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Managing Barriers to Business Reengineering Success

by Wolf D. Schumacher

…The crucial question being: "Can we trust her ?"

cont. from Chapter 4a.

The Change Agent Diagnoses Client`s Problems

The change agent must view the situation empathetically from the client`s perspective, not her or the change agents viewpoint.

The Change Agent Creates Intent to Change in the Client

After a change agent explores various alternatives of action that her clients may take to achieve their goals, the change agent seeks to motivate an interest in the organizational innovation. But the change must be client-centered, rather than innovation-oriented.

The Change Agent Translates Intent into Action

The change agent tries to influence her clients behaviors toward the innovation. This is not being done directly, but indirectly with opinion leaders. This is necessary, since interpersonal network influences from near-peers are most important for the persuasion and decision-stage in the innovation decision process.

The Change Agent Stabilizes Adoption and Prevents Discontinuances

Change Agents may effectively stabilize new behavior by directing reinforcing messages to those clients who have adopted. This assistance is frequently given when the client is at the implementation stage of the innovation process. Also the change agents help members of the change agency to confirm messages and reinforce agreed upon behaviors toward the clients.

The Change Agent Achieves a Lasting Relationship

The end goal for the change agent is to develop self-renewing behavior on the part of the client (and change agency) system. The change agent should seek to put herself out of business. She must seek to shift the clients from a position of reliance on the change agent to self-reliance.

Applicability to Business Reengineering Projects

The help of external consultants in Business Reengineering projects is commonplace. Many of these are concentrating their efforts on the technical side of the project. For example, because they are called in for their knowledge about the Information Technology to be implemented. Business Reengineering is a multi-billion consulting business, where some large consulting companies bill out more than one million US $ to a single customer per year (Davenport, 1996).

It is the experience of the author, that a considerable number of client managers ask the consultant to perform the "dirty" tasks of Business Reengineering; i.e. help to reduce the work-force. The people side of Business Reengineering requires different skills from external consultants, as laid out above. The recent development in the "consulting market" for Business Reengineering projects reflects this move from purely technical specialists to organizational development coaches.

4.3.5. Selected Global Change Interventions

IM 9: Breakpoints

Objective

After a study of eighty-seven global change projects from a variety of industries, Paul Strebel of IMD in Switzerland, asserted that many of the companies involved, were not able to cope with breakpoints. Breakpoints take the form of business discontinuities: Business growth rates jump or fall, the rules of the competitive game shift, market shares move around, and companies are drastically reorganized. The management of breakpoints is based on the force-field model. Driving forces for change on one hand and resisting forces to change on the other hand are part of a framework for global Change Management, developed by Paul Strebel (Strebel, 1992). Figure 4.3.5./1 describes the change arena, including Breakpoints.

Figure 4.3.5./1 Change Arena

The change arena provides not an exact measurement of change and resisting force, but a perspective of the context, in which change occurs. The force of change can be classified as weak or strong depending on the rate of change it generates in the environment of the organization. Resistance to change is characterized as weak or strong, corresponding to a low or high threshold, beyond which increasing force causes the resistance to break down. The rate of global business change is captured by the entries in each of the corners of the change arena. Figure 4.3.5./1 suggests four different types of change corresponding to strong /weak forces and strong/weak resistance to change.

In the top left-hand corner, weak change forces hardly affect a company with strong resistance. Since the resistance threshold has not been reached, the status quo prevails and no change occurs. Status quo agents set the tone by emphasizing continuity based on old behavior. This is typical for closed inward looking bureaucratic organizations.

In the opposite, bottom right-hand corner of the change arena, the forces of change are strong and the resistance is weak. The forces of change exceed the resistance threshold. The system adapts continuously to the change forces. This represents a flexible company, responding to strong forces in the environment. There are no status quo agents, everybody is a change agent. This is a typical situation for small young high-tech companies, being continuously exerted to strong market forces.

Bisecting the change arena is a diagonal which marks the boundary between the status quo agents and the realm of the change agents. Along the diagonal a fine line decides about change or no change.

In the bottom left-hand corner of the arena where the force of change and the force of resistance are weak, the boundary between new and old behavior is easily crossed. Many intermediate-volume markets and medium-sized companies are flexible enough to adapt to weak change forces in this sporadic way.

In the top right-hand corner, where strong forces put pressure on systems with strong resistance, the change can be sharply discontinuous, forming a breakpoint. The transition between status quo and change agent behavior is characterized by a sudden sharp jump. To the left of the boundary below the resistance threshold no change occurs, despite the fact that the change forces are strong; the status quo agents dominate. Moderate pressure for change creates too few change agents to have a significant impact on the existing system. Strong pressure is needed to shake up the status quo. Domination by the change agents occurs all of a sudden when the balance of power tips in their favor. Once the change forces exceed the resistance threshold, on the right side of the boundary, the resistance breaks down. Because of the strength of the change forces, the collapse of the resistance is sudden and rapid. A massive shift takes place from status quo to change agent behavior, thereby triggering a breakpoint. As long as strong forces to continue to confront strong resistance, breakpoints will be frequent.

The change arena suggests that all four change types are relevant. The continuing and varying tension between the forces of resistance and change, between the status quo and a new order, determines the type of change that occurs. Strebel claims, that the location of a business in the change arena during a particular period determines the kind of change that the business is likely to experience.

Intervention

There are four available intervention paths leading to the areas of the change arena. Table 4.3.5./1 describes the intervention path characteristics (Strebel, 1992).

Table 4.3.5./1 Intervention Path Characteristics

The resistance path is appropriate when strong resistance that is closed to change confronts a change force that is strong, but declining. The revitalization path is appropriate when resistance that is open to change must be adapted to a strong and growing change force. The renewal path is appropriate when resistance that is open to change must be adapted to a strong, but declining change force. Under these conditions, reducing the resistance usually dampens the change force. The restucturing path is appropriate when a strong and growing change force confronts strong resistance that is closed to change.

When choosing an intervention path on the edge of of a breakpoint, the key is a correct assessment of the forces of change and resistance. If the change force is strong and still growing, only the more radical change associated with restructuring and revitalization will be able to adapt the company to the change force. Restructuring will be needed to break the resistance, when the forces of resistance are entrenched and closed to change. In the cases where the organization is open to change, the resistance can be reduced gradually to initiate a corporate turning point followed by an all-encompassing revitalization.

If the change force is strong, but declining, then the less radical change associated with renewal or resistance will be appropriate. Putting the company through more radical change would be counterproductive.

The main characteristics of a chosen intervention path are the scope and pace of change and the approach to closing the competence gap. The pace of change reflects the time needed to complete the intervention; whether it occurs in a sudden jump or via ongoing adaptation. The type of resistance its crucial in determining the speed with which the change process can be accomplished. A dramatic restructuring of strategies, structures, processes and systems can be implemented rather quickly within a few months, because it does not attempt to change behavior or skills. Whenever old habits have to discarded and replaced by new skills and behavior to be learned, the change process can take years.

Picking an intervention path that is not consistent with the interplay between forces and resistance can lead to disaster. For example, attempting a resistance path in an environment where increased resistance results in stronger forces of change will put the company face to face with a breakpoint it can not possibly manage.

Applicability to Business Reengineering Projects

The Breakpoint approach is applicable to large scope Business Reengineering projects, where external resistant forces are important variables for the design of new work-processes. The approach combines breakthrough with incremental thinking, taking management to accept, that organizational change may never be over. As General Electric Corp. Chief Executive Officer Jack Welch asserts (Welch, 1994):

"I am convinced that if the rate of change within an organization is less than the rate of the change outside, the end for the company is in sight"

IM 10: The Learning Organization

Objective

Learning Organizations are organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together (Senge, 1990). For Senge, collaborative learning is central to successful organizational change. He defines personal mastery, systems thinking, the right mental models, shared vision and team based learning as the core five disciplines, required to build a Learning Organization. A number of strategies and tools have been developed, to drive building a Learning Organization (Senge/Roberts/Ross/Smith/Kleiner, 1994). Karen E. Watkins and Victoria J. Marsick devised a pathway of creating a Learning Organization (Watkins/Marsick, 1993). An important segment of their approach is overcoming barriers to learning.

Interventions

According to Watkins/Marsick, the barriers to learning break into truncated learning, learned helplessness, and tunnel vision.

Overcome Truncated Learning

Many organizations plan training and learning, but never get around to full execution. Training sessions alone don`t guarantee their application in real life. Sometimes management does not want people to actually put through, what they have heard. To overcome truncated learning it is important, to let learning take place and to let people actually try out the methods and techniques, they have learned. People must have the chance, to go beyond their original job descriptions and apply, what they have learned. This is the only solution to avoid truncated learning.

Overcome Learned Helplessness

People learn helplessness when efforts at taking control meet with resistance or even punishment. Individuals and and teams sit quietly, until changes blow over, and in so doing, guarantee a self-fulfilling prophecy, that people will not change. Individuals can unlearn helplessness through training, changes in reward systems, and redesign of work. Management must let people grow into new responsibilities and not take over control, in an attempt to save the organization from passivity of their learning members. The organization must attend to environmental factors that inhibit initiative and reward passivity.

Overcome Tunnel Vision

Tunnel vision is an inability to see oneself and a change situation from a systems perspective. People are often not aware of the whole picture. They tend to react blindly, without fully considering the source of a problem, or they become frozen into a situation, because of the overwhelming complexity. When a supervisor is held accountable for the work of subordinates while at the same time the supervisor`s manager is held accountable for that supervisor`s results, neither is truly responsible. A tool to overcome tunnel vision is, to hold people responsible for what they can actually influence.

Applicability to Business Reengineering Projects

The concept of the Learning Organization is highly supportive to the objectives of Business Reengineering projects. People have to take on new responsibilities, managers have to change their leadership styles. These challenges can be met, by true learning.

4.3.6. Selected Practitioner Interventions

IM 11: Work Out

Objective

General Electric Corporation (GE) is a showcase for successful organizational change. In the late 1980`s noted GE chief executive officer Jack Welch revolutionized the structure and processes of GE (Tichy, 1993). During the project more than 170.000 people at GE lost their jobs. This was the price to pay for a massive revitalization of this former sleeping giant. To grasp an idea of the extent of change at GE, Harvard Business School professor and GE consultant Len Schlesinger called the GE project "one of the biggest planned efforts to alter people`s behavior since Mao`s Cultural Revolution". The objective was, to eliminate bureaucracy at GE altogether, shatter hierarchy and to introduce processes serving nobody but the customer. This project is still underway. GE is still in the process revolutionizing itself. Work-Out, as the intervention method is being called, has four major goals (Tichy, 1993):

Building Trust: GEers at all levels had to discover that they could speak out candidly, without jeopardizing their careers. Only then would GE get the benefits of its employee`s best ideas.

 

Empowering employees: The people closest to any given task usually know more about it than their so-called superiors. To be able to tap worker`s knowledge and emotional energy, they have to be granted much more power. In return, it is expected that they take on more responsibility.

 

Elimination of unnecessary work: The quest for higher productivity is only one reason for pushing this goal. Another is the need to provide some relief for overstressed workers. This also serves to generate worker enthusiasm for the intervention.

 

Boundaryless organization: The whole organization redefines itself.

 

Intervention

The Intervention of work-out is based on Jack Welch`s conviction, that organizational revolutions are predictable. The pain, the resistance, the breakthroughs and joys of successful passage from one phase to another can be understood and mastered. At General Electric several dozen leaders sought to radically transform the culture. Jack Welch gathered them and came to symbolize their ideas but they all acted as individuals. Inevitably there are antagonists - people who hold tightly to the old ways. The struggle to change involves not just these two opposing groups but thousands of people. They all must deal with grief and deep feelings of loss as the old ways they know disappear.

Act I: Awakening

Waking up the organization to the need for change is the most emotionally aspect of a revolution. The protagonists have to shake up the status quo enough to release the emotional energy for the revolution. Act I requires two steps:

Step 1: Create a Feeling of Urgency

Step 2: Deal with Resistance

To fight resistance, Jack Welch set up two premises:

(1) The chain of command is where much of the resistance resides because people`s vested interests are at stake. Therefore it is required to:

- Stir up the total populace and begin developing new leaders for the new regime.

- Create a new set of values and templates.

- Invent mechanisms for socializing the work force.

(2) Revolutionaries overturn the current system and replace it with one of their own devising. They do not rely on the chain of command to bring about quantum change - they grab the police, media and education system. This is what Jack Welch did.

Act II: Envisioning

This is the act of the revolutionary drama where emotions becomes more positive, where frustrations and fears get channeled in new and exciting directions. The purpose of the revolution comes into focus. Revolutions requires emotionally exciting visions. The visioning process is a creative, often chaotic, multiple iteration process. A vision is a group effort. The visioning process has to involve as many people as possible, think out loud and get feedback from many different stakeholders. This visioning process breaks into several steps:

Step 1: Preparation for the Vision

Step 2: Get down to the Nature of the Visioning Process

Step 3: Create the Vision

The vision holds a company together. It is a set of shared values and human networks.

Act III: Rearchitecturing

The third act covers the art and practice of redesigning and rebuilding the organization. Architecture is creative; it involves concepts and design as well as the practicability of the new structure. Rearchitecturing breaks into the following steps:

Step 1: Access the Company on Boundarylessness

Step 2. Social Architecture at the Top of the Company

Step 3. Companywide Involvement in the Organizational Revolution

Step 4: Launching a Work-Out Effort

Step 5: Set-up of Human Resource Systems to Support the Vision.

Table 4.3.6./1 lists workshops designed to introduce the work-out change model to the employees and the management of a company (Tichy, 1993).

Workshops for Work-Out Change Agents

Workshops that are aimed at developing change agent skills and techniques, leadership concepts and skills, and helping participants to gain the total organization picture are an important part of the work-out change model.

Workshop I: Facilitation Skills Workshop

Group Dynamics/Group Development

Role of the Process Facilitator

Range of Facilitative Interventions

Facilitating Work-Out Team Meetings

Facilitation Lab

 

Workshop II: Process Leadership Workshop

Transformational Leadership

Work-Out and Business Process Management

Team Development

Process Consultation

Role of the Change Agent

Application Planning

 

Workshop III: Organizational Systems Workshop

Systems View of Organizational Change

Organizational Analysis & Diagnosis

Managing Conflict & Increasing Influence

Leading in a Boundaryless Organization

 

Table 4.3.6./1 Workshops Designed to Introduce the Work-Out Change Model

Applicability to Business Reengineering Projects

The Work-Out approach is a relevant and practical method to introduce lasting change in organizations. Key to the intervention model is the empowerment technique for employees, allowing them to freely discuss their ideas and solutions with superiors, without having to fear punishment.

The model poses some concern regarding resistance by middle management. Members of middle management may fear to be made redundant by the link of interests between top-management and the lower level echelon. This seems to be the only restriction to the applicability of this approach within Business Reengineering efforts.

IM 12: Working with Resistance

Objective

There are many potential benefits of learning to work with resistance, rather than against it (Maurer, 1996):

Using the force of resistance can increase the success rate and speed the time it takes to implement a new idea.

Showing respect toward those who resist builds strong relationships, not only improving the change at hand but providing a solid base for future changes.

Working with resistance increases the likelihood that all parties can meet at least some of their goals.

The voice of resistance keeps the initiators and managers of change to take untimely or foolish action.

 

Figure 4.3.6./1 shows the polarity dynamics of working with resistance.

 

 

Figure 4.3.6./1 Polarity Dynamics

 

Johnson developed the method of polarity management, to present a way of always dealing with the whole picture in complex problem situations, such as organizational change (Johnson, 1992). Figure 4.3.6./1 indicates polarities regarding individual and team work. If the management of an organizations plans to implement teamwork, than it would present the positive aspects of teamwork (designated with R+) and the downside of individual isolation (L-). Resisters would (covertly) move along L+ and R-. Traditionally this dilemma would be solved by power plays.

 

Polarity management suggests, to put all quadrants open on the Table and have change initiators and resisters agree on both upsides and forget about the downsides. To achieve the upsides of both individual work environments and team work is the solution.

 

Intervention

Practice polarity management between the proponents and resisters of change.

 

Any change process needs to take into account the needs, attitudes, and beliefs of the individuals involved as well as the forces of the organization. The individual must see some personal benefit to be gained from the change before he or she will be willing to participate in the change process (McCalman/Paton, 1992).

 

The greater the prestige of the supervisor, the greater the influence he can exert for change. However, an unofficial leader with high prestige and influence within the work group can be highly influential in the change process.

 

Strong pressure for change in behavior can be established by providing specific information desired by the group about itself and its behavior. The more central, relevant and meaningful the information, the greater the possibility for change. For example, if properly used, data obtained through a survey questionnaire may be much more meaningful to a particular work group than data about attitudes in general.

 

Strong pressures for change can be established by creating shared perceptions by the group members of the needs for change, thus making the pressure come from within the unit. In particular, the participation in analysis and interpretation helps to reduce or bypass resistance which comes from proceeding either too rapidly or too slowly.

 

The amount of opposition to change is reduced when those people who are to be changed and those who are to exert influence for a change have a strong sense of belonging to the same group. Change which comes from within is much less threatening and creates less opposition than change, which is proposed from the outside.

 

In the matter of change, group togetherness, may operate either to increase or reduce resistance to change, depending on the matter in which the group sees the change as being valuable or harmful.

 

A group that has a continuing psychological meaning to an individual, has more influence than does a group with only temporary membership. Therefore, a change process which involves bringing individuals together, off the job, in temporary groups, has less force for lasting change than those change processes which involve the individual in the immediate job situation.

 

Information relating to the need for change, plans for change, and consequences of change must be shared by all relevant people in the group. A change process ordinarily requires the specific and deliberate opening of communication channels. Blocking these channels usually leads to distrust and hostility. Change processes which provide specific knowledge on the progress to date and specify the criteria against which improvement is to be measured are more successful in establishing and maintaining change than are change procedures which do not provide such specific knowledge and feedback.

 

Applicability to Business Reengineering Projects

This intervention method is highly applicable for dealing with resistance in Business Reengineering project environments. In particular, using polarity management to see the whole picture, as opposed to a partly and biased view, helps considerably to reach consensus in a change situation with emerging barriers.

IM 13: Levers to Minimize Resistance to Change

Objective

Arnold S. Judson suggests, that although there are many forces that influence resistance to a change, management can have the greatest influence on only two aspects of the situation: (a) the extent to which people may be apprehensive about the change; and (b) the manner in which the change is introduced and implemented. To a considerably lesser degree, management might also have some influence on the impact of conflicts with established cultural beliefs and with relevant historical events (Judson, 1996).

Interventions

The following intervention tactics for dealing with resistance to organizational change have been compiled from the works of Judson (Judson, 1996) and Kotter/Schlesinger (Kotter/Schlesinger, 1979).

Compulsion

Compulsion is one way in which an individual can attempt or control the behavior of others. In its primitive form it involves physical coercion. In its sophisticated form it involves the use of power of authority.

Persuasion

Persuasion comes into play, if authority and the threat of punishment are undesirable ways to manage a change (Judson, 1996). The essence of this approach is to convince a person that if she behaves in a manner desired, certain gains (rewards) will follow, gains which will outweigh any losses. To be successful, persuasion depends on management`s ability to perceive a situation from the employee`s viewpoint. Just as the use of power depends on threats (Pfeffer, 1992), so does persuasion depend on the actual or implied promise of rewards. The most promised rewards are financial. When, however, the reasons for resistance are primarily non-economic ? Then persuasion can create problems instead of solving them. Conversely, the use of non-economic rewards to persuade people to accept a change that may adversely affect their earnings is unlikely to succeed. In times of high unemployment this is an immoral practice, some companies resort to. When the reasons for resistance are primarily non-economic, the successful use of persuasion depends on offering non-economic rewards. Certain aspects of work may become less cumbersome, there might be improvement in status, etc. Non-economic rewards are persuasive when the nature of the reward is made relevant to the specific reason for resistance, and when the promise of the reward can be realistically fulfilled.

Safety

How an employee`s security is either threatened or ensured in a changing situation is a factor that both has a great influence on resistance. The most significant fear is often that of redundancy. Fear of redundancy can result from any of several assumptions that a person might make when facing a change. Elimination of job might be one assumption. Whatever assumption may drive fear of redundancy, intensive resistance to change can result.

Understanding

How much people understand about a changing situation is a significant and controllable lever. Just as a manager must understand what is going on, so must those affected, understand.

What has to be understood is provided through education and facilitation (Table 4.3.6./2).

What specific long-term objective are to be accomplished ?

What specific short-term objective are to be accomplished ?

What need is there for these objective to be accomplished and why ?

Why is there any need for change ? For this change in particular ?

What is to be changed ?

How is it to be changed ?

When is the change to be initially introduced ?

How long will it take for the change to be fully implemented and made operational ?

Who is to be involved ?

What will the situation be after the change ?

What are the potential benefits that might be gained from the change, and who will benefit ?

 

Table 4.3.6./2 Questions for Understanding Change

Ensuring that everyone involved in a change understands everything about it is a powerful lever for managers to transform resistance into support. Conversely knowledge vacuum will be filled by conjectures and false assumptions and ultimately create resistance. Thus developing understanding is a key lever in achieving changes in behavior. Table 4.3.6./3 indicates tactics to reduce barriers to understanding (Connor/Lake, 1994).

Table 4.3.6./3 Reducing Barriers to Understanding

Time

Time is a significant and controllable lever in any change situation. Judson considers three periods of time important: (1) The interval between first announcement that a change is going to occur and its actual start; (2) the interval between the start of the change and the completion of its initial implementation; and (3) the interval between the implementation and its institutionalization into day-to-day operations.

In the initial phase, slow movement is less threatening than fast pace. This is so, because people get used to an idea, when they have sufficient time to think about it. Also associated with this is the process of rationalization. People try to find ways to justify why they should comply with a change. Partly, to protect themselves from the discomfort of conflict and anxiety. It is also the time for questions and expressing concerns. Management has to take time for answering questions. Most people tend to react in a strongly negative way when they feel that they are being compelled to do something. On the other hand, there comes one point, where it is advisable to bring the dialogue to an end and move on. Also to stop worrying of the people that might build up hostility and resentment.

The second phase calls for rapid pace. Also a piecemeal fashion is not advisable, since a change carried out in a piecemeal fashion often yields diminished benefits because it is difficult for management to consider at any one time all the implications and ramifications of the change as a whole. They are less able to plan effectively.

In the last phase of the change, the time required can vary widely, depending on the nature of the change. It is mandatory, that management`s focus is on providing employees with the encouragement and support necessary to ensure that they are motivated to work toward realizing the full benefits of the change. This can be achieved by defining performance in context of the change and establishing and applying appropriate performance measures that will drive continuous improvement.

Participation and Involvement

Most people welcome the opportunity to take part in making decisions that affect them directly. By taking advantage of such opportunities, interest in work is increased. Involvement means, that people do no longer feel that something is being done to them. Instead they feel that this change is being accomplished by them. Thus, the lever available to management is the offer of opportunities to participate actively in shaping both the nature of the change and the manner in which it is carried out. Another result of personal involvement in making some of the decisions about a change is that the individual feels some commitment to carry out the decision. There is a feeling of shared responsibility. When a group is involved, even a resisting individual is under strong pressure from others, to implement the change. The greater the extent of personal involvement in making some of the decisions about a change, the less will be any resistance. To not loose time in a change effort though, Lawrence advises, that participation, to be of value, must be based on a search for ideas that are seen as truly relevant to the change under consideration (Lawrence, 1969).

Criticism

In any change, there is an implied criticism of the past or current situation. Otherwise, why change ? Employees may feel criticized. They may believe that the change was introduced because their work was insufficiently carried out. The greater the personal criticism, the greater is the resistance. Management`s lever in this area is to deliberately avoid any appearance of personal criticism.

Flexibility

When most people are confronted by an impeding change which they regard as inexorable and irrevocable, their feelings of helplessness increase. They may feel that it is futile to voice any fears or reservations. Their frustration may be further increased by their view that management has little apparent sensitivity toward or concern for their needs and desires. They resort to resistance. On the other hand, if a person feels that she has some influence on the change, she will be more positive toward it. Therefore management has to flexibly incorporate ideas and suggestions, employees develop on their own.

Negotiation and Agreement

Where someone or a group will clearly lose out in a change, and where that group has considerable power to resist, negotiation to reach an agreement, might be the right strategy. Sometimes it is a relatively easy way to avoid major resistance to change. It may turn out to be too expensive, if the agreement reached alerts others to negotiate for compliance.

Applicability to Business Reengineering Projects

The intervention levers presented above are highly relevant to Business Reengineering change.

They fall into the general classification of strategies for changing (Chin/Benne, 1989).

Table 4.3.6./4 indicates this classification.

Table 4.3.6./4 Classification of Interventions to Resistance

Empirical-rational change strategies and related intervention levers are based on the assumption, that people are rational and will follow their rational self interest, once this is revealed to them. This approach is compatible to Business Reengineering linear implementation logic.

Normative re-educative change strategies and related intervention levers build upon assumptions about different human motivation. The rationality of humans are not denied. Change in a pattern of practice will occur only as the persons involved are brought to change their normative orientations to old patterns and develop commitments to new ones. Communication and education are key. These strategies take time, but typically yield good results in Business Reengineering settings.

Power-coercive change strategies and related intervention levers are based on the application of power in some form. The influence process involved is basically that of compliance of those with less power to the plans, directions and leadership of those with greater power. These strategies can be risky, because they often leave people mad at the initiators. In Business Reengineering practice these strategies are often used and often fail.

IM 14: Aligning Reward Systems

Objective

Organizational Change is effected by people. If people don`t change their behaviors, then there will be no change. Thus, the task of a change manager is, to get people to behave in new ways, which support the change objectives. Practitioners use the term motivation, to broadly describe all efforts to help (often push) people to move in a pre-conceived direction. There are two schools of thought regarding motivational tools and methods: Intrinsic vs. extrinsic. Intrinsic motivation describes the value of the task and the goals to the indiviual. The concept of Flow (IM 2) is the correct representation of intrinsic motivation. Extrinsic motivation describes using rewards to effect a certain behavior. A reward is something that is perceived desirable by the recipient and is obtained as a result of some action (McCoy, 1992). In order to be perceived positive, a reward must fill a certain need. Because each employee has different needs, no single reward is deemed equally positive by all employees. Alfie Kohn claims, that rewards do not motivate people, but motivate people to get rewards. Which allegedly turns people`s heads away from the intrinsic reinforcement (Kohn, 1993). There is disagreement, whether particularly monetary rewards are the right incentives or recognitions to make people behave in a wanted fashion, or to reinforce this behavior. There is a fair amount of ideology attached to this, the author refrains from getting into.

Regardless of this controversy, many practitioners agree, that employees tend to do, what they are being monetarily rewarded for. For example, if an employee is honored by his individual work results, independent of her team`s results, she will not necessarily support the team`s success, if that would adversely affect her income. To increase team-work, one answer is to link team-member`s income not only to her personal, but also to team-performance. In the author`s opinion, pay systems have to be aligned to the change task. Additionally, non-monetary rewards (such as travel incentives, etc.) can additionally be used to influence people`s behavior.

Traditional pay programs often have become cash distribution systems, or are in conflict with change systems, and do not really reward performance anymore (Wilson, 1994): Base pay in many organizations has become a fixed "show-up-pay. Merit Pay is the traditional annual increase, often connected to promotions. Both affect negative emotions, when they are cut. Equity-related programs are only of value, when they are substantive, and some managers have grown to expect and live on their management bonuses. Employees know, that their pay has more to do with employment history and status, than with their performance. Consequently, pay systems have to be reshaped to really serve the needs of the drastically changing organization (Wilson, 1994):

"Reward systems need to have a positive impact on behavior, they need to focus efforts on serving the customer, and need to enhance collaboration within the work-place"

Intervention

Basic Criteria

Table 4.3.6./5 shows the basic criteria for a performance oriented pay system (Wilson, 1994).

Table 4.3.6./5 Basic Criteria for Pay Systems

Reward Strategy

It is important to understand the organization`s strategic success factors, which are being brought forward by a change initiative. These should be translated into types of behaviors required of people in the organization. Then pay systems should be devised, that reflect the business strategies of the firm. It is important, to establish new pay systems as one of the first steps of the change process.

Base Salary Reflects Values and Competency

The purpose of the base pay system is to enable the company to acquire and retain the human capabilities it needs, to perform its business. Available skills and skill development should be honored with the base salary, which reflects the individual contributions to the know-how of the organization. This system breeds permanent learning and competitiveness.

Variable Compensation Reflects Economic Results and Collaboration

The fundamental purpose of the variable pay system is to create a share in the success of the team and the organization. Both the individual and the organization win through this understanding. The measures should be targeted on meeting customer needs and improving performance. Thus, new variable compensation systems help to build closer relationships within the organization, within teams and ultimately to customers. As Eli Goldratt puts it "Tell me how you measure me and I`ll tell you how I will perform. If you measure me in an illogical way...Do not complain about illogical behavior."

Performance Management Reflects the New Role of Human Resources

In the old order, the Human Resources (HR) - department was responsible for assessing the performance of individual employees. This, often annual, task was shared with managers of the department, the employee was part of. The attendants of these review-sessions often did not know each other well enough. In the new order, performance management is carried out by the people being in close contact. Fast reliable feedback is key to changing one`s perspective of performance, and building trust. Tools are available to help "360 Degree-Assessments" of behavior and performance, for example the Multifactor Leadership Questionnaire (MLP), available from www. surveycompany.com/pr02.htm. This changes the role of the HR-department tremendously: From administering personnel, to attracting and supporting good people, working in teams (Schumacher, 1995/1).

Applicability to Business Reengineering Projects

The redesign of the reward system should be a mandatory step within a Business Reengineering project. It immediately focuses everybody on what is important for the future. There are potential roadblocks, though. If the new pay structures cut back individual income, if discussions about the new pay system lingers on and takes away the energies for the project. It is the author`s experience, to quickly design the new pay system, explain it thoroughly, put it up fast, as soon as the new business systems have been installed, and get people to work in the new orders. Behaviors in the right direction will fall in place, unless the pay system has not been crafted carefully enough to generate high-performance.

4.4. Conclusion

The review of Change Management models, relevant to Business Reengineering, yielded a considerable amount of intervention strategies and techniques, that can be applied to work with and overcome Business Reengineering barriers. This helps to transform the traditional project management approach (chapter 2) into system oriented un-traditional approaches to Business Reengineering, which cover people and technical aspects. This will presumably increase the success rate of Business Reengineering implementation efforts. Table 4.4./1 lists the characteristics of the un-traditional approach to Business Reengineering.

Beliefs and Assumptions

Resistance is a natural part of any change.

The only effective way to deal with resistance is to invite and work with those who resist.

Change never ends. Today`s support causes the seeds of tomorrow`s dissatisfaction. And today`s resistance carries the seeds of tomorrow`s support.

 

Typical Behaviors

Engage others, finding ways to learn from those who resist and looking for ways to find common ground and join forces with them.

 

Probable Results

Builds excitement for the change.

Builds relationships and a foundation for future change.

Opportunity for creative solutions where most enjoy some benefit.

Keeps us from making decisions without full information.

 

Table 4.4./1 The Un-Traditional Approach to Business Reengineering

The un-traditional approach to Business Reengineering is applying normative re-educative and empirical-rational change strategies and related interventions to project management. These are not in line with power-coercive approaches applied in many Business Reengineering cases. In the authors opinion, the only valid reason for managers to apply power-coercive strategies and related intervention techniques to Business Reengineering projects, is given in those cases, when time runs out for a company:

For example when the financing bank withdraws credit limits and immediate management action is required to save the company from having to file for bankruptcy. The question remains, whether this is a case of Business Reengineering, or rather a case of financial crisis management.

It is the task of external consultants, to help management to take the un-traditional approach to Business Reengineering. Consultants should use their experience and clout to help oversee the whole picture and direct the efforts of all persons involved towards the overall goal. In particular, the consultant should be influential in such a way that he makes sure, no element of the system is living up to the expense of others. On the other hand, the consultant has to point management towards problem areas. Often management is the problem. Managers are responsible for the old way, which they are planning to overcome, using Business Reengineering. Thus the real independent consultant should always be prepared to be force-leaved the company. She is to refrain from manipulating people for the sake of her income, which she receives from management, not from the people affected by the organizational change. The un-traditional approach to Business Reengineering requires a new leadership style for managers leading the change. Konosuke Matsushita Professor of Leadership at Harvard University, John Kotter, remarks (Kotter, 1995):

"Success in managerial jobs increasingly requires leadership, not just good management. Even at lower levels in firms, the inability to lead is hurting both corporate performance and individual careers. Organizations, that stifle leadership from employees are no longer winning."

Table 4.4./2. describes a ladder of seven levels, a manager may position herself in terms of leadership skills acquired and practiced. She should immediately start to move up the ladder to effective leadership in a team environment (Labach, 1994).

Table 4.4./2 The Ladder of Leadership Skills

The first and the second rung on the the ladder of leadership are highly critical regarding the abilities of the resp. managers, to make real change happen. Managers at this stage, which are not able to change themselves, should be taken out of the responsibility to lead people. It is the task of the change agent, to effect proper assessments.

Up to the fourth rung transactional leadership prevails, i.e. leaders guide their followers in the direction of established goals by clarifying roles and task requirements. The following rungs evolve around transformational leadership, i.e. charismatic leaders provide individualized considerations and intellectual stimulation to collaborators, who are valued peers.

The highest rung of the ladder is about the visionary. The manager, who has climbed that far, is leaving a problem-driven management-style behind. In vision-driven leadership, problems are seen as opportunities, to transform oneself and the organization towards a vision of the future. It is important to understand, that visionaries don`t separate between personal and organizational vision anymore, they impersonate the vision (Bennis/Parikh/Lessem, 1994). It is the task of the change agent to see to it, that the visionary does not forget to take with him the rest of the organization to the envisioned future state. Coaching skills (IM 3) have to be applied by the change agent to facilitate the process of having managers climbing up the ladder of leadership skills. This is the touchstone of success for a change agent. Most importantly though, is that managers develop into true leaders, because (Donnithorne, 1993):

"Leaders of character build organizations of character".

Related Reengineering Resources

Reengineering Best Practices
Reengineering Toolkits and Document Templates
Business Process Reengineering Implementation
Change Management Strategies and Action Planning
Process Management and Improvement

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