I am frequently asked to write on the mechanics of change management, a level of detail I have tried hard to avoid until now. The reason is simple—change management is complex, it is difficult, and it should not be reduced to a series of “cookie cutter” activities. I will never understand why large business improvement programs frequently refuse to pay a decent wage for the change manager’s role. On less than successful programs, it is common to hear statements to the effect of “the change management work stream failed” or “we would have delivered a better program if we had started the change piece earlier” or other words similar in nature. These statements assume that the business improvement program had any change management at all. Frequently, this is not the case.
No doubt, each unsuccessful program would have involved the completion of a stakeholder analysis, the delivery of training, and the publishing of communications. But I doubt all of this was delivered in a cohesive, integrated broadside to the organisation. I use the word “broadside” deliberately. Treating them as activities is why business improvement programs fail to deliver the required changes in organisational behaviour. Activities tend to get completed sequentially and then signed off as complete when delivered. In this case, the business improvement program has at best, a change coordinator. “We have done the stakeholder analysis.”—tick.
When it comes to change, the most fundamental question to ask is: so what? What has been learnt from a change activity? What is the business going to do with the information?
Note that the question does not ask what the program team is going to do with the information. That is of lesser importance than what the business is going to do with it. This distinction is vital, as the program team cannot change the business. Only the business (line management) can change the business. The program team will do all the heavy lifting required to meet the agreed deliverables. It just won’t change the business. If the business does not want to change, then the program office, despite its best efforts, will deliver a sub-optimal result and the senior management team will once again wonder what went wrong. By the time they realise that they had abdicated their responsibility for achieving a successful outcome, it will be too late to make corrections without the need to invest significantly more money into the program than what was budgeted for. Effective stakeholder management substantially reduces this risk.
Effective stakeholder management starts with the program sponsor. The sponsor is accountable for achieving the business benefits and this, by necessity, must include accountability for the change management work stream. Consider: if the business was serious about improvement, then it would hardly make sense to make a support function (change manager) accountable for achieving the structural and cultural change necessary to deliver the desired business benefits. The change manager’s role then becomes one of a subject matter expert designated to guide the sponsor through the difficulties associated with change. This would not exempt the change manager from their responsibility to prepare traditional deliverables such as impact studies, training packs, communications, etc.
A primary variable in any change program is people’s behaviour, as individuals and as groups, and the key objective of the change program is to establish predictability of behaviour. Predictability cuts both ways. The change program must provide predictability to those staff impacted by the change so they know what to expect, and equally the change manager, working through the sponsor, must provide management with predictability of how those staff will respond to the change and what is required from them as a senior leadership group. When people know what to expect, then they will be more accepting of the change when it happens, even if the change has a negative impact on them.
In practice, predictability and stakeholder management are synonymous terms and this means stakeholder management moves from being a discrete task in a change management plan to being the backbone of all the change management activities. To further illustrate this point, consider the following typical change management plan.
To actively manage stakeholders requires agreement on who the stakeholders are. A stakeholder impact analysis workshop will help to identify the extended set of stakeholders. Stakeholders can be individuals or groups. For example, the CFO is part of the executive team, a key stakeholder group, and yet the CFO is important enough for the role to be identified as its own stakeholder group. In this way the CFO is referenced twice in the stakeholder management plan.
The impact analysis is a determination of how widely the “ripples” of the business improvement program will be felt. Ripples are typically operational, financial, or reputational. I define these terms in the broadest possible way.
The above methodology table indicates that the impact analysis is completed prior to the stakeholder management workshop. In practice, the two activities are iterative as each informs the other.
Once the stakeholder groups are identified, then the next step is to determine the best means to engage with each group, to bring them into the change program and cause them to actively participate. Basic psychology says that this is best achieved by engaging them on topics that interest them, in a manner that interests them. To this end a simple 2×2 matrix that cross references Power (the capability to influence the direction or outcome of the program) to Interest (the desire to influence the direction or outcome of the program) is a frequently used methodology.
This type of analysis is only valuable if the terms Power and Interest are understood.
In her article posted on the American Express OPEN forum, (https://www.americanexpress.com/us/small-business/openforum/s/?query=Nicole%20Lipkin%20) psychologist Nicole Lipkin discusses seven types of power, namely:
Legitimate Power is where a person in a higher position has control over people in a lower position in an organisation.
“If you have this power, it’s essential that you understand that this power was given to you (and can be taken away), so don’t abuse it,” Lipkin says. ”If Diane rises to the position of CEO and her employees believe she deserves this position, they will respond favourably when she exercises her legitimate power. On the other hand, if Diane rises to the position of CEO, but people don’t believe that she deserves this power, it will be a bad move for the company as a whole.”
Coercive Power is where a person leads by threats and force. It is unlikely to win respect and loyalty from employees for long.
“There is not a time of day when you should use it,” Lipkin tells us. “Ultimately, you can’t build credibility with coercive influence—you can think of it like bullying in the workplace.”
Expert Power is the result of the perception that one possesses superior skills or knowledge.
“If Diane holds an MBA and a PhD in statistical analysis, her colleagues and reports are more inclined to accede to her expertise,” Lipkin says.
In order to keep their status and influence, however, experts need to continue learning and improving.
Informational Power is where a person possesses needed or wanted information. This is a short-term power that doesn’t necessarily influence or build credibility.
For example, a program manager may have all the information for a specific program, and that will give her “informational power.” But it’s hard for a person to keep this power for long, and eventually this information will be released. This should not be a long-term strategy.
Reward Power is where a person motivates others by offering raises, promotions, and awards.
“When you start talking financial livelihood, power takes on a whole new meaning,” Lipkin says. For example, “both Diane and Bob hold a certain amount of reward power if they administer performance reviews that determine raises and bonuses for their people.”
Connection Power is where a person attains influence by gaining favour or simply acquaintance with a powerful person. This power is all about networking.
“If I have a connection with someone that you want to get to, that’s going to give me power. That’s politics in a way,” Lipkin says. “People employing this power build important coalitions with others … Diane’s natural ability to forge such connections with individuals and assemble them into coalitions gives her strong connection power.”
Referent Power is the ability to convey a sense of personal acceptance or approval. It is held by people with charisma, integrity, and other positive qualities. It is the most valuable type of power.
The most frequently used definition of power is legitimate power and using this definition alone is short-sighted. Staff who have relatively low legitimate power can have very high power when it comes to influencing the success of the program. This is especially true for subject matter experts who have expert power.
Once you consider all seven types of power, then it is likely that the set of identified stakeholder groups will be refined and expanded.
Equally, Interest can have multiple variables. I recommend using the same as those used to determine the “ripples” in the impact analysis, namely:
Operational Interest is a primary focus on structure, strategy, environment, and implementation; a desire to improve the operational effectiveness and efficiency of the business.
Financial Interest is a primary focus on the ROI and the impact on the balance sheet.
Reputational Interest is a primary focus on the company’s reputation in the market or the individual stakeholder’s own brand value.
Typically, all three variables will apply to each stakeholder group, but each group will have a leaning to one or another of them. For example, a middle manager will have a high interest in the operational benefits of the program and a lower interest in the financial aspects. They get their salary no matter what, so financially the program may not change their situation much, but operationally, the program could materially impact their work environment.
Then there is a forth variable to interest—self-interest.
Self-Interest is a primary focus on oneself. The WIIFM question or “what’s in it for me?” How will the program impact an individual’s personal circumstances?
This analysis gets interesting when it is used to evaluate how the nature of a stakeholder group’s interest will change depending on the health of the program.
To fully consider the relationship between the power and interest variables, it makes more sense to use a table rather than a simple 2×2 grid.
In this example, “Executive Management” has legitimate power with a primary interest in the financial results of the program. They are focused on ensuring the program is on budget and is delivering the promised ROI. They will also want to be sure that the change program is enhancing or has a neutral impact on the reputation of the company. As they are senior managers, they are less interested in the day-to-day operations and should be least worried about their “Self-Interest.” Obviously, depending on the specific circumstances of any given change program, the priority between the four interest types will change.
The above prioritisation should remain true while the business improvement program is going well. It will change if the health of the program declines and starts to have an adverse impact on business operations. When this happens, executive management will want to ensure that the business can still run and consequently, they will become less worried about delivering the program on budget. Their primary interest will switch from “Financial” to “Operational” and they will start to release additional funds. “Financial Interest” is reprioritised to second place and “Reputation” moves to third.
If the program health declines further, they may switch their primary interest to “Reputation” and start to take action to ensure reputational damage is minimised and operations are stabilised. “Financial Interest” moves to third priority.
In these examples, I have left “Self-Interest” at priority four, assuming that the executives are all professionals. It is realistic, however, to believe that individual executives will start to reprioritise self-interest higher up the scale depending on their exposure to the consequences of a failed program.
By comparison, the stakeholder group “Subject Matter Expert” is characterised by technically competent staff who are experts in their field. This group will typically have a high “Operational Interest” in the program, especially if it relies on their expertise and enhances their reputation (“Reputational Interest”). They will also want the business reputation to grow as it helps their CV. These staff may never rise to the senior levels of management and are less interested in “Financials.” Stereotypically, as long as the company keeps funding their budget they are happy. With a healthy program, interest in their “Self-Interest” is the lowest priority.
If the program health declines, then their Self-Interest will very quickly get reprioritised to the top of the list, as a subject matter expert typically does not want to be associated with a failed program, particularly in their area of speciality.
As the program health changes, so should the mode of the interaction the program has with each stakeholder group.
The 2×2 matrix can now be used as a guide to determine the best means of interacting with a specific stakeholder group with the caveat that Power is changed to Power type and Interest is changed to Interest type and the message is tailored to suit.
The quadrant into which a stakeholder falls, dictates the suite of preferred interaction styles that could be used to engage with that stakeholder. Interaction types include:
- One-to-one interactions
- Town-hall meetings
- Website updates
- Intranet forums (chat rooms)
- Awareness education
- Delegations of authority*
- Technical training
- Posters, brochures, and other marketing collateral.
* Delegations of authority refers to the degree to which a position or role can make a decision that will bind the company. Pushing delegation levels lower into the company should result in higher levels of involvement in the program as the applicable manager responds to the fact that they can make a meaningful and sustainable difference to the change program.
It should be noted that all types of interaction are relevant. What changes is the importance and reliance that should be placed on a specific type as a means to effectively engage a specific stakeholder group, with a realisation that the most effective mode will change with the health of the program.
Subject matter experts will probably respond to detailed website updates and awareness education sessions far better than to face-to-face meetings. Executives, on the other hand, will most likely respond better to succinct emails and face-to-face briefings. Tied to this, is the content of the interaction. As a stakeholder’s interest changes with the health of the program, so should the content covered in each interaction.
The matrix now looks as follows:
I close with a reinforcement of the principle that only the business can change itself and that the change manager must ensure that their activities do not absolve the sponsor and other key stakeholders from their accountability to make the program successful.