Expert Perspective by Grahall’s OmniMedia Editorial Board
We were saddened to read the foot note at the end of the column “Why Is It So Hard to Tackle the Obvious?” from the Harvard Business review published in Bloomberg’s Business Exchange, that author C.K. Prahalad had passed away. (Click here to read his obituary from the Washington Post). Prahalad was one of the most accessible theorists of business strategy and, along with co-author Gary Hamel, was the first to coin the now ubiquitous term “core competencies,” which encouraged companies to view organizations as a whole rather than simply by products or services.
In the article mentioned above, Pralahad writes: “Companies should stop looking at threats and opportunities through the lens of the dominant logic. Instead, the moment they spot signs of change, executives must decide what they can preserve—and what they must discard—in the dominant logic as they prepare to transform the organization.”
Grahall’s Joe Davidson points to health care insurers as examples of organizations that have known for months, if not years, that transformational change would be required of them. But many of these companies failed to initiate change even though they were aware that it was coming. Company leadership might be shocked at the changes demanded by health care reform legislation but they certainly cannot say they are surprised. Insurers are facing unprecedented transformation — both immediate and long term.
Although some health care insurers failed to get ahead of the curve regarding health care reform, there are things they can and must do now to improve the chance that the necessary organizational transformation is successful.
Joe says: “There have been many studies on organizational transformation and the fact is that people are more willing to change than was previously believed. Successfully overcoming resistance to change lies in the way it is implemented and facilitated. Engagement is the key to ensuring successful transformation. When employees are involved, and contribute to change efforts, rather than a “command and control approach”, organizational transformation is more likely to be successful.”
As we said in our blog The Only Thing Constant is Change: Organizational transformation requires an “… assessment of the impact of change on the company’s business strategy, followed by a review of organizational capabilities in light of change, and a realignment of talent management strategies to ensure a better long-term result.”
Human resources can help to drive change through the organization with the following approach:
1) Review and revisit the HR organizational design and be the first to transform to support the new strategic vision. HR can be the model for change in the organization and lead the effort by example.
2) Review the people strategy and identify “what must be preserved and what must be discarded” to support the transformed organization. Ensuring that the people strategy supports the transformation will help to seamlessly drive change through the organization
3) Identify the core competencies and individual leadership competencies that will be required by the transformed organization and match these to the skills and capabilities of people within the organization. Identify where gaps exist and create development strategies to fill them.
4) Identify, evaluate and implement new programs that will support employees in the new environment
5) Review and revise performance criteria to ensure that it accurately reflects the critical requirements for success in the new environment. You do not want employees to be working toward, or worse be rewarded for, behaviors that no longer create value. The right scorecards that are aligned with the transformed organization are critical to supporting and sustaining transformational change. In his article Building a Performance Culture Davidson writes: Performance management redesign that includes clear behavioral and values based dimensions of performance can provide a real competitive advantage to organizations. An additional benefit of implementing behavior based performance management is the alignment it provides for other human capital systems.
Change is inevitable. Change is also fraught with politics. As Davidson shares in excerpt from his forthcoming book Organizational Politics leaders must be fully aware of the political aspects of change. “Understanding what you are willing to support with your own personal commitment provides insight on where others stand and the degree of commitment behind their positions. Effective leaders need a clear perception of the political landscape in order to achieve personal and organizational results. By recognizing political awareness as a key leadership competency and designing developmental interventions to build that competency in current and future leaders, leadership development practitioners can directly contribute to improved organizational performance and results.”
Those many companies that fail to seize the opportunity to start organizational transformation at the first hint of change face a challenge. They must accelerate the effort to revise their business strategy and translate that into organizational capabilities, then and the individual competencies, expected behaviors, required knowledge and skills to be successful in the new environment.
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