Alsbridge, Change, Sourcing, Gordon-Pugh

Role of Change Management in Sourcing

Role of Change Management in Sourcing

By: Elizabeth Gordon-Pugh, Senior Manager, Alsbridge plc

Point of view

Implementing a successful and sustainable sourcing solution invariably requires significant change on the part of the retained organisation. This is true whether the sourcing solution involves a shared service centre, or an outsourcing or off-shoring relationship. Alsbridge has developed an approach to change management in a sourcing context that has been honed over many client engagements to deliver lasting value to organisations whether they are embarking on the outsourcing journey for the first time, or looking to improve the value they derive from existing sourcing arrangements.

What is the role of change management in sourcing?

If programme management is the tool that enables the transition to the desired future state to take place, then change management is the glue that fixes the changes in the retained organisation.

"When we asked a question about what, in hindsight, respondents would do differently, the overwhelming response was managing the change management aspects of the implementation process.

"Communications, change management, and executive buy-in should have received more attention."

From Shared Services: The Evolution of Higher Performance, SBPOA / Accenture, February 2004

It may have been written four years ago, but the sentiment has been aired countless times since, and will continue to be aired for as long as people set out to change, innovate, reform and otherwise improve the way services are delivered in organisations.

What are the elements of successful change in a sourcing initiative?

There are five key elements that contribute to the achievement of lasting change:

• Clear objectives for the change effort
• Targeted interventions
• Involvement of the right people
• Effective measurement and tracking
• Sustained long-term effort

1. Clear objectives for the change effort

Senior managers and project sponsors know that achieving lasting change in organisations is difficult. What they tend to want from change management is a kind of potion that will make it all work out for their organisation, and for the individuals in it.

But if this is as far as the definition goes, it's hard to know how to structure and plan the change management activity. Do you need one person, or six? What should these people do, and how long should they do it for?

So the first rule is: define the change you want to achieve, as precisely as you can. For example, you may want to restructure the retained organisation to enable delivery of services via the sourcing relationship, introduce new business processes and motivate people to adopt the news ways of working, all of which will contribute to the realisation of (say) the cost savings and/ore quality improvements which are the business reason for implementing the sourcing initiative.

2. Targeted interventions

The second challenge is to state exactly what will be the contribution of the change management effort and spend to the overall success of the project.

If you don't know what you're working towards you will be easily distracted and pulled off track. Typically, scope creeps occurs for the change function and it ends up doing project and programme management, or is sidelined as a producer of newsletters and tied up in endless editorial debates (this latter is one of the easiest defaults for change management to fall into, because change is 'obviously' about communications, isn't it?).

So the second rule is, be very clear about what the change function is going to contribute to the overall delivery of the project. What activities, what deliverables is the change function accountable for, and how do these map to the objectives of the change initiative? How will change contribute to creating the framework and target environment in which the changes brought about by the project can start their own cycle of continuous improvement? This might include, for example, designing and putting in place new organisation structures, reporting lines, accountabilities, new reward and recognition systems, and new recruitment and retention policies, with their supporting processes.

3. Involvement of the right people

The third rule is, make sure you're talking to (all) the right people in the organisation. This is a lot easier if the first two steps have been followed and there is a clear focus on what changes must be achieved and how the change activity will contribute to their achievement.

For example, if one of the change management objectives is to motivate people to adopt the new ways of working, then your targeted interventions will probably include revising the organisation's performance management system to include objectives and measures linked to the new ways of working. You may also decide to revise your recruitment and promotion criteria for certain roles, which will point you additionally in the direction of learning and development, so that people can be equipped to meet the new criteria. All of this analysis will lead you to engage with the HR business unit, and involve them in delivering those elements of the change activity.

4. Effective measurement and tracking

The fourth challenge is ensuring that the change management effort is measured and tracked. If you don't measure and track progress, you can't see how effective the change management activities are, and you can't take corrective action if you don't get the results you expected. Worse, you can't demonstrate the effectiveness and value of the change activities, so investment stops early as soon as money starts to run low and/or resources have to be diverted to deal with shortfalls in other areas of the project. Your change management effort is derailed and it's sink or swim time for the impacted organisation and the individuals in it.

So the fourth rule is, measure what you're doing, and its effectiveness. Constantly check whether what you are doing is contributing to achieving the project goals. Don't do anything you can't measure, and if you can't prove to your own satisfaction (never mind anyone else's) that you should be doing something, then stop it and do something more effective instead.

5. Sustained long-term effort

The fifth challenge is to sustain the change management activity right through the change initiative and beyond it. Typically, the change management effort ends too soon and everyone goes back to the old ways of working. But the organisation has changed! They can't revert completely to the old ways, but (being human) they give it their best shot. So what the organisation ends up with is a random blend of old and new ways of working, and once again the first casualty is the package of benefits that were expected to flow from the change. It takes time, and a lot of reinforcement, for people to adapt to and adopt a new way of doing things.

So the fifth rule is, don't stop too soon. Of course, if you've gone through the steps of defining the change you want to produce, and pinning down what activities and deliverables will contribute to this, and involving the right people, and measuring the effectiveness of your activity, then you probably won't even think of giving up too soon, because it will be obvious from your tracking activity that your journey isn't over yet.

The pathway to sustained changed

In summary, this is via the four stepping stones of

• Defining the change you want to achieve
• Being clear about change activities and deliverables
• Including a broad enough community of stakeholders
• Measuring and tracking your progress
• Not stopping too soon

These steps take time, and they take effort, and that inevitably means that they take money.  The upside is that when these rules are applied effectively, the change management spend will be a fraction of the total spending on the change initiative, and will ensure that the organisation gets the benefits of its investment.

This article has been written by Elizabeth Gordon-Pugh, a Senior Manager at Alsbridge plc.  For more information on the Alsbridge approach to Change Management please contact:

Helen Ricardo
Alsbridge Europe
Telephone: +44 (0)20 7242 0666
Email: helen.ricardo@alsbridge.eu
Web:  www.alsbridge.eu