Spearheading Change

Financial managers who understand and use the key tools and control levers of change management can become visionary leaders.

A client described the changes in his industry as a runaway train that had jumped its tracks but was still going ever faster. He often worried about it running over him. We concluded that the only safe place was to be on the train rather than in front of it. Many of you may feel the same way.

If this describes your situation, the only choice is to embrace change. Unfortunately, many of us do not know how; we struggle along using antiquated tools and often are unaware of the limitations of the methods we use.

Jonathan Swift once wrote, “It is in men as in soils, where sometimes there runs a vein of gold, which the owner knows not of.” I am convinced that this is true of our profession. We have the skills to help lead our companies through these turbulent times. If we can embrace these changes, we can harness the power and focus the energy on business success.

Change management has become a hot topic in the business world. Business writers highlight the need for managing the change process and suggest tools for helping direct it. Some of the key tools include:

• Force Field Analysis, which identifies the forces that support your desired changes and the forces that repel or restrain them.
• Change Readiness Surveys, which poll employee attitudes regarding management, their level of trust and their general susceptibility to change.
• Communication Plans that carefully explain corporate messages, offer suggested time frames for communicating with employees and suggest appropriate vehicles for distributing such messages.
• Training Programs where new skills can be taught and experienced.
• Action Plans and Scorecards that track the tasks and timing of implementation steps.

Controllers, as team members in the change efforts, must learn these tools as well as understand when to use them. Learning these tools can enhance the value you bring to your company and help speed the train along the right track.

Yet, there is an even more critical role you can play; you can move beyond just managing change to embracing change. You do this by moving onto the engine and taking the controls. To become the engineer you must learn the levers that can be used to effect change. Here are a few of the important controls:

Understand systems dynamics. Management experts from Drucker to Deming have commented on the need to understand businesses as systems. An excellent discussion of this concept is found in the book Improving Performance by Geary A. Rummler and Alan P. Brache. The authors note that pulling any lever in an organization system will have an effect on the other parts of the system. Optimizing the entire organization often means pulling the suboptimal aspects of individual components for the good of the whole.

Focus on the vision. The controller is not typically viewed as the company visionary, yet you can serve as a vital element by bringing the vision into sharper focus. Risk management and measurement are some of the tools you can use.

The nature of change creates risk. As Rummler and Brache note, organizations must adapt or die. Communicating these risks as well as the company's opportunities help create urgency in communicating your vision.

While all controllers serve as the masters of measurement, the really good ones have an added dimension to their measurement capability. The best controllers are excellent translators of finance. They are bilingual in that they can speak in finance but can also convey their message in the language of operations.

Build consensus. Just as a train has power and momentum, an organization embracing change develops momentum by achieving a consensus around its vision, directions and priorities. Controllers interface cross-functionally, so you can position yourself to ensure that a consensus is building.

Use visualization tools. Finding the vein of gold that Jonathan Swift wrote about often requires visualization. To embrace change, you must be able to visualize what needs to be changed, what the changes are and what the organization will look like when those changes have been made.

Tools such as activity-based costing and process mapping provide the means for this visualization. When you graphically depict the activities in a process, any redundant loops, bottlenecks and inappropriate approval levels become much clearer. This learning helps us visualize the changes that we will ultimately steer.

Change reward systems. Boarding a train requires that you leave the station; so does embracing change. Unfortunately, most of our current compensation and reward systems were designed to be stationary. If we are to move forward, they must be changed as well.

Changing reward systems is much more difficult than just stepping off a platform. Rewards are the ultimate link of measurement and behavior. They are the concrete that sets your direction. The problem is that changing directions is blocked by this same concrete. To embrace change, controllers can lead the charge to revamp reward systems.

Use benchmarking tools. Last month, I discussed benchmarking, which, I believe, is a key tool in embracing change because the basic tenet of benchmarking is that organizations must continually aim higher. As you move to become the change engineer in your company, I believe you will find a number of improvement initiatives under way. There is probably a TQM effort in place. The human resources department may be investigating self-directed work teams or broad-banding. Your operating areas may be having some success with just-in-time, supply chain management or total productive maintenance. Even your finance area may have multiple improvement efforts.

Next month, I'll discuss a framework for understanding and leveraging improvement methods — why there are so many different methods, how they are similar, how they differ and how you can combine them into a more powerful engine.