1. March–April 2009
M A N A G E M E N T PART II. MANAGING CHANGE: WINNING HEARTS AND MINDS If market intelligence on your
low-cost competitors shows they
A Change Management Toolkit have gained the manufacturing
know-how to win market share
By Jayme Alexandre Dias de Lima, Associate Consultant, Symnetics/Brazil in the near term—and your organ-
In Part I (BSR January–February 2009) Jayme de Lima ization is now more vulnerable
owing to reduced R&D or an
explored common reactions to change, drawing upon semi-
imminent patent expiration—share
nal behavioral and management literature. He also offered these projections and scenarios
communication tips to minimize employee resistance and with managers at all levels. If
maximize support. Here, he offers a short list of proven tools your industry is undergoing global
P E R F O R M A N C E
and practices—both “carrot” and “stick” approaches—that consolidation, you can alert the
can help your transformation take root. workforce that you all face an
Instill a Sense of Urgency— urgency is important even if your “expand or be acquired” scenario.
in Good Times and Bad company is presently healthy. To Invoke customer survey
maintain competitive advantage results… Even if your organiza-
The best way to impress on
and succeed in today’s dynamic tion is hitting its financial targets,
employees the need for change is
business environment, most organ- that doesn’t mean all’s well. Cus-
to push them out of their comfort
izations must keep an eye to the tomer surveys may show steadily
zone—condition them for crisis.
future and try to anticipate market decreasing customer satisfaction
Make employees understand
and competitors’ movements as levels. The message: “It’s only a
that if they continue to operate
well as political, economic, and matter of time before these levels
in a business-as-usual fashion,
legal trends. To seize employees’ are reflected in our financial per-
the organization’s future may be
attention and make the case for formance.”
endangered. As leadership expert
change, leaders can use some of
John Kotter noted, citing the advice … and customer requirements
the following techniques to convey
of a former European CEO, exec- that carry weight. Does a major
that maintaining the status quo may
utives should “make the status customer have new specifications
well lead to a not-so-bright future.
quo seem more dangerous than you must meet to do business
launching into the unknown.”1 Use benchmarks to show that with it? A company I once worked
Beyond that, people tend to competitors are outperforming for was undergoing its audit to
develop team spirit and collabo- your company. Benchmarks are obtain ISO 9000 recertification.
rate best during a crisis, so effective in jolting people out The company was performing
invoking a sense of urgency of their comfort zone. Offer well, but wanted to impress on
helps unify employees. examples of excellence (either employees the need to work hard
from within your company or to correct the internal processes to
Today’s turbulent economy
from competitors) to illustrate meet ISO 9000 requirements. The
has already conditioned many
current performance gaps—and quality manager communicated
employees for crisis, even those
help executives and employees that if the company lost its certifi-
whose companies are sound.
alike see the organization in a cation, it could not sell anything
That doesn’t mean leaders should
broader perspective. to its largest customer, which rep-
rely on fear to motivate employ-
ees about a change program. Present long-term projections resented 40% of annual revenues—
Experts suggest sharing facts with and leading indicator analy- and which required all its suppliers
employees—industry statistics ses to fortify the case for change. to be ISO 9000 certified. Commu-
and financial performance data— Use data to explain, for example, nicating this risk mobilized every-
to demonstrate that adhering to “If we don’t change this techno- one involved to get the job done.
the status quo may represent the logy platform, in a couple of Emphasize the urgency of
greatest threat to the company’s years we won’t be able to pro- seizing opportunity. Perhaps a
prospects. Facts don’t merely duce as fast as we do now, and competitor has exited a lucrative
strengthen your argument; the we won’t be able to support new part of the market, or a new
act of sharing information that product development. That will customer segment arises, one
typically only senior managers erode our market share, cause that represents potentially signifi-
may see conveys respect to sales to decrease, and prevent cant new revenues. Perhaps top
employees. That, in turn, pro- the company from achieving our management is exploring broad-
motes their emotional investment near-term ROI goals.” Employees ening the product portfolio to
in the change program. can relate to the ultimate conse- take advantage of commercial
quences: budget cuts and layoffs. synergies (say, an oil company
But we believe instilling a sense of
15

2. Balanced Scorecard Report
responding to the increasing Consider the example of an C O M I N G U P I N B S R
global demand for alternative organization that decides to switch
energy sources by investing in its customer focus from the David Norton on how to achieve an
biofuels). Whatever the potential wholesale segment to the end- Execution Premium in tough times
opportunity, leaders should make user. Without educating employ- Improving organizational focus to enable
employees aware of it. They ees about the specific needs of decision making: the strategic transformation
should explain how the organiza- this segment and how to sell to at New York City’s St. Vincent’s Hospital
tion (and consequently the it, you might create resistance. Performance measurement expert and
employees) will benefit, and what Once employees are trained on author Mark Graham Brown on the ten
is necessary to get it accomplished. the sales dynamic for the end- metrics most often missing from the BSC
user customer, they can more
Emphasize the Benefits An analysis of Merck’s change
readily embrace the change. management program
Associated with the Change
Clarify what the organization Palladium Group CEO David Friend on
People must clearly understand expects of employees’ perfor- the top 10 ways to make better decisions—
the rewards for changing, whether mance in the new environment— and make decisions better
that means expanding into global in general as well as specific
markets or simply surviving a terms, according to the audience.
rough marketplace. Managers Leaders at all levels must commu- Problems can be identified as
must therefore learn the specific nicate that the old ways will no they first emerge, allowing for
concerns of each group in order longer be accepted. prompt corrective action.2 When
to be more persuasive when milestones are acknowledged
explaining such benefits. The Forge Consensus: Hold along with achievements, people
transformation is designed not “Transition” Forums are reenergized and residual
only to yield financial improve- resistance is worn away. Success
When the change involves groups
ment (sales, profitability, and breeds success.
with different or even antagonistic
share value—and for employees,
viewpoints about executing the
the prospect of better compensa- Cultivate a New Culture
change—say, a business unit and
tion), but also to create intangible
the IT team—interactive forums Real change requires a culture
benefits, such as developing
can help them reach consensus change. Numerous transformation
skills, fostering greater teamwork,
in an orderly, constructive manner. efforts have failed because not
creating a more satisfying work
A neutral facilitator should begin enough attention was given to
environment, and so on. Studies
the proceedings by identifying preventing old ways from resur-
have repeatedly shown that recog-
common goals and establishing facing once a project was imple-
nition and a rewarding work
what each party considers non- mented. The only way to make
environment are as important
negotiable. Each party then change endure is by continually
to employee commitment and
understands the parameters and and vigilantly working at renew-
loyalty as compensation. Leaders
can discuss viable solutions. ing the culture and values that
should be sure to balance the
Forums help validate participants’ support the organization’s new
emphasis on economic (tangible)
positions, motivating them to seek focus. As leadership and change
results with that of “organizational”
compromise, which in turn helps expert Mary Lippitt once noted,
(intangible) results.
keep people focused on achieving “The difficulty is not implementing
Boost Skills—and common goals. People tend to new ideas in people’s minds, but
Performance Expectations leave such meetings more engaged removing the old ones.” 3 Transfor-
and collaboration-minded—and mation is, after all, a process, not
Make training a key part of the they’ve also experienced a mech- an event. I
change program—early on. Train anism they can apply in the 1. John P. Kotter, “Leading Change: Why Transfor-
people so they will be prepared to future to iron out differences. mation Efforts Fail,” Harvard Business Review
(March–April 1995; republished in January 2007).
deal with all the technical changes
that are occurring. Training will Review Milestones Frequently 2. Harold L. Sirkin, Perry Keenan, and Alan Jackson,
“The Hard Side of Change Management,” Harvard
diminish resistance (when people Business Review (October 2005).
According to change management
don’t know how to use the new 3. According to Lippitt, this is a variation of a
authority Harold Sirkin and
tools, systems, or methods, they quote by VISA International founder and holistic
colleagues, a long project that thinker Dee Hock, from his book The Chaordic
tend to resist change). Building Organization: “The problem is never how to get
is reviewed often has a greater
new skills is also motivating: new, innovating thoughts into your mind, but
chance of success than a short how to get the old ones out.”
Product #B09030
employees recognize they count
project that is rarely reviewed.
enough to deserve the investment. Reprint #B0903E
16 To subscribe to Balanced Scorecard Report, call 800.668.6705. Outside the U.S., call 617.783.7474. bsr.harvardbusinessonline.org