As studies show that up to nine in 10 change programmes fail, we present a guide to successfully managing change in your organisation
Change management is big business, accounting for a large chunk of the £48bn spent annually on consulting services around the world. But astonishingly for such a hyped activity, research over the past two years has tended to show a high failure rate, in some surveys as high as 90 per cent.
That is confirmed by a new poll by Cambridge Management Consulting, in which nine out of 10 large European organisations involved in change programmes reported major failings. Most of the 400 senior executives questioned complained of employees digging in their heels against new ideas and methods. About 40 per cent also conceded that management was sometimes to blame for failing to communicate the issues effectively and translate theory into practice.
But, perhaps predictably, many companies were as willing to finger their external advisers as to accept shortcomings closer to home. Nine out of 10 respondents criticised a failure by consultants to tailor solutions to the individual company’s needs, saying they tend only to deal with the rational aspects and not take into account the emotional and behavioural elements of change programmes.
But are consultants really to blame or is this simply an exercise in buck-passing? Consultants themselves tend to believe the problem lies less in the quality of the advice they give, although this may certainly vary, as in the client’s ability to carry it through. Where the consultancy is retained only to design new procedures it cannot fairly be blamed for failing to put them into practice, they argue.
“Clients voice their frustration more in retrospect than at the time, saying we have carried out all the advice we were given but still have the same problems,” says Kevin Cornwell, head of strategic development at Cambridge Management Consulting. “But that’s not the same as saying consultants aren’t doing their job.”
A more legitimate complaint is with consultants who claim to be able to implement change and then don’t deliver, a problem voiced by over half the executives in the poll. But this is not so surprising: Cornwell notes from the research that as few as one company in 10 actually selects a consulting firm on the basis of its ability to change behaviours.
One problem, Cornwell suggests, is that the strategic side tends to be more interesting to directors, who are glad to hobnob with clever consultants and learn new ideas, but tend to see the execution as something that can be handled by lesser minds recruited from within the company itself. That could be a mistake, since the implementation is where most of the problems occur, he argues.
Cornwell also points out that consultants are increasingly developing expertise in carrying through change pro- grammes, an area that Cambridge itself specialises in.
With the current pace of change and the resulting reduction of business cycle times it is artificial to divorce the strategy process from implementation. “The shiny content stuff is very important at the front but you need to balance it with a similar amount of effort putting it into practice,” he says.
Colin Carmichael, partner at the Organisation Consulting Partnership, agrees, pointing out that implementation is less of an issue now than it was 10 years ago. But that doesn’t make the problem go away.
“It’s hard to align people behind the vision of where you are going to: it takes up a lot of time and can be fraught with difficulty,” he says. One obstacle arises where a client company has already been through many cycles of change. “Fad-surfing in the board room has left a number of fairly jaundiced workforces around,” he comments.
Other consultants downplay any negative findings, pointing out that the growth in change management is fuelled by success not failure. Kevin Rubens, Aon Consulting’s senior vice-president for Europe, says: “Typically, if consultants fail they don’t get referral, and that business sector dies out. If you look at the whole explosion in this field that is clearly not the case here.” Where he more often experiences client dissatisfaction is with IT, where expensive systems often take years to start delivering results.
One problem, Rubens argues, is in the fact that large-scale change tends to involve different functions, each being advised by its own consultants. “They are never quite in sync,” he says. “You finish designing your business model only to find the competency model doesn’t work, and by the time you finish that you have to go back and redesign your processes.” To counter this, Aon has developed a method of integrating three workstreams, coordinating work on business processes, individual job activities and employees’ attitudes, a methodology it is currently using with MFI Homeworks.
A key step for companies is to recognise that carrying out change involves a separate set of skills to designing new strategy. For instance, Celemi uses business simulation models not just to inform employees about changes but to explain the rationale behind them. Recently it helped ICL with a project aimed at creating a cohesive workforce out of the several different companies that had amalgamated over the years. That was achieved through visual learning methods that were applied to most of the company’s 22,000 employees.
So confident was Celemi of success that it proposed not only to link the fee to the outcome, but to surrender any say in establishing the criteria. An independent occupational psychologist determined that the best that could be achieved in the circumstances would be a 75 per cent shift of behaviour and attitude. But when her questionnaire was applied it was found that over 96 per cent of the employees had passed on crucial indicators that demonstrated an understanding of ICL’s new goals and vision.
The reason change programmes fail is because companies don’t grasp the need to engage employees in learning, argues Ian Windle, managing director of Celemi UK. He thinks there are few firms that take this approach to reinforcing change, although it is becoming more common in the US. “Employees have to understand the rationale behind any new strategy,” he says. “The problem in many cases is that the company decides on a new approach but doesn’t explain the big picture.”
So what makes a successful change programme?
1. Horses for courses
As with any selection procedure you need to end up with the right company for the job. A quick way to get started is to identify another organisation that has been through the kind of change programme you are planning and find out who they used. The resulting contacts may not provide the answer but will at least provide useful perspectives on your brief and help you be better prepared.
Where a large organisation is planning major change it will naturally gravitate towards one of the major consultancies. But if the aim is to achieve incremental change in specific areas, a smaller outfit may be better suited.
“It’s easy to go to the top names but they won’t necessarily be appropriate to the type of work you require,’ says Aon Consulting’s Kevin Rubens. He recommends that hirers establish that the consultancy is able not just to give advice but also to build appropriate tools and methodologies, such as a balanced scorecard or competency modelling.
And don’t forget to find out what the firm has achieved on previous assignments. “It’s essential to have quite extensive conversations with the clients they worked with recently,” says Jo Bond, managing director of Right Management Consultants.
She adds that it needs to be established that the individuals you meet are going to be the ones you will be dealing with throughout the project. “Quite often you get to meet the top team at the consultancy but when work starts you find they just breeze in occasionally and you are mostly working with juniors.”
2. Get the chemistry right
You will often have to share confidential information with consultants, so it is essential to feel they will be people you can trust. And since you will be working with them closely you need also to feel a degree of personal empathy with them as individuals. “You are buying a delivery not a sales team, so you have to be satisfied that the people you are working with fit with your organisation,” says the Organisation Consulting Partnership’s Colin Carmichael.
“Even if they have the most brilliant ideas, you shouldn’t hire them if you suspect you cannot work with them on a day-to-day level,” agrees Liz Richards, partner at Smythe Dorward Lambert. Many companies have long-standing relationships with consultants and will return to those they know well. But that doesn’t always have to be the case – Xerox was put in touch with Smythe Dorward Lambert through a contact and the two sides hit it off immediately, Richards says.
The earlier the consultant can be involved in planning stages, the better the chances of integration with HR team. “I would always want to tap into their expertise,” says Bond. “If you have connected well, then you should certainly get them to advise you how to scope out the project.”
3. Look for a pragmatic approach
Many companies will already have made a start, and will need a consultant who recognises what stage it has reached. “It’s no good someone coming in and selling a great change management programme as if you were starting with nothing,” says Richards. “I would ignore anyone who says they want you to go back and start again. You need a pragmatic and flexible consultant, not someone who is selling the ideal model.”
For instance, best practice would require that a consultant does not try to launch a values reinforcement exercise until it is sure that senior directors and employees are all on board. But in the case of Xerox, work had already been done in this area so the consultants went ahead with the rest of the programme. “We didn’t go in saying they had done this wrong: we worked with from where they were,” Richards says.
But consultants need to challenge as well as listen, she continues, and it is important that clients be willing to pay attention. “If they are just agreeing with you and telling what you want to hear that is not adding value,” she points out.
One early area of disagreement is likely to be on the scale of the work needed. If the consultant wants to spend longer on the project than you had budgeted for you may think they are simply trying to make more money. But they may be offering a more realistic view based on experience. “Unless you have been through one of these programmes it is very hard to grasp what is involved,” says Rubens.
4. Get help with the implementation
Failure to achieve buy-in from both managers and employees is where many change programmes fall down, and effective advice in this area is crucial. But that calls for different skills to designing a new strategy, which is what the consultants may originally have been hired for.
So it is important to be clear about what your external advisers can and cannot do. “Many consultants tend to be innovative and will get excited about the creative stages of the project, but may not want to be involved in the implementation,” says Bond.
Where advice is needed to help carry out the programme, it makes sense to look for experts in that area. This could be a company which specialises in changing behaviours, perhaps by applying sophisticated learning methods rather than simply addressing employees in communications. “A lot of strategic consultancies say they can help implement the programme, and so they will, but just by standing up there with a flip chart,” says Celemi’s Ian Windle.
An ideal approach is to create an experience that will make the theory tangible. For BA World Cargo, Smythe Dorward Lambert designed a mock-up of an aircraft hangar where employees could view at first hand a new baggage handling process, training staff to explain the thinking behind it.
Ultimately, however, there will always be a limit to what consultants can achieve on their own. “The client has to be at the right level in the organisation or they will lack the influence to make things happen,” Richards points out. But she concludes: “Where the client has that power and there is the right level of listening and trust in the partnership, it can be very successful.”