LEADING THOUGHTS

For Generation Y — “Millennials” between the ages of 15 and 30 — the future seems anything but bright. They are a generation that “expected the world would be the way it has been for the past 20 years. They had expectations that they would find jobs and make lots of money. This will be a disappointed generation.” Go to article

A rosier view: For now, your employer isn’t likely to feel the need to create a happier or healthier workplace because a long line of people will take your job if you falter. But that’s a short-sighted view. Employers are losing the loyalty of their best employees at the worst possible time. Go to article

When it comes to team effectiveness among senior leaders in both politics and business, the two cultures face similar challenges. There are very few “real” teams at the top in either the public or the private sector. That probably explains why most companies and government agencies have such serious problems with accountability and performance. Go to article

In the UK, for example, there’s a proposal to tie top public sector pay to a 20-times multiple of low pay, and to publish the salaries of the highest earners.

Amid all the huffing and puffing, the huge UK-based HR association, CIPD, is providing a gutsy contrarian view. In a recent report, CIPD argues in favour of variable pay and bonuses, a tough argument to make in these days of retrenchment.

“Politicians and, perhaps more importantly, more strident parts of the media need to stop seeing pay in the public sector as only a cost to be driven down,” the report says. “Instead, used well, it can be a tool to drive up standards and increase value to the taxpayer.”

So how should compensation be designed to deliver what public sector bosses and their political masters intend? CIPD suggests that, for the most part, what works for the private sector should work for the public. To wit:

Ensure reward practices match the purpose.
The key question is: “Are the ways that the benefit package is structured likely to make any day-to-day difference to the ability of the organisation to deliver its objectives, or the effort delivered by individuals to help it do so?”

Make compensation transparent.
Employees need to know what is expected of them and what they need to do to earn a pay raise or bonus, and what is expected of others. Transparency also builds credibility with taxpayers. In fact, CIPD likes the idea of publishing the names of high earners, not merely their job titles. U.S. states such as Utah, Washington, Nebraska, and California already have publicly accessible online databases containing the salaries of state employees.

Reward performance.
This won’t please the “slash the pay packet” crowd but CIPD suggests public sector managers make greater use of variable pay to reward individual or team behaviour. This is a good way to recognize high performance without continually ratcheting up comp levels and pension commitments. “Bonuses can help focus minds by communicating what’s important to the organisation and can be more cost-effective than consolidated pay awards.”

Adopt flexible compensation schemes.
CIPD recommends moving from national pay agreements, “pay spines/increments”, and service-related pay progression to flexible pay structures. More flexible pay grades and progression mechanisms should be adopted to allow individuals to progress through their grades faster.

Download Transforming Public Sector Pay and Pensions

You can see it in the streets and smell it in the air: signs of economic recovery are beginning to emerge in Canada. But according to the latest estimates from the Conference Board of Canada, it will take up to five years for the economy to return to full capacity. For workforce planners with an agenda for change, now is the time to strike.

According to the Conference Board’s Industrial Relations Outlook 2010, “Employers now have a window of opportunity to develop effective workforce strategies before the recovery pushes us back to full employment and the challenges of a tight labour market.”

The report suggests that employers use this time to train and re-skill the workforce and more effectively integrate immigrant and Aboriginal communities.

As for the near term, the Conference Board predicts that the public sector will dominate collective bargaining in 2010, with negotiations involving 750,000 public sector workers. Faced with national deficits, federal workers will feel the need to concede gains. Municipal workers, however, may push for contract improvements.

Factoid: Union density rate in Canada is 29 percent — 71.3 percent in the public sector and 16.1 percent in the private sector

In the private sector, the Conference Board says, employers will continue to focus on controlling costs. The strength of the Canadian dollar relative to the U.S. dollar means dampened exports of manufactured goods.

According to the Conference Board, there are two big issues that employers face: one, a continued structural labour deficit; and two, a private pension fund system that requires fundamental change, particularly regarding employer finding.

For their part, unions will continue to be focused on protecting their existing rights and benefits and protecting jobs of existing members.

Given the uncertainty in the private sector and the fiscal deficits in the public sector, the Conference Board says, “universal labour peace is unlikely in the coming year.”

InfoBox: Current Negotiation Issues (Canada)

Management Issues:

1. Wages
2. Productivity
3. Health, pension, and benefits
4. Organizational change
5. Business competetiveness

Union Issues:

1. Wages
2. Employment security
3. Health, pensions, and benefits
4. Employment/pay equity
5. Outsourcing/contracting out

(Source: The Conference Board of Canada union-management survey)

Industrial Relations Outlook 2010: A recovery offering little relief, by David K. Shepherdson; Conference Board of Canada

photo credit: Aaron Magner

You know the statistic: planned, management-implemented change processes suffer a failure rate of more than 70 percent. Why do change projects fail at such an alarming rate? Resistance to change, the role of the change manager in managing the process, a lack of participation due to top-down steering, organizational culture, the relevance of the goals of change. . . you name it.

Renate A. Werkman (Wageningen U) set out to identify generalized patterns of change in both private and public sector organizations, and to explain variations in those patterns. As a basis, Werkman used widely acknowledged characteristics of the change management process, trying to find interrelations and linking them to the context of the change project. Data were obtained from managing directors, line managers, staff members, employees, and consultants from 367 organizations differing in size, sector, and the type of change process.

Werkman found that there are five patterns among changing organizations, each with their own specific problems, characteristics, and change approaches that require different interventions. Here they are:

Innovative pattern. The most successful pattern shows that “a pleasant culture and leadership and pleasant work characteristics provide important conditions for the success of organizational change.” Change managers here pay attention to a thorough process management, providing clear goals, stimulating employees to participate, and refraining from using power. Found in: smaller, knowledge-intensive, industrial, and food-related companies.

Systematical pattern. “Employees are quite positive about organizational characteristics but there is some control orientation and political behavior.” Change managers here do not consider unilateral and participative approaches to be mutually exclusive, and they pay attention to the process of change. Found in: medium-sized organizations in the financial industry, regional and local governments, and healthcare organizations.

Unclear change process pattern. “Employees evaluate organizational characteristics rather positively, but they experience a lack of clarity about the ultimate purpose of the change process.” Restricted exchange of information and ideas generates limited support for change but change processes do not evoke tensions. “Either people just do not have a clue where to contribute, they trust change managers with the process or they are just not interested.” Found in: relatively small organizations in the IT sector and the service industry; can also be found in public sector organizations that are specifically working on development and innovation.

Skeptical pattern. Combines low change capacity with moderately high control orientation. “The large organizations here are characterized by mechanistic structures and bureaucratic control. . . There is little opportunity for interaction and the exchange of ideas in this pattern and therefore for participative strategies.” Found in: large government organizations and large public utility organizations.

Cynical pattern. Employees are very negative about organizational characteristics. “This negativity is reflected in the change process, which is, remarkably, being pushed through in a relatively unsystematic way by apparently solitary operating change managers.” Found in: research institutions, non-commercial service industry, and central government.

“The results suggest it would be wise for change managers to choose for a participative change approach and for a thorough process management,” Werkman writes. “Power strategies do not enforce compliance but evoke resistance.”

“Understanding failure to change: a pluralistic approach and five patterns”, by Renate A. Werkman; Leadership and Organization Development Journal (Vol. 30 No. 7, pp. 664-684, 2009)

If you cannot find this paper in your local library, email me for a copy: Alan [at] AlanMorantz.com

photo credit: jtu

Public agencies may be doing a good job at slashing waste using Six Sigma and lean techniques but they could be doing a lot better by focusing on the “soft” side: implementing a robust management structure and changing employees’ mindsets.

In the publication McKinsey on Government, consultants Maia Hansen and John Stoner offer a step-by-step approach to establishing the right infrastructure for a lean transformation (lean has been defined as strategy that focuses on eliminating waste, which includes all processes that do not add value to the final product or service).

Create a value-stream map that identifies where value lies in each step of the process. “Our strong recommendation . . . is to form a cross-functional team with representatives who interact with the process in a variety of ways and therefore see it from different perspectives.”

Get data to the right people at the right time. That means focusing on Key Performance Indicators that matter most and ensuring that the right people are viewing them.

Establish new roles to smooth processes. The lean initiative may be best served, for example, by creating a new coordinating position to boost efficiency.

Align interests to drive momentum. The McKinsey consultants like gainsharing arrangements to embed the concept of continuous improvement, build morale, and sustain enthusiasm.

Hansen and Stoner also offer suggestions on how to change employee mindsets.

Get staff to focus on the consumer. This may be a challenge for a public agency with no competitors, but a good technique is to have employees follow a customer through the entire process of interacting with the agency/employer and to experience bureaucratic frustrations.

Break down silos. Make sure units know what other units are up to or create shared metrics to help units better understand shared goals.

Inspire employees to overcome risk aversion. The public sector may be allergic to performance measurement and risk but managers can change that perception. “Managers should thank employees for trying new approaches,” the authors write, “and focus on solving problems rather than assigning blame for mistakes.”

A Leaner Pubic Sector, by Maia Hansen and John Stoner; McKinsey on Government (Number 4, Summer 2009)

photo credit: Toban Black

A good argument can be made that the key reason a new initiative fails is employees’ perception that their organization is not ready for change. If that’s the case, what can change agents do to get employees to believe that the organization is indeed primed and ready? Researchers Inta Cinite and Linda Duxbury (Carleton U) and Chris Higgins (U of Western Ontario) developed an empirically-tested diagnostic to do just that.

As a basis, the researchers started with the concept of PORC, “perceived organizational readiness for change.” Developed back in the 1970s, PORC defines employees’ belief that the organization not only can initiate change but also engages in practices that will lead to successful implementation. They then developed a way to measure PORC in public sector organizations, based on research from five organizations that had initiated transformational change. Projects included a shift in the strategic direction toward a higher degree of transparency, a shift from a command and control management style to one that was based on employee empowerment, a change in reporting relationships, and two organizational restructuring efforts.

This is what they came up with:

“Organizations that want to be perceived by their employees to be ready for change should pay close attention to the behaviours of their leaders, change agents, immediate supervisors at all levels, organizational practices around the change, and how these practices impact people’s daily work.” The researchers suggest that managers who have direct reports should be well equipped to communicate change to their staff and provide the necessary support.

“Organizations are judged to be not ready for change due to poor communication practices when employees perceive that the outcomes, benefits and reasons for the change are not well explained and when employees do not understand the vision behind the change.”

Employees’ perceptions are also informed by the impact the change is thought to have on
their work. They will remain skeptical of change if: old duties are not phased out when new ones are assigned; they are discouraged from saying ‘no’ to work; and they are assigned heavy workloads that hinder them from getting involved in the change initiative.

Measurement of Perceived Organizational Readiness for Change in the Public Sector, by Inta Cinite, Linda E. Duxbury, and Chris Higgins; British Journal of Management, Vol. 20, 265–277 (2009)

Email me for a copy of this paper: Alan [at] AlanMorantz.com

photo credit: Auntie P

Colleague Andrew Graham alerted me to a forward-looking report produced by the Washington-based IBM Center for The Business of Government. “Ten Challenges Facing Public Managers” is a call to action for public sector leaders, particularly in the U.S. Read ‘em and weep:

Fiscal Sanity: “America’s current social insurance programs are both costly and antiquated. It is time to take a fresh look at reforming these programs to reflect current economic and budgetary considerations.”

Crisis of Competence: “The issue isn’t always ‘who does the work’ but rather ‘do we have the right talent at the right time doing the right job with the right level of accountability?’”

Information Overload: “The threats of information overload, and the possibility of missing important information needed to make informed decisions, has increased. However, breakthroughs in data capture, data standards, and data storage have created opportunities for large-scale analysis.”

Governing Without Boundaries: “Government is increasingly turning to non-hierarchical ways of doing business, often called ‘collaborative networks’ and ‘boundary-less organizations.’ However, these new models raise questions about
how to govern effectively in a network-based environment.”

E-Government Is Only the Beginning: “Public managers will need to embrace the long hard slog to standardize and integrate their operations. They will need to reframe service delivery around the customer.”

Government by Contractors?: “The government needs to take a strategic look at contracting, decide how to manage it, the appropriate roles for all parties, and the right contracting methods. Most important, it needs to invest the necessary resources to make working for the government more attractive.”

Results Really Do Matter: “Federal departments and agencies are confronted with long-standing and substantial challenges to becoming more results-oriented. Solving these problem areas will require a performance-driven system that builds on crosscutting connections between agencies, levels of government, and the nonprofit and private sectors.”

“Green” Leadership: “Solving our environmental problems requires a blend of public policies and incentives that encourage technology and management innovations across the globe.”

Security and Privacy in a Flat World: “Security and privacy issues need to be explicitly factored into any technology decision. . . In some cases, the most efficient solution must yield to the more secure solution.”

Expect Surprises: “Policymakers will need forward-looking information to set the stage for early warnings about emerging threats and to make informed choices about effective government responses.”

photo credit: naoki.sato