‘Contract’ or ‘Pay-as-you-go’?

‘Contract’ or ‘Pay-as-you-go’? What do these terms, used in the mobile phone market, have to do with change management strategy?

Although Change Vista would normally promote the utility of establishing an indigenous Change Management capability, it is recognised that some businesses and organisations are not in a position to achieve an acceptable return on investment for such a capability.

Whether a Change Management capability is contemplated or not depends greatly on the organisation’s understanding of its real Change Management needs and its overall strategic approach to Change Management. In the main, if an organisation does have a strategic position it will probably be underpinned by alignment to one of the two overriding paradigms:

  1. ‘Pay-as-you-go’: on an as-needs basis rely on external Change Management support. This means deferring the upfront investment in a change capability and, when the need for change does arise, establish the minimum Change Management knowledge and resources required to achieve the required changes which, when the change is completed, are then released
  2.  ‘Contract’: become self-sufficient in the ability to address the current and future change needs and commit to, and invest in, an optimised ‘on-tap’ level of Change Management capability

There is not necessarily a particular right or wrong approach for a given organisation, however the contextual size and scale of the following attributes could be used to inform the decision on what is the best for a given organisation:

  • number of people in organisation
  • number of different external stakeholder groups
  • staff turnover
  • prevailing culture
  • nature of market
  • structure of organisation
  • diversity of product or services offered
  • market maturity
  • market volatility
  • number of competitors
  • potential for predatory arbitrage activity
  • reliance on cutting-edge technology
  • degree of global operation
  • scale of overall operation
  • nature of business
  • regulatory pressures
  • reliance on economic environment
  • history of frequent change for whatever reason

Note: In the main each of the factors identified above can be assessed quantitatively and as such are well able to support the development of a business case (should one be required) for the investment. If a benefits driven approach is taken when constructing the case, the positive impact on the organisation’s work force can be factored into the case e.g. morale, confidence

Generalisations

Organisations with strong and aggressive competition (and therefore it follows with a need to adapt to environmental changes quickly) would be well-advised to consider adopting the organisational capability approach. The emergence of cloud computing has in itself challenged many of the norms regarding investment in infrastructure. Lower investment needs coupled with the increased availability of multi-configurable, high-access applications mean that organisations are more able to react and advantage themselves. But this of course is also true for the competition. Organisations operating in markets with large infrastructure investments and operating in niche or slow moving markets might be better advised to adopt the ‘as needs’ approach with minimum on-tap capability.

What the above criteria shows is that it is possible for an organisation to make an informed decision on which approach is right for it.

Some of the pros and cons surrounding these two distinct approaches are described below:

As needs approach (Pay-as-you-go):

  • Pros
    • low near-term cost
    • able to go to ‘market’ to select required ‘current’ change management expertise
    • no strategic training investment costs
    • no need to establish and fill permanent change management posts
    • organisation not ‘burdened’ with permanent individual responsibility toward organisational change
  • Cons
    • unable to draw on assured level of Change Management knowledge or capability
    • inability to predict duration of change initiative
    • organisational tendency towards only entertaining change when pressures for change become high profile and demonstrably intolerable
    • workforce must be ‘unfrozen’ from a near ‘deep-frozen’ position in preparation for change
    • mobilisation of in-scope organisation must be achieved; those involved with the change, those impacted by the change and also those that are aware that a change is to take place. Most change initiatives affect the majority of personnel within a given organisational scope.
    • must pay market rates for required Change Management knowledge

 Capability approach (Contract):

  • Pros
    • organisation maintained in a change-ready state of mobilisation
    • opportunities to exploit change driver ahead of pay-as-you-go competitors gives competitive advantage
    • Change Management knowledge and capability can be established and maintained within ‘whole’ organisation
    • Change Management memory provides organisation with ability to record and capitalise on lessons learned
    • latest Change Management thinking, tools and methods can be evaluated and assessed for appropriate implementation off-line e.g. BRM
  • Cons
    • relatively high near term cost
    • organisation must come to terms (educated) on need to achieve such a change capability
    • no place to hide. All change drivers are scrutinised and decisions (from wherever they are taken) are qualified and recorded for future reference

The required assessment to decide the most appropriate approach that should be taken can be achieved using internal personnel. However, the need for significant objectivity requires that an external mediator should, where possible, be used. External mediators may be found within other areas of the subject organisation e.g. this does not have to be undertaken using an external supplier.

Investment consideration

The establishment of an appropriately sized Change Management capability need not attract sizeable additional funding. In fact, by centralising aspects of the Change Management function from a headcount and expended man-hours point of view, the efficiency of the capability could result in direct savings. By utilising pre-existing Change Management spend data the resulting business case should reflect an overall improvement in cost efficiency.

Sustainability

In order for it to remain fit for purpose such a capability would itself need to be continually tested to ensure that it meets the needs of the organisation and its people. This ‘testing’ should be an integral function of the capability itself but scrutinised by the overarching organisational quality and compliance function.

To conclude

It is clear that, in the current economic climate and with an ever increasing pressure and frequency of change, an organisation owes it to its people to get Change Management right. Establishing an indigenous Change Management capability sends out the message that the organisation takes change seriously, respects and cares about the well being of its personnel and, above all, is determined to succeed. But as this text shows the choice must be made on the merits of each and every individual business or organisation.