Leading change management for digital change

This is an excerpt of the original article. It was written for the March-April 2020 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2020

Are you ready for NextGen technologies? Just the other day, I had the opportunity to tour one of Amazon’s highly automated robotic fulfillment centers. I expected to be dazzled—and I was. But it wasn’t because of the automation. The tour was a reminder that there’s no question that NextGen technologies such as Artificial Intelligence, blockchain, robotics, 3D printing and 5G are going to be the differentiators in tomorrow’s supply chain. The question is: Are you ready?

Browse this issue archive.

Already a subscriber? Access full edition now.

Need Help?

Contact customer service

847-559-7581   More options

Not a subscriber? Start your magazine subscription.

Multiple internal and external forces are changing the face of supply chain. Internally, organizations face the expansion of Cloud computing and digital capabilities and a shift in procurement processes to creating value rather than simply obtaining goods and services at the lowest price. Externally, organizations feel the pressure of continued globalization, increasing market volatility due to natural disasters and geopolitical events, an increasingly fast society that requires more agile supply chains and the continued evolution of a service economy that requires more strategic outsourcing.

APQC also released an Infographic entitled “Keys to Change Management in Supply Management”. View the infographic here.

Organizations are adopting more technology to address many of these factors. According to research conducted by APQC, 75% of organizations overall are undergoing a digital transformation, meaning that their technology needs are evolving to meet customer and business needs. When considering only supply chain organizations, the amount jumps to 83%.

Leaders must be proactive in getting employees on board with the digital change that must happen to meet the changing business landscape. Yet even the change management tactics needed are changing. Organizations must focus on getting employees involved and providing motivation for them to embrace the new tools and ways of working needed to meet the changing face of supply chain.

APQC has found that organizations must consider change from multiple perspectives. Middle managers play an important role in making employees part of the change. Both senior and middle managers must exemplify the change to others, but they must also be motivated by promotion opportunities and financial rewards. All of these efforts should be part of a comprehensive change strategy used at all levels.

Motivating employees to change

Organizations undergoing change have always faced some resistance from employees who do not see the value of or who feel threatened by the need to do things differently. Supply chain organizations feel this more acutely given the rapid pace of change in the industry. In fact, in a poll conducted by APQC, employee resistance is the top challenge that managers have with regard to change.

Interestingly, the same poll revealed that employees believe their managers do not share enough information about change. Traditionally, organizations undertaking change management have considered it sufficient to conduct one-way communication on the change. However, this method will do little to ease the fears of employees who see digital change as a threat. Leaders must therefore consider ways to more directly involve employees in the change so that they feel their input is valued.

Figure 1 lists eight behaviors APQC recommends managers adopt to motivate their employees to embrace change. To successfully lead their employees through a change initiative, managers must consider that change starts with the individual. Considering individual employee concerns and behaviors will go a long way in engaging supply chain employees.

Adopting these behaviors does require more effort from managers, and with the amount of responsibilities supply chain managers have it can be tempting to skip them in favor of traditional methods of pushing change. However, the empathy and engagement shown through the behaviors will pay off. Employees will feel they are a valued part of the team, making them strong supporters of digital change.

In addition to the behaviors listed in Figure 1, APQC recommends managers make six commitments to ensure effective communication with employees regarding change:

1. Have a plan. Managers must establish communication norms and schedule regular communications.
2. Be available. They should set aside time daily to answer employee questions and observe what is going on with their team.
3. Fully communicate. They must provide ample communications about both strategic and tactical issues, and they must share messages that are relevant to both the team overall and the individuals on it.
4. Tailor methods. They should use a variety of channels for communicating with employees and, when possible, tailor communications to employee preferences.
5. Explain why and how. Managers should explain not only what needs to happen, but also the why and how.
6. Listen to understand. Managers must listen to understand the meaning and feelings behind what employees say, and repeat back what they hear and see to confirm that they understand what employees convey.

The behaviors necessary for leading employees through change require managers with specific strengths and skills. To ensure that they have managers able to lead employees through change, chemical company BASF, for example, has adopted impact-based hiring, which focuses on job success outcomes rather than solely traditional requirements and qualifications. Although technical expertise is important, the organization considers what successful performance in the role looks like and looks at candidates' transferable experiences, achievements and motivations. This allows BASF to identify both internal and external candidates who can adapt, learn and grow with the organization.

Leadership responsibility for change

The role of leadership in change management is not limited to motivating employees. Leaders must be accountable (not just responsible) for change. This is essential in the supply chain field, where digital change initiatives are integral to ensure organizations keep up with changing business needs. Organizations must empower their leaders to make decisions related to the change and to take ownership of it.

However, the responsibilities of individual leaders will vary based on their role. This is already taking place at organizations to some degree. Figure 2 shows the results of an APQC survey on change management initiatives and the responsibilities of management. Senior leaders often take primary ownership of communicating what will change but are much less likely to coach and mentor staff through the change or communicate how employees can change. Interestingly, less than half of organizations have middle or senior management who lead by example.

To ensure that change sticks, leaders must take on more responsibilities for driving change.

APQC recommends senior managers be responsible for the following tasks:

• providing high-level guidance on the behaviors necessary for change;
• developing and executing strategic communications that explain the what/why/how of the change;
• leading by example and modeling changes others should make; and
• incorporating feedback and removing roadblocks to change.

Middle managers have the opportunity to connect more with employees to increase engagement. However, senior and middle managers must stay in contact to ensure that potential problems arising in day-to-day activities can be sufficiently addressed.

Middle managers should therefore be responsible for the following tasks:

• explaining what the change means for each member of their team;
• listening to employee feedback on the change and, when necessary, elevating feedback to senior management;
• coaching and mentoring employees through the change; and
• tracking adoption and monitoring staff to ensure that change sticks.

Leading organizations recognize the important role middle managers play in change management initiatives. These individuals often experience pressure from above to accomplish organizational initiatives and pressure from below to adequately support their staff. As an example, the engineering, construction and project management organization Bechtel gives middle managers clear roles regarding change management. It also provides these individuals with training and rewards to help them motivate their employees and succeed in supporting change.

Using rewards to encourage change

Digital change initiatives present a need for both supply chain employees and leaders to change the way they work and take on different tasks. Just as managers must motivate employees to embrace change, organizations must also consider ways to entice managers to embrace the change and their role as change leaders.

A best practice for change management is to tie leaders' financial rewards and promotion opportunities to effective implementation of change projects. However, most organizations have room for improvement when it comes to rewarding change. As shown in Figure 3, only 22% of organizations consider change participation when determining promotions, and only 13% hand out monetary rewards for change participation. About one-third of organizations do not reward employees for engagement in change at all.

Opportunities for professional development can also motivate managers and employees to embrace change. Technology company Cisco Systems considered ways to encourage innovation and change among its employees. It conducted surveys to find out what would drive employees to engage in digital innovation, and one of the top choices was having time to work on innovative ideas and being recognized for this work. Cisco, therefore, set aside more time and opportunities for employees to work on novel ideas. It also gives awards to employees for significant contributions to innovation, which can lead to additional career opportunities for winners.

Tactics for responsive change management

Ensuring the adoption of digital change in supply chain goes beyond merely pushing out information about the change. Managers must engage employees in identifying what needs to change and listen to employee concerns. Moreover, organizations must ensure that middle and senior managers have clearly defined roles within the change effort so that employees see them as having to make the change as well. To motivate managers to be change leaders, organizations should use promotion opportunities and monetary rewards.

These efforts should be part of a set of tactics adopted by an organization to ensure across-the-board engagement in the face of evolving digital change.

APQC recommends organizations use the following tactics to ensure a more responsive change management approach.

1. Conduct a current state assessment of cultural preparedness for change and employees' fluency with relevant technologies.
2. Use a portfolio approach to manage the change aspects of smaller initiatives involved in the overall transformation.
3. Deliver tailored communications to answer: “What's in it for me?” for different roles, teams and departments.
4. Leverage peer-led trainings and communications to cultivate buy-in and decrease the burden on leadership.
5. Use value and behavioral measures—not just milestones reached and activities completed—to evaluate the progress of the transformation.
6. Incorporate desired behaviors into employee evaluations and promotion considerations.

A digital change effort means work across the organization—from the leaders who initiate the effort, to the managers who communicate with and encourage employees, to the employees who incorporate new behaviors and technologies into their day-to-day routines. The evolution of technology to meet business needs means that supply chain organizations no longer have the option to haphazardly adopt change or see change initiatives languish due to internal pushback.

About APQC

APQC helps organizations work smarter, faster, and with greater confidence. It is the world's foremost authority in benchmarking, best practices, process and performance improvement, and knowledge management. APQC's unique structure as a member-based nonprofit makes it a differentiator in the marketplace. APQC partners with more than 500 member organizations worldwide in all industries. With more than 40 years of experience, APQC remains the world's leader in transforming organizations. Visit us at apqc.org, and learn how you can make best practices your practices.

SC
MR