Managing Your Organization Through Change
by Ellen Stuhlmann

Managing an organization through fundamental behavior change is one of the most difficult management challenges an executive can face. Why do change efforts often fail and how does a successful agent of change manage himself or herself through the period of change?

One of the most important principles for successfully implementing behavior-based change is keeping "performance results the primary objective of behavior and skill change," says change guru Douglas K. Smith, author of the book, Taking Charge of Change, 10 Principles for Managing People and Performance.

In behavior-driven change - or change that requires a significant number of people to change the way they perform their jobs - this means establishing goals based on outcomes or performance rather than on activities.

Outcomes vs. activities

Focusing on activities is a natural mistake many executives make, says Smith. For example, if you want to quit smoking, you might focus on activities such as buying a nicotine patch or hiding ashtrays. If you instead focus on outcomes, such as "cutting back to three cigarettes per day by next week" or "cutting back to no cigarettes in seven days," the likelihood is much greater that you will actually change your behavior.

It's a simple, but crucial distinction and one that applies in business change as well. For example, a customer service team setting outcome-focused goals would pick a short-term outcome that achieves an improvement in customer service, Smith says. Say the change is to increase satisfaction of customer inquiries in a shorter time. The goal might be: "In the next six weeks for customers between the ages of 40 to 50 years old, we are going to satisfy their inquiry on the first call, 90 percent of the time and we are going to do it in ten minutes or less," Smith explains.

In this way the customer service team can focus on the specific activities that are needed to achieve a stated outcome. Without the outcome in mind though, they will be unable to measure their performance and unable to meet meaningful goals.

Getting others to take responsibility

Once you have established outcomes related to the required change, you still face the daunting task of actually changing the behaviors of those within the organization. This is no small feat. No matter how well the change is defined and how committed the change agent is, he or she cannot succeed without getting others to take responsibility for changing their own behaviors, Smith warns.

So how do you do it? You must ask yourself "How do I work with others to increase the number of people taking responsibility for their own change," says Smith.

The first step is identifying people who matter. "Find pockets of people and get them to do it. Get them to take responsibility," Smith advises.

This is not an all-at-once proposition. The number of people you enlist to help will start small and grow daily, says Smith.

Getting direct reports to take responsibility for change for most executives usually is a matter of working through the chain of command.

For Keith Stein, Chairman and CEO of sub-prime lender National Auto Finance Company Inc. (NAFI), working through the chain of command meant getting department heads to constantly reinforce the message from the top. Stein joined NAFI in 1998 and was charged with turning around a company deep in financial distress. The turnaround required ousting the CEO and CFO and shoring up relations with outside auditors and customers, but it also meant consolidating facilities and installing a completely new untested hardware and software system, Stein says. In short, implementing massive change.

Stein immediately set out to develop a detailed plan of action that could be specifically and deliberately communicated within the organization, "so that there were no mixed messages and a very clear path," he says.

With the CEO and CFO gone, Stein quickly elevated one of the next most senior executives "who was more capable and more of a cheerleader," in order to help implement the new plan. But one cheerleader would not be enough to steer the company through the turmoil. At NAFI, Stein himself took a prominent role in articulating the change to employees - usually in meetings with the entire 200 person staff. However, following such meetings, division heads were charged with "making sure the message continues to be delivered and refined to their division's specific needs," Stein explains. "So I would tell everyone what needs to change and how it needs to be done and then the division heads would explain what that meant for each division. Then we would start the process of change," says Stein.

In the two years the company has undergone massive change, including moving its operation to another city and implementing an entirely new hardware and software system for its call center. While NAFI has yet to achieve profitability, there are significant marks of improvement: turnover in the servicing and collections division is less than 10 percent - far below the 15 percent industry average. And, despite being on the brink of bankruptcy, NAFI only lost one of its ten executives in the past two years, Stein says.

A tougher sell

It is harder, of course, to garner the support of those not in your direct line of command. But it can be done, Smith says. There are several approaches: getting employees to volunteer; persuading high-level executives to force those in their chain of command to take responsibility; establishing teams; or using a practice Smith calls "exchange."

Exchange is perhaps the most sophisticated concept of the four approaches to getting others to take responsibility for their own behavioral change. This method involves offering a valuable resource in exchange for their commitment to implementing change. The trick: the resource must be perceived as valuable.

If you can create a resource that is attractive -- for example, a training program to teach new skills -- and then market that resource effectively, you can offer it in exchange for their commitment to change. Participation must be restricted only to those willing to apply the program and then commit to certain performance-based goals.

To succeed, the program must be marketed as a desirable resource. For example, the selling point might be that the employee will become an expert in a certain area, improve his or her career opportunities or enhance his or her skills.

"You have to market the resource like a product and limit access to people who will pay you a 'price' in terms of performance commitment," says Smith. Limited access creates demand. "It is a sophisticated notion, but unbelievably powerful and one that staff groups almost have to use," he says.

The initial result is creation of a small core group of people committed to performance-based goals. As word of their successes spreads, the number of people taking responsibility for change rises. While it's not the only ingredient in a successful change effort, garnering the commitment of others is one of the more crucial elements of successfully implementing change.

The following 10 principles are crucial to the success of change efforts, Smith says in his book Taking Charge of Change, 10 Principles for Managing People and Performance.

The Management Principles

  • Keep performance results the primary objective of behavior and skill change.
  • Continually increase the number of individuals taking responsibility for their own change.
  • Ensure each person always knows why his or her performance and change matters to the purpose and results of the whole organization.
  • Put people in a position to learn by doing and provide them the information and support needed just in time to perform.
  • Embrace improvisation as the best path to both performance and change.
  • Use team performance to drive change whenever demanded.
  • Concentrate organization designs on the work people do, not the decision-making authority they have.
  • Create and focus energy and meaningful language because they are the scarcest resources during periods of change.
  • Stimulate and sustain behavior-driven change by harmonizing initiatives throughout the organization.
  • Practice leadership based on the courage to live the change you wish to bring about.

Smith's books explore the 10 principles for managing people and performance and understanding performance-based goals. Taking Charge of Change, 10 Principles for Managing People and Performance and Make Success Measurable: A Mindbook-Workbook for Setting Goals and Taking Action are ExecuNet recommended resources.

The book covers link to Douglas K. Smith's books at Barnes and Noble


Ellen Stuhlmann is Managing Director of ExecuNet. ExecuNet is recognized as the Internet's most comprehensive resource for effective career management, exclusively for executives and senior-level managers with salaries above $100,000. Founded in 1988 and online since 1995, ExecuNet is the nation's first and most respected online executive career site. ExecuNet is a community of senior level executives, and has served more than 50,000 executives and 5,000 companies and executive recruiters by posting more than 30,000 executive positions annually.

Reproduced with permission of ExecuNet.

Articles by Ellen Stuhlmann and Keith Stein featured in The CEO Refresher | Many more articles in Executive Performance in The CEO Refresher Archives

   


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