The credit profession has had its share of change. Mergers and acquisitions, rapidly advancing technology, downsizing, and ever-increasing demands of customers have resulted in a profession faced with new systems, new processes, fewer people, and increasing demands.

Change is inevitable, but successful change is far from a given. Rather, successful change depends on planning the change, managing the change process, and sustaining the change.

Research from the Standish Group published in the CHAOS report report, 1994 and subsequent studies, describes the very poor track record of system changes studied over a period of years. Like so many other changes, the return on all the money and time and effort expended is not impressive. The findings are that projects routinely come in over budget (by nearly double), miss deadlines (taking nearly two times longer than expected), and produce about half of the expected (and needed) result. An analysis of the reasons for these dismal results was that people and their behaviors were responsible for over 50 percent of these project failures.

Making the decision to change–to introduce a breakthrough strategy that will take your credit department to the next level of competitiveness or align it with compliance requirements–is the first step. Making sure that strategy is implemented successfully is the second step and calls for that change to be well-managed.

People often resist change, which is why they behave in ways that result in failure. Change is a tough process, inviting resistance from all corners of an organization. Identifying and reducing that resistance is what managing change is all about.

Making the decision to change–to introduce a breakthrough strategy that will take your credit department to the next level of competitiveness or align it with compliance requirements–is the first step. Making sure that strategy is implemented successfully is the second step and calls for that change to be well-managed.

The Players

Part of the planning process involves understanding the roles and responsibilities of the “players” involved in the change process. These roles are fairly straightforward in terms of their definitions but overlaps can leave individuals unclear as to their true role. Thus the planning process must make these roles clear. So, for instance, an individual who may be a manager in his or her daily job may be a sponsor within the context of a particular change project.

The Roles

Sponsors are managers or leaders within the organization who have the authority to decide that something should change and to allocate the resources to support that change.

Change agents are people within the organization who are assigned the task of planning and implementing the change. In some cases, change agents may also be sponsors because the people who have to change report to them.

Targets are those individuals who have to change. These people are also known as “partners in the change process,” a softer term perhaps but one which is, in most cases, less descriptive of how they feel about their role.

Stakeholders is the term given to everyone affected by the change – including all sponsors, change agents, targets, even vendors, spouses, and bystanders.

Each of these roles is interdependent. If the sponsors do not make the decision to change or provide the resources needed for change, no change will occur. If change agents do not plan and manage the change, there is a very real risk that the change will not happen at all and that the efforts of the sponsors and the targets will go to waste. Similarly, if the targets do not change, the work of the sponsors and change agents will be in vain.

It is important, therefore, to define and agree upon the labels, the responsibilities, and actions that are associated with each role at the very beginning of the change process.

Assessing and Reducing Resistance

When your employees are faced with a change, you can expect, even predict, that they will resist that change. If the change is determined to be, from their perspective, negative, their resistance can put your change effort and the investment you have made in that change at risk.

Any and all of these changes can and will trigger resistance by various groups of the people affected:

• How you check credit

• How you check for fraud

• How you use your A/R software

• Changes in the organizational structure

• Outsourcing a large portion of your back office function.

Being able to predict that resistance ahead of time, both its source and its intensity, will help you put in place a set of action steps to mitigate that resistance before it threatens the success of your change.

The following questions should be addressed for each group–targets, change agents, and sponsors. The answers will help to assess the resistance potential.

1. Who will resist in target groups affected by and affecting the change?

2. Why would they resist? Mapping the various target populations and laying over it the predicted potential resistance will give you a clear idea of where strong resistance could have a major or minor impact.

3. How will this resistance be exhibited? Complaining or leaving? Sabotaging or getting sick? Other methods?

The Managed Change™ model developed by LaMarsh & Associates tells us there are three systems we can use to reduce the potential for resistance: Communication, Learning, and Rewards.

The costs of those three systems will be determined by the amount of potential resistance predicted. Those predictions will give the change agents an idea of the additional cost of successful change

Too many leaders think that they can work with their team of change agents over the course of weeks or months, defining the desired state and what needs to change, and then, like Moses, descend from the executive suite, proclaim the change, and get instant alignment and acceptance.

Communications

Executives have the benefit of dealing with their own target issues while designing the change initiative. It is ludicrous and arrogant to think that a 30-minute communication meeting will generate immediate alignment from people who are hearing about the change for the first time. The answer, not surprisingly, lies in effective communication.

Communicate the message until your audience mouths your words along with you. Use company newsletters, intranets, workshops, meetings and more to communicate the initial and subsequent messages and to keep people abreast of progress. Tell them three things:

1. Why we can’t stay in the current state and why we must change.

2. What each individual’s job, location, process, and tools will look like.

3. What the change process will be, what each individual’s role will be, how the status of the change will be tracked and, most importantly, what the management of the organization is willing to do to effect the change.

If people see progress they are much more likely to stay the course and help to reach the desired state and to sustain the change.

What Do These Lessons Mean?

In the past, the pace of change was such that companies could concentrate on a change until it was finished, assume the new status quo and then coast for a year or two before the next change. Today, change is happening at such a rate that constant change is the status quo. This requires that the successful organization of today have the skill to manage change well.

The “Delta Dip”

All change causes as an inevitable dip in employees’ key measures, be it productivity or quality, etc., during its implementation. We call this the Delta Dip and it occurs as people learn what is required of them in the change process and adapt to the new, desired state.

If part of that Delta Dip is caused by people refusing to change, spending excessive amounts of time complaining, stalling, and even sabotaging the change, the cost of the change is too great and the potential for failure is too high.

As a sponsor of change, understanding the change process and managing that change will result in a delta dip that is shorter and less severe and ultimately will result in a more successful and more sustainable change.

Jeanenne LaMarsh is CEO of LaMarsh & Associates, Inc., a Chicago based consulting company focused on organizational change and serving clients such as Bank of America, Ford Motor Company and Allstate Insurance. Ms. LaMarsh can be reached at 312-464-1349 or via e-mail at jlamarsh@lamarsh.com

The Managed Change™ model can help by identifying, step by step, potential sources of resistance as well as clues as to how to minimize this resistance.

The Current State (prior to changing)

• Do the various target groups see a need to make a change–any change?

• Are there sufficient problems in the current state to cause discomfort or even pain?

• Are the targets sophisticated enough to anticipate that even if the current situation is okay, there is great risk if they do not make a change?

• The Delta State (the period during the change process)

• How many other changes is each organization undergoing besides this one?

• Has each change been considered in relation to the others in terms of importance, prioritization, and resource requirements?

• How much tolerance will the organization have for losses in customer satisfaction, productivity, and other key measures during the integration phase?

The Desired State (the goal after the change)

• Do the people see that this change will be a good solution?

• Can they see the change from an organizational perspective?

• What about from an individual or departmental or operational perspective?