The people power of transformations
A new survey suggests that
for their transformations to succeed, organizations need employee buy-in at all
levels, consistent communication, and better people strategies.
Organizational transformations are hard work, and according to the latest
McKinsey Global Survey on the topic, companies are no more successful at overhauling their
performance and organizational health than they were ten years ago. A particular blind spot seems to be the failure to
involve frontline employees and their managers in the effort.
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Transformations have their truisms. Successful ones, for
example, require visibly engaged C-suite leaders who communicate clearly about
the changes at hand. A vast majority of all respondents report these
characteristics at their companies, whether or not their transformations have
worked. But the results suggest that while C-level support is necessary, it is
not by itself sufficient. A transformation’s success also requires that people
across the organization have a specific role to play and that everyone knows
how to carry out his or her part.
Our survey asked about seven specific roles and the
actions that employees in these roles take during a transformation. For each one, and most notably for roles at
lower levels of the organization, respondents at companies with the most
successful transformations report overall greater degrees of involvement.
Respondents at these companies also are likelier to report other practices that
set their transformations apart: consistent communication around the changes being
made, especially to those on the front line; clear definitions of roles and
responsibilities; and a strategic approach to talent management. In contrast,
responses suggest that without employees at all levels having a stake in the
outcome, the transformation might well be doomed. Among respondents whose
companies’ transformations failed to engage line managers and frontline
employees, only 3 percent report success, compared with success rates of 26 and
28 percent, respectively, when each of these groups is engaged.
Look
beyond the C-suite
Among respondents, there is clear consensus that company
leaders are deeply involved in and committed to transformational change. Even
on the front line, 84 percent of respondents say their CEOs are very or
somewhat engaged. So do a majority of respondents at companies where the
transformation failed, suggesting that CEO buy-in is a critical and therefore
expected part of a transformation. Indeed, when asked which role has had the
greatest impact on transformation results, respondents across the organization
cite CEOs most often.
What really sets the more successful transformations
apart, according to the results, is the involvement of frontline employees and
their managers. Many companies seem to miss this: respondents rate these groups
(along with their human-resources leaders) as the least engaged in
transformations. At successful companies, though, respondents are much likelier
to report visibly engaged frontline employees: 73 percent do, compared with 46
percent of all other respondents.
Not surprisingly, involving the front line is even more
challenging at larger companies, where the rate of transformation success is
also lower. Just 45 percent of respondents at larger firms,
compared with 58 percent at smaller firms, say frontline employees are visibly
engaged in transformations. The same is true of line managers: respondents at
bigger companies are less likely than their smaller-company peers to say their
line managers—who oversee frontline work and whose activities are directly
affected by transformation initiatives—are engaged in the effort.
It’s not surprising, then, that these groups are the
least likely to view their companies’ transformations as successful. Yet their
involvement and perspective could not be more critical: among transformations
that fail to engage either line managers or frontline employees, only 3 percent
of respondents report success.
The
difference that good communication makes
While frontline engagement is so important to a
transformation’s outcome, few respondents report that their organizations built
broad ownership of the change effort. Only 39 percent of all respondents—and 11
percent at companies with failed transformations—say so. One way to build
ownership is with effective communication, which emerged in earlier work as a
key factor of transformation success. In our previous survey, the largest share of respondents said that if their
organizations pursued a transformation again, they would spend more time
communicating a change story about the effort.
This year’s responses suggest that communication remains
top of mind for respondents at all levels. When asked how their companies are
engaging frontline employees, respondents most often identify techniques that
involve communication—for example, communicating about the need for the transformation
and the transformation’s objectives. When asked which factors have been most
effective, they also select communication-related actions often. But frontline
employees sometimes differ from other respondents about which actions have
actually worked. Just 16 percent of all respondents say regular access to
information on the effort’s progress is an effective way to engage the front
line. But nearly twice the share of frontline respondents say the same.
Still, the most successful companies are much better
than others at creating clear lines of communication. Two-thirds of respondents
at these organizations say they provide regular access to information on the
transformation’s progress, compared with about half of all respondents and 28
percent of those with failed transformations. Respondents at successful
companies are also likelier than others to report that CEOs and senior leaders
are visibly engaged and committed to the transformation.
Transformation success isn’t contingent upon the front
line alone, of course. The results suggest that when everyone in the
organization plays their own unique roles, the odds of success are much
greater. But what does the right role look like? According to respondents,
company leaders contribute most to a transformation when they articulate a
vision and communicate actively. A transformation is 5.8 times more likely to
be successful at organizations where CEOs communicate a compelling, high-level
change story, and 6.3 times likelier when senior leaders share aligned messages
about the change effort with the rest of the organization. The leaders of program-management offices have
the greatest impact on success when they identify barriers to change and
circulate knowledge, while the leaders of transformation initiatives are
likeliest to make a difference when they take full ownership of their
individual initiatives. And for line leaders, it’s most important that they
make the transformation tangible and digestible for their employees.
With respect to human-resources leaders, respondents
report that their role is relatively small. Only 56 percent of respondents say
this group was visibly engaged, compared with 85 percent who say so of other
senior leaders. When HR leaders are involved, the odds for success are greatest
when they communicate the connection between human-resources objectives and the
transformation’s—though their actions are perceived to have less of a bearing
on success than the actions of other roles.
Change agents, in contrast, appear to have a notable
impact on success. Less than half of respondents say their organizations select
these employees, who dedicate a significant part of their time to work as
facilitators or agents of the transformation. But those who do report overall
success more often than other respondents—and are twice as likely to report
success at transforming their organizational cultures. Change agents have the
greatest impact on success when they model new mind-sets and behaviors for
others (including the front line) to follow and when they support employees to
develop the capabilities and mind-set changes they need to succeed in the new
environment.
In addition to defining specific roles—and identifying
how employees can contribute most to a transformation—companies also need to
move people around and even out of the organization, though in moderation. Just
one-quarter of respondents strongly agree that their senior leaders replace
people on their teams who aren’t personally committed to the changes being
made. But when they do, the organization’s transformation is much likelier to
succeed. In organizations where senior leaders replace uncommitted people, 29
percent of transformations succeed, compared with 6 percent where leaders keep
those people in place. Compared with transformations that fail to improve
performance or culture, these successful transformations are also likelier to
bring in new talent and move people internally, rather than moving them out .In
response to some of the challenges that the survey results revealed, here are a
few steps that companies can take to support the success of their
transformations:
·
Show—don’t tell—progress to the front line. When large
companies embark on a transformation, there is a risk that frontline employees
will see only the individual pain and not the aggregate gain. Communicating
clearly and creatively in a way that stimulates dialogue around the
transformation’s ambition and progress further increases the chances of
success. Techniques such as regular surveys taking the organization’s cultural
pulse, and progress parties celebrating a transformation’s milestones, can help
create a foundation for real dialogue between senior leaders and the front line
on the transformation and the potential changes to be made.
·
Involve HR as a strategic partner. Transformations
have a significant impact on employees and therefore require active involvement
from human resources. Yet respondents tend to perceive their HR leaders as less
critical than other senior roles to the transformation’s outcome. For this view
to change, the HR leader must set up his or her function to position itself
strategically at the center of the transformation, rather than playing a
transactional role. This will allow HR to make full use of its expertise and
contribute to the transformation in important ways, such as moving people
around the organization—in moderation. One way for HR to add value in a
transformation is by taking a clean-sheet approach to the organization’s new,
posttransformation design, then using strategic workforce-planning tactics
(such as recruitment, talent development, and dismissal) to achieve that
vision.
·
Engage employees through new channels. The survey
results suggest that reaching the front line is a greater-than-average
challenge at larger companies. But companies of all sizes can benefit from
creative, more digital approaches to engaging employees in a transformation.
The use of social media, change-management apps or games, and live-feedback
tools should support and complement the movement of information from the top to
the rest of the organization, rather than replace traditional methods. Such
approaches can do so by making communication more tailored and personal to
individual employees (for example, sending personalized push notifications if a
milestone has been reached) and by providing more regular updates on the state
of the transformation. Employees can also use these tools to explore and engage
with the changes being made, on their own terms and with the ability to provide
feedback. More advanced communication tools will be especially helpful in large
companies that struggle to engage the front line and in companies with many
different sites or locations.
http://www.mckinsey.com/business-functions/organization/our-insights/the-people-power-of-transformations?cid=other-eml-alt-mip-mck-oth-1702
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