Managing Organizational Change

Theresa ChildressClark Collins

Jason Morgan

Change management is defined as the practice of managing the human elements associated with project implementation

Implementation examples in the Controller’s department◦ Implementation of a new financial system◦ New chart of accounts◦ New accounting related process

Change Management

Human elements are the largest reason for the failure of a project◦ Transition is uncomfortable to workers

Learning new routines Workers resistant to change

◦ The cost associated with training employees is high Production time can be cut to 25% of regular level

This illustrates the importance of quick implementation Also social gossip spreading through the company

causes a huge time constraint and often a negative effect on company-wide moral

Difficulties to Change Management

Review Implementation history before starting-Identify effective an ineffective facets of

implementation in previous projects Helps pinpoint past weaknesses to avoid Shows reasons for success that should be repeated

-Patterns to look for-How realistic were the implementation budgets?-What support was given to employees who had to do work differently

Remedies

First step in reviewing implementation history is to categorize these projects◦ Objectives were achieved on schedule and within

budget◦ Objectives were achieved, but somewhat off

schedule or over budget◦ Objectives achieved, but significantly off schedule

or over budget◦ Objectives were not achieved before installation

Remedies cont

After categorizing the projects, look for patterns to emerge in the way the implementation effort was managed◦ Patterns to look for include

How realistic were the budgets and schedules What support in addition to training was given Were employees given adequate time to learn new

activities while balancing regular responsibilities How much communication was there, and which

were the most effective How were people rewarded How were unexpected events handled

Remedies cont

Implementing an ERP system◦ Objective is to integrate key processes of an

organization such as order entry, manufacturing, and accounts payable so one system can serve all the company functions needs. Improves communication channels throughout the

company Supplies management with real-time information to

help with timely decisions to achieve competitive advantage.

Example of change Management

ERP systems change the way a company does business more so than changing the technology◦ People at first will be resistant to learn the new

system. Training can be costly Production will be less during implementation

◦ Must review past implementation history to see which approach to use

Risk to implementing an ERP system

Big-Bang◦ Switches from the legacy system to the new

system all at once. Quick start so lower cost

Reduced production will be brief More risk because if problems occur there is no

turning back Must look at previous history to judge how the

company culture will conform to the change Must have very good technical support staff to coach

employees through the process quickly

2 Approaches to implementing an ERP system

Phase in approach◦ This approach starts with one or two processes at

a time to gradually phase in the entire system Less risky than Big-Bang because if problems arise

the legacy system can still be used Best for companies that are not as diversified, or if

past history showed resistance to change Could cause loss in production to gradually be

reduced while the system is slowly put in

2 Approaches to implementing an ERP system

How an organization decides which projects initiatives to go through with…

Competing Project

“One of the main problems in business today is that there are too many ideas, not too few.”

-George Tanewski, Monash University

Too much of a good thing….

1. Does the project support the company’s long term goals?

Analyzing Potential Projects

1. Does the project support the company’s long term goals?

2. How well do projects relate or detract from each other?

Analyzing Potential Projects

1. Does the project support the company’s long term goals?

2. How well do projects relate or detract from each other?

3. Which personnel will be affected by the changes?

Analyzing Potential Projects

1. Does the project support the company’s long term goals?

2. How well do projects relate or detract from each other?

3. Which personnel will be affected by the changes?

4. Are there overlapping time frames that may need to be adjusted?

Analyzing Potential Projects

1. Does the project support the company’s long term

goals?

2. How well do projects relate or detract from each

other?

3. Which personnel will be affected by the changes?

4. Are there overlapping time frames that may need to

be adjusted?

5. Which employees will perceive themselves as winners

and losers due to the change?

Analyzing Potential Projects

Which projects have highest priority?

Which ones need to be delayed or scrapped?

What is a realistic time frame for each project?

How will overlapping be handled to reduce the

burden on personnel?

How to communicate the changes through the

organization?

Management Team Decisions

How much will the change affect he way

personnel performs their work?

Will personnel be able to understand the

changes and the effects of the changes?

Does the personnel affected need training?

How will their daily routines differ?

How have they embraced past changes?

Degree of Disruption

The Obvious◦ Wasted Time◦ Wasted Money◦ Wasted Effort

The Not-so-Obvious◦ Decreased Morale◦ Doubts about Leadership

Its important that all decision makers are on the same page when it comes to the cost of failure.

Cost of Failure

Measure risk from a change management perspective to help achieve project objectives◦ Adequacy of sponsorship◦ Adequacy of the motivation◦ Vision of clarity◦ Degree of resistance

Understand the factors Budget and increase chance of success

Risks

The project will need support throughout the organization

Single most important factor in change management

Must have effective sponsors

Adequacy of Sponsorship

Characteristics of Effective sponsors◦ Adequate time and attention to communications

about the projects, its importance, its objectives and its status

◦ Ensure adequate resources and maintain them ◦ Spend time with individuals to help them

understand the project People listen to what sponsors say, do not

say, and do Make sure these are consistent to achieve

the objectives of the project

Sponsorship Cont’d

Cascading Change management

Transforming target groups into sponsors Cascading sponsorship must be developed and maintained

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Change Management Learning Center. Prosci’s research data covers more than

1600 organizations from 59 countries, with 5 longitudinal studies in the past 9 years.

Over half of Fortune 100 companies are using Prosci's change management models and tools.

http://www.prosci.com/about-prosci.htm

Prosci

The bigger the transition the more motivation people need

Adequacy of Motivation

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Motivation is created by an understanding of problems that have to be addressed or opportunities that can be used advantageously

Problems can create motivation for change◦ People want to change existing problems

Focus on the reasons for making the change ◦ Make them feel uncomfortable with their current

situation◦ Belief System theory

Motivation Cont’d

Belief System theory ◦ Individuals value their beliefs and this influences

their attitudes◦ Look at change within the individual ◦ Focus on what the individual wants to achieve

Motivation Cont’d

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Must have a vision to arrive at the desired end

Vision must be clear and actionable Clarity requires time and sponsorship Repetition is key Stay clear of resistance because of fear of

disruption … Do not confuse it with the vision.

Vision Clarity

People do not resist change they resist disruption

Often means that people understand what they are being asked to do

Degree of Resistance

Causes of resistance ◦ Confusion about the projects vision◦ Inadequate motivation ◦ Unclear or inconsistent messages from sponsors

and other key individuals about the importance of the project

◦ Poor implementation history ◦ Lack of Adequate time to respond the and absorb

the changes ◦ Organization’s history of failing to deal

adequately with people who ignore project directives.

Degree of Resistance Cont’d

Allow resistance to be expressed openly Identify the source of resistance

◦ Lack of knowledge= educate◦ Just in time education allows the people to use

the skills soon after learning them Make specific measures to assess project

progress and individual achievement Allowing people to resist a project invites

failure.

Degree of Resistance Cont’d

Guest SpeakerMr. Jerry Collins

President and CEO of Memphis Light, Gas and Water

http://www.prosci.com/about-prosci.htm Change Management Excellence: The Art of Excelling

in Change ManagementVolume 3 of Five pillars of organizational excellence, H. James Harrington

Creativity in Business, George Tanewski, Monash University. http://www.ceoonline.com/pages/2_29_533.aspx

Making sense of change management: a complete guide to the models, tools & techniques of organizational changeThe Change Series Authors Esther Cameron, Mike Green, 2004.

References