Tell me about the state of play at IAG and your role in addressing this.
IAG was at the forefront of rolling out large transformational change programs over a relatively short space of time. For our leaders, the impact on our people and customers was very clear.
Within this environment, there was a genuine need to understand the accumulative effects of change, audience impacts, and timings. This information would enable leaders to prepare for and effectively deliver and embed change.
We began investigating platforms to efficiently capture change impact data that was easy to use and relatively inexpensive, with automated reporting. The Change Compass met these requirements.
How did you introduce this to the organisation?
In the context of the change environment at IAG, we wanted to capture a true reflection of the volume and complexity of change impacting each business area to enable meaningful dialogue with leaders about how to effectively deliver and lead through the change.
By appointing heatmap coordinators within each business unit, we drove accountability for input and maintenance within business units. This underpinned the notion that each team was responsible for leading their change while maintaining the quality of the data.
This enabled teams to present a holistic change view to key leadership groups within governance forums.
What has been your journey so far?
We’ve been using the Change Compass for over a year and we’re constantly evolving how we use and manage the tool to drive decisions and actionable insights.
We’ve worked hard over the last year to demonstrate the value to the business when it may have easily been perceived as adding more work to reporting cycles.
With data now enabling leaders to show a heatmap for both employees and customers; leverage insights; and drive governance conversations between Business Performance, HR, Communications, Change and Program Delivery teams we are building great momentum.
These conversations help guide decision making and build a network of key teams who are clear on how this work contributes to IAG strategy while driving change management, engagement, communications, and initiative sequencing.
What value have you seen so far?
While we are still at the front-end of how to utilise the Change Compass fully, we’re starting to see benefits.
There are many conversations focused on how we can keep the data current and relevant. This enables Business Units to start using the information to improve how they are delivering change, not just at the initiative level but at a wider business portfolio level.
The Compass is starting to form a useful proxy to bring together professional disciplines in governance conversations and decisions.
One of the emerging themes across IAG is the need for us to be much more effective at how we deliver change into the business in a way that recognises the capacity of the people to accept change – the Change Compass helps guide this thinking.
Having established the rhythms and routines, we are now focused on how governance sessions and key groups leverage data and insights beyond the heatmap.
We want to enable leaders to use the Change Compass to help inform how they lead their team through change – by using the data to implement specific mitigations and ultimately deliver more effective and sustainable change.
Most seasoned executives will agree that implementing a strategy can be a lot more complex and challenging than the formulation of the strategy. If you read articles on strategy implementation you will find a myriad of factors to keep focused on including resourcing, prioritisation, tracking, program management, etc.
However, the one discipline that is under-leveraged in strategy execution is change management. You may ask why? A lot of change managers are hired to focus on one specific projects, whether it be rolling out a new system or introducing a new product. Many understand the skill set of change managers as focusing on developing communication and training plans.
When we look deeper into what is needed to successfully implement a strategy and the work approach of a change manager, you will see that there is significant synergy. Change management is also concerned with planning and managing not just one but a multiple of changes. In fact, best practice companies use a portfolio approach to manage a suite of changes.
Here are some of the ways in which change management naturally complements strategy implementation:
One of the most critical parts of implementing a strategy is how we bring stakeholders along the journey. Typically, senior managers will ‘dream up’ the strategy in a closed room, and then try to roll this out to the rest of the organization. Alternatively, a consulting firm may be hired to design a strategy that may stay on the shelf and never becomes implemented.
The change manager’s approach is to design the strategy formulation process by bringing concerned stakeholder groups together to build consensus and buy-in. The classic change commitment curve shows that the more you involve someone throughout the process, the more they will develop a sense of ownership and feel that it is in their interest to make the change successful.
A typical change management approach would also encompass clarifying the ‘what’ and the ‘why’ of the strategy in a way that makes sense to the audience. Is the end state clear? What is the role of each stakeholder in making this a success? How do we position the end state so that it arouses the ‘head’ as well as the ‘heart’ so that people can connect to it? Connecting to people emotionally is key to engagement.
Understanding the impacts of the change
A strategy usually involves a set of initiatives or changes that the business would like to focus on to achieve their goals. A lot of organizations jump straight into planning and implementing the various initiatives before understanding what the total impact is on the various parts of the business, and the impacts on the customer.
Having an integrated view of what the impacts will mean to each part of the organization is key. This integrated picture can be leveraged to provide a clear, cohesive and integrated set of messages and expectations to that part of the organization that will guide their change process. And depending on the change, what the Marketing department will focus on may be completely different compared to the Human Resource department. Having an integrated picture means that we are able to help employee join the dots around what the strategy and the various initiatives mean to them, versus just a set of independent projects. In this way, creating meaning for the overall change helps with engagement.
The change manager’s approach would be to focus on mapping on the various impacts on stakeholder groups, including the customer. The impacts would consist of people and organization impacts, process impacts, and technology impacts. In this way, we are able to understand and architect what changes we are making across the board before we begin the journey. This will also ensure effective sequencing, prioritization and alignment before jumping into initiative delivery.
Capabilities required to support the strategy
A typical change approach would involve looking at the capabilities required to support the strategy. A big part of change management work is analysing the requirements of implementing the change (in this case a set of initiatives to support the strategy), and formulating key capabilities required. Capabilities may be developed using a range of approaches, including hiring functional specialists, conducting learning sessions, or coaching. The Change Manager will formulate learning needs analysis, and then formulate appropriate learning interventions. For significant capability development programs, competencies frameworks may need to be set up.
Capabilities may need to be acquired rather than developed. In this case the change manager would look at how to ensure that the talent acquired can fit in smoothly in the current culture of the organization. Team development sessions may need to be conducted. This includes whether the capability is acquired through acquisition, or key talents were hired into the organization.
Engagement and communication
Ineffective engagement and communication can make or break a strategy. A significant portion of strategy implementation needs to be spent on engagement with every layer of the stakeholder impacted. Change impacts conducted will help to inform what kind of engagement is required with what stakeholder group. This includes the severity of the impact, the duration of the impact, why the stakeholders may be concerned, and how critical they are to the success of the strategy, etc.
The change manager will then design the right governance processes to ensure that key stakeholders are in the loop and embedded within the decision-making process. In addition to this, the change manager will craft a communications plan to target various stakeholder groups, with targeted messages, and using a mix of communication channels to get the message across. An effective communication approach would also include designing the right feedback mechanisms to ensure employee feedback is proactively incorporated.
A key success criterion for implementing a strategy is measuring the progress of implementation to understand where the organization is at. It is common for change managers to devise change readiness assessments to measure and test where each part of the business is at. These assessments are conducted throughout the implementation period to understand any changes in readiness and track overall progress. The assessment can in the form of interviews, surveys or ratings by selected stakeholders. Other measurements include training attendance, competency attainment, and communication effectiveness of various channels utilised.
The most important part of charting the implementation of the strategy is measuring the impact of the change. Best practice calls for detailed capturing of change impacts on each part of the organization in a visual way to aid understanding. This includes heatmaps and reports on what the implementation roadmap will mean to the business. The change impact based heatmaps are critical to allow effective planning to balance the need to drive the strategy forward, and balance the business-as-usual activities so that the business is still able to perform.
Effective reporting should call out resourcing impacts, whether there is too much going on from a rollout perspective, potential re-sequencing opportunities, and the overall pace of change within the implementation roadmap. The data should enable effective conversations in terms of how effective the planned roadmap is in reaching strategy objectives and whether the right pace and velocity of change are being planned.
Last but not least driving an effective strategy requires effective leadership skills. The work of the change manager involves assessing existing leadership qualities, including understanding any gaps and challenges. These may be addressed by capability programs.
The change manager also normally takes in working with the sponsor of the change, in this case it could be a member of the c-suite on his or her change leadership skills. Some examples of effective skills include the ability to articulate the end state in a way that the audience can relate to and be enthusiastic about, ability t listen and empathise with employee groups, ability to identify and resolve any change obstacles, the ability sense check and pivot as needed (agility), and the ability to delegate and hold others accountable for achieving prescribed targets.
– Analyse change impacts to the whole system: people, process, technology.
– Map out the impacts of current and planned strategies to better sequence and plan the change
– Look at the capabilities required in the business
– Engagement and communications, involving key players in developing the strategy
– Measurement – business readiness and indicator tracking
– Change leadership is driving traction and behaviour change
– A strategy contains a set of initiatives – the key is to formulate a picture of what will be changing and be able to sequence and prioritise things to design the roadmap effectively
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A lot of organizations think of change management as something can be outsourced to change managers or project managers. In this view, a piece of change can be managed as a project so that the rest of the business can focus on its business-as-usual activities.
What a lot of organizations do not realize is that managing change is an ethical obligation. How a company manages change can fundamentally impact its human rights record and its adherence to ethical practice standards. This includes the impact of its decisions or the way it engages with its employees, partners, suppliers, and customers.
This is especially important for a lot of financial services firms that have been under close scrutiny by regulators for ethical business conduct. In Australia, the banking royal commission has been focused closely on the ethical practices of banks and insurers. The Australian Securities and Investments Commission (ASIC) which is the law enforcement body, has been investigating unethical practices of various financial services organizations. This commission has unleashed a deluge of fresh complaints and admissions about misconduct in the finance sector. Most of these are centered around impacts on customers.
Ethics and change
Let’s explore more on ethical practices during change. Let’s take one example – Ethical practices during re-structuring. A typical process goes like this. The senior managers meet to discuss and come up with the organizational structure changes required. Sometimes, a few of the middle managers may provide some input into this process. However, overall the process is kept in secret to ensure that none of the details are disclosed to employees. The Human Resources function will be involved throughout the process.
Eventually, when all the details are finished and finalized, the organization would typically conduct a town tall, a call, or a meeting to go through these changes with employees. A short 2-3 week period will usually be given as a ‘consultation period’ to obtain employee feedback. However, in most cases, these changes are already a done deal irrespective of employee feedback.
In this very common case facing nearly all organizations, the employee as a stakeholder group is designed to be disadvantaged in that it lacks the power of information and it lacks the power over the ability to actually participate in decision making. It is also no surprise that most employees in this situation will experience stress and anxiety. Some will even choose to leave. Others may have their roles made redundant.
Yes – in this scenario, the organization needs to take into account a broad range of considerations including what is good for the shareholders of the company, what is good for the business, and what is good for customers. However, organizations often overlook the fact that both employees and customers are stakeholder groups that need to be consulted when there is a significant change being planned.
Involving these stakeholder groups makes sense from a change management perspective because this engagement enhances buy-in and ownership in terms of what is changing. It also makes sense in terms of the organization’s ethical obligation to involve stakeholder groups so that the process does not negatively disadvantage them. This does not mean giving away the decision making accountability. However, it does mean a more inclusive decision-making process that is collaborative and achieves better engagement and understanding, and therefore a more ethical approach.
Many organizations have called out ethical principles in leading change. In a document titled “Achieving structural change” 2007 the Queensland state government of Australia defined social inclusion as an approach that is inclusive so that people do not feel ‘shut out’. Social inclusion is “people wanting to participate as valued, appreciated equals in the social, economic, political and cultural life of the community”.
The Coca-cola European Headquarters very recently published a ‘Human Rights Restructuring Guidelines’ in June 2018. Under ‘Structural changes and mitigation of adverse effects on employees’ some of the points include:
“As early as possible, initiate a process of identifying the potential impact of business restructuring activity on employees, including human rights impacts”
“In general, we should be committed to use available means, as appropriate, to ensure meaningful cooperation with employees …..in order to mitigate adverse effects of restructuring decisions on employees”
So far we have been using the example of organizational restructuring. However, the same ethical principle of social inclusion and engagement also applies to other changes that may have less quantum of impact. Change initiatives include anything from implementing a new technology system, change a process, introducing a new product, changing a customer policy, or a new marketing campaign. We need to apply the same ethical principle to any of these changes. Change Managers will already call out that these are basic change principles they already use. For many organizations, this may be a wake-up call that identifying the change impacts and engaging with those impacted is not a nice to have, but an ethical obligation for any ethical organization.
Most organizations are not experiencing just one change initiative, but a series of changes that overlap one another. The obligation and challenge for larger organizations is how to assess the change impacts on employees and customers across the board, versus initiative by initiative. From this view and understanding of the collective impacts, the organization can then form a better plan on how to effectively engage, involve and inform the impacted employee and customer groups. Using an online tool to form a visual of the impacts of multiple changes on these stakeholder groups is a great way to use data to plan effectively. The Change Compass is one example.
To conclude, organizations need to think hard about its ethical practices, not just those impacts on the customers but also on employees. When we think human rights and social inclusion we usually think of disadvantaged groups such as minorities. However, the principles are just as applicable in a change context. How do we ensure that organizations are accountable for their ethical practices toward employees? Many forward-thinking organizations are already starting to take note and have committed to formal standards and practices to adhere to.