Change Management Using Culture to Drive Transformation

INTRODUCTION

???Off Course innovation is risky. But so is stepping into the car to drive to the supermarket for a loaf of bread. All economic activity is by definition ???high risk??™. And defending yesterday ??“ that is, not innovating-is far more risky than making tomorrow.??™ (Innovation and Entrepreneurship .1995) I head up the Communications Division at Foskor which mines, processes and markets phosphate products, mainly fertilizer to local and international customers. Foskor is in the middle of a change programme. I have chosen the communication part of the change project for this assignment because it fits the assignment brief. I have been in a position where I have, and can continue to observe management of change in action by my colleagues and consultants assisting us with the project. Bringing about significant change in the way an organization works, frequently necessary in our current environment of major technological innovation and globalization, is a tremendous challenge. On the technical side, it may be relatively easy (although costly) to introduce new technology, work processes and structures. Experience tells us, however, that getting people to enthusiastically support such change is a more complex and difficult task. This is my case study. It is called, ???The Foskor Way??? and is a culture change exercise driven by the board??™s desire to list the company on the Johannesburg Stock Exchange. The company was founded in Phalaborwa on a site rich in rare phosphate ore in the fifties by businessmen with the support of the National Party Government. It was seen as a strategic resource for the country. Recently Indian Ocean Fertilizer and Triomph were purchased adding a processing capability and were absorbed into the restructured business now comprising Foskor Acid, (Richards Bay) and Foskor Rock & Copper, (Phalaborwa). The 1994 democratic government placed Broad Based Black Economic Empowerment on the agenda and majority ownership by the State owned entity, the IDC drove transformation of Foskor from white to black management over the following years. Under the new black management team, Foskor has thrived, growing the production capacity and increasing the market primarily in India and expanding to South America and Japan. Coromandel our Indian customer has taken a 15% share in Foskor and has added valuable fertilizer capability to the business.

On the Structural, Information Technology and Process levels, change has gone relatively well with insignificant resistance and the project schedule has been mostly achieved. However, the necessary behavior change in the people has not been achieved nor have we built sufficient unity amongst the diverse groups at Foskor and we have some way to go before we can say there is alignment by all teams and individuals to a common and shared vision. John Kotter makes the point that having a common and shared vision is the most common cause of failure in change projects, (J Kotter, Leading Change -1996). Once we have achieved this there will be the benefit of reduced waste and increased productivity. This is what makes the business case for change and justifies the inevitable cost in time and finance that change management will cause. What is change management – how do we define change management Kotter describes change management simply as ???taking an organisation from Position A to Position B, in the fulfillment or implementation of a vision and a strategy and the whole art of it is how to carry the people with you so that the envisaged benefits of the vision and strategy are actually realized.??™ ???Not everything is subject to change. If the role of the leader is first to help people face reality and then to mobilize them to make change, then one of the questions that defines both of those tasks is this: What??™s precious, and what??™s expendable Which values and operations are so central to our core that if we lose them, we lose ourselves And which assumptions, investments, and businesses are subject to radical change At the highest level, the work of a leader is to lead conversations about what??™s essential and what??™s not.??? (Ronald Heifetz, Fast Company, June, 1999) The following overview, taken from change leadership notes compiled by the course designers of Linkage OD Consultants in the USA, best describes the core of change thinking on which this research proposal is based. It also drew from the ideas of Charles Handy, (The Empty Raincoat, Upside Down Thinking); John Kotter, (Change Leadership), John Adair, (The Effective Leader) and Peter Senge, (The Fifth Discipline).

To optimize its ability to succeed, an organization must recognize both its essential elements and its need for redefinition and change. The message is paradoxical: leaders must provide stability by preserving the organization??™s core ideology??”its defining values and beliefs??”as they promote change. However, as Heifetz asserts, the core values are the essential building blocks of the organization. For individuals within the organization,

they provide touchstones. Adherence to the core values links past successes, present realities, and future possibilities. They ground the change vision in the values that drew individuals to the organization in the first place. Before and organization embarks on a change process there are four categories of competence which are necessary in the group of people chosen as the change coalition to increase the chances of success: Direction setting, people, processes and tools and the organization structure and information.

i. The Direction Setting Category Become a partner with business leaders in deciding where the organization is heading, who is leading it, and how well people know about it. The category is comprised of two dimensions: strategy and goals and leadership. Strategy and goals are the discussions in which the organization??™s leaders analyze markets, organizational capabilities/resources, and the competitive environment to determine the most appropriate direction; and then deploy that direction to the organization??™s members. Examples include: strategic planning, budgeting, scenario planning, climate analyses, and forecasting. Leadership is the organization??™s capacity to identify, retain, and develop individuals and groups who can inspire and manage its members toward the desired direction. Examples include: a board, executives, managers, coaches, team leaders, coalition builders, and thought leaders.

ii. The People Category People play a critical role in driving a culture of performance and trust by harnessing the potential capabilities and attitudes of the organization??™s members. The category is composed of two dimensions: competencies/performance measures and culture.

Competencies/performance measures are the methods and tools to measure employee??™s abilities to achieve results. Example include: individuals??™ technical expertise, unique or proprietary skills, desire for achievement, and the expected/measurable performance outcomes when these competencies are applied. Culture is the pattern of shared and transmitted beliefs (assumptions about what is true), values (assumptions about what is good or bad, worthwhile or undesirable), and

norms (assumptions about what is appropriate behavior). It is also the atmosphere of the workplace created by the organization??™s leaders. Examples include: adaptability to change, customer focus, acceptability of risk taking, levels of employee involvement in decision making, participation in problem solving, focus on quality or process improvement, morale, dress codes, and human resource policies. iii. The Processes and Tools Category We need to be equipped with processes and tools to facilitate initiatives that drive change and add direct value to your customers. The category is composed of two dimensions: processes and systems. Processes are the collective activities and tasks of the central value stream of an organization??”how work is done. They utilize an organization??™s suppliers directly and serve its customers directly. These processes are specific to each business, but usually cross basic functions like R&D, sales, marketing, procurement, manufacturing, customer service, operations, and delivery. Systems are the tools and technologies that support the people working in core processes. Examples include: most ???staff??? functions, health and safety procedures, IT platforms and systems, machinery and equipment, proprietary technologies and methods, work spaces and physical plant assets, reward and compensation systems, and recognition activities. iv. The Organisation Category We will need to become grounded in understanding how high-performing organizations combine and connect its members to ensure accountability and the most effective use of its human resources. The category is composed of two dimensions: organization structure and learning/information. Organization structure is the way people are organized horizontally (departments, business units, teams, geographic locations) and vertically (staff, supervisors, managers, executives). It is also peoples??™ respective roles, responsibilities, authority, span of control, and proximity to different types of work processes. Learning/information encompasses the types of data accessible to members of the organization in order to fulfill their roles/responsibilities and the measures used to

assess organizational performance. It is also the mechanisms and methods by which the organization improves its output and develops its members??™ capabilities. Examples include: customer and employee satisfaction data, measurement architecture that tracks leading and lagging indicators of performance, benchmarking efforts, feedback loops, vendor partnering, and research functions. These 4 categories form the framework of expertise that we will draw from in executing the research. So we embarked on a change journey. Where to begin The message from our Board of Directors was to change the behaviours of the entire workforce as it was hindering productivity, morale, communication flow and the work climate in general. It is more difficult to change the culture of an existing organization like Foskor, than to create a culture in a brand new organization. When an organizational culture is already established, people must first unlearn the old values, assumptions, and behaviors before they can learn the new ones. John Kotter says that for any change to be sustained, it needs to become embedded in the new ???way we do things around here??? ??“ that is culture. He further elaborates that the single biggest challenge facing leadership in a change process is just getting people to change their behavior. ???people change their behavior when they are motivated to do so, and that happens when you speak to their feelings.??? (Kotter) This is where communication comes in. In order to improve business results, it is necessary to improve the behaviour of managers and employees at work. But in order to change behaviour there has to be education. People do not change unless they believe it will improve their situation. Most employees seek job satisfaction, but more important is job security. So the aim of communication is to persuade the people that the proposed changes will lead to meaningful benefits to them and their families. This is a task of persuasion and influence. Without people hearing and believing new messages, new arguments and new ways of working, there can be no improvement in results. Research has shown, (Everett M Rogers.1995. 162 ??“ 163) that to get people to adopt a new change, innovation, 5 communication phases have to be worked through and achieved step by step.

1. Knowledge: (social-economic characteristics, personality communication and behaviour of the change group)

variables

and

2. Persuasion: (advantages of the change, evidence in support and compatibility) 3. Decision: (opinion leaders engage in the new behaviours) 4. Implementation: (the changes are made official) 5. Confirmation: (The change becomes a newly acquired habit) There is no easy adoption of change. People naturally resist. For example, it took the British Naval authorities just under 200 years, (1601 ??“ discovery with supporting evidence that citrus eliminated the risk of Scurvy by Captain James Lancaster; 1795 ??“ adoption of this innovation/change by British Navy for all ship crew members for long voyages). (Diffusion of Innovations, pg 78). Our job in communicating the vision, plans and processes would need to be well prepared before implementation. This is the story of Foskor??™s communication for change. We decided to focus on the general culture. Analysis of the company structure and procedures revealed a culture based on the values of the National Party government from the fifties to the mid nineties. (Foskor, Annual Report, 2009). This culture is characterized by command and control rather than empowerment and support. There were periods where this approach worked and some years delivered good value to the business. But after the beginning of the new democracy the old culture fell short. The main problems were the skills gap between management and the workforce and a strictly racial hierarchy with whites in management and blacks on the shop floor. The formal structures have changed and Foskor has an ideal Broad based Black Economic Empowerment (BBBEE) profile. (EMEX Trust, 2009). This doesn??™t mean we have transformed completely. We have only achieved an attractive shop window. But deep inside the organisation there are still many problems that are a legacy from the past such as, poor communication, poor skills training, poor productivity and autocratic management styles. There are also positive trends though such as, good Safety Health radiation Environment and Quality (SHREQ) credentials, good Corporate Social Investment (CSI), good strategy and good money management. Also given the unique ore deposits and state of the art processing capabilities, Foskor has a great future. But

if there is no culture change then risk will remain high and waste through conflict and low efficiencies will delude the profit and growth potential. The primary force for change came from political will to build long term value in state enterprises. Foskor reports to the Industrial Development Corporation (IDC) and their purpose is to develop the South African economy through investment in high potential enterprises. Currently there is high public scrutiny on State Owned Enterprises, (SOE??™s) with a huge concern about wasteful mismanagement. Eskom and Transnet are current examples. The IDC, as majority owners of Foskor are also under scrutiny. Foskor has been identified as one of the SOE??™s that is ripe for sale to the public through a listing on the JSE. Arrangements were made for this in 2008/9 but were cancelled in the wake of falling demand for shares during the credit crisis of 2008/9. As a result of the preparation exercises including merchant banking advice, (Deutsche Bank Consulting Survey, 2008), the Foskor management realized that consistent, predictable forecasts could not be guaranteed unless significant changes were made to the current situation. This gave rise to the management supported change programme I am describing. Is it possible to fully “manage change” I believe that being very clear about what changes are required and being serious about building a culture that supports the new, shared practices increases the probability of success greatly, especially if leaders ???walk the talk??™: ???Start at the top. Because change is inherently unsettling for people at all levels of an organisation, when it is on the horizon, all eyes will turn to the Chief Executive Officer and the leadership team for support and direction??¦??? (John Jones:2004) Bearing this in mind, our change management strategy was to instill the best and most appropriate of the existing values and incorporate beneficial new ones into the programme and using leaders as role models to practice the new behaviours very publicly. From these values we would derive and instill appropriate behaviours with the aim of delivering sustainable success in our industry to benefit all key stakeholders. In order to instill company values and to create a belief system within the company the following steps have been taken:
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Setting and unpacking of values Employee focus groups, by Department, were used to put the mission, vision and values into words. This exercise gives all employees a common understanding of the

desired culture that actually reflects the actions they must commit to in their jobs and when interacting with fellow colleagues.
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Practice effective communication Keeping all employees informed about the organizational culture change process ensures commitment and success. Telling employees what is expected of them was critical for the effective organizational culture change.

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Executive Support It was further made clear to the Executive Team that the two most important elements for creating organizational cultural change are executive support and training (in this instance action learning and other forms of training).

As mentioned above executives must ???walk the talk??™ to demonstrate support for the culture change in ways beyond verbal support. They must lead the change by changing their own behaviors. It is extremely important for executives not only to consistently support the change but also to be able to create high emotional impact. Martin Luther King did not stand up in front of Lincoln memorial and say ???I have a great strategy??™. He said those immortal words: ???I have a dream???, and then he proceeded to show the people what his dream was ??“ he illustrated his picture of the future and did so in a way that had high emotional impact. ???Collaboration is vital to sustain what we call profound or really deep change, because without it, organizations are just overwhelmed by the forces of the status quo.??? (Peter Senge) As we began the field work we encountered powerful resistance to any change of the current order. We found that while political change did occur at head office, out in the far flung operations of Richards Bay and Phalaborwa, the old order prevailed where there was a clearly divided structure of white management and black shop floor arrangements. Black control remained with the support services and not the main revenue producing operations. Upon deeper examination we found that the powerful white managers were enlightened individuals and embraced the new democracy and sought to instill democratic behaviors in the organisation. This was a positive factor but against that we found two disturbing trends:

1. Covert resistance to change by some middle managers manifested by intentional manipulation of information and suggestions of incompetence to hold back potential black leaders.

2. A covert suspicion by some key white leaders that the head office employed too many executives and was in general, distracted and incompetent, though this sentiment was never articulated.

These factors gave rise to resistance to change expressed mainly by heal dragging and lack of meaningful cooperation. A second form of resistance came in the form of an obsessive focus on operational results namely; quality, volume and revenue. While these are clear priorities there is no confidence by local management that change will have a positive effect on these measurements. This will require strong leadership and visible support from key people within our organization. Managing change isnt enough – you have to lead it. When asked, in an interview, about the importance of leadership in successfully unleashing ???the heart of change???, John Kotter said??? ???Crucial. Only leadership can blast through corporate inertia and motivate people to change in a meaningful way.??? So managing change in the workplace also requires leadership that is visible and leadership that is consistent in all aspects of the way in which you lead the change as well as how you manage the situation, handle the communication, and ensure the realization of the benefits of the change. An organisation can never ???over communicate??? in leading and managing change in the workplace and especially with regard to what is happening or not happening and why. Communication is everything, and Kotter maintains that as change leader you need to use every means at your disposal to constantly communicate the new vision and key strategies that support that vision. This is also a communication process that listens actively and demonstrates to people that you have thought through the impacts of the change on them, and that you are

prepared to work with them through the transition of managing change in the workplace, and that you will help make it work for them. Management responded to these forms of resistance by engaging more frequently and on site with local managers; and by increasing the amount of necessary and useful information and speeding up its dissemination. The Communication Division has teamed up with the Human Resources Division to drive the change programme with the assistance of an external leadership consultancy. Management has launched the change programme formally and has agreed a timeline to implement various stages of the change process.

Kurt Lewin wrote that “An issue is held in balance by the interaction of two opposing sets of forces – those seeking to promote change (driving forces) and those attempting to maintain the status quo (restraining forces)”. During the planning phase of the change exercise a Force Field Analysis was done to identify possible driving forces (positive forces for change) and restraining forces (obstacles to change).

The Driving Forces identified are listed below: ??? ??? ??? ??? ??? ??? Board desire to create positive and productive workforce EXCO commitment & Support Incentive earnings Competition (teams) Union commitment and understanding Enthusiasm of Change Champion and team members

The Restraining Forces identified are listed below: ??? ??? ??? ??? ??? Resistance of supervisors Apathy Low Morale Lack of Technical Training Low productivity

The process is outlined below in the model by Kurt Lewin extracted from

Before change the force field is in equilibrium between forces favourable to change and those resisting it. Lewin spoke about the existence of a quasi-stationary social equilibrium. For change to happen the status quo, or equilibrium must be upset ??“ either by adding conditions favourable to the change or by reducing resisting forces. What Kurt Lewin proposes is that whenever driving forces are stronger than restraining forces, the status quo or equilibrium will change. Now thats useful. Especially if we apply this to understanding how people move through change and why they resist change. There will always be driving forces that make change attractive to people, and restraining forces that work to keep things as they are.

Successful change is achieved by either strengthening the driving forces or weakening the restraining forces. The force field analysis integrates with Lewin??™s three stage theory of change as you work towards unfreezing the existing equilibrium, moving towards the desired change, and then freezing the change at the new level so that a new equilibrium exists that resists further change. Understanding why change is frequently difficult for people can help us build in methods for easing the process and increasing the likelihood that it will succeed. Many people talk about “resistance” as if it were an irrational response to be overcome with rational persuasion. In fact, it is always the case that, from an individual??™s point of view, one??™s own behavior is rational. Generally, when people have worked in an organization for very long, they have absorbed a set of norms and expectations about what is expected, what is rewarded and what is least approved. They have “learned” the way to behave that will, at the very least, keep them out of trouble. This set of widely shared beliefs about what is “right” and “wrong”, “true” or “false”, “good” or “bad”, is the organizations culture. Schein states that, the bottom line for leaders is that if they do not become conscious of the cultures in which they are embedded, those cultures will manage them. Cultural understanding is desirable for all of us but, it is essential to leaders, if they are to lead. (Schein 2004:23) Change resistant behaviors are often a cultural phenomenon and not simply random personal characteristics. A culture allows behaviors to persist by either rewarding them or not blatantly penalizing them. If resistant behaviors are allowed to continue, the change effort being attempted may very well be considered unsuccessful and abandoned. People in the organization will learn that if they can stall long enough the ???problem??? will go away! Every time this happens resistance gets more solidly baked into the culture. It gets harder and harder to change. Not all resistance to change is bad. Sometimes it??™s the change initiative that??™s the problem.

It could be that the change itself is not needed. How many of us have ever worked in a company where an executive has attempted to adopt every new management theory that comes along Or where someone tries to implement a practice that worked in their previous job Concepts usually need adaptation before adoption can be attempted. And sometimes – they just plain don??™t apply. What if the change is needed There may be a problem with the implementation plan. Maybe one is planning to bring a new product to market too late or too early to have the desired impact. Maybe an internal change initiative is being implemented during the company??™s busiest season. Maybe there are parts of the organization impacted by the change that hadn??™t been identified. When people resist change in this manner it??™s usually the result of poor communication and poor planning. The right people weren??™t involved when the reasons for change and the plans to achieve it were determined. All change efforts involve conflict. Healthy conflict is open and honest. It seeks to solve a problem or exploit an opportunity. Passive-aggressive behavior is not healthy conflict. It??™s hidden conflict. It??™s when someone saying they will support an effort either does nothing or actively works against that effort. As long as this behavior is allowed to continue, the underlying conflict causing it cannot be resolved. It??™s also confusing to other team members. When people see someone say one thing and do something else they may start to feel as though their own actions are somehow less important or no longer necessary. Progress can quickly stall. Resolve is one of Foskor??™s 4 Values and this is fundamental to leading effective change efforts. David Maister, an authority on the management of professional services firms, says, ???There is no business benefit in claiming to pursue a goal that everyone can tell you don??™t have the guts to pursue??¦??? In Strategy and the Fat Smoker, David likens implementing a new strategic direction to attempting to quit smoking or lose weight. We all know exactly what needs to be done to achieve our goal and yet we fail to do it. Why ?????¦rewards (and pleasures) are in the future; the disruption, discomfort and discipline needed to get there are immediate??¦we must first change our lifestyle, our daily habits, now. Then we have to have the courage to keep up our new habits??¦ Then, and only then, we get the benefits.???

We??™ve been concentrating on how ???other??? people within an organization resist change. What about those of us in the change team I??™d like to conclude with some self evaluation questions, (to keep it real) ??? ??? ??? ??? ??? ??? ??? What are we clinging to just because it??™s what we planned or expected When we??™re the ones driving a change, what do we do when something goes wrong What do we do when we run into an issue we didn??™t anticipate Are we open to change and adjustment Can we be objective Do we listen Or do we defend our approach and rigidly adhere to the original plan no matter what we learn as we go along Do we learn as we go along

We must remember that change efforts transcend ownership. We must not think it??™s ours alone.

CONCLUSION The primary purpose of this initiative is to ensure that the company uses the positive elements of its existing culture to drive transformation into a more resilient culture that is able to withstand temporary economic setbacks, and that the employee value proposition is articulated in such a manner that it transcends short-term rewards and incentives. It is my strongly held belief that the organization will emerge out of this process with a more robust and resilient culture.

LIST OF REFERENCES

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8. Rogers, M.E. 1995. Diffusion of Innovations. Fourth edition. New York. The free press. 9. Senge, P. M. 1990. The 5th Discipline: The art and practice of the learning organisation. New York. Currency Doubleday. 10. Thomas, J. H. and Broms, A. 2008 Extraordinary results through attention to process and people: Profit beyond measure. London. Boston Nicholas Brealey Publishing. 11. Various Authors. 2009. Foskor BBBEEE Scorecard. Emex Trust. South Africa 12. Various Authors. 2009/10 Foskor Annual Report. South Africa. Creativity Design and Printing. 13. Warillow, S. Unknown Year. Practitioners master class: leading your people to change, putting together a managing whole messy business. Available at: . Accessed on 19 July 2010