Blending Sponsorship with Change Management

Blending Sponsorship with Change Management A case study of implementing a new financial model at the University of Virginia Lee Baszczewski Sarah Collie July 27, 2012 July 2012 1

Objective of Session To provide an overview of a large scale change project at U.Va., the New Internal Financial Model, with an emphasis on the change leadership and change management associated with the effort. July 2012 2

What is PechaKucha? PechaKucha Night Tokyo in February 2003. Event for young designers to meet, network, and show their work in public. Japanese term for the sound of "chatter" 20 slides x 20 seconds (6 minutes 40 seconds) Why use PechaKucha? Presentations are concise and keep things moving at a rapid pace! July 2012 3

Founded by Thomas Jefferson in 1819, the University sustains the ideal of developing, through education, leaders who are wellprepared to help shape the future of the nation. School of Architecture College and Graduate School of Arts & Sciences McIntire School of Commerce School of Continuing & Professional Studies Darden Graduate School of Business Curry School of Education 11 Schools School of Engineering and Applied Science Frank Batten School of Leadership and Public Policy School of Law School of Medicine School of Nursing July 2012 4

2012 13 Undergraduate Tuition and Fees In state $12,006 Out of state $38,018 AccessUVa Financial Aid Program meets 100% of demonstrated need Select Rankings 2012 USNWR No. 2 Best Public University; No. 25 National 2012 Princeton Review No. 2 Best Value Public College STUDENTS 2011 2012 Undergraduate 14,591 Graduate 6,515 Total 21,106 Va. Resident 69.4% Six year graduation rate 93.8% 2012 Kiplinger s Personal Finance No. 3 Best Value in Public Colleges July 2012 5

$25,000 Gross Tuition and Unrestricted General Funds per In State Student (in 2011 dollars) Finances Academic Division 2012 2013 Available Funds $1.37 Billion $20,000 $15,000 $10,000 $18,624 $18,402 $13,026 $10,066 Operating Cash Balances 3.1% Exp Gifts 8.2% Sales & Services 12.4% Tuition & Fees 32.4% $5,000 $ $5,598 $8,336 Endowment Distrib. 11.2% Sponsored Programs 22.6% State Approp. 10.2% Tuition Price per IS Undergraduate Unrestricted General Funds per IS Student Tuition Price and Unrestricted General Funds per IS Student July 2012 6

Resourcing the Mission: The New Internal Financial Model What is it? July 2012 7

Why Create a New Model? Headlines of Changing Times Competition for Foreign Students, Research and Ph.D. s Hit Higher Education Financial Models, Sustainability, and a Few Jokes July 2012 8 From Higher Education.

What are we trying to achieve? GOALS OF THE NEW FINANCIAL PLANNING PROCESS UVA, as an institution, is meeting its aspirational goals and potential. Costs are being managed in the best possible way. Revenue streams are being maximized. Academic programs and centralized services are adding value to those we serve. Deans are empowered to improve and grow their schools. Schools and central administration are collaborating and aligned. July 2012 9

Shifting the Budget Conversation Great universities are transforming traditional, appropriations based budgeting. Focus on Central Financial Control Resource Planning Allocation Management Accountability Funds are centrally collected and distributed Incremental allocations to base budget Limited ability of schools and administrative departments to determine and fund their own priorities to an effective resourcing process engaging a broader community in collective strategic decisions about shared priorities. July 2012 10

Resourcing the Mission: Sponsorship Who are the Sponsors? July 2012 11

President Teresa Sullivan August 2010 Aug. 2010 First Sponsor July 2012 12

Michael Strine Executive Vice President & Chief Operating Officer John Simon Executive Vice President & Provost July 2011 Sandridge retires As EVP/COO May 2011 Garson leaves as Provost Sept 2011 Adams remains on Steering Comm. Aug. 2010 July 2011 Sept. 2011 5 different sponsors in one year! July 2012 13

What makes an effective sponsor? Purposeful: Clearly define change Attentive: Understand the impact of change Committed: Demonstrate public commitment Decisive: Cascade sponsorship Steadfast: Focus on realization Sponsorship Cascade 50% of teams rate their sponsors effectiveness as poor to fair. How can you help ensure your sponsors effectiveness? Ensure participation is active and visible throughout the project Build a coalition of sponsorship with peers and managers Communicate effectively with employees and managers, key messages Provide change management skill training, coaching, key talking points July 2012 14

Force Field Analysis Driving Force (Positive) NEW INTERNAL FINANCIAL MODEL (Force Strength) +5 +4 +3 +2 +1 0 0 1 2 3 4 5 Restraining Force (Negative) Revolving door sponsorship Incentivize entrepreneurial activities C H A N G E TOTAL TOTAL Force Field analysis is a management technique developed by Kurt Lewin, a pioneer in the field of social sciences, for diagnosing situations. July 2012 15

Force Field Analysis ACTIVITY Based on what you know of the U.Va. new financial model What are several driving forces for change? What are several restraining forces against change? How would this analysis help you plan for change? July 2012 16

Resourcing the Mission: Case Study: The New Internal Financial Model What is the U.Va. story? July 2012 17

New Internal Financial Model What have we done so far? Aug. 2010 July 2011 Sept. 2011 April 2012 Core Work Group Formed Core Work Group Disbanded Steering Comm. Engaged Task Forces Developed Assoc. Deans / Asst. VPs Deans / Senior VPs Steering Committee Task Force Task Force Task Force President s Message Academic/Administrative Budget Conversations Benchmarking July 2012 18

New Internal Financial Model Where do we go next? Summer 2012 Fall 2012 Winter 2013 Spring 2013 July 2013 Small Modeling Group University Sponsor Cascade Steering Comm. Decisions University Implementation NEW MODEL BEGINS $Revenue$ Decisions School/Unit Work plans $Expense$ Information Cascade Training Education Entrepreneur Financial Planning Financial Admin. Financial Reporting 19

Kotter s Framework for Organizational Change July 2012 20

1) Increase urgency Key Messages: Align resources with the mission Empower innovation and cost effectiveness Incentives to encourage entrepreneurialism July 2012 21

2) Build guiding teams Core Work Group: May 2011 August 2011 Membership Academic: Associate Deans Administrative: Assistant VPs, Directors Benchmarked Institutions Developed Institutional Profiles of Financial Models in Higher Education July 2012 22

2) Build guiding teams Core Work Group Dissension over what model is best What s in it for my school? Core Work Group Storming Then Disbanded July 2012 23

2) Build guiding teams Steering Committee: May 2011 Actively participate: Sept. present Membership Academic: Deans Administrative: Senior Vice Presidents First time brought together Initial Focus: Explored Institutional Profiles Learn about each other Develop Guiding Principles July 2012 24

3) Get the vision right Vision for the Future Risks of Today Top Vision & Strategies Expand research initiatives. Enhance each School s academic programs. Grow and improve the faculty and staff. Provide quality services that are competitively priced. Develop innovative, cross disciplinary initiatives programs to support the University s goals. Advocate University stewardship, transparency and communication. Top Risks Schools budget process is generally tactical, centralized, with little input from faculty. Understanding of unit costs and revenues is variable and needs to increase for many units. Budgets are not necessarily tied to strategic priorities. Incentives are more focused on growth than cost containment. Multi year financial planning needs to be instituted in all schools / units. July 2012 25

3) Get the vision right What are we trying to achieve? GOALS OF THE NEW FINANCIAL PLANNING PROCESS UVA, as an institution, is meeting its aspirational goals and potential. Costs are being managed in the best possible way. Revenue streams are being maximized. Academic programs and centralized services are adding value to those we serve. Deans are empowered to improve and grow their schools. Schools and central administration are collaborating and aligned. July 2012 26

3) Get the vision right 5) Enable action Change Readiness Audit How ready are they for change? What activities will manage change? The Tool: Change Readiness Audit A survey that evaluates the level of organizational readiness for change. Helps determine what activities will most effectively manage the change. Service Unit Change Readiness Do services align with the University s core mission of excellence in teaching, research, patient care and service? Is there appropriate widespread involvement in budgeting among staff? Are other institutions and industries benchmarked? Are there metrics for measuring performance and quality, continuous improvement and customer satisfaction? Is there ongoing analysis of the need and value of core service functions? Are core functions identified, providing a basis for basic level of service? Are services identified that are above basic level; functions that could be cost allocated, outsourced or established as service for fee? Are key customers identified, documented and surveyed for feedback? Are there service level agreements made to document customer expectations and define the provisions for quality services? Yes Some what No July 2012 27

6) Generate Short-Term Wins Revised 2012-13 budget process to begin the transition to a new model. 1. Broader cross-functional participation Greater collaboration between administrative leadership and deans EVP-COO and EVP-Provost participated in joint budget meetings for all major areas (Schools, VPs) 2. Greater transparency of information President Sullivan met with deans and VPs to discuss the final outcome of the budget process Information requested as part of the budget submission included reallocation and efficiency efforts 3. Centered around the academic enterprise. Revenue from undergraduate enrollment growth flows to the schools that generate it, aligning incentives as the University grows New funding provided in the 2012-2013 budget is clearly tied to the University s strategic priorities July 2012 28

ACTIVITY Manageable Components to enable action Steering Committee Task Forces Based on your knowledge of the new financial model and implementing large complex change management initiatives How would you divide this project into manageable components to focus on critical areas and enable action? July 2012 29

Resourcing the Mission: Change Management What about the people impacted? July 2012 30

5) Enable Action Stakeholder Analysis Matrix Side Player Consult on potential interest areas Increase their engagement & interest Observer Up date regularly Increase their interest Try to turn them into supporters Low Influence High Side Player Keep Satisfied Observer Monitor (minimum effort) Key Player Manage Closely Supporter Keep Informed Key Player Change Agent Consult regularly Engage them in the decision process Confidential face toface communication Supporter Inform regularly Consult on interest areas Low Interest High 31

ACTIVITY Stakeholder Analysis Matrix Which role and where in the matrix will you place these stakeholders? Looking at your squares in the matrix... 1. Who will be your champions? 2. Who will be your communicators? 3. Who will you ask to provide feedback on changes to their area? Identify 3 key activities to engage or move your stakeholder group to a higher level of interest. Change Management Learning Center, 2012 Edition of Best Practices in Change Management. July 2012 32

6) Making it stick Change Management Continuum: Personal change Internalization - Degree of support for the change - Commit Educate Inform Awareness Understanding Positive Perception Experimentation Adoption Institutionalization Contact Unawareness Confusion Negative Inaction Rejection Non- Perception of change compliance -Time - Terminate 33 Adapted from connorspartners Change Management Continuum

6) Making it stick Where would you place U.Va.?? Internalization - Degree of support for the change - Commit Educate Inform Awareness Understanding Positive Perception Adoption Experimentation Institutionalization Contact Unawareness Confusion Negative Inaction Rejection Non- Perception of change compliance -Time - Terminate 34 Adapted from connorspartners Change Management Continuum

4) communicate, communicate, Communicate INFORM New Internal Financial Model Website, Forums, Sponsor Videos, News Articles, Financial Workshops July 2012 35

4) communicate, communicate, Communicate INFORM Message Cascade for New Internal Financial Model Level 1 How does the project link to goals or vision? What is the future state or to be vision? What is the timing? Resource the Mission Units empowered to be innovative, cost efficient & entrepreneurial What are the stakeholder concerns and issues? WIIFM? What s in it for me? What support is needed from this stakeholder group? Level 2 What changes will stakeholder groups experience? What are specific job changes? High level organizational messages More detailed group & individual messages Change Management Guide Tools for Managing Change

Resourcing the Mission: Change Management Where do we go from here? July 2012 37

Kotter s Framework for Organizational Change Where is U.Va. today? July 2012 38

New Internal Financial Model Where do we go next? Experiment Inform Educate Commitment Summer 2012 Fall 2012 Winter 2013 Spring 2013 July 2013 Small Modeling Group University Sponsor Cascade Steering Comm. Decisions University Implementation NEW MODEL BEGINS $Revenue$ Information Cascade Decisions School/Unit Work plans $Expense$ Training July 2012 Education Financial Reporting 39

8) Make it stick! Contributors to successful change SPONSORS #1 KEY TO SUCCESS!!!! Greatest Contributors to Success Tools to Help Structured change management approach Kotter s Framework Change Management Continuum Force Field Analysis Change Management Plan Active and visible executive sponsorship Sponsorship Cascade Frequent and open communication about change Pecha Kucha Information Cascade Message Cascade Employee engagement & participation Stakeholder Analysis Force Field Analysis Task Forces (Manageable Components) Engagement with and support from middle management Stakeholder Analysis Change Readiness Audit Task Forces (Manageable Components) July 2012 40

University of Virginia Lee Baszczewski Sarah Collie slb3da@virginia.edu slc6h@virigina.edu July 2012 41