change management

How can people in an outsourcing respect their manager but hate the organisation

Business, change management / By

I was thinking about outsourcing change management and the observation that those being outsourced often speak with respect about the boss delivering the message whilst being very hostile to the organisation actually forcing through the reorganisation. It has often happened to me when talking to people being outsourced that some managers or leaders are able to give bad news when it is necessary whilst still maintaining a good relation with their staff.

From a justice perspective, followers, or in this case the ones on the ‘receiving end’ of the outsourcing change, will judge the leadership exercised as to the degree which it is fair. That is leaders can motivate followers by following ‘fair procedures’ and followers can as a result become more supportive of the direction or goals being proposed and exercise good organisational citizenship – even when the goal being proposed is adversely affecting them.

This can be sharply contrasted if you think of a more distributive type of process where the person affected by the change only sees the instrumental issues – how the change is materially affecting them (loss of income or job for example). What this forces us to consider is how people apply different yardsticks when looking at an organisation’s position and how this can inform us why a person could simultaneously ‘respect’ the person who is communicating the bad news whilst keeping this distinct from poor justice perceived at an organisational level – or from another person or department elsewhere. I.e. is it seen as fair what the company is proposing as articulated by the manager compared to the way it is actually carried out at a company level. For example an outsource in order to gain cost advantages over an incumbent workforce would I suspect be judged adversely in a distributive justice sense, whereas a correct and fair application of the selection of the people affected by the outsource, as done by the manager, could be seen as procedurally fair if done with integrity – you would probably hear things like ‘he’s only doing his job’ or ‘he has no say in the matter’ but never the less ‘he’s a good chap.’

You could also take another view more directly related to identity and leadership: followers internalise the leaders perspective and construct an identity congruence to the leaders (buy in to the vision) and the issues around Identity in terms of the organisation (letting go and the processes involved in breaking the psychological contract) and constructing a new identity with the new organisation in outsourcing or ‘downsizing’. These types of processes also affect those left behind – i.e. be distanced from the organisation as a consequence of a poor outsource process. These sorts of processes could also help us ‘explain’ a differential response to the different players within an organisation (respect the manager but despise the organisation) – this is seen a lot in downsizing or outsourcing organisations people leave and organisation with a bitter taste in the mouth. It should not be forgotten that poorly outsourced people are probably lost as customers for the rest of their lives!

What this means is that the response of workers to an outsource can be greatly affected by the way messages and procedures are actually executed. A fair and equitable approach delivered by a well trained and respected manager can actually help in reducing resistance to change – in effect stopping causes of resistance at source.

Royston

Involve people in change to reduce the resistance

change management / By

Involve people in the change to reduce the resistance

Forced change against a strict deadline is now the reality for most changes and what we see more and more is that the complexity of change is increasing and many major programmes consist of several in their own right substantial change tasks.

In one of my jobs I had to advise a major European unit of a global company which had particular change issues that made their changeover within a global project have high perceived business risk. This unit for example had already gone through several changes of ownership in their recent past and was again heavily impacted by the new global program. Our first step was to understand how the change impacted on the group in some detail – on the departments and individuals within the business. Change needed to be thought ‘through’ not ‘about’ and the changes in role and tasks were worked through at a detailed level of granularity – and how these would change as the global project proceeded.

The intervention strategy we considered was based around thinking through what the ‘changed’ organisation’ would look like when the dust had settled. The patterns of communication, the new roles and responsibilities and the impact on individual tasks were considered and what the steps would look like to bridge the gap from the current situation to the future. We worked backwards from the desired state and forwards from the current to meet in the middle! This defined inter alia the changes in role and task, and the necessary training and coaching for the individuals. The transition was trickier, and this was handled by facilitating the transition cutover planning at group level. This acted to involve the organisation in the changeover (it’s on ‘its’ way!) and confronted them with the change and engaged them in participating in the design of the whole process. Getting them to define in detail their future roles and tasks as well as the timings were key aspects of this intervention. Further, interviews and group meetings around the changeover period itself allowed ‘voice’ to be given and concerns and issues to be fully surfaced.

Key learning points

Do not interpret all resistance as opposition to change. Opposition can often be a sign of interest in the outcome and an expression of legitimate concern Capture the concerns and rationale. It may be that someone has identified a flaw in our reasoning and may have identified a route to possible failure, perhaps from the last time this occurred. To find out why it did not work last time may reveal some interesting lessons. However, be cautious about agreeing with an issue as this may be interpreted as a sign that the change can be negotiated – capture without judgement.

The assumption that all employees will go through the same cycle of resistance is false and too simplistic. Often there are winners in a change process. Identify these and build coalitions to build a success culture. Furthermore, some departments or groups of people are more successful or more robust with handling change than others. Building on these departments within an organisation help bring the whole organisation along

We all know the value of clear communication but forget to include the need for relevant clear communication. Exhortations of the value of the change at high level are useless unless made clearly relevant to the people affected by the change. Unless the communication is made explicitly relevant to the employees specific needs they will switch off and ignore you.

Royston

Why Outsourcing often does not deliver value

outsourcing / By

Why are the benefits of outsourcing only rarely achieved

In a recent Dun & Bradstreet report they noted that “25 percent of all outsourcing fails” completely and over 50% of all outsource deals do not deliver any substantive benefit at all. Outsourcing failures are often the result of companies rushing into transactions with unrealistic or unsubstantiated expectations of cost savings and performance improvements that cannot be met because the client does not communicate its requirements in a clear way either internally or to the potential vendors. The outsourcing of many business processes besides IT also has the same less-than-stellar results – call centre problems are almost a
cause célèbre. Some people believe you need hundreds of pages of detailed specifications as complex as War and Peace to make outsourcing work at all tying up the whole thing in a tight contract that covers every possibility – clearly not a practical proposition.

The main causes of failure in an outsource in my view are :

  • The buyer’s unclear expectations up front as to its objectives – poorly defined goals and requirements and a lack of outsourcing contract management capability are two of the top reasons for IT outsourcing failures.
  • The parties’ interests maybe aligned up front but become misaligned as the buyer’s business environment or needs change over time (as they will inevitably)
  • The provider’s poor performance against service level agreements – which in some cases is dramatic.
  • The parties do not consider each other’s interests to ensure their relationship is mutually beneficial – the naturally conflicting objectives and the need for vendors to make money are often not really internalised by clients.
  • Poor governance structure for managing the ongoing relationship – in some cases this is left just to account management.
  • Poor cultural fit compatibility of the parties – asymmetric sizes between client and vendor as well.
  • Poor communication; the parties do not proactively share necessary information with each other – the relationship deteriorates rapidly when information is hidden

In another recent work I have been involved with there have been several instances of buyers and outsourcers in direct conflict and not inclined to acknowledge their own influence on outsourcing failures. The blame game starting early on in the relationship. Hidden costs, high staff turnover and poor cross-cultural communications are also some of the key causes of offshore outsourcing failures. Another big source of outsourcing failures is the way that outsourcing vendors tend to “sell high,” pitching their projects to the CEO rather than to the IT staff and managers who really know how to run the business – this enrolment of ‘C’ level managers is often the source of great difficulty when the real discussions take place. They have bought into a process based on high level aphorism that have little practical value on the street corner.

If you choose to look at global outsourcing as an opportunity, as numerous companies do, you may quickly realize that making it work requires a carefully planned and orchestrated approach. I suggest, though, that the current failure rate of performance improvement in outsourcing is only tolerated because the full extent of failure is disguised; few organizations or individuals are willing to admit the extent of failure on a major outsource contract. Failing at this game can have career damaging consequences.

See more at Bizface in the Outsourcing forum