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During
the 1990s the The Client’s Consulting Business had grown steadily into a
profitable and healthy £6M entity by July 1999. A number of challenges had been
faced, including skill creation to attack new markets (primarily Microsoft
Windows NTTM), absorption of resource from two recently acquired
companies and a continued internal challenge from another services group.
So,
why change a ‘successful’ formula?
One
of the key problems was that the management of Consulting Services had become
complacent and hierarchical. Little creative change had occurred, and they had
become comfortable and possessed with personal status, rather than the health of
the company.
The Board looked at the group, its internal skills, and its clients and decided that:
the consulting business must be moved to its next stage of development
a completely different set of competitors needed to be challenged
Clearly, a new approach was required. It was decided that this approach would be achieved by a number of different measures.
The
first option of purchasing a consulting business was discounted as the
affordable companies offered no competitive advantage, and the companies
offering competitive advantage were too expensive.
On
1st September 1999, a completely new company was created with a
Managing Director recruited from one of the main Consulting ‘names’. All
consulting staff and management were immediately transferred into this
organization, with a mandate to create a professional, profitable consulting
practice.
On
Day One, the key individuals were assembled, and the new Managing Director and
his vision were introduced. Important information regarding the possible
purchase of a consulting company was also communicated. Two senior managers were
directly affected, in that they had a perceived reduction in status. Each
assembled individual was given a challenge to perform for the new Managing
Director, ranging from SWOT analysis to re-design of business processes. Some
rose to the challenge, others missed the opportunity that this change had
created.
One
critical success factor was Executive Sponsorship from the first day. The
Managing Director of The Group became the Chairman of the new company, and gave
full backing to the new Managing Director.
The
creation of The Client was well communicated to those considered to be key
members of the company. Warren Bennis Theory
and Method in applying behavioral science to planned organizational change
(1965) refers to this as “circulation of ideas to the elite”. Unfortunately, this left all other consultants to find out the news
via an e-mail and press release on 1st September. This was
unfortunate, since a group meeting of all employees of the new company would not
occur until 15th September. At least this gave the new Managing
Director an opportunity to formulate a vision and focus prior to this meeting.
Over
the two week period, he travelled the length and breadth of the country meeting
and discussing business approach with individuals at all levels of the company.
This was crucial to the possible future success of the company, with individual
views being genuinely incorporated into this vision of the future.
Unfortunately,
at this time, it became clear that the new business could not support the level
of costs from the old, hierarchical system. Radical action was taken, resulting
in a number of consultants being made redundant. This was one of the badly
handled parts of the management of change. For example, one consultant was asked
to drive several hundred miles to be made redundant! The selection process was
not clear – a significant feature was that it was predominantly the acquired
companies’ employees which were affected, resulting in reduced morale amongst
all remaining employees.
Based
on the results of the challenges set, and future plans, a new structure was
designed. This structure was communicated to the new management team in advance
of the changes being made, but again, the first that individuals knew of their
new managers and roles was through an e-mail.
The
new structure presented a number of challenges, including:
Former sub-ordinates became peers of their former manager
There were more senior people than jobs available
One
of the two former senior managers was made redundant at this time, again
impacting the morale of staff from one of the acquired companies.
It
became clear that the new management structure would take some time to form, and
at times, it appeared that they had jumped straight to the’ storming’ phase.
Two months later, the management team is moving into the ‘normin’g phase,
and presumably ‘performing’ may start within the next month or two.
The
design of the new company was created around functional boundaries. It was also
designed to provide a career development structure. It was communicated that
members of Technology Consulting could grow into Project Management who could
grow into Programme Management who could grow into Centres
of Excellence (CoE). Unfortunately, while this would have worked well in a new
company of new employees, the message interpreted was one of a class system,
with Technology Consulting being the lowest class. This caused significant
problems in morale and motivation.
In
Clark & Cavanaugh, Bell Atlantic, et al. (1996) Building
a Change-Ready IS Organization at Bell Atlantic, Bell Atlantic’s CEO
Raymond W. Smith is quoted as saying “the winners in this era of open markets
will be those organized around the requirements of the market and ready to take
advantage of emerging opportunities” [Excerpt from the 1995 Annual Report].
These
emerging opportunities are the life and blood of a knowledge-based organization.
Early entry to new markets could lead to significant pay-back for the company.
To ensure that focus is given to key manufacturers such as Microsoft, a Centre
of Excellence was instigated. As Charles Clark of Bell Atlantic says, “if we
truly believe that knowledge currency is key, then it deserves 100% attention in
its own right. This is the fundamental argument for advancing skill centres of
excellence. Pooling resources by skill enables an organization to focus on
advanced training, conceptualize new approaches, and hone future-driven thinking
in a business-driven manner”.
The
creation of functional groups was intended to organize the business around the
requirements of the market, improve communications, improve skills sharing,
provide a flexible and efficient consulting service, and provide individual
motivation and development. Perhaps, in The Client terms, this equated to Warren
Bennis’ “death of bureaucracy” and the creation of Alvin Toffler’s “adhocracy”.
A new way of managing new business opportunities takes the appropriate skills
from each team and delivers the best possible response. This team is then
disbanded. This will improve teamwork between groups, encourage sharing of
skills such that proficiency can be partially attained through mentoring.
As has been observed, there was significant conflict within the management team. While such conflict can be healthy, in the early stages, more should have been done to channel this positively into organizational change. By not getting the management team more ‘on-message’ an already de-moralized group of workers could see discord within the management team, and in some cases, between this team and the Managing Director.
It
is fair to say that the creation of the company, the redundancies, loss of
senior managers, downturn in business, creation of a new management team and
being moved to report to different managers created an atmosphere of extreme
uncertainty! This has led to a number of valued employees deciding to leave the
company. In a recent conversation, the Managing Director described the staff as
suffering from ‘change fatigue’. As stated in Chief Executive (May 1995) People Power: enlisting the agents of change, “Employees are
exhausted – or at least they think they are. Several years ago, they were
thrust into a temporary state of madness, from which they and their
organizations would emerge stronger, leaner and ready to return to business as
they had known it. But somewhere along the line, the currency of time plummeted
in value”. In the company, we are at the beginning of continuous change.
For
some staff, salary reviews have not occurred for eighteen months. Whilst the
change has provided a career development structure, salary adjustments can not
occur until January 2000. These
economic effects are not directly attributable to change, but are a reflection
of the state of the market in the run-up to year 2000.
The
new structure is designed to provide better skills opportunity and job security
as the company grows and develops over the coming years. Unfortunately, in the
context of the negative factors elsewhere, it would be futile to try to convince
anyone that their personal security is not under threat. This can only be
achieved through the next phase of recruitment and company growth.
Sun
Tzu, The Art of War for Executives
includes “Once an executive understands the need to take on a competitor, he
gathers his resources, organizes them carefully, and brings them under his
control”. For company, the competition is apathy and inertia, and the
challenge is to bring resources under control for the future well-being of the
company. Interestingly, as an IT company, we have been guilty of what David A.
Buchanan The organisational politics of
technological change (1993) proposes “that information technology
specialists may have a ‘trained incapacity’ to deal effectively with the
organisational dimensions of change”.
It
was anticipated that the announcement of the changes would have a beneficial
effect on the clients. The client feedback has been at best neutral, and at
worst negative. On the whole, clients are resistant to any change that they
perceive will change the resource or quality of service delivery. It is also
imperative that negative comments by staff are not communicated to clients.
In
E. Kirby Warren Dealing with Change
(1997), he states that “outdated accomplishments and those who created them do
not necessarily need to be ‘destroyed’ to make room for your visions.”
“Praise and celebration of past successes are necessary precursors to smooth
change, and the underlying talents which created them may represent the
building-blocks of successful new programs”. The behaviour of the staff has
demonstrated that there was a great deal of loyalty to the previous management
team and organization. With this in mind, greater effort to channel this loyalty
into the new structure may have reduced the number of problems experienced.
In
every change management document, a reference is made to the fact that change
hurts. In this experience, change has hurt a number of individuals through
status change, work re-organization and modified career aspirations. E. Kirby
Warren also states that “A successful change agent must increase
dissatisfaction with the status quo”. While
change has hurt the company, the status quo would have hurt the company and
employees even more. This has been echoed by E.J. Muller How
to be an agent of change (1991): “But in today’s business environment,
clinging to the status quo is often tantamount to slow death”.
Change
was not undertaken lightly. The investment in setting up a new company,
recruiting a new managing director and making the appropriate changes has been
significant. Change was required to freshen up the company approach, move people
outside their comfort zones, and generate new business ideas and processes.
Change was required to move the company from IT delivery of commoditized
resource towards a goal of providing premium strategic consulting to a more
profitable client segment.
Change
would be easier to adopt and accept if the management team could work as a team,
and work hard to ensure that all team members are involved and in touch. The
author, with the Managing Director, has experienced the wrath of an individual
team member complaining that there was nothing wrong with the old structure,
while the manager of the old structure stood back and watched. It is vital that
the management team is on message, and gives full support to any team decision,
even if they disagree at a personal level. In Kets de Vries Charisma
in action: the transformational abilities of Virgin’s Richard Branson and
ABB’s Percy Barnevik (1998), Barnevik says “Once a decision is taken, we
demand people stand behind it whether they like it or not. We don’t want them
to sabotage it. But before decisions are taken, people must speak their
minds!”
Kets
de Vries asks “What sort of person does the leader need to be to act as an
effective agent of change? The answer appears to be someone who can combine the
characteristics of a charismatic with an architectural role – a visionary who
can build a solid construction on his or her vision”. It takes more than
charisma to effectively implement successful change. There are a number of
charismatic individuals in The Client, but the content has to match the nature
of delivery, and the vision and communication of that vision are of paramount
importance. As Kets de Vries says, “The preeminent requirement of any
leader’s role is to formulate and communicate a vision, aligning the workforce
behind it”.
The
Client has become the ‘land of new’: New Managing Director, new company, new
structure, new focus, new opportunity. Lanny Blake Reduce
Employees’ Resistance to Change (1992) says “At times, an internal
change agent must bring in outside experts to generate community self-doubt
about current practices”. We should never forget that this is juxtaposed with
an old organization, old staff and old ideas.
It is easy to forget, or ignore, that not all employees will be enthused
by a new Managing Director’s ideas and goals. As John Harvey-Jones Making
It Happen says, he does “not believe in the myth of a great leader who can
suddenly engender in his people a vision and lead them to an entirely new
world”.
The
changes required had to be significant. There would have been no point in
setting up the new company if the re-organization just tinkered around the
periphery. The changes have been described as temporary. The next set of changes
will be equally significant, and the timing is crucial to successful
implementation. Where the first set of changes had to occur within two weeks of
company formation, the changes in January can be afforded some considered
communication.
In
every instance of change encountered by the author, the common complaint is lack
of communication. If someone would only define ‘enough’ communication, most
changes would occur smoothly! The disparate location of staff across the whole
of the UK made face-to-face communication impractical. This led to a dependence
on e-mail as a communications medium – famed for being easily mis-interpreted
this was not an ideal situation. The round UK trip communicating with
individuals was well received by employees. In future, this task can be
distributed among the Board so that all employees can be contacted in a shorter
period.
The
author’s experience shows that it is impossible to satisfy everyone’s
ambitions, desires and points of view when managing change. The key lesson from
previous changes has been to decide on the best strategy for the company, and to
implement early, as procrastination leads to greater dissatisfaction and
confusion. The good people who miss out first time will stay with the company,
work hard for its success, and benefit from future change. As stated in Tom
Peter’s In Search of Excellence, “Do it, Fix it, Try it” and attributed
to an executive at Cadbury’s “Ready, Fire, Aim”. People will forgive an
imperfect decision, but will not forgive no decision.
Much
is made of the phrase “the only constant is change”. As ABB’s Barnevik
succinctly states “When you’re through changing, your through”. As stated
in the Chief Executive article, People
Power: enlisting the agents of change (1995), “Winning the hearts and
minds of employees, sustaining and increasing the change momentum will require
new approaches”.
The
key recommendation is to communicate early, frequently and openly. The purpose
of the early communication is to tap into the wealth of creativity and knowledge
that will undoubtedly exist within any organization. An outsider will bring
pre-determined ideas, values and opinions to an organization. To implement these
ideas without consultation risks alienating the entire workforce and ruining
potential success. Lanny Blake Reduce
employees’ resistance to change (1992) states “Generating receptivity to
change requires that organization members understand the pressure, both external
and internal, that make change necessary.”
After
consultation and examination, other communication with indirectly interested
parties and industry advisers can provide further direction. For The Client,
other board members were consulted, but manufacturers such as Compaq or IBM
could have been consulted to gain their views of industry best practice.
Alternative
solutions should be designed with a Strengths, Weaknesses, Opportunities and
Threats analysis of each. Further communication with the existing management
team may give guidance, but there is bound to be a vested interest in the
outcome. The best-fit solution can then be chosen from a number of alternatives.
Once
a decision is made, it should be implemented immediately, and carried out over
the shortest possible time. Any complaints about the change should be made by
the individual, and handled by the change agent, behind closed doors. The time
for public debate was before the decision was made.
The
organizational effects have become more positive as people have adapted to the
changes. The vision, structure and skills are beginning to build a better
reputation for The Client within the overall Group. The current structure is
only temporary. This will create more direction for the company, but will also
create more uncertainty.
Undoubtedly,
individuals will suffer anxiety from any change programme. As John Harvey-Jones
says in Making It Happen, “Change
Management, like all aspects of management and leadership, requires
understanding and attention, and a great deal of sensitivity to the needs and
fears of the people who are affected by it”. They will worry about personal
status, change, future prospects amongst other concerns. These concerns are
real, and should be treated as such. Affected individuals should be formally
appraised at the time of the change, as this provides an opportunity to voice
issues and allows their manager to respond on behalf of the company. More
important than ever at a time of change, extra appraisals should be scheduled
within three months rather than a year, and this should be continued until the
effects of change have become clear.
Most
companies today say “People are our greatest asset”. One of the few industry
leading figures to live and breathe this philosophy is Richard Branson. His
phrase “Staff first, clients second, shareholders third” should lead us all
to provide more focus on the effect of change on our staff, because how the
change is perceived by staff will impact our clients, and our clients will
ultimately affect our shareholder value.
R.
Glenn Ray Developing Internal Consultants
(1997) proposes “When people know how a change will benefit them, then
they’ll make an effort to change. Contrary to conventional wisdom, people do
not naturally resist change. When change is presented, discussed, and planned,
people will choose to change”. Clearly, if the change is negative towards the
individual, it would be naïve to expect that they will make an effort to
change, and they can be expected to resist change at almost any cost.
In
summary, the key recommendations for the successful management of change are:
Communication, communication, communication
Make Plenty of Mistakes
Make plenty of mistakes, because if you are not making mistakes, you are not changing.
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