Once upon a time, an engineering consulting company hit a speed bump. Revenue was falling so fast that staff attrition couldn't keep up with the contraction. So management leapt into action, declaring a salary freeze.
But there was a carrot — if the company met its revenue target, everyone would get a bonus. In consulting, revenue equates roughly to billable hours, so the engineers did their best to help Marketing find business. Trouble was, there wasn't enough business.
With less than a month to go before the CEO's annual state-of-the-company address, Management announced a buy-out for people close to retirement. After his address, in Q&A, a bright engineer asked him, "Since so many are taking the buy-out, we won't have enough billable hours left to meet the bonus target. Does this mean there's no bonus?"
Jacques, the CEO, was blind-sided, but he was no dummy. He knew that if he said yes, he could expect an exodus of his best engineers. So he replied, "I'll have to get back to you on that." Back in the calm of his office, Jacques and his team worked out the right answer: "We'll lower the bonus target proportionately."
So they issued a memo, and everyone relaxed some. But Jacques had been embarrassed at a time when he needed to show strong leadership. He probably wasn't ready for that question because it involved an intersection of two unrelated policies. Since there are so many policies in any company of even moderate size, the number of such intersections is large, and it's difficult to anticipate which intersections cause problems.
The executive team goofed, as most do now and then. Yet, even though we test our products thoroughly, we rarely test organizational changes before we "roll them out." It's a high-risk practice, because we end up testing our change plans using the company itself. To limit that risk, we must discover defects in change efforts before we execute them, and one approach that works well is the simulation.
Even though we test
our products thoroughly,
we rarely test organizational
changes before we
"roll them out"Simulations — sometimes called "games" — parallel reality. They're especially valuable when the event being simulated is high-risk. That's why the military runs war games, and why US presidential candidates run mock debates.
Simulations do require planning to ensure that they're faithful to reality, and you do need a skilled facilitator. But you can use simulations to test almost any organizational effort — process designs, project plans, test plans, reorganizations, mergers and acquisitions, marriage proposals — anything. Simulations can be off-site and small-scale, and you can use stand-ins for the actual players if security is an issue.
Next time you have that queasy feeling about your plans, look before you leap — simulate. Top
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Related articles
More articles on Organizational Change:
Workplace Taboos and Change
- In the workplace, some things can't be discussed — they are taboo. When we're aware of taboos,
we can choose when to obey them, and when to be more flexible. When we're unaware of them, they can
limit our ability to change.
Beyond WIIFM
- Probably the most widely used tactic of persuasion, "What's In It For Me," or WIIFM, can be
toxic to an organization. There's a much healthier approach that provides a competitive advantage to
organizations that use it.
When Change Is Hard: II
- When organizational change is difficult, we sometimes blame poor leadership or "resistance."
But even when we believe we have good leadership and the most cooperative populations, we can still
encounter trouble. Why is change so hard so often?
Reactance and Micromanagement
- When we feel that our freedom at work is threatened, we sometimes experience urges to do what is forbidden,
or to not do what is required. This phenomenon — called reactance — might explain
some of the dynamics of micromanagement.
The Restructuring-Fear Cycle: I
- When enterprises restructure, reorganize, downsize, outsource, spin off, relocate, lay off, or make
other adjustments, they usually focus on financial health. Often ignored is the fear these changes create
in the minds of employees. Sadly, that fear can lead to the need for further restructuring.
See also Organizational Change for more related articles.
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- Although the Dunning-Kruger Effect is widely recognized, people describe it — and understand it — in many different ways. Some of these expressions are misleading. Proceed with caution. Available here and by RSS on July 30.
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