by Adrian Ryan Head of Finance and Transformation
I recently read an article that gave 5 reasons why Finance Transformation fails. While the reasons were all valid, and no doubt you will have heard them all before, the article didn’t discuss the primary reason for failure, which is a lack of commitment by senior leadership figures at the outset. The principal reason for a lack of such leadership commitment is fear of change. There a 5 main change fears experienced and exhibited by organisation leadership:
Risk to reputation: the nagging concern that someone is going to ask why these opportunities had not been identified sooner and therefore question whether the incumbent managers are up to the task in the future
Risk to position: the concern that in embarking on a long term change to ways of working new skills will be needed and therefore new management will be needed or at the very least that changes to existing remit will ensue, remits often long in the building
Risk to rewards: management knows how a company works, especially in terms of maximising rewards, and changes to ways of working can lead to changes in rewards structure leaving people feeling that they no longer know how “the game is played”
Risk to legacy: the fear of being seen as the person who instigated significant and widespread changes to the way things are done and, more particularly, the impact of job losses, especially if the changes are not deemed to have been successful or reaped sufficient benefits when set against the emotional stress of job losses
Risk to short term results: a mismatch between short term needs and long term benefits. The classic reason given for not proceeding with long term ways of working change is that the benefits don’t pay back quickly enough and cost too great in the short term
The risks all point to one central theme which is a fear that one’s position will be undermined by one or more of the above. The trick is to find ways to alleviate these instinctive fears sufficiently for decision makers to feel they are secure and so can make the decisions based on long term horizons rather than past or present circumstances. This safe environment must come from the board and the Chief Executive. It is about leadership. Without this no major change is possible and no change management plan is achievable.
It is also not surprising that management fears change failure, and the ramifications of change, especially if they have little or no experience of implementing the kinds of change on the table. This fear of the unknown is entirely understandable but needs to be put into the context of the long term impacts of not changing. This is about corporate Darwinism; those organisations that don’t adapt will die out in the long run.
If your organisations leadership is exhibiting these fears then either a change in leadership may be required or a change in board focus, and thereby managements motivation, is needed. However before you conclude on this first ask whether a major transformation change is what the organisation requires versus a simple set of cost reduction projects. This is the very first step before you get people agitated about a major transformation.