change management process change management plan
When turning around a business unit, management has clear expectations on financial benchmarks and time tables. The human element of the turnaround is considered, but at times there are misunderstandings on how workflows must be reshaped. These issues can be devastating to the recovery especially if there isn't a clear understanding on what tasks and reports are needed to make decisions. Getting the team to understand their roles as stakeholders in change often makes the difference.
One of the first priorities has been to understand the old established business assumptions. These are the framework for daily decision-making such as key productivity indicators (KPI's) and bonus incentives. While changes are going to take place a baseline understanding of what incentive and financial metrics employees have been driving toward is important to the communication process that is critical to change management.
With this information a comparison with the new expectatio ns is created and one of the best tools is the P&L. Often management didn't' share the P&L with employees. They were working on daily operating processes that my have not kept up with the changes in the P&L over time. Every day the office would get a little bit farther away from where it needed to be. This creeping variance has been a major challenge in many business units. The implications are important because the disconnections between departments and teams can lead to numerous dis-functionalities.
Naturally, most non-management employees are task oriented and the big picture is not an everyday concern. In a turnaround situation, they need to be part of the solution and understanding new KPI's can be critical to ground up communication.
The first discussion of the P&L is frequently a wrenching situation. Often basic explanations about how the money flows are required. For example, the team may have not been in the daily discussions on inventory management. Mat erial simply appeared and was received, shelved and then sold as it was demanded. The idea that the material was a loan, had interest associated with it, that churn would improve cash flow and discounts, that slow moving items had to be reviewed for either returns or price adjustments (such as on expensive rarely used material that had to be available at a moment's notice and the real value had to be determined) that quarantined/returning items needed to be dealt with quickly and so on.
In network operating center (NOC) services for example, having a package solutions rather than engineering every order from the ground up was needed to support Sales. Gold plating the solutions was costly in time, limited customer choice and the ability to upsell and may actually be adding risk or reducing the size of the market.
From these baselines the workflow levers that impact these financial benchmarks are explained. The revised expectations and how the levers will change pr ovides a sense of direction for these employees.
The inventory purchasing decisions often are a key area of change. Purchasing managers may be managing to business cycles that are partially irrelevant. For example, key customers have left and an exit from vendors and sales regions must be made. Some customers are no longer profitable. Supply chain issues from logistics to service charges must be revised. These changes can have an emotional toll as well as anxiety from change.
In one case while presenting comparative P&L's a young salesman, the best on in the office by far, announced that his monthly sales were very strong. The entire office was aware of the gross sales number by salesman. It was a shock to him and the team that he was at 80% of the level other offices considered minimal. Naturally the team was devastated.
What was to be done was to provide a clear direction on how reach the new expectations and the timeframe to doing so. The earlier financi al discussions were then very helpful for the team to start to create bridges in their minds between the old model and new model.
The team discussions will move to understanding the competitive situation, what advantages the team has, gaps, what the impediments are and how a concerted effort will be needed to re-align their tasks with the new environment.
One business unit had the benefit of dedicated employees who often worked twelve hour days as they had tried to meet their manager's goals. The issue was that because of misguidance, the harder they worked the worse the situation become. Significantly changing the workflows was disheartening since they had a lot of prided in their efficiency. An appreciation of their efforts and dedication was necessary on a regular, daily basis for morale.
At this time, thanks to a shaken but positive attitude, a variation of Ted Levitt's Marketing Myopia questions, Peter Ducker's five questions for Managers and Stephen C ovey's effective habits frameworks were shared. The key questions around why the firm was in business, who was the best customer, what was needed to gain a better advantage over the competition and become more or a partner with valuable clients, what were the priority tasks and so on. Aligning these concepts with the new expectations helped the team understand where they were being lead.
Within this new framework management decisions became better understood. Often, this is a radical cultural change. The more transparent environment often helps get buy-in. Team members would become active questioners as their anxiety lessened and they realized they had to become more engaged in the overall business. Simply asking why or how became a powerful tool in staying on the path and improving communication.
The team has an active stakeholder role in this turnaround. They also realized that senior management was going to be a lot more engaged in workflow issues.
Turni ng around a business unit is a huge challenge. Developing a stakeholder mentality has proven to be an asset when meeting this challenge.
Garry Wood has been consulting to global and mid sized firms since 1984 and stopped counting at 200 firms. Background and contact information can be found at http://www.linkedin.com/in/garrywoodpm.
My startup experience includes IT, management consulting, wireless and security. Industries include oil logistics, distribution, outsourcing, software, manufacturing, healthcare, financial services and government.