Five critical factors in business transformation

The credit crunch and global recession are forcing some organizations to transform themselves, but speakers at a recent Toronto conference for human resources leaders warn that business transformations will fail if organizations focus solely on cost cutting and job reduction. “While cost cutting is a necessary defensive move in these difficult economic conditions, we also need to focus on offence to build a positive vision of the future and involve employees in the transformation,” says Bruce Simpson, director, McKinsey & Company at the recent conference, sponsored by Verity International, an HR consulting firm.

Simpson, whose firm authored the global study, “Organizational Transformation and Engagement: Highlights from an Executive Study,” says that the personal style and involvement of chief executive officers, the authenticity and honesty of the senior management team, and a focus on business fundamentals and culture are all critical to successful business transformations.

“Our research indicates that only one-third of business transformations succeed,” Simpson adds. “Transformations with leaders who were strongly involved and led from the front were twice as successful as those with uninvolved leaders.”

So, how does an organization engage its workforce in its transformation efforts?

“Communication, communication, and more communication,” says Elizabeth Stevenson, managing director, career management and transition practice, Verity International. She suggests:

-    Active communication from leaders outlining the positive reasons for change and what the future vision looks like;
-    Continual communication regarding the process – tell them what is going to happen next and when, tell them when it is complete, and what is going to happen next; and
-    Communicated using every medium possible – email, employee portals, town halls, department meetings, individually, in groups, and through employee action planning teams.
A good communication plan allows leaders to mobilize employees around a clear vision of the future, and create the momentum needed to successfully transform a business.

But when jobs are lost, what then?

“It is critical to reduce the fear and uncertainty caused by change and job losses. Treating people who lose their jobs with dignity, respect, and support can have a profoundly positive impact on the employees remaining. It helps them move on and engage in the transformation, knowing that their former colleagues were well looked after, and they will be too, should it happen to them,” Stevenson says.

According to McKinsey’s research there are five critical success factors in business transformation. Simpson summarized them for the conference audience:

  1. Set clear aspirations for the future of the organization, anchored in external and internal realities.
  2. Ensure the top management team is aligned, focused and driving the change.
  3. Co-create a change story that describes a positive mission and purpose and engage the organization broadly in its description and execution.
  4. Integrate the change in culture with a focus on financial performance rather than doing two separate programs.
  5. Engage in skill-building and relentless follow-through and execution.

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