Change Management
EV Murray Faculty Member Reserve Bank of India College of Agricultural Banking Pune 411 016
Change Management
“Change is not merely necessary to life. It is life“ Alvin Toffler
What is Change Management? “Change Management is applying techniques and tools to manage the people-side of change to achieve the desired results with minimal disruption or negative side effects.” Jeff Hiatt Change Management Learning Center “Change is persuading massive numbers of people to stop what they have been doing and start doing something that they probably don’t want to do.” - David Nadler, Champions of Change 3
Change Change involves three aspects: Processes, People and Culture
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Forces driving Change Nature of Workforce
Economic Factors
Social Trends
Technology
Forces of Change
Competition
World Order
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The Nature of Change • Change is a process, not an event Break change down into discrete process elements
• Change occurs on two dimensions – Business – Individual
Sustainable Change
PostImplementation Implementation
Concept & Design
• Successful change happens when both dimensions of change occur simultaneously
Business Need
Awareness
Desire
Knowledge
Ability
Reinforcement
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Change Equation If A + B + D > Z, then C C = Change A = Dissatisfaction with the status quo B = Knowledge about first practical steps D = Shared vision of the future Z = Costs of change (economic, psychological)
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Acceleration of History • In the past, changes were incremental. • In today’s world, change is transformational. – Fax has killed the telex machine – Digital Cameras have made photo film redundant – Mobile phones have made BSNL sober and done away with telegrams – E mail has shrunk mail flows – CDs have made cassettes history and cinemas smaller
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Societal Transformation • Family structures have undergone radical transformation From “Daddy will be home soon, start studying” to Children taking most decisions at home today • While families have changed, organizations have not “We are still getting used to working under CEOs younger than us” 9
Redefining Organizations • Earlier Organizations were valued on the basis of the tangible assets they possessed • Today many billion dollar companies have no tangible assets – Google – Amazon.com
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Changes in The Banking Sector • Earlier, people had to run behind banks, today, bankers run after people • Earlier the focus was on deposits, today deposits are seen as a liability • Earlier, people had to go to the branch to transact during “banking hours”, today banking is 24X7 • Earlier banks talked of overdues, today it is NPAs
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Changes in the Banking Sector • Easing of inflationary pressures and deregulation of interest rates has brought about substantial reduction in cost of credit • Earlier banks charged to give technology access to customers • Today, the reverse is true • Minimum human interface • Branchless banking has arrived • Customers demanding – One-stop banking –
Anywhere and Anytime Banking
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Impact of ICT in Banking Average cost per transaction: • Branches - Rs.45/• ATMs - Rs.12/• Call Centre - Rs.14/• Internet & Mobile - Rs.2/Courtesy ICICI Bank
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Impact on Cooperative Banks • Shrinking market share • High cost of resources • Higher Cost of delivery in comparison to Commercial Banks • Quantum of Credit not stepped-up • Low adoption of technology • Inability to provide integrated financial services 14
Eight critical stages in the change process
1. Establish a Sense of Urgency • Examine external realities • Identify and discuss crises, potential crises, or major opportunities
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2. Form a Powerful Guiding Coalition • Assemble a group with enough power to lead the change effort • Encourage the group to work as a team
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3. Create a Vision • Create a vision to help direct the change effort • Develop strategies for achieving that vision
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4. Communicate the Vision • Use everything possible to communicate the new vision and strategies • Teach new behaviors by the example of the guiding coalition
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5. Empower Others to Act on the Vision • Get rid of obstacles to change • Change systems or structures that seriously undermine the vision • Encourage risk taking and nontraditional ideas, activities, and actions 20
6. Plan for and Create Short-Term Wins • Plan for visible performance improvements • Create those improvements • Recognize and reward employees involved in the improvements
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7. Consolidate Improvements and Produce Still More Change • Use increased credibility to change systems, structures, and policies that don't fit the vision • Hire, promote, and develop employees who can implement the vision • Reinvigorate the process with new projects, themes, and change agents
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8. Institutionalize New Approaches • Articulate the connections between the new behaviors and organizational success • Develop the means to ensure leadership development and succession
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The Principle of Exceptionalism While change elsewhere is desirable, we are a special case – immune from powerful improvement
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“Boiling Frog” Phenomenon
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Four Common Mistakes The source of most failures of change
1. Writing a memo instead of lighting a fire • • •
Change efforts fail at the first critical step - establishing a sense of urgency Too often leaders launch their initiatives by calling a meeting then expect people to “buy-in” It doesn't happen
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2. Talking too much and saying too little •
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Most leaders undercommunicate their change vision by a factor of 10 An effective change vision must include new, aligned behaviors on the part of senior executives
• Leading by example • People watch their bosses very closely • Inconsistent behavior by a manager fuel the cynicism and frustration
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3. Declaring victory before the war is over •
It is important to celebrate results but underestimating the difficulty and duration of organizational transformation can be catastrophic
• If you settle for too little too soon, you will probably lose it all • Celebrating incremental improvements is good to mark progress and sustain commitment but don't forget how much work is still needed
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4. Looking for villains in all the wrong places •
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The perception that large organizations are filled with middle managers who resist all change is not only unfair but untrue People at every level are engaged in change processes
• The biggest obstacles to change are not middle managers but, more often, those who work just a level or two below the CEO – those who may have the most to lose in a change • That's why it is crucial to build a guiding coalition that represents all levels of the organization 30
Change Leaders • All institutions need effective leadership, but nowhere is the need greater than in the organization seeking to transform itself
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YOU must be the change you wish to see in the world Mahatma Gandhi
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Different Views
Since the view from the front is obviously different than the view from the back, isn't it obvious that we must help share the vision and goals in our communications? 33
“Leadership isn’t about being loved by everyone. It’s about being respected by enough people to get the job done.”
Successful Change Leader Eleven competencies clustered in five major themes
Passion for performance Successful leaders are restless in their entrepreneurial drive and highly motivated to realize mission and strategic targets. This driver enables them to seize opportunities and to make improvements in increasing the capability to deliver value and innovational solutions to the users. This is the engine that makes the wheels turn. Related competency: Entrepreneurial Drive1.
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Making sense of the business world Successful leaders understand the complexity of the environment in which they operate: customers, markets, competitors, politics. Involving systematic approaches to getting the right information, digging beyond the obvious, successful leaders redefine markets, products or processes through new and innovative ideas. Related competencies: Customer Focus2
Innovative Thinking3.
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Making sense of the people Successful leaders know how to value diversity, both cultural and other aspects of managing a global business, on an individual, interpersonal and organizational level. They have excellent insight into the organization and they know best how to use the organizational resources. They know about the importance to act always in line with the principles, beliefs and values of institution. Related competencies: Understanding People and Cultures4, Understanding Organizations5 Living the Principles6. 37
Courage and determination Successful leaders have a strong belief in their capabilities to face highly challenging situations, to take the right decisions and stick to their opinions even in conflict with powerful others. They have a strong conviction. Related competency: “Backbone"7.
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Delivering Change and a Climate for Success Successful leaders are able to translate their insights into markets and organizations, into energizing people and teams, and thereby deliver actual performance. They position themselves as team leaders ensuring that their teams know and support the targets. In leading others, they empower people, support and develop them in their roles to build up the required human resources to be a strategic asset. They are capable of flexibility, reacting to new situations while keeping the overriding targets in mind. Related competencies: Building Capability8, Team Leadership9, Persuading Others10 Adaptability11
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Four Dimensions Of Change Understanding Change Consolidating Change
Planning Change Implementing Change 40
Building Blocks of Change Vision
Skills
Incentives Resources
Action Plan
=
Skills
Incentives Resources
Action Plan
= Confusion
Incentives Resources
Action Plan
=
Resources
Action Plan
= Resistance
Action Plan
= Frustration
Vision
Vision
Skills
Vision
Skills
Incentives
Vision
Skills
Incentives Resources
=
Change
Anxiety
Treadmill
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Qualities of change evangelists Realistic Eager for improvement
Restless Good collaborator
Effective Communication
Attentive listener Ideas person
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Do’s and Don'ts (1) Do invite suggestions from everyone Do hold frequent formal and informal meetings Do involve teams in planning as well as implementation Do manage people’s expectations with care
Don’t make offers people cannot refuse Don’t keep unnecessary secrets or tell any lies Don’t forget that CHANGES should improve organizational results Don’t leave anybody out in the cold 43
Do’s and Don'ts (2) Do promote comradeship among CHANGE agents Do give CHANGE agents stretching tasks Do encourage people to form and follow up ideas for CHANGE Do listen to what CHANGE agents say about morale and reactions
Don’t assume that older people are too set in their ways to be CHANGE agents Don’t discourage others by singling out CHANGE agents for special treatment Don’t prevent CHANGE agents from using their initiative Don’t create an atmosphere of secrecy 44
“Never launch an initiative unless you are willing to personally support it until it is embedded in the DNA of your Organisation” Larry Bossidy Execution The Discipline of Getting Things Done
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Success Rate of Change initiatives in the US
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Why Change Programs Fail? Why Do Change Programs Fail?
By Employees Resistance byResistance Employees
82%
Inadequate Sponsorship Inadequate Sponsorship
72%
Unrealistic Expectations Unrealistic Expectations
65%
Poor Project Management Poor Project Management
54%
Business Case notCase Compelling Business not Compelling
46%
Project Team Lacked Skills Scope Expansion / Uncertainty
44%
Project/ Team Lacked Skills Scope Expansion Uncertainty
44%
No Organizational Change PlanPlan No Organizational Change
43%
Silos/No Horizontal Process View Silos / No Horizontal Process View
41%
Source: Deloitte CIO Survey
IT Perspective not Integrated IT Perspective not Integrated
Change Leadership issues are noted in RED
36% 0%
10%
20%
30%
40%
50%
% of Firms
60%
70%
80%
90%
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Resistance To Change • • • •
Organizations and individuals resist change Doesn’t surface in standardized ways Can be overt, implicit, immediate, or deferred Easiest for management to deal with when it is overt and immediate • More challenging if it is implicit or deferred • In one sense this is positive since it provides a degree of stability. Without resistance it can lead to chaotic randomness 50
Resistance to Change : Individuals • Sources of resistance – Habit; Security; Economic Factors, Fear of the Unknown • Habit, i.e., programmed responses helps us cope with complexities of life; when confronted with change this tendency to respond in our accustomed ways becomes a source of resistance • Security – People with a high need for security are likely to resist change because it threatens their sense of insecurity 51
Resistance to Change: Individuals • Economic Factors – Concern that changes will result in lower income; Fear that they cannot perform new tasks or routines especially when pay is closely tied to productivity • Fear of the unknown – Change substitutes ambiguity and uncertainty for the known; You trade known for the unknown and the fear and insecurity that goes with it 52
People’s timings vary
Early Majority 34%
Early Adopters 13% Innovators 3%
Late Majority 34%
Laggards 16%
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Rogers, Everett Diffusion of Innovations
Resistance to Change: Organizations • Organizations are conservative – actively resist change change through structural and group inertia and threats to member expertise, power relationships and established resource allocations
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Resistance to Change: Organizations • Organizations have built-in mechanisms to produce stability • When the organization is confronted with change this structural inertia acts as a counter balance to sustain stability • Even if individuals want to change their behaviour, group norms act as a constraint • Any redistribution of decision-making as the result of change threatens the long-established power relationships 55
Use Participation To Reduce Resistance to Change
A potent force for combating resistance to change
Right conditions for using participation • • • •
Adequate time to participate Issues are relevant Staff have the ability to participate Organizational culture support staff involvement
Participation can reduce resistance, obtain commitment and increase the quality of the change decision 57
You Can Teach Old Dog New Tricks • Older staff are perceived as being inflexible, resistant to change and less trainable than their younger counterparts • Part of this prejudice reflects the widely-held stereotype that older workers have difficulties with change These perceptions are wrong •Older workers want to learn and are just as capable of learning as any other •They may take longer to train but once trained perform at comparable levels to younger workers •Age is found not to be related to learning and training outcomes •Older workers are more committed in that they are less likely to 58 quit their jobs that their younger counterparts
Revision of a CHANGE programme If successful, continue programme
Implement CHANGE programme
Measure results and obtain feedback
If necessary, revise programme
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Strengths of the Cooperatives • • • • • •
Peoples’ institutions Lasting relationships Regional and Personal touch More transparent and ethical operations Business orientation with social values Functional and Operational flexibility Over 30% of Banking in Germany and the Netherlands is in the Cooperative Sector even today 60
What then is Change Management? Change management is the process of ensuring that the people most impacted by proposed organisational change are ready, willing and able to make the operational and behavioural changes required to deliver success.
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Finally • Ask Yourselves – Why do we need to Change? – How do we need to change?
• Only when you have clarity on these two points, proceed.
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The Coke fiasco Don’t fix it if it ain’t broke • In April of 1985, the most widely known and best selling soft drink on the market was going to be reinvented – “New Coke” • Within weeks of the switch, loyal and dedicated fans of the original formula became so vocal that the rest of the nation followed along, calling the switch in formula Un-American, some stating that Coke had no right to take away something so intricately ingrained in Americana. Essentially, it was tanking. • "Coca Cola Classic" was revived, and reintroduced to the marketplace. An apology was made, more or less, but in the spirit of experimentation, New Coke was renamed Coke 2 and remained on the market for some time in limited quantities. Time has swept the incident under the rug, and no mention of the product is made on the official Coca Cola website, even in the history section that cites new products released in the 1980's Source: Danger-seekers.com
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Thanks. Look forward to your feedback
[email protected] Phone: 020 2553 6087 Mobile: 0 98909 74045 Please visit: www.cab.org.in
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