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Organizational Change Management is Key to Program's Success Vance Kauzlarich For most large modernization programs, an organization's predominant focus is often on the enabling technology—the definition, acquisition, and implementation of information technology systems. If a program's success depended solely on installing the right hardware and software, however, many more modernization programs would be successful. It is the people who are going to use the new technologies who add an unpredictable, complex dimension. It's a well-known fact that people don't like change—they fear the unknown, fear losing control, worry that their jobs may change or go away. One way to combat fear is through consistent communications and by providing mechanisms for collaboration. Change management—a critical component of any modernization program—involves communication, consensus building, developing new practices, training, working with contractors, and more. "Organizational change management" has been an important topic for large commercial companies since the late 1980s. By that time, many efforts to improve overall corporate efficiency and cut costs through business process redesign and IT modernization had failed, and leaders began looking for root causes—many of which turned out to reside in company culture, human behavior, and employee motivation. As government agencies began adopting commercial business practices—looking for better customer service, increased efficiency and costs savings—they ran into many of the same problems commercial companies had experienced in their enterprise improvement programs. Now, government agencies are using organizational change management techniques that have worked in the commercial world within their own modernization programs. Enterprises, including government agencies, are more like complex living organisms than mechanical devices. Thus, they must be handled from a complex system perspective. Traditional systems engineering works better for groups of components that can be completely characterized and understood. Like a complex system, an organization's functional units need to be well integrated, even as they become highly specialized. If not well integrated, departments and business units can evolve to resemble stove-pipes, with minimal communication and cooperation among them. Stovepipes arise because groups lose sight of the overall purpose of the organization, compete for funds and resources, or are insular and see no value in collaboration with other groups. Competition encourages people to withhold information, shun cooperation, and hoard resources. In an enterprise modernization program, these separate groups must collaborate on multiple decisions—from the purpose of the program to changes in business processes, changes in organizational structures, and changes in the technologies the company will adopt. Governance Is Key One way to get managers and staff from around the organization to bring their complementary skills and knowledge to the table, effectively enabling change management, is through strong governance structures. These should provide open decision-making forums and include participation by all key decision-makers and employee representatives. Each enterprise needs a governance structure for modernization—a structure that represents that enterprise's unique mission and organizational components. Without an effective governance structure, a modernization program is likely to fail. All organizations have a "governance" structure (or an organizational management structure) to manage their business—from the Board of Directors or Trustees to corporate officers and on down. This structure tends to pay full attention to conducting day-to-day mission operations. For enterprise modernization programs, the organization must set up an adjunct governance mechanism, separate from its normal chain of command, to oversee the change program, solve problems that arise, and eliminate barriers. Success is more likely if the governance structure includes the head of the agency and leaders of its business units. Working-level managers and employee representatives must also be involved. Otherwise, while people at the top are working together to make decisions, mid-level managers will be practicing business as usual, looking out for their own units. People look to their immediate supervisors and representatives for direction and they are more likely to interpret and imitate their behavior than follow a party line from managers above their visibility. In very complex organizations, such as the Department of Defense, the governance structure may need to be hierarchical in order to ensure all decision-makers have a forum in which they can actively contribute and collaborate. When the Internal Revenue Service (IRS) began its current multiyear Business System Modernization Program, it understood that the top governance structure needed to be cross-functional and held accountable for achieving measurable goals that would transcend departmental or divisional boundaries, requiring both collaborative effort and mutually beneficial resolution of conflicts. The IRS created a Core Business Systems Executive Steering Committee, chaired by the IRS Commissioner and comprising "business owners" from across the IRS, along with representatives from oversight organizations (such as the Department of Treasury and General Accounting Office). This committee makes strategic business and investment decisions and reviews each modernization project as it approaches decision milestones. By bringing these players into an integrated decision forum, the IRS took a major step toward eliminating organizational barriers and ensuring an enterprise-wide approach toward modernization. The IRS has also created lower-level governance entities to focus on specific major aspects of its enterprise modernization program. 
Figure 1: Employees are better able to tolerate change if they understand why the change is important and if they feel the changes are being handled with fairness and transparency. Collaboration Through our work on several government programs, MITRE has learned that business units need to be made accountable for the success of enterprise modernization efforts, and we believe this requires an active and effective collaboration process—beyond the governance structure. Close collaboration must be established and maintained among those managing and executing the program, the business units seeking modernized capabilities, and the business customers. This cannot be accomplished through executive-level governance alone. By including all levels of management in collaboration processes, an organization is more likely to ensure that these managers take ownership of the modernization program, through participation and accountability. We believe the governance structures and collaboration processes should reflect the many levels of integration that must occur, not just between the modernization program/projects, the IT organization, and the business units—but also among the business units. This should achieve vertical and horizontal harmony across the enterprise. If a culture exists of hierarchical stovepipes that don't actively value collaboration, the people at the middle management and ground levels will not collaborate with the other units (or with the modernization program) even if their bosses say they are doing so. And thus horizontal integration will fail. Change management in enterprise modernization must, therefore, include the creation and maintenance of collaborative systems at multiple levels. Governance structures are necessary, but factors of communication and culture must also be addressed. Barriers to Change Governance structures, and other methods to build collaboration, help ensure communication throughout the organization—provided the governance boards have broad representation. These boards or committees serve as open forums to discuss issues and hear perspectives from all parts of the agency. Communication trickles down from these representatives to employees. Communication is critical to address the barriers to change that exist within every organization. The most common barriers include evaluation and reward systems. For instance, if people have been tasked to work together in teams, but then are rewarded primarily for individual efforts, team building will not be effective. Reward systems should reflect an organization's business goals. For example, the goal of many large, for-profit companies is to find ways to improve efficiency and effectiveness, thereby gaining a competitive edge. They are focused on bottom-line results and quick return on investment. Reward systems reflect this.
Government agencies, however, have different drivers, different cultures, and different reward systems, which often makes it more difficult to clearly communicate change objectives and measures and engage employees in change programs. Competition isn't the driving force for federal modernization programs, but improving customer service and reducing operational costs are executive government and congressional mandates. In addition, federal government oversight organizations—including those who fund modernization programs—are pushing hard for agencies to adopt commercial business and other preferred practices. But the public service benefits of such initiatives must be embraced by the government culture before effective real change is possible. Research and experience show that communication is a key mechanism for breaking down barriers to change. People must understand the value of collaborating in groups—which they may otherwise see as just additional meetings to attend. Leaders should set the example. If people at the executive level wholly engage in the modernization program, show willingness to ignore organizational boundaries, and collaborate to achieve the best enterprise results, their subordinates are more likely to do so. Governance structures must be augmented by agency-wide communications to all employees on a regular basis regarding agency goals, the purpose and plans for the change program, and how the changes will affect staff as individuals. An effective communications program provides a mechanism for each employee to ask questions and receive answers from the leadership. Employees are better able to tolerate change if they understand why the change is important and if they feel the changes are being handled with fairness and transparency. Good communication throughout the enterprise builds trust and understanding. People must see how the changes will affect the organization, the customers, and themselves. |
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| For more information, please contact Vance Kauzlarich using the employee directory. Page last updated: November 12, 2003 | Top of page |
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