work for us and our customers? The best place to start is with a hypothesis, even a hunch, that if a particular level of performance is reached it will provide a major and recognized benefit to customers. This is often a threshold effect; no change in customer attitude until the threshold is reached, then a dramatic change.

We have to measure the correlation between the soft measure performance and customer behaviour to confirm whether it is a KPI. It is not necessary that you build it into your KPI model, as long as you measure and track it outside your accounting system.

I hope this article provides guidance on some of the behavioural benefits of your KPI model.

Change management is one of the most important disciplines of Information Technology Infrastructure management. The Wikipedia defines change management as “The objective of Change Management in this context is to ensure that standardized methods and procedures are used for efficient and prompt handling of all changes to controlled IT infrastructure, in order to minimise the number and impact of any related incidents upon service.”

Change management was always an integral part of business management, but with emergence of Information technology it gathered seriousness. Information Technology Infrastructure management is one broad term which encompasses all the elements necessary to ensure smooth functioning of business processes which may be threatened due to technological problems or other incidents. It’s the “change is rule” attitude (as coined by some experts) that forced these businessmen to change their attitude towards change management. Good change management techniques always help the businessmen to adapt and adopt new ways of doing business. Change management is not merely implementation of new techniques to cope up with a change within the organisation; rather it is a discipline of Information technology infrastructure managementwhere changes are managed with a more systematic, reliable, rigorous and disciplined approach. Changes are brought into system when the integrity of business organisation is challenged due to some incidents or customer requests or technological updates.

Process of change management unfolds through following steps

1. Identifying the need for change in organisation.

2. Designing need specific changes to curb with the requirement of the organisation.

3. Making others understand why change is necessary for the proper functioning of the organisation.

4. Altering the organisational process like processes, technology and performance meters to incorporate the changes.

5. Managing the production and changes to ensure that customer and the stakeholder continues to be bonded with each other over the long run.

According to Wikipedia Change management involves management of process related to Hardware, communications equipment and software, system software, and all documentation and procedures associated with the running, support and maintenance of live systems.

Project management is another aspect of change management, which needs to incorporate its values for proper functioning. There are some touch points between project management and change management. Project management is all about handling change with elance. It is defined as the discipline of planning, organising and managing resources in order to ensure the successful completion of projects. Aim of any project management endeavour is to attain the successful results despite of constraints like space, time, changes, quality, time and budget. Every project is developed around some permutation and combination methodology. Changes are made to the existing methodology in order to avoid potential failures. Identifying, managing and controlling changes become important for the smooth functioning of the Project. According to some experts “project is change and change is project”. So it becomes difficult to differentiate or draw a line between the inter reliability of project management and change management.

So change management holds utmost importance in the world of business where things are assessed on the basis of their perfection and capability to address the needs of customers and clients.

Our Egyptian culture by nature is anti-change, not to mention man’s general fear of change. You can get the image on how important change management is. Do not get me wrong, change when necessary is a must; but a necessity should not distract your management from the correct course of action to implement and manage the change in your business.

Here are 8 Questions you need to answer to implement a successful change management:

1. Q 1: What is wrong with the status quo?

To be on the right page here, you need to understand that change in itself is not the reason behind it. In other words, you “Change” because there is a problem with the current status. Therefore, the first step is to identify your problem. After all, when it comes to management you do not want to subject your business (both as its manager and its owner) to unnecessary inconvenience, unless you are sure that change is the only way to achieve your objectives.

2. Q 2: Do others agree with you?

As a manager, answering the previous question will help you by directing your team toward change. As we previously mentioned Egyptians by nature are against change; so in the most likelihood they do not see the reasons why your management is pro-change; and accordingly, there is no need for change. Therefore, management requires that you validate your managerial decision using examples and statistics. management needs you to evaluate the perception of your employees of your vision. After all you, no change can take place, unless people feel the need to change.

3. Q 3: Have you selected people from all levels to implement this change?

To obtain the best results, you need to involve people from different levels to implement change. You may have the authority to initiate the change process as a manager or a business owner. However, you need the insight of professionals and specialized employees in order to succeed. Not only involving people from different levels will provide you with insights about the feasibility of your plan; they will also help you transfer your vision to lower managerial levels in your organization assuring that all your staff is on board for the project.

4. Q 4: Do you have a plan to remedy the situation?

It in the culture of management that employees are always looking up to the “Boss” and taking his lead, specially that at the current time Egyptian employees are not familiar with styles of management where they are required to take the initiative. So as a manager you need to come up with an action plan. While crafting this plan make sure it is flexible enough to adapt easily to unforeseen issues.

5. Q 5: Are others on board?

The following step after you have got everything you need to implement your plan set and ready is to put on your manager thinking cap and dedicate a team or department meeting to explain the problem and the need for change. As your crew’s manager you need to make sure that all your team is on the same page as you by assuring that everyone knows what he is doing, why, and to what end.

6. Q 6: Have you identified obstacles and sources of resistance?

Organizing and planning your change implementation, does not mean that you are not going to meet any setbacks. Therefore, a backup plan is an essential component for any change management. Especially, because Egyptians have the tendency to avoid being honest with higher managerial levels due to their belief that it is not good to disagree with the manager. So it is very likely that you will meet some resistance from certain members from your team, and your change management needs to be ready to deal with those members.

7. Q 7: Do you have demonstrable backing to support your change?

You do not want doubting and skeptical members inside your team. Most certainly, you will collide with employees who doubt your vision and the accuracy of your decisions. Being a manager does not protect you from these doubts, so be ready to demonstrate the validity and certainty of your actions.

8. Q 8: Do you have a time frame, a budget, the people necessary to help you and other resources?

Now, it is time to get your Management checklist, the past 7 questions measure your ability to manage change, but you need to check other non-managerial elements. You need to know if your management has the time fame, the budget, and the human resources to help you through your change implementation.

How many of us attend a lecture, read a book or article or hear a great new idea and we think, “this will work in our industry or organization”. We immediately want to make a “change” in our organization, company or practice. We want to implement this new “change” as soon as possible and that is what we do because we are determined that this new idea will improve the productivity and profitability in our company or practice and benefit our customers or patients.

We thought that we had explained things in detail and shared the new vision correctly, but after several weeks, we discover our people and the office culture reverting back to the “same-old-routine.”

Why didn’t this new change work? Why do we feel like the team isn’t with us? Why don’t they see the benefit? Unfortunately, we will never be 100% successful at implementing change, but we can improve our success rate by understanding these three common problems associated with making CHANGE stick.

Error #1: Not Establishing a Sense of Urgency -According to Dr. John Kotter, a professor of leadership at Harvard Business School, over 50% of companies fail in this area. Change starts with generating a sense of urgency, a reason or need to change. If your staff members do not fully understand the reason for the change, how can they effectively make the change? A sense of urgency is essential to rallying the staff. Take the necessary time to explain to the reason or need for change, and remind your staff daily how this change will benefit the patients and practice.

Error #2: Not Explaining Why It’s Important To the Staff -Leaders must be aware of “WIIFM” attitude-What’s In It For Me. People are more likely to change if there is something in it for them. Explain to your team why the new change will have a positive effect on their careers, both personally as well as professionally. Remind them that change usually means becoming more efficient, and that efficiency will reduce stress and make their job easier. Better efficiency results in higher salaries. You must communicate the benefits of this new change-how it will benefit your staff, patients and organization as a whole.

Error #3: Not Developing a Plan That Includes Your Team -Your team will require a detailed “game plan” on what to do, and how to do it. Communicate your desires with your team and develop a plan for the new way of doing things. It is important to have their participation in this process, and it is critical to the success of the program. By involving your staff and implementing a plan together, you can avoid some of the normal, negative psychological reactions to change. Also, explain their role and the importance of each person in making the change a reality.

Change is not easy, but having an understanding of these three common mistakes can improve your chance at incorporating change.