Week 7: Empower other to act on the vision (step 5 of Kotter’s 8 stage process) Barrier to empowerment Note: - Interconnection of change with the McKinsey 7s Model with the barrier to empowerment Structures should support strategic decision making (is not just about moving box – you need to have a good reason why you move or place in a position in an organization.) There is not a ‘one-size fits all’ approach to designing effective organization structures. “Failure to adjust structure appropriately can undermine strategy implementation” But “Good structure alone is not enough for success” How structure can undermine change vision Structure Organization charts typically document the organizational design (Map out the formal structure) An organization structure describes Formal roles, Responsibilities, and Lines of reporting Why do formal structures matter? 1) Shape patters of communication and knowledge exchange 2) Suggest the types of skills and knowledge required to move up in an organization Organizational configurations: Three strands - Structure Processes Relationship Core concepts of organizational design 1. Chain of command: The organizational reporting architecture. “A clear and distinct line of authority among the positions in an organization” 2. Span of control: narrow or wide (links to flatter or more hierarchical organization structure) 3. Degree of centralization: Where does decision-making authority lie? - Decision making at the top vs. lower levels of employees. - In a centralized organizational structure, decision making is concentrated with a specific leader (or location) - In a decentralized structure empowers teams or departments to make decisions - The degree of centralization depends on organizational size, management style, quality of managers. 4. Degree of formalization: More formal organizations drive consistency and control based on rules. Advantages of formalization - Standardization - Repeatable work processes - Predictable quality or service - Compliance with external norms Disadvantages of formalization - Reduced motivation - Less fun (less fun to follow rules...) - Slow decision making - Ineffective rules 5. Differentiation: - The degree to which jobs are specialized and distinctive from one another - Takes place in an early step in the life of a start up as it grows - Usually high level of differentiation in large organizations 6. Integration: - How organizations work together between different groups? - You may also have people or teams with coordinating roles Organization structure types: Five Basic Structures 1. Functional Design: Based on the primary activities undertaken by an organization Advantages - CEO in touch with all functions - Simplifies control mechanisms. - Clarity in roles and responsibilities - Specialists at senior and middle management Disadvantages - Senior managers overburdened with routine matters - Senior managers can neglect strategic issues - Coordination between functions is difficult - Can create challenges in adapting and encourage silos 2. Divisional Design: Built from separate divisions based on products, services or geography. Advantages • Flexible • Control by performance • Ownership of strategy • Specialization of competences • Training in strategic view 3. Disadvantages - Cost! Duplication of central and divisional functions - Fragmentation and non-cooperation - Risk of loss of central control Matrix Design: A hybrid form where functional and divisional overlap Advantages Integrate knowledge - Flexible - Allows dual dimensions Disadvantages - Length of time to make decisions - Unclear job and task responsibilities - Unclear cost and profit responsibilities - High degrees of conflict 4. Process Design: Groups employees in departments based on steps of a process Advantages • Can lead to faster and more efficient processes • Promotes teamwork within and across departments Disadvantages • Can lead to barriers between departments • Can lead to miscommunications • Can lead to challenging handoffs (and finger pointing!) 5. Project Design: Employees are grouped together in small teams, each responsible for a certain task or project. Meant to disrupt traditional hierarchy’s. Usually teams are created, undertake work and are then dissolved. Advantages Disadvantages • Collaboration between team members • Limited specialization or career growth • Empowerment, autonomy and decision making • Conflict between teams/team members • Communications, alignment and faster decision (competing goals or priorities) making • Limited control, lack of coordination • Adaptability, teams respond quickly to change between teams • Varied skill sets, diversity of thought • Tunnel vision Organizational design health-check: 9 tests The Market-Advantage Test. This test of fit with market strategy is fundamental. Ex. if coordination between two steps in a production process is important to market advantage, then they should probably be placed in the same structural unit. The Parenting Advantage Test. The structural design should fit the ‘parenting’ role of the corporate centre. The People Test. The structural design must fit the people available. Ex. Do you have the managers with competence in running decentralized structures? The Feasibility Test. This is a catch-all category, indicating that the structure must fit legal, stakeholder, trade union or similar constraints. Example; Consulting and Audit Organizations The Specialised Cultures Test. This test reflects the value of bringing together specialists so that they can develop their expertise in close collaboration with each other. A structure fails if it breaks up important specialist cultures. The Difficult Links Test. This test asks whether a proposed structure will set up links between parts of the organisations that are important but bound to be strained. For example, extreme decentralisation The Redundant Hierarchy Test. Any structural design should be checked in case it has too many layers of management, causing undue blockages and expense. The Accountability Test. This test stresses the importance of clear lines of accountability, ensuring the control and commitment of managers throughout the structure. The Flexibility Test - the extent to which a design will allow for change in the future. Organization Structure Challenges: 3 Factors Rational • New strategy/new markets • Change initiatives • Growth (organic or M&A) • The need for flexibility • Leadership development opportunities • Introduction of new technologies • Embed new behaviour • Cost reduction or performance improvement Political • Power struggles • Delayed decision making • Senior people want to retain or increase control and power base • External stakeholders may require changes Emotional • New management wishes to make a mark • Company may wish to promote valued colleagues • Company may wish to remove colleagues that no longer fit. Skills and competencies - Often in change initiatives we don’t think carefully enough required: Knowledge, Skills, Abilities and Attitudes. Lack of necessary skills can slow, or stall needed action. Habits built over the years may become irrelevant or destructive. Addressing a skills gap: Training plan A training plan is important to: • Enable people to understand and engage in the change • Develop competencies • Introduce, manage, and reinforce change Skills to assess: • • • • • • Training needs to consider: • Timing: providing the right training at the right time • Skills: understanding the gaps in skills required for the change • Approach: a mix of tools for different audiences Process System Technical Organizational Behaviours/Attitudes Change Management Developing a training plan 1. Identify the different audiences that require training: • • You may have identified this during the stakeholder analysis! You may need to go back to it and apply a training specific lens. 2. Conduct a training gap analysis/needs assessment • What skills and knowledge are needed for the future state - What is changing? - How much resistance is there? - How ‘ready’ is the organization for this change? • What is the ‘as is’ situation? 3. Develop training plan • • Amount of training required. Formality of training 4. Develop training materials • • Consider your budget and what is practical! Consider learning materials and delivery channels. 5. Measure training results Systems & processes Systems and processes can hamper the progress of change which influence and impact behaviours. Few examples of systems: Compensation Performance management - KPIs Not aligned with the desired results, - Behaviours that are no longer important continue to be rewarded. Training Talent Management - Penalizing people for making mistakes, taking risks, or moving forward with change - Promotions based on loyalty to individuals (who have a lot to lost during the change. Management Resistant leader & managers: Signs • Withholding information or resources from those who need them • Undermining the credibility of those proposing and driving the change efforts • Refusing to participate in subtle ways • Micro-managing the group’s activities • Fostering a climate of political backbiting or ‘us vs them • Treating any change effort by a team member as disloyalty • Controlling all decisions and incoming/outgoing communications Suggestions • Engage resisters in honest discussions about their concerns • Provide resisters with opportunities to contribute and/or resolve problems • Deal with them in a fair, straightforward, and timely manner • Communicate clearly when the resistance behaviours is not acceptable and explain the consequences • If alterations in leadership/management are necessary proceed in a clear, honest, direct and timely manner • Confront resistance directly Culture - - Change management is about the people side of change: “People are not like other resources. They influence change both through their skills and competence and through their collective behaviour (culture)”. “Understanding the prevailing culture of an organisation can help inform the type of change needed, as well as an organisation’s readiness for change” Hard to Change Observable/Tangible • Behaviours • Branding • Representatives • Mission • Strategy • Dress Code Extremely hard to change. Not observable/Intangible • Relationships • Values • History • Perceptions • Attitudes & Feelings • Beliefs • Status • Unwritten rules Culture and group norms • • • • • • • Have a strong influence on an employee’s behaviour. Very difficult to change. Mostly Invisible We don’t think about them – often unconscious “The way we do things around here” Evolve informally over time Reinforced through subtle and often unspoken means. Week 9: Engaging and enabling the organization: Generating Change results. Characteristics of good short term wins Short term wins are necessary to maintain momentum and keep stakeholders engaged. Three characteristics: 1. Visible: large numbers of people can see for themselves whether the result is real or just hype. 2. Unambiguous: there can be little argument whether they are a sign of success. 3. Related: its clearly related to the change effort. Types of measures to uses in short term wins: Financial, Non-Financial, Quantitative, or Qualitative. Examples: cost savings, increased revenue, streamlined procedures, more effective use of technology. Are people starting to see the progress because just talking about the change is not enough to keep momentum, sign of progress (short term wins) keeps people engage. Table 8-1: The role of short term wins • Provide evidence that sacrifices are worth it: Wins greatly help justify the short term costs involved • Reward change agents with a pat on the back: after a lot of hard work, positive feedback builds morale and motivation • Help fine-tune vision and strategies: Short term wins give the guiding coalition concrete data on the viability of their ideas • Undermine cynics and self-serving resisters: Clear improvements in performance make it difficult for people to block needed change • Keep bosses on board: Provides those higher in their hierarchy with evidence that the transformation is on track • Build momentum: Turns neutrals into supporters, reluctant supporters into active helpers etc. How do you generate short term wins? • • • • • • • • • • • • • Plan for short term goals. Set achievable goals. Break down larger objectives into smaller milestones to demonstrate progress. Prioritize high impact tasks that can deliver quick results. What are critical actions that will move you closer to the desired outcome. Allocate resources. Ensure that you have allocated time, people, and budget to support short term initiatives. Monitor progress What KPIs will you use to manage success? Adapt and Adjust Communicate progress. Foster a culture of continuous improvement. Encourage a culture where short term wins are valued and seen as stepping stones to long-term success. Action Priority Matrix: A simple tool to prioritize activities and identify quick wins. Planning vs Praying 1. People don’t plan sufficiently for short term wins because they are overwhelmed 2. Attitude – belief there is a trade-off between short run and the long run 3. Lack of sufficient management You can’t just hope for thing to change because hope does not bring about change, but change is brought by planning and taking necessary action acting. Major change takes time • Resistance = pesky! • Progress will skip for two reasons: Corporate Culture, Interdependence Manager vs Leaders “Transformation and change is not a process involving leadership alone: good management is also essential” Transformational change What stage 7 looks like in a successful, major change effort (Table 9-1) • More change not less • More help • Leadership from senior management • Project management and leadership from below • Reduction of unnecessary independencies “Without sufficient leadership, change stalls and excelling in a rapidly changing world becomes problematic” Organization needs to maintain relevance Week 10: Implementing and sustaining change “Culture is a powerful influence on behaviour”. Why is culture powerful? Definitions Culture: “The norms of behaviour and shared values among a group of people.” Norms of behaviour: “common or pervasive ways of acting that are found in a group and that persist because group members tend to behave in ways that teach those practices to new members, rewarding those who fit in and sanctioning those who do not. Shared values: Important concerns and goals shared by most of the people in a group that tend to shape group behaviour and that often persist over time even when group membership changes. Culture and Change “When the new practices made in transformation effort are not compatible with the relevant culture, they will always be subject to regression.” 3 key reasons culture is powerful: 1. Because individuals are selected and indoctrinated so well 2. Because culture exerts itself through actions of hundreds of people (or more!). 3. Because all of this happens without much conscious intent. Anchoring change in culture Comes last, not first: most alternations in norms and shared values come at the end of the transformation process. Depends on results: New approaches usually sink into a culture only after its very clear that they work and are superior to old methods. Requires a lot of talk: Without verbal instruction and support, people are often reluctant to admit the validity of new practices. May involve turnover: Sometimes the only way to change a culture is to change key people. Makes decisions on succession crucial: If promotion processes are not changed to be compatible with the new practices, the old culture will reassert itself.
