Konstantin Y. Smolentsev
Ph.D., the Academician of IIA, ÑÌÑ
Chairman of Board of directors
IC “SMOLENTSEV & Partners”
Each shareholder or an owner of a company hopes to receive maximum dividends on invested capital or the work that was put into that. And at some point in development organization sets ambitious goals in front of it: to rapidly expand client base or geography of sales, increase turnover, get more income, decrease expenses, increase controllability. Some start with local tasks: hiring new personnel, setting up budgeting, and so on. Some decide to look in the core: hold organizational diagnostics and self diagnostics, team building, development of a plan for strategic development, reengineering of business processes and organizational structure, introduction of ERP and the Balanced Scorecard and etc. Some try doing everything on their own. Others hire professional business consultants. And in the moment of taking a certain decision for activization of development or reorganization, no one, not even skeptics stand against it.
What happens in reality? What kind of “reefs” do we meet on our way to organizational changes? From the analysis of our work with companies that decided to improve their work we can make the following conclusions about most common difficulties and ways of dealing with them.
On the first stage when the management team is full of enthusiasm (or at least makes it seem like it) and changes haven’t touched anyone yet, movement forward is usually very rapid and intensive. However, usually in a month or two, resistance starts showing itself. Why? Because the intensity for the management team and other employees increases. And that on its own breaks the old regime of functioning and offers an additional volume of work. Secondly, old intentionally hidden problems of the organization start showing up. Thirdly, in the moment of development activation, it becomes clear accordance of employees with their official positions, often new leaders emerge, inner competition for power spices up. Fourthly, from the point of view of finances and required time of first faces in the company this is an expensive reorganization. And what’s most important, manager is bombarded with a huge amount of new as well as old problems and tasks. Even if we stop the moment in the process of changing then imbalance of the organization is almost impossible to stop. This situation reminds of a sick person in the peak of his chronic illness. Wanted to cure, but broke the fragile balance and got an acute condition.
So what to do then? Not to touch organizational improvement? Not at all. Changes have to me actively managed and you should never let that process flow on its own. To avoid common mistakes, manager should know few rules. First of all. It is necessary to visualize not only fortunate but also the above stated possibilities of scenarios that can occur. Second. Organizational perfection can not be a “one occasion” action. It takes from minimum 6 months to 2-5 years to get first permanent visible result. Third. It is necessary to involve in the process maximum number of employees to achieve the clarity and understanding of the process. It will also decrease uncertainty for the whole team. Four. It is necessary to work out and get through to employees the system of moral and material rewarding for additional participation in the increase of the organization’s effectiveness. Five. There should be a developed system of supporting organizational changes, which can include in itself a whole row of elements and procedures. For example, it is very useful to introduce especially in production companies a Mechanism of Active Innovational Self-development (MAIS). Six. It is necessary to define the budget and identify financial and material resources. Organizational construction of business is more important then its technical support (meaning IT programs), even though people usually are not afraid to spend lots of money on them. As one classic of world entrepreneurship said: “Take away my factories, and I will live. Take away my people and there will be no business”. Seven. Create an open informational environment: systematic meetings of the team, planning occasions, devoted only to one question: organizational development, goals and tasks. It allows to achieve serious synergetic effect. It would be possible to even start an inner company newspaper and informational pamphlets, ads and so on devoted to the topic of the company’s development. Eight. It helps to carry out inner and external PR campaigns, which show advantages, potential and possibilities which come with the changes. Nine. Gradually and slowly but firmly form a new innovational culture and ideology of the organization. Ten. For operating management of the organizational transformations it is necessary to create and give authority to the accompanying structural subdivision or state position in development. But only to the organizational development and not to promotion of products or regional expansion departments as it is misunderstood in some companies.
And eleven. Personal active support of organizational development by shareholders and tops is a must.
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The Director, ¹ 11’ 2005
The Tyumen PRO, ¹ 8, December, 2005
“Managing the Company” Magazine, ¹ 03, March, 2006.
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E-xecutive, May 15, 2006
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CAREER CLUB.RU, December 27, 2006