The two ‘E’s to success - Engagement & Enablement

16-Jun-2010 - PHILADELPHIA--(BUSINESS WIRE)--Following two bleak years for the job market which saw employees grateful to avoid redundancies and many employers putting a freeze on recruitment, recent research from Hay Group, the global management consulting firm, reveals that the tide has turned with 59 per cent of employees in the United Kingdom starting the year with a firm resolution to look for a new job.

- 59 per cent of employees in the United Kingdom started 2010 with the firm resolution to look for a new job

- Cost of replacing employees can be between 50 per cent and 150 per cent of salary

- Employee engagement and talent retention cited as the first and second most important issues respectively by CEOs and HRDs going into 20103

- Organisations that engage and enable employees demonstrate a total reduction in voluntary turnover of 54 per cent4

- Companies in the top quartile on both engagement and enablement achieve revenue growth 4.5 times5 greater than their industry peers who focus on engagement alone

- Employees who are both highly engaged and enabled are 50 per cent6 more likely to outperform expectations.

Loss of talent delivers a hefty blow to a business’s bottom line, and Hay Group studies estimate the cost of replacing employees to be between 50 per cent and 150 per cent of salary5. With businesses potentially facing a significant ‘brain drain’ in 2010, the pressure is on to find effective ways and means of preventing mass exodus of talent as market conditions improve.

The two ‘E’s to success

Many top-performing businesses across Europe and the United States are already deploying effective employee engagement and enablement programmes as a business priority, to mitigate against staff turnover and drive performance and revenue as the global business community continues on its path to recovery. In fact employee engagement and retaining talent were cited as the first and second most important issues respectively by CEOs and HRDs going into 2010.

Hay Group defines an enabling work environment as one which empowers employees to ‘go the extra mile’ and provides the tools and processes to actively deal with employee frustrations. Companies effectively combining employee engagement and enablement report significantly improved revenue growth, staff retention and employee performance. The top organisations on both engagement and enablement achieve revenue growth 4.5 times greater than their industry peers who ranked lowest in the study.

Similarly companies with high levels of engagement show turnover rates at 40 per cent lower than companies with low levels of engagement. However, companies that both engage and enable employees demonstrate a total reduction in voluntary turnover of 54 per cent. Hay Group’s research also reveals that engaged employees are 10 per cent more likely to exceed performance expectations. Employees who are both highly engaged and enabled, however, are 50 per cent more likely to outperform expectations. Past studies have shown that the difference in productivity between superior and typical performers is 35 per cent on average, depending on job complexity.

Nature of Change

There is a new pattern of change emerging driven by information and communications rather than leadership and vision. This is a new cycle. It is interesting because it is qualitatively different from what we all know about change management. The traditional pattern for change rests on:

• Problem – something is wrong, the problem is defined, given shape and the need for change is communicated.

• Solution — the actions you take to address the problem either wrapped in the term initiative or program. The assumption is that there is a solution to each problem. The assumption is that the solution, properly applied, will solve the problem, if it did not then why go to the effort of implementing the solution.

• Adoption — the acceptance of the solution by the workforce. This is the change part of the change process as people are assumed to discontinue old ways of working in favor of new approaches. A well-executed adoption process will ensure the solution is applied properly in order to solve the problem and raise performance.

The logic of Problem/Solution/Adoption to change gives the whole process a mechanistic or programmatic approach, show in the figure below. Follow the steps properly and you will get the intended results. Its interesting that when people encounter difficulties in the change process and they ask for help, the answer is that you must not have done the steps right.

This view is advocated by change experts, for example John Kotter in his book Leading Change comments, “Successful change of any magnitude goes through all eight stages, usually in the sequence shown. Although one normally operates in multiple phases at once, skipping even a single step or getting too far ahead without a solid base almost always creates a problem.” (p.23)

This view is the hallmark of a technical process that equates changing the way you work with how you make a roast beef dinner. True there are steps to follow, but change is a social process that resists mechanistic answers.

Change is a social system that requires a social process

New change processes reflect the social nature of change. The logic of Dissatisfaction/Transparency/Choice and Change is not neat or clean, but it is inherently social. It recognizes that every problem cannot be solved by an initiative and that things will naturally evolve. This is the changing nature of the change process with a pattern based on the following cycle:

• Dissatisfaction – there is a feeling or evidence that the status quo is no longer acceptable. People know things are wrong and they ask for information to prove otherwise.

• Transparency – the demand for information creates a move for transparency either as a proposed solution or as means to rebuild trust while solutions are being implemented.

• Choice - armed with the information created by transparency people start voting with their voices, dollars or feet. Before transparency I either did not have a choice or I did not know how different my options are.

• Change – people change in the face of clear information that drives active choice rather than passive submission. The change creates dissatisfaction that drives the energy and cycle of improvement.

These activities occur continuously in a cycle, shown in the figure below. It is important to note that companies using this cycle never really ‘solve’ a problem rather then are always working toward improving processes as one solution or changes in the marketplace create new issues requiring choice and change. The ability to use transparency and choice to adapt gives this approach greater flexibility than the more programmatic approach to change that rests on a premise of holding the world constant while we execute the change initiative.

The nature of change is changing because the flow and control of information has become turbulent no longer flowing top down, but flowing in every direction at all times. This means that the ability to manage and lead change is no longer based on messaging, communication and traditional sponsorship. Rather it is based on processes of informing, enrolling and adapting that is significantly more disruptive and difficult to manage for executives and leaders.

The changing nature of change is symptomatic of broader changes facing enterprises and their leadership teams. This post seeks to put the changing nature of change on the table with a brief description of the differences and the process. Subsequent posts will talk about what these activities mean for the enterprise and IT.

Why your business process change management model needs to change

Daniel Sheehan was neck-deep in an SAP implementation at Georgia-Pacific LLC in the mid-1990s when he saw the importance of business process change management. The Atlanta-based paper and pulp manufacturer had decided that the patchwork of back-office systems used by its 12 divisions needed to be centralized. Everyone agreed the plan made sense on paper. A year into the work, with its business division leaders in revolt, Georgia Pacific shut down the SAP project and wrote off $120 million, recounted Sheehan, then an IT manager on the implementation.

More on change management CIO lessons in change management Mastering the skills of change management

"This reengineering process had nothing to do with the software, and had everything to do with change management," said Sheehan, now CIO at Dunkin' Brands Inc., whose brands include Dunkin' Donuts and Baskin-Robbins. "It was amazing how worked-up people would get about changing. I learned a big lesson there."

Sheehan took his "big lesson" on change management across town to Coca-Cola, which he helped see through a seven-year, $1.7 billion global SAP implementation. And at Dunkin', his change management skills continue to be put to the test: He recently was tapped by business leadership, for example, to show 150 new Dunkin' franchisees the value of standardizing on and financially supporting corporate platforms -- not a job typically given to the CIO.

"Forget the technology; it is all about human behavior and how you get people to look at things differently," Sheehan said.

Ten years into a new century, effective business process change management remains as critical as ever -- and as elusive. That's not because CIOs are inherently bad at change management or haven't recognized how important change management skills are to the job of being a good CIO, experts say. Factors ranging from the way employees get company information to the pace of change now required of companies to stay competitive, are upending traditional change management models.

"Change management is a perennial issue for CIOs because the context of change management is constantly changing," said Mark McDonald, head of research for Gartner Executive Programs at the Stamford, Conn.-based consultancy.

This is especially true for business process change management, said McDonald, who has written a series of blogs on the changing nature of change management.

Unlike infrastructure change management, where mechanical precision is tantamount to success, business process change management is more like a social science, in McDonald's view, subject to judgment and interpretation and dependent on context.

"In infrastructure change management, you need to get 100% on your test. With business change management, it is pretty much impossible to get 100%," McDonald said. Change is a social process that resists mechanistic answers, he added.

According to McDonald, traditional change management models no longer hold.

Betting the success of an entire company on an SAP implementation or on a merger and acquisition, for example, is highly risky and disruptive to the growth of organizations and to day-to-day operations, McDonald said: In a rapidly changing business environment, successful companies often are better off making many small changes whose sum ideally is greater than any one transformation. Gartner has found that the total number of changes that organizations have to go through on a yearly basis has grown dramatically, and each change has gotten much smaller, he said.

That's why change management doesn't go off the radar. Just when we think we have a handle on it, the rules of the game change. Jack Santos executive strategist, Burton Group executive advisory program

Also changing is the way change is brought about in the enterprise, McDonald said. Thanks to social media outlets, modifications to the way employees do their work are increasingly critiqued in real time. In this setting, the old, top-down paradigm of change management -- senior leadership identifies a problem, proposes a solution and goes to considerable pains to explain why that change is good for the rank and file -- is no longer tenable.

Instead, the first signs of a need to change often bubble up from the bottom, based not on a strategic decision from the top, but on a feeling of dissatisfaction among the rank and file, McDonald said. Thus, the first step in change management is for employers to be attuned to these rumblings of discontent. Secondly, employees and the public are demanding greater transparency from employers in the face of change. This clamor may stem in part from employees' and the public's increased access to all kinds of information -- or from a lack of trust in the wake of recent financial scandals and crises, he posits. Recognizing this need for more transparency is critical to effecting and managing change.

"People change in the face of clear information that drives active choice rather than passive submission," McDonald said.

Tom Sawyer's fence

Jack Santos, executive strategist for the executive advisory program at Midvale, Utah-based Burton Group, agrees that change itself is changing. "That's why change management doesn't go off the radar. Just when we think we have a handle on it, the rules of the game change," he said.

But the new zeitgeist also applies at the IT infrastructure level, where theconsumerization of IT has upended change management, Santos argued.

"IT traditionally has said, 'We have to get changes under control.' Small changes were made on a once-a-week-basis; big changes, on a version-rollout basis, once a quarter. Now a Google comes along and screws that up, making changes all the time," Santos said. "With the consumerization of IT and the growing technology expertise in the business ranks, the business has turned around and said, 'Gee, why can't we manage change like that?'"

Santos' advice to CIOs? "Because business is more involved in IT, business has got to be more involved in change management, and that is best described as business process change management."

Gartner's McDonald put it more strongly: "The first thing CIOs need to do is get the hell out of the way of the business, unless the CIO is changing the IT organization or IT processes," he said. While IT may be spending a huge chunk of money on the change, one of the biggest mistakes CIOs can make is to take ownership of business process change management, he said.

"The business executive is more than happy to assign the majority of the risk to the CIO and IT for change management. It is like Tom Sawyer getting others to whitewash his aunt's fence," McDonald said.

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