Although 75 to 80 percent of large U.S. companies are pursuing reengineering, many of these efforts are unsuccessful. Surveys published in the ABA Banking Journal (Dec. 1993) and Journal of Business Strategy (Nov./Dec. 1993) suggest that 60 to 80 percent of reengineering projects do not meet their expectations. What is the real cause of failure? In their book, The Reengineering Revolution (1995), Michael Hammer and S.A. Stanton say the answer is “management's failure to deal with [resistance to change by employees].” Hammer admits that two-thirds of the reengineering efforts he has seen have crashed because of management's ineptitude in handling employees' resistance to change.
Why does management find it difficult to deal with employee resistance? One big reason is that managers may have never dealt with such extensive and extreme change. Reengineering strives, in the words of Hammer and co-author J. Champy, for “fundamental rethinking and radical redesign of business processes to achieve dramatic improvement in critical, contemporary measures of performance…” (Reengineering the Corporation, 1993). Fundamental rethinking and radical redesign may involve gut-wrenching change for many in the organization—ultimately requiring employees to embark on a totally new way of doing business. They may have to learn news skills, perform new jobs, and develop new work teams. Long-standing relationships may be altered and former ways of doing work abandoned. In addition, pervasive fear of possible layoffs and downsizing may create losses in productivity. In short, reengineering involves tumultuous change that can ultimately inundate managers.
Management's difficulty is exacerbated because the general prescription for managing resistance to change is more a reactive wait-and-see approach rather than a proactive one. We have seen many reengineering efforts concentrate on the design and implementation of the hardware side of reengineered processes, assuming they could spot and resolve any “people” problems as they emerged. While this approach is helpful, and somewhat necessary, it is analogous to curing an illness after it has weakened the system, rather than taking steps to prevent it.
Our approach focuses on employee involvement in change as the primary prevention method for resistance. Although involvement (or “engagement,” as we call it) may not eliminate resistance, it is a clear winner over “wait and see.” Our model recommends specific action steps that management can use proactively to immunize the organization from “resistance paralysis.” In addition, we discuss the distinct types of managerial actions required in the different phases of reengineering.
Model
The model we propose offers both a way of thinking about employee involvement in change and action guidelines for needed employee engagement. The five action guidelines shown in Figure 1 lay out the areas managers will need to address if they want effective employee engagement.
Employees need Direction, a picture of where the organization in going. They will need new Skills to do work in new ways and Incentives to be refocused on the desired direction. They will need access to Resources to ensure their success. And, they will need an Action Plan to provide a starting point.
Figure 1. Action Guidelines for Engagement
The top row of Figure 1 shows action that will be needed in each of the five areas to produce employee engagement. Failure to act in any of the topic areas may produce the results or behaviors frequently associated with resistance to change: Confusion, Anxiety, No Change, Frustration, or False Starts. Dealing with employees' natural resistance to change is tough enough without the burden of the “manager-created” conditions just cited.
Let's identify the conditions that occur when there is no action in an area and examine steps managers can take to prevent such problems.
Direction. Lack of clear definition of either company outcomes or desired employee performance results in “confusion” for both managers and employees. This confusion may look to some like resistance to change, as employees either ask endless questions or pull back to wait for clarity. Without clear direction, the company (and employees) shoots for ephemeral outcomes with no way to measure results. Confusion results in wasted resources and disenchanted employees.
To prevent these problems, managers have to (1) clarify company outcomes desired from reengineering (e.g., profitability, market share, quality, cycle time, cost/unit), and (2) clarify desired employee behavior/performance to achieve company outcomes (to perform new tasks or complete old tasks in new ways). A brokerage firm, about to start reengineering, collected its entire management team in one room for a two-day meeting to clarify the desired outcomes for both reengineering and the running of the existing business while reengineering was going on, and to clariify the roles of each of the managers during the project. After clarification of roles, each manager left the meeting knowing both his or her role in the reengineering process and in the critical day-to-day running of the existing business. These roles were re-clarified regularly—in the group's quarterly meetings.
Skills. Without needed skills, employees cannot accomplish their tasks. Inability to tackle the new tasks may mean “anxious” employees who, despite wanting to get the job done, do not have the requisite skills to do so. Extreme anxiety can even immobilize some employees, creating a condition that could easily be read as “resistance to change.”
Therefore, after managers clarify direction, they have to identify the skill development needed to convert employee effort into desired performance. Based on this assessment, the company may need to provide training that will lead to development of needed skills. This can involve training for those involved in the reengineering effort as well as training for employees who must perform new tasks in the redesigned organization. A manufacturing firm engaged in extensive reengineering of decades-old production capability provided focused training on reengineering tools for its design teams. This training helped team members to work through some novel alternative designs to select an effective new way of doing business. As a part of the new business approach, all production employees were required not only to perform, but also to verify their own work. Before actually changing to the new approach, the company helped prepare employees by developing, testing, and deploying training in Manufacturing Verification.
Incentives. Without incentives that are congruent with desired employee performance, companies are likely to experience “no change.” Even if employees begin the reengineering effort, they are not likely to implement or sustain the effort if their incentives do not focus them toward reengineering.
For employees to adopt, adapt, and sustain a reengineering effort, managers must clarify the incentives for desired performance leading toward organizational outcomes. Clarification means defining (1) the personal report cards, (2) the performance-to-payoff linkage, and (3) the method that will be used for assessment and feedback. Additionally, managers have to offer personal outcomes/incentives that “match the market” for the employees' needed performance level.
One of the manufacturing firms mentioned above took direct action to change employee “report cards” as they transitioned work to the new design. Changes to each worker's personal report card included adding new targets/tasks fitting with the new design and deleting targets/tasks that no longer fit. In addition, a human resources manager was assigned to work with each manufacturing manager to ensure that task and job changes were properly reflected in the firm's compensation structure. In some cases, employees' positions were upgraded, necessitating compensation changes.
Resources. Lack of organization resources leads to employee frustration. Employees may understand what they need to do and feel capable of doing it, but find themselves stymied by factors beyond their control.
To prevent this frustration, managers have to identify and provide the new mix of resources needed for employee success (e.g., tools, information, funds). An aerospace firm starting the first phase of reengineering promised to provide any resources needed. They anticipated that the economic impact would include overtime for many employees who would be directly involved in design and implementation teams, and made arrangements to fund the overtime.
Besides statements of management commitment, the firm took actions that made their commitment visible: they conducted training courses through the in-house training department and converted one of the oldest (but most centrally located) plant buildings to a spotless showcase. At that time the work processes done in the building were largely untouched by reengineering, but the multimillion-dollar renovation conveyed the firm's intentions to employees in a much stronger way than words alone ever could have.
Action Plan. Employees without an action plan can wander and waste valuable time and resources. Direction, skills, incentives, and resources are of little value unless employees know “what to do on Monday morning.” Many organizations experience “false starts” as employees grope for tangible steps they can safely take.
Continually updated action plans, specifying who is to do what and when, focus employee effort and performance. An old-line manufacturing firm supported its reengineering efforts with regular, staged meetings designed to review results and keep action plans fresh. The firm also created a once-a-month management forum to focus exclusively on “managing the changes” (i.e., the reengineering effort). At this forum, managers with reengineering assignments worked issues and agreed to the steps to be taken in the upcoming month. Simultaneously, the firm initiated a weekly management meeting of the top three levels from all functional units. At this meeting, all major jobs necessary to keep the existing business running were reviewed and issusd worked. Then they discussed, coordinated, and agreed to all reengineering changes that were about to impact the functional units. With this combination of meetings, the firm kept action plans fresh and effectively coordinated the “changes” with “serving today's customers.”
Table 1. Engagement in Phases of Reengineering
| Design Phase | Implementation Phase | Increased Outcome Phase | |||
| Design Team | Design Support Team | Implementation Team | Implementation Support Team | All Employees | |
| Direction | Develop and test new process to increase performance on specific outcomes (e.g., cost, quality, cycle time). | Assume full responsibility for “running the existing business” plus accommodate the work of Design Team members. | Plan and install changes in firm's attributes called for by the new design (e.g., information systems, assembly lines). | Accomplish responsibilities of the place in the new work design (this place could be a new job, new or changed tasks in the current job). | Execute assigned new duties in the newly implemented processes. |
| Skills | In the analysis, development, and testing of new processes (e.g., flowcharting, benchmarking, design development). | For assuming the responsibility of employees assigned to Design Team. | For implementing new processes (e.g., technical skills required to change technology, procedures, tools/equipment; “change management” skills including those for adjusting performance systems of employees). | In performing new assigned jobs, frequently with rearranged set of co-workers. | For new tasks and new ways of doing work. |
| Incentives | To perform effectively on Design Team (e.g., “safety net” for Design Team employees to enable them to focus on best design without fear of job loss; no penalty for part-time on old job). | For assuming responsibilities of the Design Team including modification of personal report cards. | For implementation role including specific payoffs for making needed changes happen. | For those jobs that have “changed value” and changing payoff rules for all affected jobs. | In the form of individual outcomes, a changed report card, and a performance-to-payoff matrix linked to new desired outcomes. |
| Resources | To design effectively (e.g., funds, information, time). | To perform regular duties plus the assumed duties of colleagues away on Design Team. | For changing organizational attributes (e.g., tools, procedures, information, as well as dollars for extra employee time). | For training and then use in the new way of working (e.g., tools, time—frequently overtime). | For everyday execution of the new work processes that have been implemented. |
| Action Plan | Specific steps (e.g., method to be used) to start “next Monday morning.” | Specific steps (e.g., what, when, where) for assumed duties as well as modifications for regular duties. | Specific steps (e.g., what, when, where) for changing the firm's attributes in accordance with implementation plans. | Specific steps (e.g., what, when, where) to prepare each worker to (1) transition to new work (starting new tasks and stopping old ones), and (2) keep up current levels of production and service to customers. | Specific steps for start-up (or switchover) to new tasks, job assignments, or ways of doing work. |
Phases in Reengineering
While the five action guidelines suggest ways to seek employee engagement and reduce employee resistance to change, the actual application of each action guideline will change according to the phase of the reengineering process. We have defined three general phases of a reengineering project:
- Design Phase—which involves identifying and testing new processes for running the business
- Implementation Phase—which involves making the necessary changes in the various attributes of the system (e.g., assembly lines, information systems, employee skills) to get the new processes in play while continuing to run the existing business at the same or better level
- Increased Outcome Phase—which involves running the business in the new reengineered way to achieve better outcomes.
In addressing employee engagement in the different phases of reengineering, managers should also consider the different categories of employees who need to be engaged. In the Design Phase, engagement is sought from two categories of employees: Design Team members—who need to be engaged in identifying the targeted processes for reengineering, and Design Support Team members—the remaining employees who need to continue running the existing business while accommodating the absence of Design Team members. In the Implementation Phase, two categories of employees need to be engaged: Implementation Team members—who focus on planning and making appropriate changes in the organizational attributes, and Implementation Support Team members—who are charged with running the existing business while accommodating the changes in the attributes of the organization initiated by the Implementation Team. Finally, in the Increased Outcome Phase all employees need to be engaged in running the newly changed business.
In Table 1, we provide specific action guidelines for employee engagement, matching each phase and category of employees involved. While the employee engagement guidelines are arranged around the same five topics (direction, skills, incentives, resources, action plan), there are important distinctions among the guidelines for the different categories of employees and reengineering phases.
As discussed above, the level of engagement required from employees is extensive and calls for detailed planning. In addition to planning, managers need to cultivate the right mindset for reengineering. Such a mindset is akin to one used by those starting a totally new business. With such an assignment, most managers would focus considerable attention on the detailed planning necessary to find the right employees and engage them in doing the right things at the right time. In reengineering, the situation is the same—a new business is being created with precise needs for employee engagement, and managers must act directly to address these needs.
Employees who are involved in making change happen will demonstrate less resistance to change. Every effort should be made to find ways to engage them throughout the reengineering process. Additionally, if managers take the kinds of actions we have outlined, much of what passes for resistance will not appear. However, even after taking such actions, managers will still need to be aggressive about finding resistance, identifying the sources, and responding quickly.
Conclusion
While the model and action guidelines we have suggested are for engaging all employees throughout the organization, managers should take note of the following caveats to complete employee engagement.
First, not all employees will engage at the same rate. Some employees will be relatively eager to engage in all phases while others may be slow. Some will be faster to engage in the Design Phase (new ideas!) while others will be faster to engage in the Implementation and Increased Outcomes Phases (we're finally doing something!). In this situation, managers can simply recognize the different engagement rates and exercise patience as most employees “find their way aboard.”
Second, not all employees can or will be engaged in reengineering—not in Design, Implementation, or Increased Outcome. Non-engagement of employees may arise for several reasons: some cannot accommodate the change; some will not have the basic abilities or mindset required by the new design; and some will not be sufficiently motivated to make the effort to change. If it becomes clear that an employee should not be transitioned to the new work design, that employee must be moved out of a position requiring such a change.
Finally, not all managers will be willing to do what it takes to get employees engaged in reengineering. The idea of forming “new contracts” with employees around new processes is not conceivable to some managers. It is important to realize that managers who do not work aggressively to engage employees may not be engaged themselves. The solutions to the two situations above apply to managers as well.
Employee engagement in reengineering is critical—not optional—during all phases. For the needed engagement to be there, project managers will have to work hard and smart to make it happen. And if engagement does not happen with some employees or managers, it may be necessary to intervene quickly with those individuals so that the organization continues to progress toward its goals of radically improved performance. ■
Dutch Holland is president and founder of Holland & Davis, Inc., a Houston-based firm focusing on change management, strategy development and implementation, and reengineering. He co-authored The Change Management Toolkit of Reengineering.
Sanjiv Kumar is an assistant professor of management at the University of Houston-Downtown. He has worked in the energy industry, and consults on international joint ventures, expansion strategies, and business process reengineering.
