Leading Change

We just finished an assignment working with a major utility company.  Their goal was to develop a one day training course that would help support their recent Business Improvement program efforts.  It was interesting to work with them at this stage of their journey, and develop a course for them that would be effective.

As usual, I learn something new every time we work with a client.  In this case, it was interesting to see where their culture was in terms of driving change, and implementing processes that were intended to transform the way that they do business.

I learned a couple of things that could be helpful to others when considering a culture shift in their organization:

• The journey has to be mapped out as a much larger exercise than developing a one day course.
• Developing the material to share within the organization that gives them tools and techniques is important.  However, it is important that a larger strategy and subsequent action plans accompany the expectations set in the course.  Make sure that the team knows what the leadership expects them to do in driving culture change when they leave the training class.
• Don't make the class too long in length.
• For this course with our client, we elected to split it up in two four-hour sessions that will be held one month apart.  The point is to teach them tools and techniques in the first session, then discuss what they did and how they learned during their experiences in the second session after a month has passed.  Sometimes sharing experiences is more powerful than any tools can be.
• Get the right people in the room for the first session so they can be the forerunners.
• People learn from leaders, and leaders lead by example.  Choose the first session participants carefully who will make the biggest impact and set the best example for the organization.
• Do a pilot session.
• Once you develop your training, conduct a pilot session to check your timing of the class delivery, presentation techniques, etc.  It will be well worth the time.

Call QuantumSix today to help you with any type of Change Management training.  We have materials ready to customize to meet your company's needs and culture.

Thanks and until next time.......Julie

Identifying benefits as a result of sourcing cost improvement projects can be very challenging for most organizations.  There are several theories as to why this effort presents itself as difficult.  For example, some organizations are satisfied with the general improvement in their financial statements after implementing some kind of Business Improvement methodology, such as a Project Management Office or Lean Six Sigma.  In this case, they have not deemed it necessary to reconcile the benefits to the company financials because the company is holistically performing better.  Another theory is that many companies do not realize the benefits of implementing a financial validation process during their initial efforts of driving cost saving projects because they are so focused on training and project execution. 

As Business Improvement  methodologies have matured over the last few decades, many companies have developed the perception that simply learning the tools and driving the project to completion will deliver the desired benefits.  Unfortunately, they have missed an opportunity to bring true credibility to the effort by implementing a process that directly and auditably reconciles any project and its savings to the company’s bottom line.  What companies need are accounting and reporting processes so there is no debate and argument as to the financial impact and effectiveness of the process improvement effort, whether the projects reside within the sourcing function or not.

The Key to Success – Strong Project Governance

It is widely understood that a strong project governance process is key to the successful execution of projects.  A high level governance process is demonstrated below, where we illustrate the critical elements of the project selection process:

1.     Idea Generation

2.     Benefits Estimation

3.     Project Prioritization

4.     Project Approval

5.     Project Launch

Most organizations recognize the value in this process, but many fail to follow each step for every

project.  In fact, research has shown that many companies are so anxious to launch projects that they do not

perform a proper benefits estimation process for each project, thus resulting in an ineffective project selection and prioritization process.  As a result, too many projects are chartered, and few are completed to the company’s expectations.

The Relevance of Financial Validation

 A necessary element to add to an organization’s project governance process is financial validation.  By ensuring that this element is fully integrated into your project selection process, an organization can
drive improvements in several critical areas:

1.     Project benefit reporting;

2.     Definition of project benefits, defined specifically as tangible and intangible; and

3.     Credibility of the project’s deliverables by the company financial representatives.

The implementation of such a financial validation process can be achieved by applying the following basic principles:

1.     Customize the project financial rules, in accordance with specific company financial policies and guidelines;

2.     Integrate with the company’s general ledger and financial reporting system;

3.     Reconcile calculated savings with actual financial movements and transactions within the general ledger and reporting system;

4.     Integrate and compare with the company’s financials, as included in the project governance process, with the real financial transactions going through the accounting system;

5.     Report output provided for key schedules for the Management Accounts relating to the improvement program; and,

6.     Direct control and governance of the cost savings’ program in a way that directly and auditably reconciles to the company’s accounting and reporting systems.  

 

Thus, through the implementation of these principles, you eliminate the debate as to the financial impact and effectiveness of the process improvement program within the organization, thus driving credibility and building sustainability.  The linkage to the project benefits is direct and not ‘fuzzy’, because the validation and reporting is performed by your company’s financial representatives – not the sourcing organization.

Results

The implementation this model drives significant improvement in project reporting and financial internal controls for sourcing, or another organizational, projects.  The model is effective regardless of whether your company uses a project management portfolio database, or simply tracks them on Excel spreadsheets.  In either case, introducing this financial infrastructure elevates an organization to another level by validating and locating benefits that are often overlooked by a company’s financial community.  The end result is more precise measurement of benefits, and credibility that a sourcing organization’s efforts are indeed yielding the desired results.