Managing the human perspective of implementing a new sourcing strategy

Change Management, Sourcing

There‘s an abundance of literature and advice on how to design a sourcing strategy and model for implementation, whether it is in-sourcing, out-sourcing or multi-sourcing. New ways of working, new governance and new roles are to be implemented.

It’s generally accepted that change management starts with creating a structure of what is to be accomplished, which many people are willing to do. Signed contracts, organisation charts, transition and transformation programs, new job descriptions, presentation of governance structures and a retained organisation, are the first visible important deliverables and it’s easy to think that change is accomplished when these are in place. But what happens after that? Why are so many organisations struggling with obtaining required results, even after the retained organisation is in place?

We know that organisations have varying cultural readiness for change, but how can we determine the readiness level of our own organisation, and how can we increase our readiness? How can we use our knowledge and experience to be more successful and reach the goals we have set?

Determining the organisation’s change readiness

The conditions for succeeding with change programs will vary between organisations. There will always be forces acting for or against change in every organisation, but some have a cultural advantage. Below is a quick test of the cultural change readiness in an organisation.

change-readiness-model

Model adapted from Bisk Education and Villanova University (2012)

Explanations

Average tenure: average years in same position.

Middle managers strong leadership: managers are coaching, provide clear direction and resolve issues quickly.

Middle managers week leadership: managers are not coaching, don’t provide direction and are leaving issues unresolved.

Accounting focus on value chain: accounting is focused on keeping track of investment costs to generate value.

Accounting focus on functions: accounting is built on departments/functions previous budgets.

Results

0-10: High change readiness

11-20: Medium change readiness

21-30: Low change readiness

Actions for change

Depending on your result and thus the level of difficulty of implementation, you need to decide on a plan to handle the specific obstacles for your organisation.

For organisations with high readiness no drastic actions to enable change usually have to be taken.

  • Common actions include distributing communication about the change such as newsletter and intranet announcements.
  • Programs or projects for transformation initiatives are kicked-off and followed through to enable the new sourcing strategy.
  • Offer discussion sessions with employees to forge a better understanding of the changes and walkthroughs of new agreements, processes and organisation charts.
  • Distribute roles and start up new collaboration groups.
  • Managers of affected employees should have information ahead of employees to be able to lead and guide them.

For organisations with medium readiness it is key to engage managers in communication, develop a good understanding of the risks involved and have a good plan on how to mitigate the issues you will encounter, on top of the actions above.

  • Managers on all levels should make themselves visible in the corridors and be approachable. They must actively communicate the vision and how things should be done, as well as take an active part in resolving issues and communicating solutions.
  • Having a rigorous communication program can support this process. It’s vital that the visualisation of the progress is prepared, made available and used in communication and discussions regarding results.
  • KPIs should be identified, status reports produced and used, and regular follow-up meetings should be held.
  • Manager and employee incentives should be linked to the implementation of the new sourcing strategy. These can be economic incentives and perks.
  • For bigger changes, there is a risk that key employees may leave the organisation. Identify potential leavers early and have a plan to reduce the risks involved.

In organisations with low readiness, managers need to prepare for resistance. Handling change must be on your top management’s daily agenda, in additions to the above listed actions.

  • In order to successfully drive progress, it can be necessary to replace managers that are stuck in old tracks.
  • It may be needed to flatten the organisation and shorten decision paths.
  • Changing an organisation’s culture to become more communicative and willing to adapt to change requires effective and persistent change management. This means communicating new values and attitudes in a structured manner, engaging employees and having managers lead by example. Management must walk the talk with clear and big steps.

Deciding on what actions to take won’t always be easy. A high readiness level may not be attainable for every organisation, but measures can always be taken to increase the readiness. No matter what your organisation’s change readiness is, all changes require an effort on every level. And there are actions that can be taken no matter the readiness level.

Preparing for a better change experience

Many, if not most, people will be inherently doubtful about changes not initiated by themselves. This means that for a majority of organisations, resistance to some degree is to be expected. Resistance should even be considered normal when larger changes are made. As a leader you have to manage this resistance, which can be discouraging for everyone involved. That is why managers need a joint plan for how to handle this and support each other on all levels to get through resistance. The plan usually has to evolve over time, and be adjusted as things progress. Being skilful in reading people and handling situations with diplomacy become key skills. Meeting employees that are frustrated and discouraged by changes requires courage and often being humble. Having a forum to discuss resistance is a necessity.

Real change will happen only when people change their ways of thinking and behaviour, and a new culture is established. People must be committed both in their minds, hearts and hands. To get there takes time and effort, and managers need to detect and capture what employees are thinking feeling and doing, which requires attention and foot-work.

One way to keep track of the status is to really engage in communication with employees. Managers need to spend plenty of time explaining the direction of the sourcing strategy so that employees truly understand it. This means communicating the reasons for why we are doing this, how we will do it and what the goal is. Most of us understand that a dialogue between management and employees is needed, but the necessary frequency and time spent doing this is often underestimated.

When engaging in dialogue on a regular basis, you create a sense of urgency in the organisation, inspire to reach the new future, point to the first steps, and celebrate first achievements. Give employees the opportunity to ask questions and discuss the new ways of working in order to gain a better understanding. Furthermore, practical issues often arise from the change that need to be managed. Taking quick action to address these sends a clear signal that the change is important and urgent. This interactive management style will help employees to understand the reasons for change, help them become committed and create an understanding for how they are contributing to the strategy in practice.

Not losing focus

As soon as contracts have been signed we usually get busy with the next improvement in the pipeline. This is especially true in large corporations with many hierarchies and managers. Managers quickly become too occupied discussing new initiatives to know what is going on with the recently launched sourcing initiative. A major change can take up to two years to implement with devoted commitment from managers, including top and middle management, throughout the period. By not immediately starting running for the next initiative in the pipeline, but staying focused and carrying the strategy through, organisations can move ahead faster and reap the benefits of the chosen path.

People react differently to change. Being too busy with the next project or program can create issues with late bloomers and early adopters, leading to disillusionment and lost management trust. When late bloomers notice the lack of attention, they may figure that if they stay low, this will soon blow over, and they take no action to adapt. By visibly demonstrating that the initiative will be followed through, late bloomers will be pushed through the change process. Meanwhile, early adopters who want to embrace the new initiative can get frustrated if they notice a lack of interest from management.

Slow down to speed up

One way to sum up the advice is slow down to speed up. This doesn’t mean you should stop pushing for progress and success. On the contrary, it means doing less at once, staying focused and keeping pushing until you reach your goals. If you keep shifting focus, you won’t progress at desired speed and may divert your energy to other initiatives that will slow down the change process.

  • Have a plan based on the conditions of your organisation.
  • Make sure each employees has plenty of time and opportunities to get the new way of working into their minds, hearts and hands.
  • Stay focused until you’ve reached your goal with the sourcing initiative and don’t rush off to the next improvement too quickly.

As a bonus, this will build trust for management and increase the likelihood of succeeding with a new sourcing strategy.

About the author

Mette Laudon is an IT management consultant with a strong talent for coaching and driving change with a pragmatic approach and a clear vision. She has extensive experience from operational excellence, change management and sourcing. Her industry experience ranges from global retail and logistics to manufacturing.


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