November 2007

Organizational Change Management: ‘Hard’ Value from ‘Soft’ Skills

Summary

Organizational Change Management (OCM) is a discipline which may be applied to a broad range of organizational change efforts, from enterprise-wide transformations to individual capital or technology projects. When enterprises embrace and employ Organizational Change Management methodologies and approaches, quantifiable results are achieved.

What is OCM?

Within organizations, OCM may mean different things to different constituents. It is a common perception that OCM is the application of ‘soft’ skills, the people side of an enterprise. SEI defines Organizational Change Management as:

“The disciplined approach to leveraging opportunities and human capital plus controlling risks related to people issues resulting from new systems, process redesign, mergers and acquisitions, growth, and enterprise-wide organization changes.”

The application of OCM strategies, methodologies, practices and techniques does impact the people side of an enterprise. This impact is strategically planned, continuously and proactively communicated, supported with education, personal development, mentoring, and coaching. Additionally, modification must be considered and made for roles, responsibilities and, often, the performance management and rewards/recognition systems within the organization experiencing the change.

OCM may be applicable whether the change is:

  • an enterprise-wide transformation
  • an organization structure change
  • a business process change
  • a new product development
  • a major capital project
  • a significant systems implementation
  • a technical system/solution implementation
  • an information management change

 

Measuring Results:

The employment of OCM principles and practices provides traction by identifying opportunities, enhancing existing strengths, and overcoming challenges.

Results achieved from successful change efforts are tangible; they can be measured and quantified, and linked directly to very specific ‘hard’ performance criteria. Application of proven OCM methodologies will measure change readiness and measure the impacts of change before, during, and after the change event occurs. Benefits that can be measured include:

  • cost savings and specific financial metrics
  • time bound measures
  • employee morale, satisfaction, and retention
  • customer satisfaction and retention
  • cultural attributes such as the top quartile of preferred employer status and recognition on ‘best places to work’ lists
  • increased effectiveness of human capital
  • goals achieved or exceeded
  • projects completed on or ahead of schedule and within or under approved budget

Measurable results are expected and anticipated as the use of OCM becomes an accepted practice, a cultural expectation, and a standard within the enterprise. Organizations which utilize OCM understand that it will maximize the benefits from human capital; it makes the connections between strategies and operations, and also between technologies, processes, and people.

The challenge of any change process or project is to guide an organization from the current state to a future or desired state. In order for this to occur, the current state and readiness for change must be known and understood. Likewise, the future state must be described and articulated. This is best accomplished through addressing vision and well defined goals and objectives; in other words, what will success look like, how will success be defined, described, and measured. Once current and future states are determined, a gap analysis is conducted to understand the types and amount of change that the enterprise will expect and must anticipate to reach the stated goals and success factors of the future state organization.

In many organizations, change and transformation efforts and project management are entrusted to those who demonstrate desired results-focused discipline and practicality. OCM professionals, working in conjunction with project management practitioners, yield highly predictable and successful results. In fact, numerous well respected organizations endorse, promote, and institutionalize organizational change management into their culture and consider it a competitive advantage. They now include OCM resources as a standard part of budgeting for new projects just as they would for project management resources.

The effect of a successful transformation or change process on human capital within organizations may range from minimal impact to profound, and may significantly alter the method and manner in which resources are allocated to accomplish the organization’s goals and objectives. The human capital or human resource factor plays a significant role in the success or failure of change projects or processes. Attaining the commitment of the human resources at a team and individual level is a critical factor for achievement of a successful transformation or change. Building commitment through awareness, education, understanding, and continual communications - before, during, and throughout the change - is imperative to yield a successful outcome. True commitment, not simply ‘buy-in’ by individuals, is a key to the attainment goals and the increased performance or in project measures and corporate key performance indicators. An OCM practitioner increases the likelihood of gaining that commitment and long term project adoption.

OCM Results Measured in Project Success Metrics:

OCM is often applied successfully on large scale projects in conjunction with project management. Where project management’s focus is often on the race to the go-live date, OCM’s focus is on go-live and beyond – ensuring that the change will “stick” and that benefits will be reaped long after the implementation. Have you ever seen a system implementation execute perfectly, yet not yield the desired results because the users are not using the new system, or not using it effectively?

Executives who understand OCM have no difficulty explaining the rationale or justifying the expenditure for change management consultation as a line item within a large scale project budget. The payoff or return on investment is frequently significant, even when the amount expended for OCM resources is no more than a rounding error in the context of the overall project budget. Utilization of OCM on large projects is viewed by leaders and executive sponsors as an important ingredient for success. Considerable empirical data and justification exists within organizations, stakeholders, and experienced professionals to indicate they overwhelmingly prefer to be involved with and participate on projects where OCM methods and practices are employed.

Large scale projects of this nature typically see results and benefits such as project completion on schedule or ahead of targeted due date and successful project completion within or under the allocated budget; more importantly, compared to projects without OCM resources these projects have more long-term benefits and measurable user adoption. Overall, results are generally much more favorable and successful results attained and sustained by utilization of OCM strategies, methods, and practices.

OCM Results Measured in Employee Retention:

Another example of delivering ‘hard’ value within an area considered to be a ‘soft,’ human resource or people issue is of the application of OCM in employee retention initiatives. The delivered results for these projects are, in fact, clearly quantifiable. Consider the cost of employee turnover, the undesired result of a nonexistent or an ineffective employee retention strategy. Expense is incurred when an organization must recruit, relocate, hire, educate, and/or train replacements, as well as potentially pay unemployment benefits, severance, and perhaps legal expenses allocated to employees who terminate employment of the corporation. These are real dollars and ‘hard’ measures which may be avoided in part or in whole by successful OCM directed to the goal of maintaining and retaining competent, satisfied human resources – the ‘soft’ side, the people side of the organization.

OCM Results Measured in Mergers and Acquisitions (of companies or departments):

The blending of two or more organizations is challenging and difficult at best, even under positive circumstances. Consider an OCM effort during the combining of disparate organizations and cultures. This may come as the result of a hostile takeover, an acquisition and merger of distinct entities, or consolidation of multiple departments within an organization. The organizational blending and assimilation may be filled with challenges, negativity, and strife, yet positive impact and results may be achieved through the deliberate and purposeful use of OCM practices before and during the time it will take to combine the enterprises. Again, there are ‘hard’ metrics which can be attributed with regard an effective merger utilizing OCM. When the positive OCM option is not considered and utilized, there is large scale resistance to change, employee dissatisfaction, high rates of employee turnover, and lack of focus on business needs and organizational performance. The differences and distinctions between these two choices are measurable, tangible, and represent ‘hard’ costs or valuable financial measures.

Finally, let’s consider the blending of two or more separate organizations with various different and distinct technology systems, hardware platforms, data management philosophies, and unique capabilities and competencies. It is difficult to imagine a more challenging scenario. In this situation, competing missions, philosophies, technologies and most likely cultures, are to be blended or assimilated into a single functional, performing organization. The new, combined or consolidated organization is expected to achieve results, support the enterprise’s technology requirements, and accomplish desired business performance goals all the while being transparent to the business stakeholders and customers. Blending two different organizations and cultures with the same technology would represent a challenge. There is perhaps no greater challenge for an organization transformation or change project and the OCM professional than what is herein described. Employing OCM strategies and a seasoned OCM professional for this type of transformation is an absolute necessity and well able to be justified and the return on investment.

OCM Results: The Leader’s Role

OCM is critical to all successful change, and should be endorsed and adopted by leaders in active sponsorship. Effective sponsors communicate routinely, are proactive in support of the change, personally demonstrate the desired competence and behaviors, as well as continuously seek to eliminate obstacles or barriers which limit or hinder success. This barrier removal ranges from subtle policy and procedural obstacles to significant resistance to change due to a variety of causal factors. Executive level sponsors form additional sponsorship collaborative groups within the organization. By demonstrating leadership and effective management coaching, sponsors help build a critical mass of change adopters. Successful employment and execution of this collaborative approach allows for ideation, creation, design, and implementation of the desired change to accomplish or exceed the expected outcome. Although change is a constant, achieving a desired change does not just simply happen – it must be designed, articulated, planned, and implemented in a manner which will yield measurable performance outcomes and goal attainment.

Conclusion:

In summary, OCM focuses on resolving organizational issues, which are often viewed as people-related or unquantifiable ‘soft’ issues. We offer that an OCM resource is a valued business partner and collaborator in achieving future state goals, outcomes, and measureable results. This may simply seem like common sense, but a successful intervention utilizing a proven OCM expert (along with good project management) can reap great rewards and benefits that far outweigh the cost or expenditure to engage the OCM resource.

The OCM practice at SEI leverages our capability, competence, proven results, and reputation. We provide demonstrated value, measurable results, proven benefit, and competitive advantage through the application of strategic and pragmatic OCM methodologies.