Positive organisational change is increasingly project driven, according to Sherrill Tapsell writing in Management magazine in February this year. But successful projects need good leaders.
The hypothesis was reinforced in an interview with Ian Taylor, managing director of Sheffield, whose key message was that leadership competencies are essential to ensure the completion of successful projects. Sheffield clients were, he said, seeking project leaders for specific roles of limited duration as opposed to using full-time employment.
Leadership guru Warren Bennis describes leadership in terms of competence, integrity and ambition. In five-year study of 60 effective corporate leaders Bennis recorded specific leadership competencies that differentiated these managers from others. The ability to develop and articulate compelling vision and create climate of trust in the workplace was apparent in every case.
These managers created performance cultures where mistakes were accepted and turned into learning opportunities. mandate to learn and drive for innovation closely linked with disciplined approach to delivery will bring astounding results.
Leadership is the key. There is high statistical correlation between leadership and positive change. American Management Association research on change management (Dec 1995) revealed that leadership was rated by 98.1 percent of participants as the most important factor in change management.
Competitive forces are building like cyclone. Competition is forcing companies to reinvent themselves, seek new innovative strategies, and upgrade product and service delivery. Despite all this energy companies are suffering from reduced profits. Although volume is often maintained, margin between reducing price and rising costs is squeezed.
The challenge for most companies is to create real productivity improvement. If price is reducing by one percent per annum and inflation is running at two percent, productivity improvement in excess of four percent is essential. Yet real productivity improvement is difficult to achieve, employees tire of relentless cost cutting and no clear sign of relief.
Study successful organisations and you will find that most of their chief executives possess leadership qualities. Leadership must be seen to be present through the alignment of managers’ actions with the leader’s vision. What leaders say must, in the end, result in actions that drive an organisation forward. Projects which demonstrate alignment through successful completion, are an effective means of creating organisational change.
Senior executives, no matter how proud of their organisational achievements, will in moment of honesty admit that, at times, their organisations behave in dysfunctional ways. They will invariably talk at length about organisational paradigms that run counter to the direction they are leading their companies.
Executives recognise the need to develop people, yet when faced with tight budgets, often forgo the training required to equip them to meet the demands of the new environment. People are organisations’ greatest assets but simultaneously represent significant component of the cost. It is not surprising perhaps that when faced with reduced profitability managers look to reducing employee numbers and reorganising the structure.
If managers can’t create additional revenue from an improved customer value proposition then the immediate solution is to reduce costs. But restructuring can decimate organisational loyalty and pride, it is often harder for those left behind than for those facing redundancy. Restructures seldom achieve the renewal expected. Managers are left trying to do more with fewer resources. Customer relationships are broken and performance suffers. Restructure can be just step in organisational decline.
The real opportunity lies not in restructuring but in the reduction of waste. The quality movement of the 1980s provided some of the answers. Many organisations suffering from lost profitability lack quality systems and processes. Good systems that are embraced by employees can drive out cost and lift product standards and service delivery.
Studies show that failure and appraisal costs can represent up to 20 percent of successful company’s cost base. Failure costs include scrap product, rework, lost production, re-testing, excess stock, wasted management time and lost business. Waste can also include poor delegated authority, slow decision making, excess paper flows, poor capital investment processes and lack of control over pricing.
Too little time spent on waste prevention, including recruitment, induction and employee training, can also starve an organisation of the skills and competencies required to succeed. Employees do not always have sufficient information to recognise and make effective change.
Companies need more sophisticated lead performance measures as they move from control oriented, functional hierarchies to flatter team-based approach. Key performance measures that demonstrate balanced scorecard of performance provide an effective way of communicating and demonstrating improvement.
If restructuring is not the most effective change mechanism how do we create significant and effective organisational change? The answer is obvious if not difficult. People are the greatest asset and therefore rather then cull them with slash and burn mentality, enrol them to grow the organisation, seek innovative stepped change, drive out waste and improve customer delivery.
This will never happen in culture of fear or where loyalty and pride are not present, however. Political expediency serves the centre not customers. Innovation, courage and appropriate risk taking survive only where people are appreciated and grown. Imagine an organisation where people know what needs to be done and work together to bring effective and urgent change rather than resist it.
The most effective way to change behaviour is to put people in new organisational context which imposes new roles, responsibilities and relationships on them. Organisational change needs to focus on the work itself, rather than abstractions such as structure or culture. Creating projects teams that are empowered to deliver stretching goals, in realistic but tight timeframes can be the best opportunity companies have to innovate and outrun the competitor.
Before embarking on change project ensure that senior executives are committed and have signed off on the project, otherwise it may not deliver the desired outcomes. Employees selected to work on high profile change projects will invariably see it as personal development opportunity and it will demonstrate commitment by executives to act in alignment with the company vision and strategy.
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