Culture Based Change Management DGQ Jahrestagung 56 th EQG Congress FQS Forschungstagung 15 th June, 2012 Dipl.-Ing. Thomas Zentis Prof. Dr.-Ing. Robert Schmitt Fraunhofer Institute for Production Technology IPT
The numerical impact of change management and strategic company focus Surveys show that the importance of change management increased during the last years 79% of medium-sized companies CEOs would give the topic Strategy a high ranking 45% of interviewed persons from the top, middle and lower management think that long-term planning has an important influence regarding to business success 25% are even convinced that this is the reason for the great success of the company 70% 60% 2003 60% 49% 2008 50% 40% 37% 40% 30% 20% 11% 10% 3% 0% Very important Important Less important Source: Personalwirtschaft 6/2004 21% 79% Source: Deloitte. Begleitstudie zum Axia-Award High Rather high Leading a company successfully means to adapt to permanent changing parameters, not to hold the status quo 50% 40% 30% 20% 10% 0% 45,0% 25,3% 21,8% 6,4% 1,5% Very large Large Middle Small Very small Source: TU Clausthal Page 1
Preconditions for change projects Change does not equal Change It is not a one-off process, but a continuous one Change is dynamic. There is no clean line between conception and implementation According to the prevailing corporate culture, change is influenced by supporting and inhibitive factors What is the resulting challenge to gain sustainable change? There is a variety of methods to support change projects This collection is like a black box from which the optimal supportive method can only be chosen after considering the surrounding conditions and corporate culture Page 2
The process of Culture Based Change Identify the change Analyze the corporate culture Cultural Characteristic 1 Cultural Characteristic 2 Cultural Characteristic 3 Change Project type 1 Change Project type 2 Support change process methodically Decision Preparation Design Implementation QG 1 QG 2 QG 3 QG 4 Reinforcement Page 3
The type of change describes the goal of change and the way to it Every kind of change includes features and goals classified in standardized types of change: Headcount reduction Program of cost reduction An increase of productivity Outsourcing Reorganization and restructuring Implementation of new IT Depending on the kind of targeted change, there are different aspects of corporate culture importance and there are different methods of change management to be used Page 4
What is corporate culture anyway? Stories managers personality Architecture financial orientation dress style pressure to perform working times open doors kitchenette & smokers corner readiness to assume risk attention to detail result-oriented atmosphere employee turnover colleagueship inventive talent Hierarchy Personnel development company s founder rituals creative freedom netherworld company history gossip appraisal of criticism idea of man myths Feedback time oriented Controlling communication exemplified values Power team trip leadership Page 5
A conducted survey shows a strong connection between Change Project Type and Cultural Characteristics Projects for increase of productivity benefit from a high identification of the employees with their enterprise. This gives those employees an understanding of their personal additional benefit of the change intended For outsourcing, the consistency of a leader s point of view is an essential element for a project s success. Employees will understand their decisions as elaborate and necessary A frequent change of leaders has a strongly negative influence on change projects for reorganization and restructuring. Change needs time and continuity to become successful An intensive and personal contact between leaders and employees facilitates the challenging processes of reorganization such as reduction in staff. An elaborated communication concept helps to keep employees informed If new IT will be implemented, this should be argued by the advantage for the enterprise and the optimization of products. Commitment fades when projects become ends in themselves Source: www.cuba-change.com Page 6
Three main success factors for sustainable change can be deduced Change projects must not coincide with the frequent changing of leaders positions or executives opinions A stable working environment needs to be developed by promoting aspects of interpersonal workplace relationships Employees need to believe in the strategy and goals of their executives to identify with their company Page 7
Core results of the survey The influence of corporate culture on different project types has been clearly indicated Role and behavior of leaders are vital important (significant) for all change types At the same time consequent implementation of change methods is a good indicator for positive project success Leaders have already perceived, that employees need to be supported during change projects. Methods for motivating employees are mainly applied during the phase of implementation Little importance is tributed to preparing and designing change projects. Anyhow, adequate preparation and communication is crucial for the employees commitment to change Page 8
The process of Culture Based Change Identify the change Analyze the corporate culture Cultural Characteristic 1 Cultural Characteristic 2 Cultural Characteristic 3 Change Project type 1 Change Project type 2 Support change process methodically Decision Preparation Design Implementation QG 1 QG 2 QG 3 QG 4 Reinforcement Page 9
Integration of classical and innovative Quality and Project management Instruments Analyse environment Develop a strategy Prioritize alternatives Create feeling for urgency Form leadership coalition Communicate vision Plan first successes Motivate, enable, brief and authorise people Identify constraints for implementation Secure and communicate first successes Control and monitor results Adjust implementation plan to changed boundary conditions Decision Preparation Design Implementation QG 1 QG 2 QG 3 QG 4 QG 5 Reinforcement Observe environment Experienced know-how Cultural manifestation Page 10
Decision: Core Problems are detected and a Strategy derived Finding the system s bottleneck The central issue [CI] is the shortage of the system The CI often arises from V-connections between independent branches The elimination of the CIs leads to a maximum improvement of the system SE W V-connection CI SE SE W Control zone SE W W Sphere of influence Defining and managing the Strategy Positive aims are defined Specific information about desired target state is given Break-down to concrete aims for employees Strategic aim Operative aim Vision X X X X X X Page 11
Preparation: An overview of communication methods provides inspiration for the application within a company Sponsor cascade Communication cascade Sponsor Change Agent Concerned Different roles regarding different people: To my sponsors I am a change-agent, but to my employees I am a sponsor : member of process team : persons concerned : communication channel : direct sponsor : indirect sponsor Communications-toolbox An overview of communication methods provides inspiration for the application within a company The selection of appropriate communication tools and channels helps the change agent to reach the employees and to be reachable for their concerns Approx. 80 communication-efforts with detailed descriptions (target group, frequency, chances/dangers etc.) Page 12
Conclusion Leaders need to form the change strategy, but strategy still can be defined by the prevailing corporate culture For the success of a change project it might be necessary to break down the existing hierarchical structure as well as grant capacity and room for team work and inter-divisional projects Once a change process is initiated, leaders need to be aware that they should stick to the process at all times and thereby form the foundation for stability Page 13
Thank you for your attention! Dipl.-Ing. Thomas Zentis Group Manager Telephone: +49 (0)241/ 89 04-704 E-Mail: thomas.zentis@ipt.fraunhofer.de Fraunhofer IPT Steinbachstrasse 17 52074 Aachen Germany Page 14