LESSONS LEARNED FROM LEADING ORGANISATIONAL CHANGE ... Learned from Leading Organisational Change: Establishing the Ministry of Social Development 2 Introduction This paper, jointly

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    Justin Strang Shenagh Gleisner

    Tanya Howlett Marguerite Loth

    July 2004

  • Lessons Learned from Leading Organisational Change: Establishing the Ministry of Social Development 2


    This paper, jointly sponsored and produced by the Ministry of Social Development (MSD) and the State Services Commission, seeks to capture the lessons learned from conducting organisational change in some New Zealand public sector organisations. It is based on incoming chief executive Peter Hughes experience of establishing MSD1. It also draws on the change experience of five other public sector chief executives to provide a broader perspective and identify common themes that can offer a point of learning for future public sector change leaders. These chief executives are: David Butler, Commissioner of Inland Revenue; Howard Fancy, Secretary for Education; Garry Wilson, Chief Executive, ACC; Geoff Dangerfield, Chief Executive, Ministry of Economic Development; and Belinda Clark, Secretary for Justice. The content of the paper is based primarily on information gained from interviews with the chief executives, as well as with senior managers and a cross-section of other staff from MSD. In total 19 people were interviewed, the list of which is appended to this paper. We would like to thank all of the people who participated for willingly sharing their views. The following section provides an executive summary of the key lessons learned from leading organisational change by those interviewed. Each of the lessons is then discussed in the context of the MSD establishment and contrasted with the experience and outlook of the other chief executives who were interviewed as part of this exercise. The paper concludes by reflecting on the MSD experience and summarising the salient points. It is not the purpose of this paper to make judgements about the success of the change process or assess the quality of its outcome (except in reflecting the views of those associated with it). To do this would have required objective measures of success at the outset and an independent review of events. Instead, the aim is to present an account of events from which readers can learn and draw comparisons to their experience and expectations of organisational change.

    1 The Ministry of Social Development came into existence on 1 October 2001. It was the result of the merger of the Ministry of Social Policy (around 180 staff based almost entirely in Wellington) and the Department of Work and Income (staff of over 5,000 located in 143 offices nationwide).

  • Lessons Learned from Leading Organisational Change: Establishing the Ministry of Social Development 3

    A summary of the lessons learned

    This section summarises the key lessons learned from the interviews. It also includes a brief bibliography of additional material on organisational change. The following sections explain the context in which this experience was acquired and why it proved positive.

    Analyse the context of change The objectives of the change exercise, expectations of Ministers and the environment in which the change is taking place determine the options for approaching change. Key points include: nature of the change, e.g. restructuring or merger need to establish a sense of urgency for change need for financial savings and productivity increase how much time is available external constraints (e.g. political demands) history of change within the organisation(s).

    Tackle people issues People-related issues during a change process are the most prominent. The change leader needs to understand reactions to change and deal with staff concerns directly. Key points include: put the organisations interests above that of individuals, but place people before structures understand peoples attitudes to change:

    those who embrace it those who are unsettled by it but can be led through it those who are threatened by it and resist it

    deal with resistance get senior management buy-in so consistent messages go out to staff if organisations are being merged, form teams of people from different backgrounds to

    prevent entrenched behaviours and use neutral staff as facilitators involve staff in structural changes to build-in ownership of the outcome reassure staff who are not affected to alleviate their personal concerns so that productivity

    is not impacted.

    Maintain open lines of communication Build staff buy-in and minimise resistance to change by keeping people informed about the change. Key points include: take responsibility and act with honesty and integrity to establish trust communicate all stages of the change process directly, continuously, openly and

    transparently and establish open channels for feedback you can never over-communicate adapt messages to suit the audience.

  • Lessons Learned from Leading Organisational Change: Establishing the Ministry of Social Development 4

    Set a clear vision for people to follow Give staff a clear explanation of what the change is seeking to achieve so that they can understand it, own it and make the necessary adjustments to contribute to it. Key points include: repeatedly explain the organisations new vision to gain buy-in communicate the vision in ways staff can relate to: in their own words and in their own

    context; using real-life stories can prove useful build ownership of the vision by encouraging staff to contribute to its implementation.

    Recognise cultural issues Understand how cultural issues can impinge on change and deal to them, especially in merger situations. Key points include: recognise different outlooks, cultures and operational focuses and do not favour one over

    the other take the best of the old world, but create something new acknowledge the past and do not make judgements about it do not deal with iconic issues first let emotions settle before setting new standards in big organisations, accept diversity in merger situations, push people to work in teams with individuals from both sides to

    develop a joint approach, taking into consideration the resource-intensive aspect that this approach can have.

    Manage stakeholder relationships Successful external relationships are key to the new organisations success and have to be actively managed. Key points include: identify key stakeholders, then actively and systematically manage the relationships with

    them; ask senior management to do the same at their level establish transparency and accountability principles and adhere to them consistently manage public perception: own the organisations mistakes, but stand up for it it when it is

    unjustly attacked anticipate risks attached to public attacks by having response processes in place communicate publicly about the organisations achievements and successes.

  • Lessons Learned from Leading Organisational Change: Establishing the Ministry of Social Development 5

    Maintain the momentum of change External demands can be useful to reinforce the need for change and create urgency. Once momentum is gained, finding ways to continue to move forward and avoid regressing to past behaviours can prove challenging. Key points include: progressive change is preferable to big-bang restructurings because it minimises risks of

    disruption and early errors of judgement piloting change is a useful way to test it before full implementation external pressures can be useful for creating urgency link internal performance to external benchmarks to raise delivery expectations and keep

    staff challenged provide positive feedback when progress is made so that the goal gets closer empower staff to make them responsible for their future.

    Selected references The following references offer some useful insights to leading change: Bernhut, S. Managing the Dream. Warren Bennis on Leadership Ivey Business Journal, May/June 2001, pp36-41. An interview with an American change guru, which touches on all main contemporary issues. Crainer, S. John Kotter: Has plans to change himself and the world New Zealand Management, September 2003, pp48-50. Another American guru reflects on the importance of creating urgency and communicating (including the power of stories). Hamel, G. and Vlikangas, L. The Quest for Resilience Harvard Business Review, September 2003, pp52-63. A relatively new topic in leadership literature. Heifetz, R.A. and Laurie, D.L., The Work of Leadership the Harvard Business Review, December 2001, pp131-140. A reprint of the January 1997 article. Heifetz, R.A. and Linsky, M. A Survival Guide for Leaders Harvard Business Review, June 2002, pp65-74. Offers advice to change leaders as well as including tactics for managing your personal frailties. Kotter, J.P. Leading Change: Why Transformation Efforts Fail Harvard Business Review, March-April 1995 pp59-67. Kotter identifies eight common reasons why organisational change exercises fail. Considerable alignment with lessons identified in this paper despite private sector focus. Parry, K.W. and Proctor-Thomson, S.B. Leadership, culture and performance: The case of the New Zealand public sector Journal of Change Management, May 2003, 3(4), pp376-399. Adopts an empirical approach to test theories about leadership and effectiveness using the New Zealand public sector for context. Scott, G, Public Sector Management in New Zealand (lessons and challenges), Wellington 2001, Astra Print.

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    Lesson one: analy