Presentation: Make Change or Wreak Havoc, Final Part

The final part of a 3 part series from the presentation on 'change management' delivered at the 9th annual Shared Services and Outsourcing Week in Budapest.

To read Part I, click here  & To read Part II, click here 

Attendee: Coming back on your previous comment, how do you measure track records for change?  You said that you had chosen Budapest because of their track record.  Is there some kind of KPI for measuring the capacity for change?

Philip: That’s a great question – everybody hear that question?  It’s about whether or not, you know, how do you track the capability of Budapest to say that it’s such a great place for driving change?  There isn’t a singular KPI, ok, so let’s nail that now.  If it were that simple I wouldn’t be working for BP I would have my own consultancy and I would be selling it to everybody, right?  What you can do, however, is you can use things like the benchmarking data that is available, you can talk to people who’ve ran operations here, you can talk to clients who’ve had their services delivered from here – I’m not trying to suggest that Budapest is better than everywhere else and everywhere else is crap, but if you look at the track record of an industry that in 1989 had about three companies, and in 2009 I think it’s something like 89-90 companies with close to 20,000+ people employed, I think those companies aren’t here for labour arbitrage any more.  They are here because of the capabilities of the people and that’s why actually the really good companies, they have a two way system of captives and outsourcing.  So they might move something from certain countries to, say, Budapest, but when you create the process dependency you de-risk the language and make it a commodity, then guess what?  That should go to the low cost outsourcing provider.  And then you backfill that with more contextual jobs which add value to your business, and that’s what I mean by the two way.  I can guarantee you that if you talk to most people who have had an operation or a service out of a country like Budapest and Bucharest and Poland are also, I would say, very close in that respect – I think you’d get a lot of positive vibes. Unfortunately no KPI...

Deborah: Yeah, I think that’s a problem with change management, because it’s soft and it’s squishy and there really isn’t anything to manage.  You really don’t know if you’ve done a good job until you see the wrong... I mean, the problems become lesser and lesser and lesser, the noise level goes down, and it’s almost a noise-o-meter process.  It’s not – that’s why we’re all uncomfortable, because we can’t measure it.

Philip: Yeah, this is the thing - think about it, how many people have gone through a transition and after you’ve gone live, do you not think the first pieces of noise are just total crap?  Oh, you’re terrible at paying your vendors!  And it’s all happened since you moved it…And then you ask the obvious question which is: OK, can you give me some information?  So I can react?  And guess what? 

Deborah: They don’t have it. Don’t have it.

Philip: And that’s where you’ve got to separate the emotional from the factual.  And it doesn’t mean you can always manage on factual – life isn’t that simple or pretty either OK, but what you do have to do is to remember that most of the noise that propagates, at least to my twenty plus years now of being in these types of industries – it comes when you do not manage your stakeholders well.  You do not manage their expectations, you do not communicate enough with them, you start off as a dictator saying we’re doing it ‘cause we’re doing it, because I don’t care about your business, and that’s the worst thing that you can do.

Deborah: And I have to say that I did that once at another organization; I was told by my boss, "Deborah, put up the website and a couple of cool posters and put the mouse pads around, and you don’t have to talk to anyone because they will do it and bloody they will like it."  And guess what happened – first transition and the noise was deafening and the head of global banking calls me and says "Deborah, you – one wasn’t paid, and how can our analysts look at economic data because they didn’t have it" – well it turns out that I never told them how to create the cost in the new system because I had my neat little book that said this is what you do and this is how you do it, and if you have a problem call Bangalore.  And I didn’t sit down and say, I didn’t have a concierge service, I didn’t sit down and say "Now this is what’s going to happen to you.  You may not like it.  This is what you do if you don’t like it, this is what you do if you do like it, and this is what you do if you have a question..."  I didn’t do the hand-holding, and boy was I stupid.  And once I started to understand that these were people we were changing and it wasn’t a corporate policy it made a huge difference – and I think you’ve seen that as well.

Pierre: Yeah.  What I wanted to add as well is to share one experience that we did to measure how ready the organization was for the change and how much we did in terms of preparing for change.  What we did actually, we brought in a small firm, a small consultant firm to make a proper assessment of where we are, so they have in terms of change preparation, so they have gone through our work change management plan, a plan is nice but this is not the reality, so they have been actually visiting and interviewing the stakeholders, the team leaders, the front line people and as I said, some customers.  Obviously they could not do everything but it was quite enlightening and it was perfect, the result of this assessment was – it was before the transition hopefully, but you are not completely ready, guys.  These are the areas where you have to make an effort.  And one of those – and this is where, for example, they suggested this – take the plane and go around and visit these fifteen countries and do your road show – so that was them giving us a tip as to how to improve our change management plan.  I think it’s not a bad approach.

Deborah: Yeah, one of the things I found was that I had to get really down to the battle level and once I learned this I was a lot better off.  People try out things over time and then they get to a period of time where they’re thinking about it and they don’t know whether it’s going to work for them or not.  But you want to do it; you don’t want them to be guerrillas.  You don’t want them undermining you – what you want to do is create what I call the ‘loyal opposition’.  If you can box them in a corner and they don’t make any noise, that’s a good thing, even if they don’t like it.  If you can’t make them enablers of their process, basically you’ve got to defame them, and unfortunately you have to do that person by person and not everybody changes the same way.  One of the things I found is that the woodshed technique works real well – if I had a business line guy who really didn’t like it, I’d figure out who he kind of listened to, who shaped his career, who is his mentor and I’d say "Would you please take him out to the woodshed and beat the crap out of him?"  Until he understands that he’s got to be loyal opposition.  But this is dirty – this is rugby, this is not Australian rules football, this is not American football – as you all know that’s really the same stuff, this is really mapping people, getting down to the people... I would say that business lines are made out of people and unless you can get them in a box and take out, you know, take out their brick bats and get them quiet, it’s not going to work. 

Attendee: Sorry, can I just ask a really awkward question of Pierre?  Pierre, some years ago you did a presentation about how Kimberley Clark prepared for Sarbanes-Oxley.  It was a really, really... it was a wonderful presentation and one of the lessons I think that you said at the time was around expectation management... and the question I want to ask is... the stuff that Kimberley Clark has done has been really great stuff and it’s industry leading... why was it that you didn’t follow your own advice, and more importantly, if you had set expectations and basically told senior management the truth, would they have actually gone through with it?

Pierre: That’s a very good point actually – why did we make the same mistake?  And genuinely I’m going to explain – we made this mistake because of our history in the shared service.  We went through the establishment of the shared service coming from a region in Europe here – I’m looking for a good example... coming from regional organisation, everything decentralised, to a centralised organisation. So I can tell you that it was hell, but everybody knew that it would be hell, so expectation at that time was resolutely managed.  After that, we thought having gone through hell, keep moving with the nice end to end process, pieces of this end to end process to an outsource provider must be a piece of cake.  And I must admit, I have been saying that in this road show, I have been saying, "Look guys, you have gone through this hell creating the shared service, arranging the organisation into a central single shared service, that was very difficult, we have again gone through hell, it has been many things at the same time, so it must be easy to go to the outsource without changing any process."  As a matter of fact, you are changing some processes; you are cutting your processes at one point so you have to manage the breaks in communication, the breaks in work flow etc.  So I am, I have been the first in making this mistake, to be honest, in overselling it.  Managing expectation is – if I had told the truth to the management, would they have listened?  I am not sure, actually.  That’s probably right because they were very interested in the outsource deal because of the benefits.  To be honest, at the end of the day, that’s what they were expecting, and they wanted to look at the bottom line – yeah, go through your transition, do what you have to do but I’m not interested in that.
 
Chairman; Guys, sorry about this – we have time for one more question, so I think there was one over here – we have one more question and then I’m afraid we’re going to have to cut it off because the next session’s starting so... thanks.

Attendee: Thank you.  My question is a real life situation that I’m facing in my company – we want to outsource a hundred and fifty people operation and I’ve listened to a few... about change management.  Now we are going to sign the contract, let’s say six months from now and I am unable to convince my operational people to make the announcement today.  Start preparing the augmentation so that after twelve months we can shift these hundred and fifty people overseas.  His logic is that I want to get everything done in sixty days – that in sixty days I want everybody out of the door.  Now, I cannot manage this process, this change management in sixty days, it’s a huge operation.

Philip: What would you like, would you like the Irish blunt answer or the politically correct answer?  Get rid of your operations manager because he doesn’t know what he’s talking about.

Pierre: Absolutely.

Deborah: Yeah.

Philip; You cannot do this type of transformation in sixty days.  Now, you obviously have to respect communication protocol because there are legal obligations, councils etc... Definitely, my advice – don’t screw that up because it damages your good will and your credibility.  You will not do anything like that in sixty days so I would take the Irish route of saying you’ve got to go above his head.  OK? 
Pierre: Yes, I fully agree with you.  We did the transmission in six months, which was relatively aggressive, and in there you had about four months of knowledge transfer.  To me, that was not enough.

Deborah: Yeah, I think one of the mistakes top management make is that they think people are going to be affected by outsourcing whether they retain or they go out the door are stupid, and they’re not, they know.  If you’re honest, tell them early and tell them what you know, and what you don’t know you’ll be far better off.  And with that, we’ll empty the room.  Thank you all for taking the time to think about change.