August, 1996 - Managing Change
by Trevor Boutall
The checklists below will help you to:
Step 1. Identifying opportunities for improvement
Step 2. Assessing the pros and cons of change
Step 3. Planning change
"Tips on Managing Change" from The Good Manager's Guide © Trevor Boutall, 1994 (used with permission of author)
To contact the author, send e-mail to boutall [at] dircon.co.uk. Trevor Boutall is a Management Standards Consultant, working as an independent and for the Management Charter Initiative in London. Thanks, Trevor, for providing your tips!
These case studies of organizations dealing with change come from our own experiences. Names and identifying details have been removed to protect the companies and the people involved.
A note: it was very easy to find examples of doing it wrong. Our files have an excess of those types of case studies. Examples of doing it right are much fewer.
Doing It Right -
Doing It Wrong -
The company: A family-owned construction company with approximately 100 employees.
The challenge: Business had fallen off substantially, due to changes in the home building industry. The company was faced with drastically reducing expenses to stay in business.
How they handled it: The owners met with some of the supervisors, and let them know that business was not good. The supervisors suggested that all employees be given a chance to participate in the decision about how to handle the layoffs. This was done. The vote was unanimous to keep everyone working as long as possible, cutting their hours if needed rather than layoffs. At first, employees' hours were cut to 4 days a week. As the slow down continued, they cut further, until employees were only working 2 days a week.
The results: Employees did face some hardships with their hours cut, particularly when they got to 2 or 3 days a week. However, their positive attitude and motivation continued at a high level. Everyone felt they had made the right choices in keeping everyone working, rather than laying off some of the employees. Several times, those with more resources chipped to help others - in raising money, providing food at holidays and in assisting in their work. Employees felt they worked harder on the days they did work, so none of the company's deadlines fell behind. Eventually, the industry turned around and everyone went back to working full time.
Lessons Learned: There were no regrets on the decision to avoid layoffs, even though everyone suffered some hardship. They felt it was better for everyone to work a little, than some to lose their jobs altogether. Most of the experienced employees stayed with the company, so that when the industry turned around again, they were ready to go full steam ahead. The company continued to prosper for many years and has not since been faced with such a serious challenge.
The organization: A large multi-campus public university.
The challenge: A new executive had given an edict that the university would change all their financial systems within a nine-month period. This executive said he had seen it done at his previous job, therefore, it was possible here.
How they handled it: The people involved in implementing this edict were not consulted in how it would be accomplished or whether it could be managed within the nine-month time frame. A new computer system was chosen because it was the lowest in purchase cost, not because it fit the school's needs. Whenever anyone questioned the decision or told the executive about problems that were arising, the edict would be reissued with an ultimatum - do it or else!
The results: Many challenges quickly arose in all areas: in developing a new financial structure, in implementing the new computer system, in updating/modifying existing computer systems, in changing office procedures and in defining new responsibilities. Without executive support to provide resources necessarily to accomplish the additional workload required for such a major undertaking, everyone involved became discouraged. Prior high levels of productivity faltered, so that things previously running smoothly began to fail. The new processes did not receive adequate attention, so schedules slipped badly. People who needed training were not able to obtain training. Even manuals for the new systems were not available to programmers who needed them; they were told there was "no budget" for training or manuals. Those involved in implementing the new computer systems struggled to learn, making lots of mistakes along with way. The impact reached every area of the campus, creating massive dissatisfaction with the whole process. Many good people struggled to keep moving forward, in spite of almost insurmountable challenges.
When it became clear that there was no way the mandated deadline could be achieved, many department heads who were near retirement age chose to retire. Many other key long-term employees left in frustration. A huge amount of experience and knowledge left with them. The system was years late being implemented, with significant cost over-runs. T he executive who started it all was asked to leave.
Lessons Learned: Many of the eventual problems could have been avoided if time had been spent in organizing the project, detailed planning, developing realistic budgets, providing appropriate training resources to the required tasks, and involving the people who were expected to perform miracles. A high-level corporate sponsor is very appropriate for a huge project. However, a figurehead or dictator is not enough. They must be able to delegate and be involved in appropriate ways in order for the rest of the project teams to function properly.
Simply giving orders and making threats does not get the job done and can be hazardous to an executive's career.
The company: A large financial services company with thousands of employees.
The challenge: For many years, the company grew like a bad weed. The biggest challenge was always on hiring enough people to keep up with the growing business. Almost overnight it seems, business began to drop off - due to changes in the entire economy and other industry factors.
How they handled it: Layoffs were rumored. When employees confronted their managers, they were told not to worry. Rumors persisted. Eventually, there was an announcement that some people would be offered early retirement and other incentives to leave. Some people took advantage of these right away. As time went on, groups of employees were given "end dates" and offered termination packages. Several rounds of layoffs occurred, often happening unexpectedly. Managers could not give their employees specific details about what was happening in their units, nor were they willing to talk to them about what was happening in the company. Many employees felt that even their own managers did not know what was happening. Some employees' end dates were extended; others were not.
Over a period of almost a year, promises changed, probable end dates changed, possibilities for other job transfers within the company changed, layoff's continued to happen sporadically. The company was inconsistent in its messages to employees about their future, as well as inconsistent in most of its communications (both written and verbal) to employees about the company's future plans. Human Resources functions, which should have been able to help employees deal with transition issues, was downsized and kept in the dark as well.
The results: Many employees suffered from stress, some becoming extremely ill or finding therapists to deal with their anxiety. This stress led to lack of motivation to do their job, as well as lack of confidence in finding another job (inside or outside the company). Lawsuits were eventually filed on behalf of some employees who felt they had been discriminated against on the basis of age, sex, race or longevity with the company. The company "seemed" to be getting rid of the long-term employees, older employees and highly paid employees according to those that remained.
All employees were facing additional stress, since the messages from the company had been so unreliable and inconsistent. Often, there was simply no communication from management about impending layoffs. Some managers admitted that they were afraid for their own jobs.
Lessons Learned: Delaying difficult decisions does not make them easier. In fact, it may make the process even more damaging to the affected employees. Refusing to provide even basic information or deliberating withholding important information from employees sets up a company for legal retaliation from harmed employees. Lack of communication on such important matters as whether an employee has a future is asking for trouble. The morale and productivity of the entire workforce has been destroyed because of what seems obviously to be inappropriate communications and inappropriate actions on the part of corporate executives.
The company will pay for these weaknesses painfully for many years and in many different ways. The employees who are left will never again trust management to tell the truth.
Niche Services Company
The company: A small services company with seasonal business cycles, approximately 100 employees, the majority of them paid hourly wages (no benefits).
The challenge: The company had struggled for many years with slim profits. Because the business was seasonal, employees were often laid off during the summer downturn. This was explained to all employees when they were hired. The company hired many women who enjoyed working during the school year and spending the summer with their children. Wages were a little above minimum wage, so the company often hired people with little experience; it became known as a good place for entry-level people to find jobs. The company was developing a good reputation in its segment and hoped to use that to expand its existing markets, develop new markets and take on new clients to grow the business. After signing a major new client, the company found they did not have enough people to handle the work involved within the deadlines requested by the client nor enough time or facilities to hire and train new people fast enough.
How they handled it: A company-wide meeting was held to explain what had happened. Existing employees were asked to work as many extra hours as possible on evenings and weekends (at overtime pay, of course). Employees were told that the company hoped this new client would help them upgrade their facilities as well. It was a major positive breakthrough for the company if they could pull it off in the next few months.
The results: Many employees took advantage of the opportunity to make some extra money, working as many as 4 hours a day extra and 8 hours on Saturdays. At the end of two months, the results were announced. The company had doubled its overall production and the error rate of work production had dropped dramatically. Why? Because all employees had focused so much extra energy to doing their job and helping the company. Even those that could not work extra hours improved their production output and their error rate. The company completed the extra work much sooner than originally anticipated and made much higher profits than expected as well. T he company was eventually sold and has continued to grow substantially.
Lessons Learned: Involving people in a positive way often pays off with much higher benefits than expected. People naturally want their company to succeed. I
If employees are treated with respect and their contributions acknowledge, they can do amazing things when necessary. Often, they far exceed even their own expectations when their energy is focused to work they enjoy.
The company: A specialized company in the utility industry, approximately 250 employees.
The challenge: Extreme high growth, young company. T he founder and first president had been a walk around type of person. Every one loved him and the company prospered under his leadership, both in new business and in profits. When the founder got to mandatory retirement age, he was replaced by someone with very different management style. T he new president stayed in his office and was rarely seen around the company. In his meetings with key executives, he was known for his foul-language and excessive demands.
Over a period of 18 months, the entire culture changed from a fun place to work to one many called "sick." The 1st tier executives became afraid and started abusing their line managers and employees as they had been abused by the president. More and more employees became physically ill - this became known as the company flu. Morale declined. Productivity declined; suspicion, gossip and inconsiderate treatment increased. Many potential clients refused to do business with the company after getting to know the culture inside. Potential contracts were lost and the company's reputation took a serious beating.
How they handled it: Good people left or retired when they could. Everyone else hunkered down and did whatever they could to stay out of the line of fire. The primary focus was on avoiding trouble, rather than on doing a good job.
The results: The president was eventually replaced, with someone even less friendly, according to rumor. Recruiting employees became more difficult as the culture inside became more widely known.
Lessons Learned: Good executive management creates a good healthy corporate culture. Bad executive management can undo all the good work in a very short period of time.
The organization: A public agency, approximately 2,000 employees.
The challenge: The agency operated as a monopoly since its inception, raising rates as it deemed appropriate, with little backlash from its "customers." The public and clients of the agency began criticizing it because of its bloated size and demanded significant improvements in many different areas.
A major computer systems project was initiated with the expectation that the results would be better service and substantial reduction in costs over the next few years. When the computer systems installation was almost completed, there was a change in executive leadership - with a mandate to demonstrate benefits of the new system.
How they handled it: A "reorganization" was announced - three divisions were to be consolidated into one division. Affected employees were told to attend a meeting with the outside consultants who would be advising management on the new structure. On the day before the meeting, it was canceled. About 2 months later, the meeting was finally re-scheduled. By this time, many employees were becoming nervous about the plans. At the meeting, employees were introduced to the consultants and told they would be part of making the final recommendations. Individual meetings were held with affected unit managers, who were told they would see the results before they became final.
The process dragged on for months - every time a date for release of the final plan was announced, it would be delayed. Managers were shown the final plan a few days before all employees were presented with the results. The suggested changes were not included, and the resulting organizational structure did not make sense to many affected managers.
The results: The final plan involved demotion of approximately two thirds of the current managers, a reduction in pay for them and the hiring of two assistants to the executive in charge of the combined division. Two of the three former division heads were demoted. None of those demoted were told they had been doing a bad job, nor were their suggestions for the new organization considered. The resulting organizational structure seemed to be a punishment of some kind, at least to those affected. People were also confused at why new executive level positions were added at higher salary, when the goal was to "cut costs."
Lessons Learned: Many good people left. Those who could not find work elsewhere stayed. New managers with no interest or skill in management were put in manager positions. Competition among those left heated up as people jockeyed for power. Many tried to find a way to get back their old salary by competing for jobs they were unqualified for. Other units that had been publicly praised for their positive contributions to the agency were abolished and their function eliminated.
The company: A high tech company with approximately 400 employees.
The challenge: Extreme high growth, young company. Like many similar companies, this one was started by a group of friends sitting around the kitchen table with a great idea. Business took off almost immediately. There were never enough good quality people available to fuel the extremely high growth. Business came faster than there were people to handle it. Everyone was stressed from overwork. The founders had very clear objectives about the type of company they wanted to create - one that did not make the mistakes of their former employers. The corporate culture supported a family atmosphere, where employees were expected to give their best at all times and were rewarded for their efforts.
How they handled it: Management recognized that employees voluntarily came to work at the company. Employees were given the resources they needed to do their job and encouraged to deliver excellence in all aspects of their work. Company ethics and the code of professional was very strong. Employees were trained and coached constantly by management. Extra money and time was spent on noticing the good work of all employee, individually and in their work groups. Every week, press releases were sent to everyone inside the company, highlighting the good work being done by coworkers. Employees were given extra stock options and/or bonuses unexpectedly for doing a good job. Business continued to climb. Because everyone wanted to go a good job, employees tended to be driven even harder to do a good job, sometimes to the point of working too hard. Part of management's job was to monitor employees and notice signs of stress and overwork.
The results: The company became known for its exceptional high-caliber people and business continues to grow. The company eventually went public, turning the original founders and dedicated employees into millionaires. The company bought up several competing companies and continues to grow. Profits continue to climb and the company was able to expand into new market segments. The number of employees continues to grow - still without compromising their exceptionally high standards for hiring. Concerns about employees working too hard resulted in improved work scheduling and better benefits to avoid the burnout that had been prevalent in the early days.
Lessons Learned: Good people can work too hard, even to the point of harming their health. The company recognized this and took action to help its employees regain a more balanced schedule.
Treating employees well continues to pay off in profits for the company. People working for the company truly feel part of a family - they love what they do and stay because they feel good about themselves, are proud of the company they work for and are rewarded in many different ways.
Page updated: June 05, 2009
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