Leadership’s Role in Driving Change Management: Part II

PART TWO: The Challenge

In the first part of this series, we took a look at change within the engineering and construction (E&C) industry and how organizational change management (OCM) is a key component to the adoption of change. In part two we will look at some of the challenges that come with transformational changes in the E&C market.

With the many customers and projects we have served over the years, we have seen the following challenges to change within our E&C customer base:

  • Executive Sponsorship: Due to the fact that many E&C companies promote from within, there tends to be a strong informal network amongst all the employees — craft, business employees, managers, and Unless the executive team focuses on delivering a consistent message concerning the change, managers and employees will lose their commitment and the project will lose momentum. Key leaders, both formal and informal, need to be identified early so that the message delivered “early and often” by the executives can be supported by a role-based approach to change management.
  • Manufacturing: We have seen that E&C firms have a significant challenge with respect to implementing changes in the area of manufacturing processes. As the market forces better cost control with respect to materials, and the use of prefabrication techniques increases, the firms we have worked with have asked to implement better controls. The controls they require come out of non-construction business models — either discrete or process manufacturing. Executives and managers alike have a hard time dealing with unfamiliar concepts like standard costing, bill of materials and routings. The employees running the aggregate pits or the asphalt plants now have a different set of disciplines and data to deal with. We have seen these issues delay key decisions and increase time to benefit.
  • Project Managers and Estimators: These two individuals are responsible for the success or failure of most projects. PMs and estimators are where the “rubber meets the road.” They are the leaders who manage risk for the firm. In most cases, these individuals have developed their own processes and procedures to manage their projects. Current best practices bring standardization, discipline, and consistency to these processes. This shift to standard processes, data transparency and near real-time reporting present these independent agents with a unique set of challenges. If these key managers are not on-board with the change, the new processes will never stick. OCM proactively engages this group; early and often during a project.
  • Financial Management: With the implementation of an integrated system, what happens on the job now is clearly represented in detail near real-time — to everyone. Now the division controllers and CFOs see the same information as the PMs in the field, as the presidents in their offices, as the customer. This transparency and immediacy of information requires a different set of rules and procedures for dealing with exceptions. These changes may even require organizational changes. If not dealt with early using such tools as change impact analysis and cascading leadership, these issues can sidetrack an otherwise highly effective improvement for the organization.
  • Equipment Management: In the majority of heavy civil and specialty contractors effective and efficient management of equipment is a must. Calculating an accurate and true rate for a piece of equipment is material with respect to the profitability of a job. Being able to know that a piece of equipment is ready to perform where and when it is needed is essential for managing the risk on a project. Technology and systems can support these objectives but they require new disciplines and procedures. Most of the maintenance shops we have been exposed to operate informally. Moving to a formal environment with standard work orders, maintenance schedules and integrated procurement presents these employees and their managers with significant challenges. Creating an integrated change network and sustainability template provides a step by step approach to leading (and maintaining) change in this area.

Projects that neglect to address the human element are susceptible to threats that can easily escalate over time. They may result in derailment, or worse still, total project failure. Therefore, it is imperative that organizational change and people management initiatives be deployed as a part of the overall project methodology.

So, where does an E&C firm preparing for a large-scale change start? To begin, it’s best to navigate three major speed bumps:

  1. The first is to thoroughly plan for “change fatigue,” the exhaustion that sets in when people feel pressured to make too many transitions at once. All too often the change initiatives employees have to suffer through are poorly thought out, rolled out too fast, or put in place without sufficient knowledge, sponsorship and resources. Fatigue is a common problem in managing change, and can cause delays in implementation, resistance, turnover, and reverting back to old ways of doing work…especially when initiatives are driven from the top.
  2. Secondly, commit to investing in the growth of internal change skills to ensure that change can be sustained over time. Leaders might set out eagerly to enlist and build a cadre business and process experts to lead the change, yet those key experts all too often are lacking an effective way to deal with the people and political landscapes at the frontline — stalling out when it comes to the actual transformation to the new state of operations. Identifying and developing a strong change network, and equipping the organization for long-term sustainability and continuous improvement, will dramatically shift the change to “onboarding” and instill new practical approaches to give people the knowledge and cultural support they need.
  3. The third speed bump to be considered is that business transformation and new technology efforts are typically decided upon, planned, and implemented from the C-suite, often with little input from those at lower levels within the organization. Research has shown that the top leaders of an organization only know 4% of the actual business problems. Yet, rank and file employees are aware of up to 96% of the day-to-day problems that compromise business. This means that top leaders are making decisions with a 96% blind spot. Limiting your information stream to just the executive-level filters out key information that could be helpful in designing the initiative while also limiting opportunities to get frontline ownership of the change.

Leadership’s Role in Driving Change Management: Part III

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