| Champions
for Change
By Steve Klinkerman
Ultimately, breakthrough
organizational changes must be fostered — not forced.
Sometimes people just won't
cooperate, and that can be a towering obstacle for companies
struggling to transform themselves. According to Deloitte
Research, in fact, "organizational resistance"
surfaced as the single greatest barrier to implementing
significant change in a 2001 survey of senior financial
services executives, cited by 82% of respondents.
That's a woefully inadequate
explanation of why change is so difficult, however. Among
other things, employee resistance can be a reflection
of how the company is being led and managed. In any case,
a wider circle of factors must be addressed if the corporation
is to break the intellectual shackles of only making incremental
improvements to traditional processes and products.
Transformational change
is an increasingly acute issue for financial services
providers, and the Internet provides a perfect example
of why. It is now widely acknowledged that replicating
paper-based processes online simply won't do. Metamorphic
change is essential in taking an entirely different approach
that capitalizes on the interactive nature of the online
medium. Virtually all of the major U.S. financial institutions
have broached this challenge with great seriousness.
It is easy to see how employee
resistance can flare up in such circumstances. Over time,
a certain skill set, organizational hierarchy and reward
system builds up around established business processes.
The relevance of these things comes under assault in times
of great change, and employees — often correctly
— perceive that everything they've built up is being
placed at risk. Not knowing how the new business model
will coalesce, they tend to cling to the status quo, sometimes
with a sense of resignation.
One narrow managerial reaction
is to take a condemnatory attitude toward hesitant employees
and begin dictating the process. But that approach staunches
the natural torrent of energy, enthusiasm and creativity
that emanates from workers when they rally around a cause.
A higher management path, Deloitte says, is to embrace
a set of principles that will foster change — not
force it.
First, senior executives
must become visible champions for change, and this cannot
succeed without high personal credibility. Second, they
must develop and convincingly communicate a business case
as to why change is necessary, including the financial,
strategic, competitive, operational, technical and human
resource implications. A third requisite is managing transitions
in a way that is clear, measured and realistic. Anchoring
everything around current and future customer needs is
essential. And fifth, to establish the urgency, the risks
of not changing — and they are substantial —
must be explicitly acknowledged and communicated.
Even if management replaced
every single one of the employees deemed resistant to
change, an evocative approach such as the one advocated
by Deloitte would still be essential in transforming the
organization. After all, mere conformity to corporate
dictates arguably captures less than half of the support
and participation needed from today's knowledge workers
to achieve feats such as forging a new business model
or adapting to online competition.
Resistance to change,
then, can give way to inclusive and powerful organizational
transformation, but only if senior managers step up to
a much larger leadership challenge.
Mr.
Klinkerman is editor-in-chief of Banking
Strategies.
Copyright © 2003 by Banking
Strategies, published by BAI.
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