The Change Management Imperative for Shared Services and Outsourcing

Why is change management imperative for shared services and outsourcing?

• Manage resistance from perceived ‘loss of control’

• Motivate outgoing employees to retain them through the transition period

• Ensure effective knowledge transfer

• Ensure the right culture and values are created

• Embed new ways of working post go-live

Introducing Deborah and Sourcing Change

• Was tall and blond, now short and dark

• Admits failure• Deep experience as

buyer/provider• On mission to help industry

succeed through www.sourcingchange.com, the first resource dedicated to outsourcing and shared services change management

Houston, (do) we have a problem?

• How many of you are struggling with change?

• What is your definition of change management?

• Where are you finding the greatest challenges when implementing shared services and outsourcing?

Real purpose of sourcing change

Rapid control of and compliance to new ways of working

Which means revolution…

• Moves fast—makeover throughtakeover

• Not democratic--limited input from stakeholders

• Initial degradation—majority experience or perceive loss

• Collateral damage—loss of position/jobs, new “rulers”

• Not optional—requires mandatory modification of behavior

“Revolution is an attempt to impose by any means rapid and comprehensive changes in the way people behave and think”

Where almost everything changes

• Enablers - the what, when, how

• Outcomes - benefits from the change

• Rules - ordained ways of working

• Culture - faith in dogmas

Add loyalty, vision, attitude, performance

Add loyalty, vision, attitude, performance

GOVERNANCE

Complexity

SPEED

GOVERNANCE

WORK GENERATIONORGANIZATION

Grey matters: Revolution ensues …

• Loss of productivity and morale• Business line

rejection/workarounds• Passive resistance—”wait out

another program failure”• Unnecessary noise• Open warfare

“when rapid advances occur, people think they are merely numbers”

… and compliance becomes critical

• Credibility—is the sponsor credible; is the change credible?

• Validation—can you get others I trust to do it as well?

• Reciprocation—what’s in it for me?

• Penalty—if I don’t change, what will you do to me?

But we avoid dealing with grey …

• Tell, not engage, stakeholders

• Do not equip with skills to change/behaviours

• Do not position new “rulers” optimally

• Do not harness “self interest”

• Ignore the underpinnings of culture

• Do not acknowledge “taking” and use it effectively

• Do not deal with the psychology of change

…which results in risk…

• During solution - suboptimal deployment strategy, inappropriate pace, unrefined organization structure, scope diminution, inadequate response models, insufficient championship, low commitment levels, no defined incentives

…which results in risk…

• During solution - suboptimal deployment strategy, inappropriate pace, unrefined organization structure, scope diminution, inadequate response models, insufficient championship, low commitment levels, no defined incentives

• At announcement - grief, insurrection, departures, lack of trust, inattention, loss of productivity, high noise levels

…which results in risk …

• During transition -insufficient knowledge transfer, loss of productivity, low morale, delays, rework, insufficient training, inadequate response models, wrong pace, improper staff reassignment/exits

…which results in risk …

• During transition -insufficient knowledge transfer, loss of productivity, low morale, delays, rework, insufficient training, inadequate response models, wrong pace, improper staff reassignment/exits

• At steady state - passive resistance, solution corruption, inability to expand scope, inadequate communication, lost sponsorship, suboptimal performance, duplicate organizations, rejection of sourcing programs

Typical approach to change management

… which is not “better than before”

For compliance, manage the grey

• What changes for whom? Use what changes to stage and pace

• What is the context in which the change occurs ? Work with the culture

• How best to encourage compliance? Apply the psychology of change

Stage and pace change

Work with culture

Change by the numbers6 months to adopt/12 months to embrace/18Months to expand. No 2 organizations change the same way.

Organization to speak with 1 voice. 3 stages to sourcing change. Infinity = number of opinions. 10+

potential stakeholder groups. Reinforcement of behavior 3 times more powerful than 1

announcement. Maximum attributes to change at once is 5.

change programs in effect 24/7. 3 components of initial messaging in 4 phases. 2 most important messengers

are sponsors and managers. Majority of change efforts spend only

5 percent on employee concerns. Communication is a 2 way street. Effective change results from communicating 7 times

and in 7 ways. 1 chance to get it right.

Parting words

• Result is revolution, not evolution, where almost everything changes

• Compliance means focus on the grey

• The grey can be effectively managed!

• Change management is control of and compliance to a new business model

Questions? Comments?

deborah.kops@sourcingchange.com

Resources for Outsourcing and Shared Services Change Management