Cultural Analytics: Assessing Readiness for Shared Services By Kathryn Kienast and Robin Rudy
Table of Contents The Challenge.... 2 Measuring Organizational Culture and Readiness for Change.... 5 The Booz Allen Approach.... 7 1
Cultural Analytics: Assessing Readiness for Shared Services The importance of assessing an organization s readiness for change cannot be underestimated. In a recent study of public and private organizations, the Center for Creative Leadership concluded that 66 to 75 percent of change initiatives fail, and a resistant organizational culture is the chief culprit. In fact, the cultural aspect of transformation is often overlooked, which results in negative consequences that may appear during post-implementation. Cultural analytics can enable an organization to better understand what hidden key success factors may be in launching a transformational initiative. It is often a must use approach by successful organizations in business situations such as mergers, organizational transformations, leadership changes, or decision making focused on a new strategic initiative. The concept of cultural analytics includes research methodologies and nextgeneration analytical techniques that are driven by data mining of structured and unstructured culturally relevant sets of data derived from studies, social interactions, networking, and other activities within the organization. Determining an organization s readiness for change uses a similar approach expanded to include not only people, but also organizational processes and supporting technology. Combined, these approaches can empower leadership to make informed implementation decisions leading to a greater probability for successful outcomes. The Challenge Today s federal executives lead in a time when organizational agility matters and change is persistent. That change is driven by significant budget constraints and increasing scrutiny, ever-changing mission complexity, unpredictable disruption, and new policy mandates. As a result, federal mandates are driving many agencies to consider adopting a new service delivery model for support activities, including shared services. Unfortunately, many organizations underestimate or overlook the importance of cultural analytics as an effective way to lay the groundwork for transformation. There are several reasons. An organization s culture is often considered too complex to be understood, too burdensome to be measured, and too formidable to be analyzed. It is often perceived as even more difficult to change. A culture that is deeply rooted in its beliefs is frequently seen by management as a legacy requiring too many resources to change, and if attempted, the potential results are unclear. The transformation may also be seen at odds with employees ownership of the current processes, their vested interest in the status quo at risk. Further, the change is transitioning to a new service delivery model accomplished internally, creating a customer-driven organization with people who are co-workers may be a different concept that is not readily adopted. Any or all of these perceptions seem expedient to ignore the importance of assessing the culture. This is a serious mistake. It poses a high risk of a flawed implementation that will often appear later in ways that devalue the anticipated benefits. Our experience has shown that failing to address the cultural attributes of the organization in their planning stage results in: + + High employee resistance both passive and active 2
Shared-First drives organizations to provide service delivery of equal or higher quality at equal or lower costs. Identifying and pursuing opportunities for shared services is one method to reduce operating costs by leveraging shared platforms and service delivery (Federal Shared Services Implementation Guide, 2013). 3
+ + Inability to redirect leadership behaviors as a result of new job demands driven by the transformational initiative + + Low speed of adoption and ownership of a new way of doing business by employees + + Low utilization of new tools and methodologies + + Extended implementation period increasing cost and planning disruption + + Productivity loss + + Employee dissatisfaction leading to turnover of valued employees The organization frequently has to fix these consequences in postimplementation if possible, often resulting in organizational conflict and costing valuable time and resources. Worse, the result could be a failed transformation of the service delivery model or the introduction of work-arounds of shadow service operations adding cost. In this era of rapid technology advances, the need to understand cultural shifts is increasingly apparent. 75% of CIOs in our CIO survey recognize the need to change their leadership style in response to digitalization, especially by decreasing their control and increasing their visionary leadership over the next three years. (Gartner, January 2015) While this has broad implications government-wide, individual member organizations in the federal community will grapple with the impact locally. Developing a comprehensive plan and a customized change management approach based on the unique cultural aspects of the agency will help facilitate a smoother transition to a shared services delivery model. Another and more apparent dynamic cutting across the public sector are policies emphasizing the move to shared services, particularly in conjunction with organizations needing to invest in modernizing their infrastructure a policy mandate known as Shared-First. 1 Shared-First drives organizations to provide service delivery of equal or higher quality at equal or lower costs. Identifying and pursuing opportunities for shared services is one method to reduce operating costs by leveraging shared platforms and service delivery. (Federal Shared Services Implementation Guide, 2013). As agencies plan their transition to a new service delivery model, understanding the current state of the organization, and its ability and willingness to move in a new direction will inform management in developing governance, project management, and change management strategies. In each of these activities, the extent that leadership embeds the cultural lessons learned, the more likelihood that the planned implementation strategies will stick and the effort will be successful. The culture of an organization values, norms, and behaviors will shape the organization s ability to implement these changes. Like other transformational demands, converting to a new service delivery model requires an organization to take on the challenge of organizational change. Central to an organization s preparation is assessing their strengths and weaknesses focusing on people, processes, and technology. In order to manage organizational change effectively, the first step is to assess an organization s readiness for change by understanding its culture through a disciplined analytical approach. 1. https://cio.gov/wp-content/uploads/downloads/2013/04/cioc-federal-shared- Services-Implementation-Guide.pdf 4
Measuring Organizational Culture and Readiness for Change Applying a sound methodology and the right analytical techniques are necessary to measure an organization s culture and its readiness for change. The first step is the design and deployment of workforce surveys to gather data as well as developing and deploying an approach to capture unstructured data relevant to the impending change. Leveraging the appropriate analytical tools and techniques on the relevant data sets will enable leadership to develop a specific plan of action. Additionally, it will differentiate organizational culture from organization climate an important distinction. Organizational culture reflects the deeply held values, norms, and beliefs that have evolved over time. They are less visible even for people inside the organization because they are often taken for granted. The measurement approach should include baseline data that identifies traits and characteristics that serve the mission, those that do not, and evaluate key influencers of the culture. Organizational climate is often a function of the cultural foundation and reflects behaviors that are situational, individually subjective, and transient (i.e., focused in the present). Organizational climate is more easily affected by improving the work environment and employee relations. This information and the distinction therein are invaluable to shaping the strategies going forward through implementation. The following provide a few examples of the value of determining an organization s readiness for change: Booz Allen can bring insight, practical knowledge, and seasoned judgment to successfully leverage the wealth of information and insights from assessing the organization s readiness for change. 5
+ + Real Message. The culture of an organization is often defined by how significant initiatives are accomplished in the past and present. Senior management may articulate a set of values that they assume defines an organizational culture, but the reality is how the employees perceive the initiatives were accomplished; what actions were rewarded; the degree of collaboration; and the influence employees had in the process. This body of opinion is the real underlying message reflected in the in-house culture of how things are accomplished. Understanding the degree that employees share the values of senior management will indicate the level of effort required to build trust throughout the change management strategy (e.g., shaping communications), explicit actions required in the project management stages, and development of leadership/governance roles. + + Uncertainty. Cultural analytics reveals the extent employees are comfortable with uncertainty, ambiguity, and risk-taking including the willingness and ability to learn new skill sets. For example, transitioning to a new service delivery model may challenge employees to take actions outside their comfort zone. As in the previous consideration, this information will provide important data in developing a risk mitigation strategy, training, and other steps that may lead to investment requirements. + + Strengths and Weaknesses. To the extent employees within the organization are enamored with the current business processes and supporting technology, transitioning to a new service delivery model may be impacted by passive resistance and/or visible friction in daily operations. Conversely, it is likely that the organization includes employees who are or may be considered change agents. In both cases, the readiness assessment should identify potential problem areas as well as characteristics of strengths to be leveraged. Based on the findings, developing strategies to address people, processes, and technology proposed in changes to a new service delivery will facilitate a smoother transition. When determining the organizational readiness for change, it is also important that the motivations or imperatives for considering different service delivery models are made transparent by the leadership. Lack of transparency could negatively impact the results of the analytics being performed, specifically the attitude of employees impacted by the proposed change. Similarly, the impact on employees, business processes, and supporting technology by a particular service delivery model must be considered in the context of the organizational readiness for a particular model. In effect, the organizational culture becomes a baseline for consideration in light of each alternative service delivery model. Understanding the results from this perspective helps the planning process so that the organization optimizes the implementation of the selected service delivery model for the benefit of the mission and potential cost savings. A simple example is illustrative. If the decision is to transition to an external shared service delivery model, what is the follow-up strategy that must be implemented for the employees and business processes impacted when the cultural assessment reflected issues around organizational uncertainty? What specific actions are needed as perceived by the employees? What is the communication strategy and who are the most effective leaders to carry the message given the specific circumstances? How should the results be customized for different stakeholder groups? The cultural assessment forewarns and allows senior management to mitigate critical issues and drive the best outcome possible. 6
The Booz Allen Approach Based on extensive experience in designing and implementing new service delivery models for multiple federal agencies, Booz Allen Hamilton, a leading strategy and technology consulting firm, developed a Strategic Service Delivery (SSD) methodology. SSD is a comprehensive, lifecycle set of integrated, but discrete activities that has been deployed in multiple federal agencies. The SSD lifecycle consists of the four primary phases: > > > > Discovery Define and Model Deploy Sustain and Improve. Cultural analytics and organizational readiness assessment as well as the business case development is part of the Discovery phase and leveraged through Sustain and Improve. Each of the four phases is carried-out through supporting activities in partnership with our clients. It is important to note that these phases and supporting activities can be provided from the perspective of the client as a consumer of a new service delivery model or the provider as a successful shared service center. The action agenda in Booz Allen s readiness assessment includes a survey of incisive, client-facing questions that provides an effective decision framework to assist project teams in decision-making in context of agency s unique culture and mission. The readiness assessment also documents the organization s maturity in terms of business processes, technology, and standardization. It examines governance and leadership roles, employee perspectives, and the degree of acceptance across the organization and stakeholders of the reasons for change. The results of Discovery provide an in-depth understanding of the client s current culture and operations and the foundation from which to move forward. The data collected and tools applied baseline the organization s current state including its culture, people, business and IT processes, technology, service, and cost. This organizational baseline provides the basis for developing strategy for subsequent activities, including the analysis and selection of service delivery alternatives or other organizational and performance goals. Embracing cultural analytics will leverage the core capabilities of the organization and provide strategies effectively addressing shared services. Booz Allen can bring insight, practical knowledge, and seasoned judgment to successfully leverage the wealth of information and insights from assessing the organization s readiness for change. The value to the organization can be inestimable. 7
About Booz Allen Booz Allen Hamilton has been at the forefront of strategy and technology consulting for more than 100 years. Today, Booz Allen is a leading provider of management consulting, technology, and engineering services to the US government in defense, intelligence, and civil markets, and to major corporations and not-for-profit organizations. In the commercial sector, the firm serves US clients primarily in financial services, healthcare, and energy markets, and international clients primarily in the Middle East. Booz Allen helps clients achieve success today and address future needs by applying functional expertise spanning consulting, analytics, mission operations, technology, systems development, cybersecurity, engineering, and innovation to design, develop, and implement solutions. The firm s management consulting heritage is the basis for its unique collaborative culture and operating model, enabling Booz Allen to anticipate needs and opportunities, rapidly deploy talent and resources, and deliver enduring results. Booz Allen helps shape thinking and prepare for future developments in areas of national importance, including cybersecurity, homeland security, healthcare, and information technology. Booz Allen is headquartered in McLean, Virginia, employs more than 22,000 people, and had revenue of $5.48 billion for the 12 months ended March 31, 2014. Over the past decade, Booz Allen s high standing as a business and an employer has been recognized by dozens of organizations and publications, including Fortune, Working Mother, Forbes, and G.I. Jobs. More information is available at www.boozallen.com. (NYSE: BAH) 2015 Booz Allen Hamilton, Inc. C.02.047.15 FOR MORE INFORMATION Kathryn Kienast Principal kienast_kathryn@bah.com 703-377-1314 Robin Rudy Senior Associate rudy_robin@bah.com 202-203-5610