OCM: Two Keys to Doing It Right

Organizational Change Management is a very challenging undertaking. Most people are not comfortable with change, so this can be a frightening and uncertain experience for them, especially during and after a merger or acquisition, which is what typically engenders an organization-wide change. It is even more scary when they are not kept in the loop or changes are filtered down from upper management outlining all the organizational levers that need to be pulled to implement the desired change. This is referred to as the "organization in" approach. This method breeds resistance, resentment and fear. I am a believer in the "individual out" approach. Like anything else, from project management to field marketing, if you want supportive and excited participants, you need to get buy-in. This brings me to my two keys to successful change management: Communication and Integration.

Communication

As most people know, communication is the transference of meaning. What many people forget is that for communication to be effective, the meaning must also be understood. Without that, the process is meaningless. Communication serves four basic functions that have the potential to be lost if the process is broken: control, motivation, emotional expression and information.

1. Control - It serves to control behavior through both formal and informal processes and policies.
2. Motivation - It provides team members with clarification on how well they are doing, and what can be done to improve performance. The formulation of goals and feedback are prime examples of this.
3. Emotional Expression - For many people, their work team is where they get their social interaction. Communication provides an avenue for venting of frustration or peer validation.
4. Information - It provides individuals with the information they need to move forward, evaluating possibilities and making decisions.

There are three methods of organizational communication that are common: formal networks, the grapevine and electronic methods. The grapevine is noteworthy in that 75% of employees hear about matters through the grapevine first and that the grapevine is more active when situations are important to team members, where there is ambiguity and where there is anxiety. It is also important to note that while most people find the grapevine more reliable and believable, less than 10% of team leaders act as a liaison and pass down information to their teams. Most managers do not leverage the grapevine and that is a mistake. Managers can use it to convey information quickly, test out decisions prior to the oimplementation, and get valuable feedback. Of course, managers should also use formal channels to provide relevant accurate information, but the grapevine should be a tool in any manager's toolbox.
Managers should be aware of where kinks will arise in the communication process, as well. Distortion of meaning can occur when the originator intentionally filters information so it appears more favorable. The receiver of the information may have a preconceived idea around it which will result in selective perception. Too much information can result in poor communication just like to little - people will weed out or ignore information when they are getting too much. Finally, gender plays a role. Men and women often share information for different reasons. For instance, a woman may speak to an issue she is having. She wants empathy, confirmation or support while the man sees her asking for a solution.
In the end, clarity is key. Have a clear vision of where the organization is headed and provide clear communication around that. The communication should consistently reinforce the vision and be consistent in the messaging. Limit ambiguity and provide a timeline for when future communications will be coming out or big changes taking place. This will help minimize speculation and keep employees focused on the business.

Integration

In many cases the first thing that happens during a merger or acquisition is the replacement of top management by the more powerful or acquiring company. According to The Wharton School's Creating Value in Post-Acquisition Integration Processes the replacement of leadership has a negative impact on performance. Any improvements they may offer is offset by the disruptions in processes, routines and personal motivation that a change in leadership inevitably causes.

Integration of teams, on the other hand, improves or maintains productivity, usually offsetting any hidden costs and disruptions that may result from this more complete integration. Experience also plays a part in the success of an organizational change.

The higher the degree of experience is, the more likely it is to play a part in a successful integration of teams or efforts resulting in lower costs, few replicated mistakes and a better employee experience. Experience comes in two types: having done an acquisition or merger before and in the similarity of homogenous acquisitions.

This allows for leveraging learning from previous acquisitions and the codification of that learning for use in future acquisitions through the use of already-created support systems, manuals, and tools. Wharton shows the selection of convergence strategy by the average bank will improve the bank’s net earnings by $145.4MM over a three-year period, post-acquisition.

Implementation of a combination of high integration and high codification of another acquirer, which had ten in-market acquisitions resulted in a competitive value of $129.6MM over a three-year period, post acquisition.

Impacts

What does all this tell us? It tells us that post-acquisition strategies determine the value creation. Simply coming in and taking over a company, as opposed to effectively integrating it, is likely to cost more and have a higher failure rate. Failure can be defined as everything from loss of customer satisfaction to the more concrete measurement of negative balance sheet impacts.

Experience is wonderful to have, but not effective on its own. Only when it is combined with codification of learnings which are applied to the current acquisition or merger will it be cost-effective and create a strong system of integration, which will result in higher overall employee satisfaction and buy-in.

In the end, it’s not what you buy – it’s what you do with it after you buy it that determines success and failure.

5 Strategies for Creating a Coaching Culture

"Why a coaching culture?", you may ask. Recent research indicates that coaching cultures create a multitude of benefits including improved employee engagement, job satisfaction, morale, collaboration and teamwork. This indicates that assisting leaders and their teams in developing coaching skills and weaving them into the overall management strategy, not just Human Resources, can reap rich rewards. After all, it's a well-know fact that companies with more satisfied employees are more successful.

Strategies

The Center for Creative Leadership's study on Coaching Cultures separated out 5 key strategies for successfully implementing a coaching culture:

1. Seed the organization with leaders and managers who can role model coaching approaches.

   Note the use of the word "seed" above. This is critical to this strategy. In a large organization, it wouldn't make financial sense to train all the employees in coaching behaviors. It would be cost and time prohibitive. The key is to train select leaders and managers in coaching behavior and have that waterfall through the organization. This ensures maximum return on investment and leverages scale to the best advantage.

2. Link coaching outcomes to the business.

   It's been proven time and again that when undertakings are viewed as business initiatives and presented in such a way as to link them to the business goals, they are more likely to receive continued support from senior leaders. These leaders are more likely to stay interested in supporting propositions if you can tie improved business outcomes to the undertaking. You might even go so far as to create KPIs for individual performance measurement. It's all about the bottom line, folks.

3. Coach senior leadership teams in creating culture change.

   Culture change is always painful. It creates fear and uncertainty if handled incorrectly. In order to successfully create a coaching culture, which would be a culture change in most instances, senior leaders should undergo training on how to successfully implement a culture change. Teams with strong bonds, such as excellent communication and interdependent strengths are more likely to successfully implement an organizational improvement than those without.

4. Recognize and reward coaching-culture behaviors

   This is standard positive reinforcement. You see this emphasized repeatedly in any organizational change management course, leadership seminar, or coaching class. It just makes sense. It ties directly into KPI rewards or business goal achievement. However, unlike those goals, which are typically reviewed quarterly, biannually, or annually, new behaviors should be rewarded on a more timely basis. It's the best way to show support, across the organization, of the desired behaviors.

5. Integrate coaching with other people-management processes

   This is critical for the sustainability of the new culture. It needs to become a "business as usual" process. At the very least the new coaching behaviors should be integrated into learning and development, job competency models and team-management processes.

Any organizational change is difficult, but creating one that appears to have no hard metrics and is relatively intangible is even more difficult. There will also be cultural barriers that will need to be overcome. They may include senior leadership not exhibiting the desired behavior all the while speaking in support of it, lack of accountability, or just not knowing how to start. I've provided some ideas for how to deal with these situations in the strategies above. Just keep in mind - in the end it's worth it.

Impacts

A survey of ~350 key senior leaders (non-HR) shows they feel a coaching culture will have far-reaching benefits. 67% believe this organizational change would increase employee engage. 62% believe that increased job satisfaction and and morale will result and 58% believe a coaching culture will result in increased collaboration and teamwork.

A study by Bersin & Associates, now Bersin by Deloitte, puts it into even better perspective. Businesses that are highly effective at teaching managers and senior leaders coaching are 130% more likely to realize stronger business results and 33% more effective at engaging employees. Bersin's research showed that organizations in which senior leaders frequently coach had 21% higher business results and those with excellent support for coaching had 13% stronger business results and 39% stronger employee results. Coaching organizations clearly have better results. How can you not make the transition now?

Values-Based Diversity - The Competitive Advantage

We all know what diversity in the workplace is, right? It’s inclusion of those whose race, creed, color, sexual orientation, religion, etc. are different from the homogenous norm. Hold on! It’s not quite that simple anymore, thanks to a recent study by The Economist Intelligence Unit (EIU), which finds that diversity is shifting to include values.
Diversity in the workplace used to be tricky enough to manage when it only included gender, race and ethnicity. It’s becoming even more difficult as the definition changes. Susan Galer of SAP, notes in her article, "Workplace Diversity Has a New Meaning that diversity now includes values such as work ethic, communication style and motivational drivers. Ideally, managers want their diverse employees to fit in and be part of the team, accepting the organization’s culture and norms, but without losing their individuality. Do you see the paradox? However, if you can manage this effectively, you gain the competitive advantage.

The Challenges

Over 200 HR executives worldwide were surveyed for the EIU report, "Value-based diversity: The challenges and strengths of many”. The survey discovered three main characteristics that are going to require the biggest change in HR strategies over the next three years:

• Almost 60% of HR executives cite employees’ lack of interest in assimilating organizational values.
• Over 50% point to conflicting values across a multigenerational workforce.
• Forty-seven percent called out unrealistic expectations of millennial employees.

The Solutions

It’s leadership’s job to figure out what’s motivating these employees and what their expectations are. It’s not enough, anymore, to just pay them well and many executives don’t understand that. Tamara Erickson, a workforce researcher and author, says millenials are more likely to want to earn enough to support their lifestyle but not necessarily more. This doesn’t mean they’re not motivated; it just means different drivers than the ones that motivate the executives inspire them.

Moreover, if this isn’t daunting enough, the challenges faced by companies vary depending on their geographic region. A company with international locations may face language and generational challenges in Asia-Pacific, but gender issues in the Middle East. The African branch may be facing challenges of education, while the European headquarters may see diversity as a social initiative.

The Benefits

Getting strategies in place to effectively manage diversity in the workplace will result in a multitude of benefits, primary amongst them are diversifying the client base and target markets, having access to an enriched talent pool and a competitive advantage in labor markets.

It’s time for workplace leadership to recognize that it’s not enough to provide employees with a standard workplace environment with standard hours and standard benefits and require they force their round peg into the square hole or take a walk. This is a new generation, with new expectations and new motivations. Wake up and smell the diversity, folks. It’s time for you to get on board the flexibility train or watch your company derail as best talent goes somewhere that will allow their round peg to fit in a round hole.