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.
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More articles on Organizational Change:
- Now We're in Chaos
- Among models of Change, the Satir Change Model has been especially useful for me. It describes how people
and systems respond to change, and handles well situations like the one that affected us all on September
- Kinds of Organizational Authority: the Informal
- Understanding Power, Authority, and Influence depends on familiarity with the kinds of authority found
in organizations. Here's Part II of a little catalog of authority, emphasizing informal authority.
- Good Change, Bad Change: II
- When we distinguish good change from bad, we often get it wrong: we favor things that would harm us,
and shun things that would help. When we do get it wrong, we're sometimes misled by social factors.
- When Change Is Hard: I
- Sometimes changing organizations goes smoothly. More often, it doesn't. Whatever methodology we use
— and there are many methodologies available — difficulties can arise. When change is hard,
what's happening? What makes change hard?
- Patching Up the Cracks
- When things repeatedly "fall through the cracks," we're not doing the best we can. How can
we deal with the problem of repeatedly failing to do what we need to do? How can we patch up the cracks?
See also Organizational Change for more related articles.
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- The Power Affect: How We Express Our Personal Power
Many people who possess real organizational power have a characteristic demeanor. It's the way they project their presence. I call this the power affect. Some people — call them power pretenders — adopt the power affect well before they attain significant organizational power. Unfortunately for their colleagues, and for their organizations, power pretenders can attain organizational power out of proportion to their merit or abilities. Understanding the power affect is therefore important for anyone who aims to attain power, or anyone who works with power pretenders. Read more about this program.
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