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Change in Management in an Organization
Reference :-Satyam Computer Services (Now Mahindra Satyam)
A Project Report submitted in partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
(Industry Integrated) TO EIILM University, SIKKIM
By peeyush Ashani
STUDENTS DECLARATION I here by declare that the Project Report conducted on ON
Change in Management in an
Reference :-Satyam Computer Services (Now Mahindra Satyam)
Under the guidance of
Ms. Lynite Rozario
Submitted in partial fulfillment of the requirements For award of the degree of MASTER OF BUSINESS ADMINISTRATION (Industry Integrated) TO EIILM University, SIKKIM
Is my original work and the same has not been submitted for the award of any other Degree/diploma/fellowship or other similar titles or prizes. Place: Mumbai Peeyush Ashani
This is to certify that the Project Report
Change in Management in an Organization
Reference :-Satyam Computer Services (Now Mahindra Satyam)
Submitted in partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION (Industry Integrated)
EIILM University, SIKKIM
Is a record of bonafide Training carried out by
Under my supervision and guidance and that no part of this report has been submitted for the award of any Degree/ diploma/fellowship or similar titles or prizes.
Change in Management in an Organization
Reference :-Satyam Computer Services (Now Mahindra Satyam)
Change management can take many forms and include many change environments. The most common usage to the term refers to organizational change management. Organizational change management is the process of developing a planned approach to change in an organization. Typically the objective is to maximize the collective benefits for all people involved in the change and minimize the risk of failure of implementing the change. The discipline of change management deals primarily with the human aspect of change, and is therefore related to pure and industrial psychology. In Management consulting change management is a euphemism for dealing with an organization's actual or impending insolvency. Many technical disciplines (for example Information technology) have developed similar approaches to formally control the process of making changes to environments.
Change management can be either 'reactive', in which case management is responding to changes in the macro
environment (that is, the source of the change is external), or proactive, in which case management is initiating the change in order to achieve a desired goal (that is, the source of the change is internal). Change management can be conducted on a continuous basis, on a regular schedule (such as an annual review), or when deemed necessary on a program-by-program basis. Change management can be approached from a number of angles and applied to numerous organizational processes. It’s most common uses are in information technology management, strategic management, and process management. To be effective, change management should be multi-disciplinary, touching all aspects of the organization. However, at its core, implementing new procedures, technologies, and overcoming resistance to change are fundamentally human resource management issues.
About Saytam Computer Services (Mahindra Satyam)
(NYSE: SAY) Satyam Computer Services is a leading global business and information technology services company that leverages deep industry and functional expertise, leading technology practices, and an advanced, global delivery model to help clients transform their highest-value business processes and improve their business performance. The company's professionals excel in enterprise solutions, supply chain management, client relationship management, business intelligence, business process
quality, engineering and product lifecycle management, and infrastructure services, among other key capabilities. Mahindra Satyam is part of the $6.3 billion Mahindra Group, a global industrial conglomerate and one of the top 10 industrial firms based in India. The Group’s interests span financial services, automotive products, trade, retail and logistics, information technology and infrastructure development.Mahindra Satyam development and delivery centers in the US, Canada, Brazil, the UK, Hungary, Egypt, UAE, India, China, Malaysia, Singapore, and Australia serve numerous clients, including many Fortune 500 organizations.
History Of Satyam Computer Servies
Satyam Computer Services Ltd is one of the leading global consulting and IT services company that offers end-to-end IT solutions for a range of key verticals and horizontals. Satyam Computers has domain expertise in verticals such as Automotive, Banking & Financial Service, Insurance & Healthcare, Manufacturing, Telecom, Infrastructure, Media, Entertainment, and Semiconductors. Satyam has nearly 40,000 employees on its rolls, working in development centers in India, the USA, the UK, the UAE, Canada, Hungary, Singapore, Malaysia, China, Japan and Australia. Satyam Computers' network is spread over 55 countries across 6 continents. Satyam serves over 558 global companies including over 163 Fortune 500 corporations.
Satyam Computers was founded in June 1987 as a private limited company by Ramalinga Raju along with one of his brothers-in-law, DVS Raju. In June 1991, Satyam Computers got its first Fortune 500 Client. In the same year in August, Satyam Computers was recognized as a Public Limited Company. Satyam went public in May 1992 and its issue was oversubscribed 17 times. In July 1993, Satyam entered into a joint venture with Dun & Bradstreet. Satyam was awarded ISO 9001 Certification in March 1995. In December 1995, Satyam Infoway was incorporated. In May 1997, Satyam became the first Indian IT Company to get ITAA Certification for Y2K Solutions. In November 1998, Satyam became one of the first companies to enter Indian Internet service market with the launch of Satyam Infoway's ISP Service. In the same year Satyam entered into a joint venture with GE. In 1999, Satyam Infoway became the first Indian Internet company to be listed on NASDAQ. In February 2000 Satyam was declared one of '100 Most Pioneering Technology Companies' by World Economic Forum, Davos. In May 2000 Satyam became the first organization in the world to launch Customer-Oriented Global Organization training. In March 2001 Satyam became first ISO 9001:2000 Company in the world as certified by BVQI. In May 2001 Satyam was listed on New York Stock Exchange. In 2003, Satyam announced business continuity center in Singapore, the first of its kind outside India. In 2004, Satyam opened new development center in Mississauga, Canada. In 2005 Satyam acquired 100% stake in Singapore based Knowledge Dynamics, a leading Data Warehousing and Business Intelligence solutions provider.
Achievement Of Satyam 1. First Indian IT Company to get ITAA Certification for Y2K Solutions. 2. Satyam Infoway is the first Indian Internet company to be listed on NASDAQ. 3. Declared one of '100 Most Pioneering Technology Companies' by World Economic Forum, Davos in the year 2000. 4. First organization in the world to launch CustomerOriented Global Organization training. 5. First ISO 9001:2000 Company in the world as certified by BVQI. 6. Ranked by the Brown-Wilson Group as the number two outsourcing vendor globally in the year 2006.
Our journey has been eventful, designed for growth, and marked by numerous pioneering achievements and global awards. We have made significant contributions to the professional services industry, in India and overseas. Some significant milestones are listed below:
1. Unveils the new brand identity, “Mahindra Satyam”
2. Tech Mahindra announces an open offer to buy an additional 20% in Satyam from existing shareholders 3. Tech Mahindra acquires a 31% stake (Preferential Shares) in Satyam 4. Venturbay Consultants Private Limited, a Tech Mahindra subsidiary, emerges as the highest bidder to acquire a controlling stake in Satyam
1. Adopts new tagline “Business Transformation. Together.” 2. Enters agreement to acquire S&V Management Consultants, a Ghent, Belgium-based supply chain management (SCM) consulting firm 3. Becomes the first company to launch a secondary listing on Euronext Amsterdam under NYSE Euronext’s new “Fast Path” process for cross listings in New York and Europe 4. Becomes the first company to be invited by the National Stock Exchange (NSE) to ring the opening bell 5. Enters into a definitive agreement Chicago-based Bridge Strategy Group to acquire
1. Becomes the Official IT Services Provider for the FIFA World Cups, 2010 (South Africa) and 2014 (Brazil) 2. Announces acquisition of UK-based Nitor Global Solutions Limited 3. Opens Global Development Center (GDC) in Malaysia 4. Opens Development Center in Vizag, India 5. Becomes the first Asian company to feature in the Training Magazine’s list of Top 125 companies for learning
1. Sets up the first “Global Innovation Hub” in Singapore 2. Sets up operations in Guangzhou, China
1. FLC framework launched across the entire organization 2. Largest global development center outside India (in Melbourne) begins operation 3. Citisoft and Knowledge Dynamics acquired
1. Satyam BPO launched in Hyderabad 2. First Customer Summit conducted
1. Satyam becomes world’s first ISO 9001:2000 company to be certified by BVQI 2. Listed on the NYSE (SAY) 3. APAC headquarters established in Singapore
1. Associate count reaches 10,000 2. Satyam receives National HRD Award from Indian
1. Assessed at SEI CMM® Level 5 2. Satyam Infoway (Sify) becomes the first Indian Internet company listed on NASDAQ 3. Satyam forms joint venture with TRW Inc. 4. Presence established in 30 countries
1. Satyam signs joint venture with Dun & Bradstreet for IT Services 2. Awarded ISO 9001 Certification 3. Satyam Technology Center (STC) inaugurated 4. Joint venture with GE announced
1. Offshore software project with John Deere & Co.— Satyam’s first Fortune 500 customer—announced 2. Recognized as a public limited company; debuts on the Bombay Stock Exchange (BSE) 3. IPO oversubscribed by 17 times
1. Incorporated as private limited company
Since inception, Satyam have been honored with numerous prestigious awards. These reflect our unwavering focus on quality and commitment to make a difference. Listed below are some of the awards we have earned:
Award 2009 Hyderabad Organizational unit assessed at a maturity level 5 on KPMG the SEI CMMI ver 1.2 in Jan 2009 “Excellence In Practice” recognitions for learning Declared as Voice-Ready partner for Microsoft Unified Communications Moves up to be among the Top 10 in Training Top 125 list American Society for Training & Development (ASTD) Microsoft Training magazine Awarded by
Awards for excellence in Leadership Development, Marketing & Corporate University Xchange Communications of Brand Value of Learning, and Strategic (CorpU) Alignment of Learning to Business Strategies Progressive Manufacturing 100 Award for Rain CII Carbon 2008 BS25999 Certification for all India Operations. Satyam Computer Services Ltd. is the third company to achieve this certification. Asian MAKE (Most Admired Knowledge Enterprise) Award UK Trade & Investment India (UKTI) Business Award for corporate social responsibility SAP Pinnacle Award 2008 under “Service – Ecosystem Expansion (Growth)” category Best IR Website in the Asia Pacific & Africa region for providing complete, accurate and timely investor relations information Award for Best IT Practices in IT Sector BSI Management Systems Managing Automation Media
Teleos, in association with KNOW Network UKTI SAP MZ Consult
Amity Business School, Noida, India
2007 Partner Innovation Award for Anti-Money Laundering (AML) solution Competitive Strategy Leadership Award for Offshore Testing Market Asian MAKE (Most Admired Knowledge Enterprise) Award Indian MAKE (Most Admired Knowledge Enterprise) Award Award for "Strengthening Customer Relationships" Winner of the First “Partner Innovation” Award Ranked # 1 in the ASTD BEST Award First Asian company to rank in Training Magazine's Top 125 companies for learning Citizenship Partner of the Year Award, 2007 Vision, Impact, Progress (VIP) Award, 2007 Second-Best Employer in India The only IT Services company from India in the list of the TOP 20 Best Employers in Asia BML Munjal Award for Excellence in Learning and Development 2006-07 TDWD Best Practices Award Top Asian Knowledge Organization Third-Best Company to Work for in India Award for most innovative recruitment practices Ranked in the ASTD Fourth BEST awards Recognition Of Commitment (ROC) Award 2005-06 TDWI (The Data Warehousing Institute) of North America Most Admired Knowledge Enterprise (MAKE) BT-Mercer-TNS RASBIC (Recruiting & Staffing Best in Class) American Society for Training & Development (ASTD) The Institute of Internal Auditors, USA (IIA) Pegasystems Frost & Sullivan Teleos, in association with KNOW Network Teleos, in association with KNOW Network ITSMA (IT Services Marketing Association) Software AG/webMethods American Society for Training and Development (ASTD) Training Magazine Microsoft Computer Associates Hewitt India Hewitt Asia Hero Mindmine Institute (part of the Hero group of industries)
Winner, Corporate Citizen I award for Corporate Social Responsibility CMMI Level 5 Company-wide ISO 27001 Global Certification Forbes Top Asian Companies under US$1 billion Top 13 Best-Managed Companies in India AS 9100/EN 9100 (Aerospace Standards Certification) People CMM Level 5 Assessment, Pune facility 2003-04 Ranked Among Top 10 Best Companies to Work for in India Ranked Among India’s Top 10 Best Employers, 2004 and 2003 Best Risk Management and Solution Delivery Organization that Creates Fun and Joy at Work 2001-02 National Award for Bright Ideas for Idea Junction™ IT Offshore Service Delivery Program named “Industry Best Practice” Security Standards Certification BS 7799
Business World , FICCI, and SEDF SEI, CMU authorized Lead Assessor BVQI , UK Forbes Magazine Business Today and AT Kearney BVQI , UK TUV Rhineland
Business Today —Mercer— TNS Survey CNBC-Hewitt Best Employers Survey Gartner HT Power Jobs Awards
Indian National Suggestion Schemes’ Association Aberdeen Group International Information Security and Management Standards TDWI Bureau Veritas Quality International
Best Global Data Warehousing Solution First IT Company in the World Certified under ISO9001:2000 Pre-2001 SEI CMM® Level 5 Certification “100 Leading Pioneering Technology Companies”
SEI, CMU authorized Lead Assessor World Economic Forum
Why change in Management Required at Satyam
Downfall Of Satyam ( Asatyam SAGA)
The problem started when the Ramalinga Raju, Satyams computers chairman announced the decision taken by board members to buy 51% stake in Maytas infrastructure and 100% stake in Maytas properties. The Maytas infra structure and Maytas properties are the companies run by family members of Ramalinga Raju. This decision is taken without share holders considerations. It was the big surprise to share holders world wide and the ADR fell by 50% on the same day in the American market and the stock fell by 30% in the indian stock market on next day. Then the Ramalinga Raju taken decision immediately to withdraw the idea of purchasing the Maytas infra and Maytas properties.
Satyam was plunged into a crisis in January 2009 after its founder, B. Ramalinga Raju, said that the company's profits had been overstated for several years. Finance professionals, however, say that the scam could not have happened without the complicity of company auditors. Satyam had engaged PricewaterhouseCoopers as its auditors over past 10 years. The company's accounts are being restated.
On 7th January 2009 morning at about 11 O'clock the news came that the Ramalinga Raju The Chairman of Satyam Computers Services limited resigned to his chairman post. He also confessed that the accounts shown in the quarter ending 30th September, 2008 were wrong and the amount of net income to be shown as Rs. 600 Crores instead of 60 crores. This means the profits of Satyam Computer Services for the quarter is only 60 crores and hence the stock has fallen 80% based on its actually earnings.
Chairman Ramalinga Raju resigned after notifying board members and the Securities and Exchange Board of India (SEBI) that Satyam's accounts had been falsified. Raju confessed that Satyam's balance sheet of 30 September 2008 contained: inflated figures for cash and bank balances of Rs 5,040 crore (US$ 1.07 billion) (as against Rs 5,361 crore (US$ 1.14 billion) crore reflected in the books). an accrued interest of Rs. 376 crore (US$ 80.09 million) which was non-existent.
an understated liability of Rs. 1,230 crore (US$ 261.99 million) on account of funds was arranged by himself. an overstated debtors' position of Rs. 490 crore (US$ 104.37 million) (as against Rs. 2,651 crore (US$ 564.66 million) in the books).
Raju claimed in the same letter that neither he nor the managing director had benefited financially from the inflated revenues. He claimed that none of the board members had any knowledge of the situation in which the company was placed.
He stated that "What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore (US$ 2.4 billion) in the September quarter of 2008 and official reserves of Rs 8,392 crore (US$ 1.79 billion)). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten”
In 2008, Satyam attempted to acquire (Maytas Infrastructure and Maytas Properties) founded by family relations of company founder Ramalinga Raju for $1.6 billion, despite concerns raised by independent board directors.Both companies are owned by Raju's sons. This eventually led to a review of the deal by the government, a veiled criticism by the vice president of India and Satyam's clients re-evaluating their relationship with the company. Satyam's investors lost about INR 3,400 crore in the related panic selling. The USD $1.6 billion (INR 8,000 crore) acquisition was met with skepticism as Satyam's shares fell 55% on the New York Stock Exchange. Three members of the board of directors resigned on 29th December 2008.
The World Bank had banned Satyam from doing business with it for 8 years due to inappropriate payments to the World Bank's staff. The World Bank accused Satyam of giving improper benefits to its (the Bank's) staff and of failing to maintain documentation to support fees charged for its subcontractors. However, it clarified that Satyam was not involved in incidences of data theft or malicious attacks that had been made on the Bank's information systems.
UK mobile payments company Upaid Systems is suing Satyam for over 1 billion US dollars on complaints of fraud, forgery and breach of contract.
Accounting scandal of 2009
In addition to other controversies involving Satyam, on January 7, 2009, Chairman Raju resigned after publicly announcing his involvement in an accounting fraud. Ramalinga Raju is currently in a Hyderabad prison along with his brother and former board member Rama Raju, and the former CFO Vadlamani Srinivas.
CHANGE IN MANAGEMENT AT SATYAM
Over the past few decades, large-scale organizational change has become a way of life in business. Many organizational changes, however, have failed to deliver promises of increased productivity and morale, decreased costs, decreased waste, and increased customer satisfaction. A common theme among these failures is a lack of understanding of the power of the collective human system to obstruct the progress of initiatives. The result has been to reinforce fear, defensiveness, and cynicism among workers toward change efforts. Failure of an organizational change for businesses has both short term and long term consequences. Direct short term implications to a failure of an effective organizational change means that objectives are not achieved and resources, including money, time and people, are wasted. Indirectly, morale suffers, job security is threatened and confidence in leadership diminishes. Over the long haul, a failure of change means that business strategies are not accomplished; resistance
to change increases and the organization’s survival is threatened. Mahindra Satyam uses the iceberg metaphor to explain these upheavals. In organizations when Change is announced, the whole focus of change is on observable reality. Although, there are lots of invisible forces that will destroy the success, if not handled scientifically and systematically. The conscious world is the observable reality (iceberg above the surface – 10% of total size) – rational facts, figures, logic, analysis, plant, equipment, capital systems --- people come to grips with these relatively easily. However, the sub conscious world (iceberg below the surface – 90% of total size) is a different matter altogether. It consists of attitudes, values, beliefs, feelings, habits, assumptions, emotions, norms and culture. When change is announced there may be intellectual understanding at the conscious level, however at the sub conscious level there will be emotional reaction, doubt, fear, suspicion, frustration, anger, and resentment. Over the period of time even though willingness, trust, and energy may increase, still the progress will be very slow and erratic, unless Proactive Change Management Interventions are made. Value Proposition Our Change Management Interventions address these “Under the Ice Berg Issues” right from the start of the change event Mahindra Satyam’s well planned Change Management Methodology has been proven during various kinds of projects across the globe; and will not only ensure smoother implementation of the proposed change initiative; but will also help create a culture which
sustains the change, and gives bottom line benefits by managing the impact of change. Mahindra Satyam’ Real Time approach to Change Management provides: 1. A customized approach to nature of project and prevailing organizational context. 2. Tracks interwoven with project implementation track. 3. Leadership buy in and preparation of written statement of future state early in the project. 4. Early identification and timely involvement of stakeholders. 5. The formation of change management network across the organization, involving managers, supervisors and informal leaders as change agents. 6. A real time change management approach involving careful diagnosis and periodic risk assignment. 7. Team building between client and vendor teams. 8. Mechanism for post execution sustenance. 9. For the analysis of business impact of change on users and role clarification support. 10. For developing internal change management capabilities through change management training to line managers / supervisors. 11. Mahindra Satyam has a proprietary change management methodology successfully deployed in multiple change management initiatives across global organisations. These include Fortune 100, government and UN organizations. The methodology is comprehensive, proactive and real time in nature and includes interventions which are interwoven with the project lifecycle phases.
John P Kotter's 'eight steps to successful change' John Kotter's highly regarded books 'Leading Change' (1995) and the follow-up 'The Heart of Change' (2002) describe a helpful model for understanding and managing change. Each stage acknowledges a key principle identified by Kotter relating to people's response and approach to change, in which people see, feel and then change. Kotter's eight step change model can be summarised as:
1. Increase 2.
- inspire people to move, make objectives real and relevant. Build the guiding team - get the right people in place with the right emotional commitment, and the right mix of skills and levels. Get the vision right - get the team to establish a simple vision and strategy focus on emotional and creative aspects necessary to drive service and efficiency. Communicate for buy-in - Involve as many people as possible, communicate the essentials, simply, and to appeal and respond to people's needs. De-clutter communications - make technology work for you rather than against. Empower action - Remove obstacles, enable constructive feedback and lots of support from leaders - reward and recognize progress and achievements. Create short-term wins - Set aims that are easy to achieve - in bite-size chunks. Manageable numbers of initiatives. Finish current stages before starting new ones.
7. Don't let up -
Foster and encourage determination and persistence - ongoing change - encourage ongoing progress reporting - highlight achieved and future milestones. Make change stick - Reinforce the value of successful change via recruitment, promotion, and new change leaders. Weave change into culture.
Solutions Overview Business Value Enhancement has developed a set of process solutions—spread across the value chain, covering continuous operations at the base and consulting led value delivery at the pinnacle—that enable business transformation together.
These solutions are based on drivers that influence a CXO’s decision process. These include:
How do I optimize my business performance? What should be my technology portfolio, both existing and new? How do I mobilise the Enterprise for 24 X 7 operations? Is the IT Portfolio aligned to my organisational business processes and architecture? Does it make sense to get this done externally or to do it myself? Will this investment provide impetus to the planned growth? While I have grown inorganically, how do I drive strategic alignment, efficiency, and effective operations?
How do I simplify IT and Business Process landscape? Do I have the basis for effective utilisation of resources leading to the desired outcomes? Can we improve significantly our historical returns by asset class and by business unit? Am I prepared to deliver ‘High Availability’ and ‘Continuity’ to the business? Is my business prepared to meet environmentally imposed constraints?
The Value Enablers
Business Value Enhancement addresses the above drivers through a set of competency blocks, our Value
Principal of change of management
1. Address the “human side” systematically. Any
significant transformation creates “people issues.” New leaders will be asked to step up, jobs will be changed, new skills and capabilities must be developed, and employees will be uncertain and resistant. Dealing with these issues on a reactive, caseby-case basis puts speed, morale, and results at risk. A
formal approach for managing change — beginning with the leadership team and then engaging key stakeholders and leaders — should be developed early, and adapted often as change moves through the organization. This demands as much data collection and analysis, planning, and implementation discipline as does a redesign of strategy, systems, or processes. The changemanagement approach should be fully integrated into program design and decision making, both informing and enabling strategic direction. It should be based on a realistic assessment of the organization’s history, readiness, and capacity to change. 2. Start at the top. Because change is inherently unsettling for people at all levels of an organization, when it is on the horizon, all eyes will turn to the CEO and the leadership team for strength, support, and direction. The leaders themselves must embrace the new approaches first, both to challenge and to motivate the rest of the institution. They must speak with one voice and model the desired behaviors. The executive team also needs to understand that, although its public face may be one of unity, it, too, is composed of individuals who are going through stressful times and need to be supported. Executive teams that work well together are best positioned for success. They are aligned and committed to the direction of change, understand the culture and behaviors the changes intend to introduce, and can model those changes themselves. At one large transportation company, the senior team rolled out an initiative to improve the efficiency and performance of its corporate and field staff before addressing change issues at the officer level. The initiative realized initial cost savings but stalled as employees began to question the leadership team’s vision and commitment. Only after the leadership team went through the process of aligning and
committing to the change initiative was the work force able to deliver downstream results. 3. Involve every layer. As transformation programs progress from defining strategy and setting targets to design and implementation, they affect different levels of the organization. Change efforts must include plans for identifying leaders throughout the company and pushing responsibility for design and implementation down, so that change “cascades” through the organization. At each layer of the organization, the leaders who are identified and trained must be aligned to the company’s vision, equipped to execute their specific mission, and motivated to make change happen. A major multiline insurer with consistently flat earnings decided to change performance and behavior in preparation for going public. The company followed this “cascading leadership” methodology, training and supporting teams at each stage. First, 10 officers set the strategy, vision, and targets. Next, more than 60 senior executives and managers designed the core of the change initiative. Then 500 leaders from the field drove implementation. The structure remained in place throughout the change program, which doubled the company’s earnings far ahead of schedule. This approach is also a superb way for a company to identify its next generation of leadership. 4. Make the formal case. Individuals are inherently rational and will question to what extent change is needed, whether the company is headed in the right direction, and whether they want to commit personally to making change happen. They will look to the leadership for answers. The articulation of a formal case for change and the creation of a written vision statement are invaluable opportunities to create or compel leadership-team alignment.
Three steps should be followed in developing the case: First, confront reality and articulate a convincing need for change. Second, demonstrate faith that the company has a viable future and the leadership to get there. Finally, provide a road map to guide behavior and decision making. Leaders must then customize this message for various internal audiences, describing the pending change in terms that matter to the individuals. A consumer packaged-goods company experiencing years of steadily declining earnings determined that it needed to significantly restructure its operations — instituting, among other things, a 30 percent work force reduction — to remain competitive. In a series of offsite meetings, the executive team built a brutally honest business case that downsizing was the only way to keep the business viable, and drew on the company’s proud heritage to craft a compelling vision to lead the company forward. By confronting reality and helping employees understand the necessity for change, leaders were able to motivate the organization to follow the new direction in the midst of the largest downsizing in the company’s history. Instead of being shell-shocked and demoralized, those who stayed felt a renewed resolve to help the enterprise advance. 5. Create ownership. Leaders of large change programs must over perform during the transformation and be the zealots who create a critical mass among the work force in favor of change. This requires more than mere buy-in or passive agreement that the direction of change is acceptable. It demands ownership by leaders willing to accept responsibility for making change happen in all of the areas they influence or control. Ownership is often best created by involving people in identifying problems and crafting solutions. It is reinforced by incentives and rewards. These can be tangible (for example, financial
compensation) or psychological (for camaraderie and a sense of shared destiny).
At a large health-care organization that was moving to a shared-services model for administrative support, the first department to create detailed designs for the new organization was human resources. Its personnel worked with advisors in cross-functional teams for more than six months. But as the designs were being finalized, top departmental executives began to resist the move to implementation. While agreeing that the work was topnotch, the executives realized they hadn’t invested enough individual time in the design process to feel the ownership required to begin implementation. On the basis of their feedback, the process was modified to include a “deep dive.” The departmental executives worked with the design teams to learn more, and get further exposure to changes that would occur. This was the turning point; the transition then happened quickly. It also created a forum for top executives to work as a team, creating a sense of alignment and unity that the group hadn’t felt before. 6. Communicate the message. Too often, change leaders make the mistake of believing that others understand the issues, feel the need to change, and see the new direction as clearly as they do. The best change programs reinforce core messages through regular, timely advice that is both inspirational and practicable. Communications flow in from the bottom and out from the top, and are targeted to provide employees the right information at the right time and to solicit their input and feedback. Often this will require overcommunication through multiple, redundant channels. In the late 1990s, the commissioner of the Internal Revenue Service, Charles O. Rossotti, had a vision: The IRS could treat taxpayers as customers and turn a feared
bureaucracy into a world-class service organization. Getting more than 100,000 employees to think and act differently required more than just systems redesign and process change. IRS leadership designed and executed an ambitious communications program including daily voice mails from the commissioner and his top staff, training sessions, videotapes, newsletters, and town hall meetings that continued through the transformation. Timely, constant, practical communication was at the heart of the program, which brought the IRS’s customer ratings from the lowest in various surveys to its current ranking above the likes of McDonald’s and most airlines. 7. Assess the cultural landscape. Successful change programs pick up speed and intensity as they cascade down, making it critically important that leaders understand and account for culture and behaviors at each level of the organization. Companies often make the mistake of assessing culture either too late or not at all. Thorough cultural diagnostics can assess organizational readiness to change, bring major problems to the surface, identify conflicts, and define factors that can recognize and influence sources of leadership and resistance. These diagnostics identify the core values, beliefs, behaviors, and perceptions that must be taken into account for successful change to occur. They serve as the common baseline for designing essential change elements, such as the new corporate vision, and building the infrastructure and programs needed to drive change. 8. Address culture explicitly. Once the culture is understood, it should be addressed as thoroughly as any other area in a change program. Leaders should be explicit about the culture and underlying behaviors that will best support the new way of doing business, and find opportunities to model and reward those behaviors. This requires developing a baseline, defining an explicit end-state or
desired culture, and devising detailed plans to make the transition. Company culture is an amalgam of shared history, explicit values and beliefs, and common attitudes and behaviors. Change programs can involve creating a culture (in new companies or those built through multiple acquisitions), combining cultures (in mergers or acquisitions of large companies), or reinforcing cultures (in, say, long-established consumer goods or manufacturing companies). Understanding that all companies have a cultural center — the locus of thought, activity, influence, or personal identification — is often an effective way to jump-start culture change. A consumer goods company with a suite of premium brands determined that business realities demanded a greater focus on profitability and bottom-line accountability. In addition to redesigning metrics and incentives, it developed a plan to systematically change the company’s culture, beginning with marketing, the company’s historical center. It brought the marketing staff into the process early to create enthusiasts for the new philosophy who adapted marketing campaigns, spending plans, and incentive programs to be more accountable. Seeing these culture leaders grab onto the new program, the rest of the company quickly fell in line. 9. Prepare for the unexpected. No change program goes completely according to plan. People react in unexpected ways; areas of anticipated resistance fall away; and the external environment shifts. Effectively managing change requires continual reassessment of its impact and the organization’s willingness and ability to adopt the next wave of transformation. Fed by real data from the field and supported by information and solid decision-making processes, change leaders can then make the
adjustments necessary to maintain momentum and drive results. A leading U.S. health-care company was facing competitive and financial pressures from its inability to react to changes in the marketplace. A diagnosis revealed shortcomings in its organizational structure and governance, and the company decided to implement a new operating model. In the midst of detailed design, a new CEO and leadership team took over. The new team was initially skeptical, but was ultimately convinced that a solid case for change, grounded in facts and supported by the organization at large, existed. Some adjustments were made to the speed and sequence of implementation, but the fundamentals of the new operating model remained unchanged. 10. Speak to the individual. Change is both an institutional journey and a very personal one. People spend many hours each week at work; many think of their colleagues as a second family. Individuals (or teams of individuals) need to know how their work will change, what is expected of them during and after the change program, how they will be measured, and what success or failure will mean for them and those around them. Team leaders should be as honest and explicit as possible. People will react to what they see and hear around them, and need to be involved in the change process. Highly visible rewards, such as promotion, recognition, and bonuses, should be provided as dramatic reinforcement for embracing change. Sanction or removal of people standing in the way of change will reinforce the institution’s commitment. Most leaders contemplating change know that people matter. It is all too tempting, however, to dwell on the plans and processes, which don’t talk back and don’t respond emotionally, rather than face up to the more
difficult and more critical human issues. But mastering the “soft” side of change management needn’t be a mystery.
New Management At Mahindra Satyam On 5th February 2009, the six-member board appointed by the Government of India named A. S. Murthy as the new CEO of the firm with immediate effect. Murthy, an electrical engineer, has been with Satyam since January 1994 and was heading the Global Delivery Section before being appointed as CEO of the company. The two-daylong board meeting also appointed Homi Khusrokhan (formerly with Tata Chemicals) and Partho Datta, a Chartered Accountant as special advisors
Board Members Deepak Parekh Kiran Karnik C. Achuthan Tarun Das T. N. Manoharan S. B. Mainak Vineet Nayyar C. P. Gurnani Sanjay Kalra Ulhas N. Yargop