Presentation: Make Change or Wreak Havoc

At the recent Shared Services and Outsourcing week in Budapest, a session took place looking at change management when building a sourcing model. This was led by Deborah Kops, WNS Global Services; Pierre Leroy, Kimberly Clarke and PhilipWhelan, BP. This is the first extract of three parts.

Deborah: OK, you see before you three of the biggest liars at this event. Do you want to know why? Because we’re saying that change is fail-proof and it’s not, and what we hope to do today is help you understand what techniques you can use, what trials that you’ll experience and hopefully take a little bit away not just from us but from each other – is that a deal? How many of you have gone through major change programs? How many of you used to be taller and blonder and have more hair? (laughter) OK... well you see before you three people - Pierre used to look like "The Beatles." (more laughter) Philip used to be a Calvin Klein advertisement, and pre- my last change experience I was tall, svelte and very blonde. So the three of us are actually humbled by our experiences of what change really means and what we’d really like to do today is to give you some sense of what works, what doesn’t work and two deeply profound case studies that will hopefully either resonate with you or you’ll be able to take some lessons from... I’ve had my red shoes already introduced, so without further ado – I’m Deborah Kops, but I’d like to introduce my two illustrious fellow facilitators – Pierre LeRoy who really is the brains behind Kleenax)... alright?! (laughter from Pierre)

Pierre LeRoy: And Huggies. And Andrex.

Deborah: And Huggies... and Andrex... OK, OK. And then we have Philip Whelan who recently joined BP... he is running shared services centres and he has gone from dark side to light side! Yeah, see now he’s Luke Skywalker – the Luke Skywalker of SSON. OK... Our topic today is to make change of Gempack a fail-proof method... and again, one of the challenges with change is that nothing about it is fail-proof. The biggest challenge you have whether you’re dealing with outsourcing change or shared services change is that we all are business people, we all like to be logical, right? We don’t like to think on the right side of the brain unless those of us in the room wear a skirt and we know how to do both, right? But fundamentally change is about right side, we’re all wired to be left side; we like to have power points, we like to have GAM charts and people don’t behave according to GAM charts – let’s just call this what it is, this is about people, this is about organisations, this is about getting people to do something they really don’t want to do and don’t necessarily see the need to do. And once we understand that it makes it a little bit easier to make a change.

It’s challenging, in some places it’s prescribed – how many of you operate in Germany? And have gone through Workers’ Council process? OK, you know how prescribed that is – you want to go, you want to move and it’s going to take you two years to either move to Shared Services or Outsourcing. It’s ever-evolving – one of the biggest challenges, particularly with Outsourcing is that you make all sorts of lovely plans and then the day you open up you’ve either done an acquisition – you’ve filed for bankruptcy... or you have 45,000 more company codes than you did before, so the complexity is absolutely mindboggling – we make plans based on certainty and reality is not certain. It’s parochial. This biggest challenge is... How many of you see somebody from the top say, "we need to make this change" and then you see guerrilla warfare coming from all the business lines? Is this common or are you all absently have perfect organisations? You know, the Controller really doesn’t want to do this, and the guy in the US is going to nuke the whole thing because he really doesn’t like it... I mean, it happens. It’s critical; it’s very difficult that it’s linked to revenue production.

Quite frankly, finance and accounting has a little less criticality than revenue productions, for example outsourcing customer care is exceptionally critical, especially if it’s a revenue rather than an order, but it’s a revenue creation function so it becomes even more difficult. It’s complex – more customers, more internal relations, more upstream and downstream processes means a larger and larger headache and last but not least there are two people in the room who have the same agenda. I don’t care what you say, but nobody sees life the same way, that’s why we’re all lovely and special.

So, if change is not a one size fits all process I think there are a couple of things we have to look at when we look at the degree to which an organisation can change. The sourcing maturity is very, very, very important – if a company has gone through an IT change typically it’s going to be easier for them to source business processes because at least the have some inkling as to what to expect. So, prior experience, sourcing maturity... if an organisation has done nothing but buy pencils or outsource travels...you call American Express for your travel rather than calling Suzie down the hall... it’s going to be hard, because fundamentally what we do is we’re breaking a series of relationships. Some of them are very personal, some of them are organisational. So that’s a challenge. Also, executive commitment... one of the things that really irks me... when I was at the... the Global Transformation Leader at an investment bank is that everyone at the top would say "Oh, we’re going to outsource, we’re going to outsource" and when it was time for them to stand up and take the hit they all ducked under the table. They basically look at change – change is a drive-by shooting, it’s kind of like The Sopranos. You say it when it sounds real good to the analyst, but when it’s really time to tell the Head of Global Banking to make a change then it’s like, oh, all right, if he tells you to get stuffed then you get stuffed and you hide under the table. Those executives really sometimes just don’t get it. So that’s a challenge.

If there’s a clear line of sight to delivery it makes a difference... and if there isn’t – this morning we talked about the fact that – do you really know what’s going on? If you really know what’s going on then it’s a little bit easier, but if a myth is being sold – outsource and all good things will happen, then we will reach nirvana within eighteen months – most people don’t get that and don’t believe it. Corporate agility, ability to change and quite frankly it’s almost predictive what sort of organisations can change easily. If a company is very process orientated – take a General Motors if there is one – very much longer. Company that is very prescribed and process orientated will find it less easy to change than an organisation quite frankly... like BP that is very networked, and years ago was able to make a radical change in their finance structure by outsourcing because it was a series of relationships of people who trusted each other and ultimately could see what the common good was.

And last but not least it’s culture and style. Most people will not change if you say, "You will like this outsourcing" – it does not work. It really has to appeal to here (pounds chest). So it’s really rough stuff – one of the problems most organisations have is they think about change as, y’know, calling in that PR lady or that communications lady or the HR people at the end and say "Make this work. Or put up a poster". That’s not change and that’s what we’re going to talk about today.

OK, making the change. If it’s not from the top of the house, quite frankly it’s bogus. If there is no strong governance it’s not going to stick, it’s not going to be sticky change. If somebody doesn’t have clear process ownership it doesn’t work. If it’s purely emotional and there’s no accountability it’s generally challenging, and if you make it optional, it’s not change. Change is hard, and the nice thing about outsourcing is that it makes people change because you’re putting a line in the sand. When change management goes wrong – and I think this is important as a precursor to what Philip and Pierre are going to say as they sing and dance – is that if there is no plan for change and there are no champions, it typically doesn’t work – you have to network it down to the lowest level of the organisation. We talked about Sopranos – the drive-by shooting stuff doesn’t work, it has to be in the DNA, it has to be very consistent – it has to be the same message to different constituencies because business lines hear differently from functions. They just do. And you have to really appeal to a "What’s in it for me?" And last but not least, we don’t know how to listen - when we hear something we take it the way we want to take it, we don’t listen in the larger context, so that’s very important for change. So with that, as I mentioned we have two people who used to be taller and have more hair and probably Pierre is a great person to kick this off as you probably – many of you may know, Kimberley Clark went through a massive outsourcing a couple of years ago and quite frankly has been quite good about encoding some of the lessons that she’s learned.

Pierre: OK, thank you very much Deborah. Just before I go into the lessons we learned and the change relevant plan that we developed for this particular outsourcing activity, I just would like to give you a quick perspective on where we are in the Shared Services journey and the Shared Services Organisation. We have a Global Shared Services Organisation with four captive Shared Services Organisations – one in the US in Tennessee, one in Brighton for Europe, one in Costa Rica for Latin America, albeit a much smaller one, and one in Australia. And we have two delivery centres which are outsourced, one in India and one in Bucharest. Our service provider is Genpact so there is no ambiguity on who is the guys we are playing with. This is the representing of about one hundred people in total as a Global Shared Service Organization. So, not very big actually compared to the size of Kimberley Clark’s nineteen million dollar turnover.
Our outsourcing transition was completely supported by the overall management, by the global leadership team – we went to a multi- tower outsourcing deal including ideas, application development and maintenance, sourcing and supply and HR only for the US and finance and accounting. And what I am going to talk about is our finance and accounting experience because I have been involved in the transition – I have been leading the transition for outsourcing in finance and accounting space for Kimberley Clark.

So, having said that I have actually depicted here and put a few bullet points about our change management plan – we did have what I would call a proper change management plan, but as you can see, it’s not all rosy – a few things went well and a few things went wrong, as you can imagine. But I have tried to identify what are really the big things, the big hitters and I think that Deborah said before that you must have stakeholder engagement. So, obviously you may have a high level of global leadership commitment because they are driving the change, but you have to drill that down into the lower level of stakeholder management, particularly when – I’m taking the example of Europe where you have to visit several businesses. So we had quite a strong plan for stakeholder identification and commitment and we started it relatively soon, before actually the contract was signed. We signed the contract late 2006 and we engaged in discussion with the stakeholders eight months before the contract’s signature. And we have invested in face to face presentation, face to face discussion – what will be the implication for your businesses? – and I will come back to that.

We tended to oversell the transitions saying "this is a lift-and-shift" transition, meaning that you won’t be seeing a lot of changes because basically we are not changing the processes, we are taking the processes as they are and we are going to throw those to an outsource provider. Keep in mind that we had an experience of transition to a centralised organisation shared service four years before. So compared to that we say it’s going to work, don’t worry. That was probably a bit of an oversell.

The second, obviously, key people you need to engage are your end users in terms of customers, and again, you have to invest in talking to these people. What we found extremely positive and extremely well received is that we made round trip shows – road shows – in each of the countries in Europe. This is quite demanding – we visited fifteen countries in total – some of them were grouped together obviously, but this is quite an investment. And we did that, and I think this is one case which worked well, as well as the early engagement of our stakeholders. Obviously when you move to this kind of thing you are going to lose people so you have to be able to communicate to your employee, that’s basic. You also have to go through some formal processes with work councils - in the UK it’s a work representative because we were based in the UK for Europe. And here, I would recommend – and that’s my lesson from this transition and change management – I would recommend to be as open as possible with your employees so... tell them the truth. Yes, we are going to lose a hundred – the organisation within Brighton where we were – is going to lose a hundred and fifty people, this is how many in each area. We have not yet identified who they are, there will be a due process, but please, be as open and honest – so that is the second thing – well, the third thing that we need to do well.

And we started that even more ahead than our stakeholders’ involvement – we started that twelve months before transmission, twelve months before we started the contract – before we signed the contract. And also we quickly differentiated between the retained people and the non-retained people as soon as the selection had been done because you can’t make that until a selection of people is done. And we have focussed our communication and training, which is a key part of the change management, I believe, on our retained organisation – so retained organisation, we developed specific training packs for team leaders but also for the shop floor and we developed multicultural awareness for them to be able to work with our service providers, our new service providers. So these are a few things – and I’m not going to expand too much on that – that we have identified as critical to make a proper change management and there are plenty of other things – we had three pages, A3 format of the change management programme, and despite all that things are not going as expected. If I quote three things which probably have not worked well – so I’m not going to talk about things that had worked well – to make it brief! – let’s talk about the things which have not worked necessarily well.

Click here to view part II and part III