It seems that if companies want change to happen in their organisation one of the worst things they can do is call the projects they plan 'change management'. This is the conclusion of a recent McKinsey report that shows 70% of so-called change management programmes fail to deliver many of the results they expect. In times of prosperity not achieving all change can be tolerated. The problem now, though, is that as the economy enters recession, 2009 will once again see change management take centre stage. Worse still, rescue and realignment projects will not be about tweaking business processes. Change may be the key to a company's very survival. So how can HR ensure change actually happens this time?
According to Valerie Garrow, associate director at the Institute of Employment Studies: "The recession is a punctuation point. Prompt action can save the day, but now everyone has to see the need for change and sign up to it."
A body of evidence is starting to back the fact that the best change management policies work because they are not rushed, or taken as emergency, desperate measures. Two years ago when Garrow was principal researcher at Roffey Park she surveyed change management in 500 companies ranging from SMEs to FTSE 100 giants. She explains: "Prudent, methodical companies, which were able to maintain momentum and employee motivation, had the highest instances of success. Commitment to change was the major differentiating factor."
Consultants who help companies deliver business transformation believe the label 'change management' will set the project up to fail. Carolyn Taylor, partner with the global change consultancy Axialent, explains: "The term change management has come to mean something superficial. Businesses wanting to refocus on the customer experience or develop a more global perspective are better off shifting values and changing beliefs at the top of the organisation." This culture shift enables a company to take action around its core priorities. With a blue-chip client list that includes companies such as Microsoft, IBM, Nestle, Shell and Unilever, Axialent has a record of success. Taylor sums up. "Our approach is about getting companies to ask the right questions about themselves."
That still leaves project implementation. When economic circumstances are moving against you and when redundancies are on the cards, getting employees on side is not easy. HR professionals agree that honest communication is the key.
A senior executive within the Post Office HR department, Alana Renner, has the unusual title, head of engagement and internal communications. Her remit recognises that employee engagement is central to the Post Office's five-year transformation plan in which HR is taking a leading role. Renner says: "We don't call it change; we call it our business strategy. Two years into our plan, the Government-owned business has shown an operating profit for the first time in five years."
With the Government ploughing in £1.1 billion to cover one-off costs such as compensating sub postmasters as part of its programme of branch office closures, the focus is now on growing the Post Office's core business. Although the financial indicators are looking good, Renner measures ROI in human terms. She says: "Our latest quarterly staff survey shows 72% of staff understand their role and how it contributes to delivering the business plan. I and my team spend most of our time in branches taking the temperature of local businesses. We are celebrating each success along the way because it is bloody hard work. If staff don't know that you are winning then you will lose their support and goodwill."
Tony Watson, professor of organisational behaviour at Nottingham University Business School, applauds the Post Office's communications-led approach. His advice is simple. "Do not set out to change the employees' mindset, because you will not succeed. Managing change is about weighing up the network of interests and negotiating a compromise. Success is finding a solution that respects the interests of all stakeholders - suppliers, customers, workers and management."
Like the Post Office, media conglomerate EMI is also having to undergo radical change. From its early beginnings in 1900 as the Gramophone Company, EMI's survival is under threat by internet music-sharing sites and free downloads. Private equity entrepreneur Guy Hands took over EMI last year and set about a major restructuring that would protect income streams and return the company to profitability. Hands' company, Terra Firma, brought in change management consultancy Penna to lead the process and put one of its partners on the board of EMI to build a power coalition.
Paul Hills, a director of Penna, gives his view on why change might succeed in transforming EMI's business model. He says: "The secret is that you need someone in the company with enough weight to drive it through. It wasn't a case of 'let's tighten our belts and cut costs by 5% across the board'. What was needed was a radical solution."
Penna and Terra Firma undertook what Hills calls 'process mapping' - finding out how existing systems work and then superimposing a change blueprint. In order to streamline processes, management fiefdoms had to be broken up and the big artists and repertoire budgets slashed. Marketing would in future become a global operation. Lots of jobs went but new jobs were created. It was then a question of matching the talent to the new structure.
The past year has been one of non-stop change, says Hills. "One year on we're still bedding in. At the end of the process we've got a different group of people from the one we started with, needing new skills. The challenge now is to get people used to the new situation and to get teams to become high-performing once again." The results are too early to call but Hills is cautiously optimistic. "What you never know in a change situation is what the results would have been if you'd done nothing. You rarely have a control group in organisational change."
Damaging though it is for corporate balance sheets, the recession could be an opportunity for businesses to re-invent themselves. Two years ago insurance group Axa began a change management project to support its mission to become the trusted UK market leader. Cynics might say that an advertising campaign is all that is needed but the company knew that besides talking the talk it also had to walk the walk. Call-centre and sales staff in particular had to be trained in a new corporate culture and a code of behaviour. Focused around communications, change management is driven by HR and it has not been derailed by the worsening economic climate - in fact, quite the reverse. A more competitive market has added impetus to change.
Sonia Wolsey-Cooper, Axa's group HR director, says: "Even before the credit crunch the financial services industry's image was tarnished by lack of trust and mis-selling. However, the credit crunch resonates with what we want to be as an organisation. Our core values are about delivering an excellent service in a trusting environment."
Axa's change management consultancy, Involve, tackled the brief with a culture change programme aimed at call-centre staff and middle management. Involve devised a nationwide training programme that would demonstrate the new values of trust Axa wanted to communicate. David Matthew, project manager for Involve, starts from the basics. He explains: "The only way businesses can change is if you get employee involvement. If you want true buy-in from your staff then involve them in what you're trying to achieve so that they don't see change as a threat."
Involve's communication strategy was aimed at all of Axa's 13,000 UK employees and based on employee engagement roadshows in which actors simulated a range of typical customer scenarios. The real-life problems were designed to get staff to come up with solutions that fairly reflected the values of trust the company was seeking to instil. Did it work? Wolsey-Cooper says: "I think it's fair to say employees are now walking the walk. Our new business model is even more important now we are in a downturn."
So what can challenges can HR departments expect to encounter as the financial crisis deepens? No longer immune to external cost pressures, the public sector will have to restructure. Consolidation of services and migration of public-service delivery online are trends that will underpin a series of change management initiatives. Jeremy Leach, markets director with Serco Consulting, comments: "The buzz-word is transformation - step change rather than incremental improvement. The key challenge for us is up-skilling civil servants so that they are less reliant on external support."
In the private sector Accenture believes HR departments need to contribute to organisational agility and flexible working practices that can adapt to sudden movement in the markets. Aimie Chapple, Accenture's head of talent and organisational performance, says: "Response to change needs to be a core competency of the organisation." This means multi-skilling and training on the job rather than narrow competencies and investment in costly qualifications.
HOW READY FOR CHANGE ARE YOU?
Do you regard change as a threat or as an opportunity? David Ollerhead, head of consulting for the professional services division of Airwave Solutions, has devised a questionnaire for HR magazine that gives harassed HR managers an instant change management health check.
The aim, says Ollerhead, is to point out where organisations are going wrong and how they can get back on track. "The questionnaire is a bit of fun really. It's a fairly hypothetical model but if people answer honestly it shows us how things are in the organisation rather than how you would like them to be. Self-assessment is the basis for considered action."
The questionnaire highlights 10 factors that can help or hinder change within a company, from attitudes to change and leadership style to the role of HR and performance management.
- 1. Which of the following statements best summarises what change means to your organisation?
A: It stops us doing our jobs properly
B: It liberates us to be everything we can be as an organisation
C: It is a necessary part of doing business
- 2. Which of the following statements best summarises how your senior management team view change?
A: They enjoy inspiring and leading organisational-wide change directed at winning maximum competitive edge
B: They initiate change initiatives but often don't fully support them all the way through
C: They see it as a threat to their power base
- 3. Which of the following statements best summarises how your organisation actually facilitates change?
A: We change as a response to what our competitors are doing and to changes in the marketplace
B: People who advocate change normally end up getting fired
C: We take pride in being at the vanguard of vitally important change for our industry
- 4. Which of the following statements best summarises how your organisation actually manages change projects?
A: We have robust and flexible project management processes that we use to manage change and to ensure that we continually improve
B: He who shouts loudest gets heard
C: We follow documented project management processes
- 5. Which of the following statements best summarises the contribution you think your human resources department can make to successful change at your organisation?
A: The HR department is useful for helping mobilise change
B: I don't see what change has to do with the HR department at all
C: We believe successful change only happens because people understand the need for it and are willing to change. Our HR department plays a vital role in recruiting and training our people to prepare for successful change
- 6. Which of the following statements best summarises how you see technology in relation to successful change at your organisation?
A: Technology is a matter for the IT department
B: We regard technology as a prime facilitator for change but our technological implementations are always led by business needs
C: Whenever we see that some important new technology has become available we'll think of how we can deploy it usefully in our organisation
- 7. Thinking now of your business processes - which of the following statements best summarises how you change process at your organisation?
A: We want individual departments within our organisation to work with maximum efficiency, but when it comes to changing process our initiative always focuses on process end-to-end (that is, across individual departments.)
B: We just tell people what to do and they'd better do it
C: We find it a problem that politics between individual departments can inhibit our initiatives to effect changes in process
- 8. Which of the following statements best summarises how you measure your performance as an organisation?
A: We measure performance on a department-by-department basis
B: We focus on measuring the entire efficiency and effectiveness of the end-to-end process
C: Performance measurement is just about money so we leave it to our accounts team
- 9. Which of the following statements best summarises what you look for when appointing people to improve the efficiency and effectiveness of process at your organisation
A: We use people who happen to be available
B: We seek out people who have a genuine ability to understand the role process plays end-to-end across departments
C: We use managers of departments
- 10. Which of the following statements best summarises the involvement you feel your customers should have in a major initiative to improve process?
A: We'll hire some telesales people and get them to talk to some of our customers
B: The whole point of process is to produce deliverables for customers, so we focus our entire change initiative on customer needs and make sure we talk to customers about this at all times
C: We think our customers should be jolly pleased that we're bothering to look after them at all
Question 1 A=0 B=3 C=2
Question 2 A=3 B=2 C=0
Question 3 A=2 B=0 C=3
Question 4 A=3 B=0 C=2
Question 5 A=2 B=0 C=3
Question 6 A=0 B=3 C=2
Question 7 A=3 B=0 C=2
Question 8 A=2 B=3 C=0
Question 9 A=0 B=3 C=2
Question 10 A=2 B=3 C=0
HERE'S HOW TO SCORED
30 - 25: Your organisation is superbly equipped for successful change
25 - 18: You have many bases covered but could still benefit from thinking hard about how to become better at organisational change
17 - 10: You need to do some serious thinking if you want to make your organisation truly flexible and adaptable. Customer needs are always changing and you need to change with them
9 or less: Does your organisation want to change?
Staff rostering technology gives Wickes the agility to respond to demand
Basing a change strategy on gut feeling is no substitute for proper number-crunching. It is here that technology can come to the aid of the hard-pressed HR department.
Even in 2006, building product and DIY store Wickes knew that it was facing some tough choices. Customer footfall was uneven and in order to give the best possible service at peak times staff would have to be rostered according to demand. This meant, in effect, renegotiating retail staff's psychological contract.
Given what they were demanding, management needed to have the facts at their fingertips. Wickes called in workforce planning software specialist LSI Consulting, part of WorkPlace Systems, to map real time sales in store and plan new shift patterns to match. Electronic-point-of-sale tills provided a mass of data that could be analysed for each of the nationwide chain's 177 stores. Gordon Gilkison, managing partner of LSI, outlines the challenge. "The old way of staffing stores based on hours worked was to divide the number of people into turnover. But this doesn't take into account customer flow, demographics or the store layout, all of which vary from store to store. Wickes wanted a more scientific approach in order to change their service proposition."
LSI introduced off-the-shelf workforce planning software, RetailEase, to match staff shifts more closely to the time and value of transactions. Armed with this information Wickes could allocate more staff to high-value products and services like kitchens and conservatories at periods of peak demand while ensuring trade customers would continue to receive high levels of service.
The more flexible staffing means Wickes is agile enough to respond to demand and can cut unnecessary labour overheads when business is slack. Craig Pickett, stores productivity manager, says: "We have started to see ROI through better absence management of sickness and holidays, which is now centrally held. More importantly we are starting to implement flexible working hours which will deliver significant additional benefit."