HR and Reorganisation - CIPD

Managing Change in the Civil Service
HR and Reorganisation:
From Dilemmas to Delivery
© Duncan Brown
Assistant Director General
15 July 2004

CIPD and Managing Change
• The Psychological Contract
• Organising for Success
• People Management and Performance
• From Research into Practice

The State of the Psychological
Contract in the Public Sector
• Declining levels of employee
satisfaction and commitment;
7.3
Satisfaction with work
7.2
• Lowest sector ratings in central
7.1
government;
7
• Related to:
- lower levels of trust;
6.9
6.8
- less freedom/more controls; 6.7
- more change;
6.6
- lower involvement.
1998 2000 2001 2002
Public Sector
Private Sector

The CIPD’s Organising for Success
Project
• Objectives:
- produce knowledge/tools to help HR
- thereby improve the success rates.
• Method:
- initial questionnaire survey
- case studies in 12 organisations;
- follow-up survey on key issues;
- workshops groups;
- publications and tools.

Organising for Success: Initial
Findings
• Lots of reorganisation and change;
• Changes are shaped:
- by prior experiences of
executives (76%);
- external learning (30%).
• Causes in the wider environment:
- merger/acquisition/Government: 53%
- decline in performance: 53%
- new CE: 50%
- market/service changes: 48%
“We are under
pressure to
increase
efficiency…
unfortunately our
senior
management
equates that with
shedding staff”.
HR participant

What’s Involved
• 85% make redundancies;
• But two-thirds recruit;
• 83% employees move to new jobs;
• 44% extensive change in senior management positions;
• 42% changes in organisational culture;
• 25% extensive change in accounting and IT systems;
• 26% other business processes.
• Training
In project
management
27%
For employees
affected
52%

Who’s involved: Employees
36%
Employees
part ici pated on
design
41%
“Employees rarely have the
opportunity to shape the
development and management
of reorganisations”.
Survey Report
82%
Programme of
c ommunicat ions
“At the start of the process we had
a staff side of 8. Now we have 40
reps”
Employer Representative
82%
“We didn’t involve the unions until
all the decisions had been made
…. there just wasn't time”
HR Director

How Far is HR Involved
“HR issues
such as career
and reward
structures are
relatively
neglected in
comparison, for
example, with
accounting and
IT changes …
though involved
HR people were
generally not
leading these
programmes”.
Internal OD
External
consultant
HR specialist
Membership of Steering Group
24%
27%
“They pushed it
though from the
top. I had
virtually no
involvement and
I headed the HR
function”.
HR Director
respondent
88%
Prof Whittington CEO/unit head
93%

What’s the Effect of HR Involvement
Improvements in performance with or without
formal HR role
Employee-related factors 28%
41%
Efficiency 50%
59%
Internal effectiveness 50%
62%
External effectiveness 53%
61%
No HR
HR on change team

Initial Findings: Is it working
Aims
CRITERIA Achieved
24%
70%
1. External effectiveness eg
59%
improve service;
34% 2. Internal effectiveness eg
flexibility;
59%
3. Efficiency eg cost reduction;
4. Employee effectiveness eg 39%
retention morale
• 40% are not completed on budget, 60% not on time.
59%
58%
“The consequences of this
change have knocked the
organisation back by at least 2
years”. CEO respondent
“The deadline was very tight …
decisions were pushed through
without time to fine tune”. HR
respondent

Initial Findings: So what makes it
work
Use of project management methodologies
Complementary HR changes
Employee involvement
HR function involvement

The Case
“Our challenge is to create a better service and better working
environment”. Jane Hutt, Welsh Health Minister
“Because of its parallel antecedents, there is a powerful case
to be made for involving HR expertise at the most senior
levels of strategic and organisational change, from planning
through to execution”. Richard Donkin, The Financial Times
Efficiency
Taylorism
Work Study/Job Design
BPR
Welfare
Cadburys, Boots etc
Theory X and Y
Wellness centres
People as
Assets

Research shows people management
has a huge influence on organisation
performance more generally.
18%
17% 17%
16%
Percentage 14%
of variation in
change in
12%
company 10%
performance
8%
accounted for 8% 6%
by 6%
managerial
practices 4%
3%
2%
2% 1% 1% 1% 1%
0%
Profitability
Productivity
HRM Strategy Quality Technology R&D

The CIPD’s Future of Work research
4000
Profit per employee (£)
3000
2000
1000
0 to 4
5 to 7
8 to 10
11+
Number of HR practices
Source: FoW (N=297)

The value of HR involvement in
Restructuring
HR Involvement by M & A phase
70%
86%
97%
49%
62%
71%
20%
10%
Successful Mergers
Unsuccessful Mergers
Pre-deal Due Diligence Integration Planning Implementation

So why aren’t organisations more
people oriented A Common
Picture
Business
Strategy
Organisation
Restructuring
Black Box
HR Policies
and Practices

The Dilemmas
• Between what managers know and what they do:
the knowing/doing gap.
• Between HR strategies on paper and in practice:
the implementation gap.
• Between desired and actual HR roles.

The gaps: knowing/doing
“Why does so much business research and education, so
many books and articles, produce so little change in what
managers actually do ….. so many managers know so many
smart things about how to achieve high performance, yet do
so many things to undermine it”.
Jeffrey Pfeffer, Stanford
“We need to turn the learning organisation into the doing
organisation”.
Howard Behr, President, Starbucks Corp.

The gaps: say/do
HR administration
4%
46%
Updating your own HR 9%
knowledge
14%
Responding to line managers
44%
70%
Providing specialist HR input to 47%
wider business issues
60%
Developing HR strategy and 45%
policy
71%
Implementing HR policies
20%
49%
HR programme design
Business strategy
14%
16%
17%
64%
Most important
Most time-consuming

The gap in strategic influence
“Many of the HR managers were focused on operations
and did not see strategic involvement in reorganisation
as part of their domain … leaving HR to pick up the
pieces and address the problem after the event ….
“In the career ladder operational HR doesn’t seem to
provide all the competencies required”.
Prof. Richard Whittington

So the message is not getting across:
‘Voices from the Boardroom’
• 3 executives in 16 organisations;
• 40% not aware of research findings:
• Concerns:
- how to implement progressive people management;
- how much to do;
- how to measure the outcomes;
- “we spend a lot of dead money on training, rather
than determining the real return on it”.

Moving to ‘real’ change and HR
strategies
• Professionalising HR roles and
developing our skills;
• Changing the concept of business
change and HR strategy;
• Changing the performance
management model.

The Different Roles of HR
Business Partner
Change Agent
Employee Champion
Administrative Expert
• All roles are important;
• A strategic role in addition to technical specialist
and administration expert;
• The change agent/process champion.

The New HR Function Model in One
Major Multinational
Board & Line
Management
HR Business
Partners
Processing
Centres
Centres of
Excellence

HR is moving in a strategic direction and needs
to go further
Strategic
O
X
Operational
Proactive
O
X
Reactive
Tailored
O
X
Off the
shelf
Business
driven
OX
Employee
driven
Specialist
O
X
Generalist
X Current
O Future

HR expanding its influence on
change/OD
45%
36.1%
40.5%
43.5%
38.8%
28.9%
27.3%
15.7%
16.6%
19%
8.4%
2%
organisation facilities internal health and corporate social other
design management communication safety responsibility

HR staff skill needs
Willingness to innovate 13%
Integrity 25%
Negotiating skills 11%
Business knowledge 33%
Ability to deliver target 40%
Strategic thinking 46%
Leadership ability 40%
Empathy/Communication/listening
skills
24%
Understanding HR practices 26%
Influencing/political skills 61%

The Changing Nature of Business, HR
and Change Strategies
From: “Planning the deployment of resources to
achieve corporate goals”
Ansoff
“Corporate decisions of significance on the basis of
economic rationality”
Nathanson
“The commander model”
To: “A pattern in a stream of decisions”
Brodwin
Yves Doz
“A process, a gestalt, introducing the appropraiate
attitudes and behaviours to focus on strategic
requirements”
Miles and Snow
“Strategy is our organisation and our
people”
Sir John Browne

Is Change Changing
“Top down pragmatic change does not work ………
…. we need to recognise the complexity of change
processes, set out a broad general direction with a
small number of guiding rules.
…. we need a more emergent approach with less
centralisation and a focus on creating an
environment to engage people
…. effectiveness was found in long-term initiatives in
an environment of continuous change”.
Professor Malcolm Higgs, Henley

HR and Change Strategies: From Intent to Impact
• 12 case studies – Tesco, Nationwide, Jaguar
• 6 further public sector cases – Selly Park
Tech, Inland Revenue, West Mercia Police.
• Major follow up study starting in the NHS;
• Major follow up study underway with Cabinet
Office and Employers Organisation;

Learning from the Research
Unlocking the Black Box
• Overall sense of purpose: ‘the big
idea’
• Front line leadership
- translate goals into individual
actions
- extensive support and
development
• Focus on people
- ability
- motivation
- opportunity
Delivering Public Service
• Energise
- create an energising goal/purpose
- lead by example – integrity, trust
• Enable
- strengthen leadership capability
- the importance of the front line
• Empower
- forge teams to release energy
- strong alignment HR policy and
reality
- seize opportunity, adapt rapidly

The Real Relationships
The ‘Big Idea’
M
A
HR
Policies and
Practice
PEOPLE
Ability
Motivation
Opportunity
N
A
G
E
M
Commitment
Satisfaction
High
Performance
E
N
T

Successfully Achieving Change: An
NHS Hospital
• Bottom of the English league tables: senior management replaced.
• New Ward Manager applies a range of HR practices:
- appraisal; - training;
-shifts;
-briefings.
“I’m much more motivated now, there’s training, the atmosphere’s
totally different”.
“Communication is excellent now … our manager is very approachable”.
“When I came here it was very unsettled. Now we have a strong team …
you want do the the job to the best of your ability”.

Changes in employee satisfaction in one
hospital studied
Job Influence
45
62
Appraisa
l
55
74
Manager good at dealing
with problems
36
49
Respect shown by your
line manager
66
89
Motivation (% fee l 'very'
or 'fairl y' motivated)
79
94
Commitment (share the
val ues)
38
57
Year 1 Year 2

The HR and Change Strategy Process
Where we are
now
Change Barriers
Tradition
Fear
Cost
Transition
steps and
alternatives
Where we need to
be
• Business
• Organisation/HR
• HR
• Business
• Organisation/
HR
• HR
Change Drivers
Change Drivers
Change: Capacity
Commitment
Competence

Some simple things we can all do on
the process
• Involve line managers and employees on project groups;
• Run focus groups early in any change exercise;
• HR/line agreements;
• Assess line managers skills/delivery;
• Improve our own change/process skills
• Train and coach managers;
• Communicate the goals, not just the design details, of changes;
• Run pilots;
• Use technology to support, not replace other channels:
• Regular opinion polling
• Involve and communicate, communicate, communicate

The Performance
Management Process
• Part of the routine/embedding: “Quality is not just a statement, it’s all about
our day-to-day processes and routines”.
• Tailored and ‘borrowed’ scorecards:
- Tesco steering wheel – Jaguar: Six Sigma – Court Service: EFQM.
• Extensive reviews of employee attitudes.
• Strong focus on development, competencies and two-way communication.
• Strong teamworking component.
• Not huge number of targets and close supervision.

Performance Reporting – a positive
process
Reporting
human capital
Developing
credibility
Generating
information
Measuring
human capital
Building
knowledge
Managing
human capital

Conclusions: So what should I do
now to change the HR agenda
• Show evidence on people, performance and change to your board;
• Measure the value added of HR;
• Improving administration is key to closing the desired/actual gap;
• Change your idea of HR and change strategies
From
Top down detailed plan;
Boardroom;
Design focus;
Big bang change, perfection;
Organisation as mechanism.
To
Mix of plan and action;
Whole organisation;
Process focus;
Continuous improvement, evolution;
Organisation as system/organism

Conclusions: So what should I do
now (Contd)
• Develop your process/change management/OD skills;
• More from top management/planning to delivery/line focus.
“Moving from strategy,
structure and systems to
purpose, people and
processes”. Sumantra
Ghoshal
“The Education Department
seeks to promote happiness
at work and through
happiness, true efficiency”.
Selfridges Archive, 1920

Changing the Reform Agenda
Economy
Efficiency
Effectiveness
Energising
Enabling
Empowering

“Save one life and you save a world …
Change a life and you change the world”.
Raoul Wallenberg
d.brown@cipd.co.uk