As regulatory pressures, increasing customer demands and competitive forces impact utilities worldwide, change is becoming the norm rather than the exception. It is becoming increasingly important for utility managers to act not only in their traditional roles as managers, but also as transitional leaders — a role that focuses on guiding people through the changes inherent in our industry today. I present the concepts underlying transition leadership, its characteristics, roles and sequence.

The Impact of Change on People

Information technology (IT) professionals often overlook the impacts of technology changes on people. Almost any change to technology will have an impact on business processes, which will directly impact the day-to-day jobs of individual employees. As a result, changes to technology require attention to the impacts that they have on both process and people. The practice of Organizational Change Management (OCM) focuses on ensuring that the people side of change is addressed appropriately. Change inevitably results in an initial performance and motivation decline, but effective OCM helps minimize this drop.

OCM is the process of aligning the organization's people and culture with changes in business strategy, organizational structure, technology and business processes. At the most rudimentary level, all change involves some degree of loss, whether it is loss of stability, expertise, relationships or understanding. People often try to avoid loss by resisting change. Resistance can come in different forms and be expressed with different emotions such as anger, frustration and fear.

Change has a tendency to elicit an emotional response; therefore, any large-scale change initiative will likely transfer the employees' focus from the business to transition-related issues. This shift in focus will likely disrupt productivity.

Many technology implementation/business process redesign efforts fail because they overlook the impacts that change will have on the people in the organization. An organization that ignores the importance of OCM could experience the following risks: increased resistance to new technology, decreased quality and customer service, high turnover and absenteeism, difficulty recruiting and retaining high performers and damaged internal and external brand equity.

However, an organization that implements a technology/business process transformation with integrated OCM will experience realization of the business transformation objectives, higher return on technology investments, retention of high performers, maintained and improved productivity and improved employee satisfaction and morale.

Transition Leadership

Given the impact that change has on employees, it is clear that managers must learn to proactively manage employees through the many changes that are inherent in most organizations. The role of transition leader is an often overlooked but important aspect of management. In general, there are 10 characteristics of an effective transition leader.

  • Gains support from and confidence of others. Change is not accepted and work cannot be done without the buy-in of key stakeholders.

  • Listens and collaborates effectively. No matter how good a manager is, people will not follow without a sense of ownership in the organization.

  • Takes accountability. As with any effective manager, successful transition leaders take accountability for their own work as well as that of the entire organization that he or she manages.

  • Provides constructive feedback to others. This type of feedback enables employees to be more effective in adapting to and accepting change.

  • Builds relationships with customers, peers and project team members. This alliance building enables leaders to effectively delegate and gain the buy-in from key resources.

  • Inspires and motivates. To manage change effectively in the organization, transition leaders need to have inspired employees and stakeholders.

  • Communicates openly, early and often. In that change is such a complex and fearsome idea for most people, it is important for transition leaders to open the flow of communication.

  • Provides clear direction. In order for the organization to get to where it needs to be, employees and stakeholders have to understand where they are and where the organization is going.

  • Models the way for the team. Successful transition leaders do more than just delegate work and build relationships. They also lead by example in order to build credibility and trust.

  • Creates opportunities for small wins. The change involved in large-scale and complex IT implementations often appears insurmountable to employees. It is important to reward and recognize team members to boost morale and to keep change initiatives from failing.

Transition leaders are responsible for directly influencing the outcome of IT and process change implementations; therefore, successful change requires that transition leaders also assume different roles. In general, transition leaders have four primary roles: catalyst, system and process helper, solution giver and gatherer, and resource linker.

How to Manage People Through Change

All successful change initiatives follow a similar pattern or sequence. The first step consists of “unfreezing” the current way of doing things. This is the phase where the burning platform for change is realized and the vision for a new way of operating is created. The second phase of change begins when it is time to begin energizing the work force by involving more people in the change process to begin building ownership over the final outcome. This is also the point where it is critical to identify and secure early project wins. Ensuring that the right resources are provided to achieve early milestones will ensure that the project is perceived as a success.

The third phase consists of building the infrastructure (job and organization designs) required to make the change successful. The final phase consists of a series of activities aimed at measuring results and identifying lingering gaps and issues that need to be addressed in order to achieve the project's intended benefits.

A Proven Example

Transition leadership, while often viewed as a “soft” issue not appropriate for utility and IT managers, is clearly a relevant and critical issue to managing the changes that are inherent in organizations today. Even the most robust IT package with the highest benefits potential is meaningless if employees and key stakeholders do not effectively accept and adapt the changes. By understanding the impact that change has on employees, managers will ensure the changes stick and the anticipated benefits are realized.

  • Transition leadership in action at PSE&G. In 1999 Public Service Electric and Gas (PSE&G, Newark, New Jersey, U.S.), with more than 10,000 employees and 3.5 million customers, underwent a successful large implementation of the SAP R/3.

  • Transition leadership characteristics. Perhaps the most effective aspect was the structure of the project team: a full-time core team and an extended, part-time team. Project Leader John Anderson designed a team that ensured involvement from the business side of the company, rather than relying primarily on the IT department, so that the project considered the input from end-users as well as technical specialists.

    Anderson also solicited involvement from other business areas that were indirectly impacted by the implementation, examining the goals and objectives of each department, then revising them as necessary to ensure alignment with the high-level corporate strategy. Internal customers were interviewed to determine the most appropriate process for handling their internal needs with the new software.

    Another was the communication between senior management and the project team. From the start, the project team was given clearly defined accountability in terms of expectations and required results through a set of performance metrics. Team members and managers were rated frequently on how they were measuring against the metrics. Team members' individual roles were communicated clearly throughout the project life cycle.

    Although the project time line was aggressive, Anderson celebrated small wins by regularly recognizing team and individual efforts. Core team members were rewarded with a retention plan for staying through go-live.

  • Transition leader roles. As catalyst, Anderson confronted a challenge: PSE&G was doing well financially and had not yet experienced deregulation. Although difficult to identify and communicate a burning platform in relatively successful times, Andersen focused his communications on the need to prepare for competition and to improve work management to better serve customers.

    As system and process helper, Anderson established that the extended, part-time team was responsible for rollout and user acceptance activities in their respective business areas.

    As solution giver and gatherer, Anderson proactively anticipated resistance to the changes that SAP entailed, rather than waiting for employees to bring up issues. He also demonstrated his role as a resource linker by bringing together the cross-functional team comprised of users from business areas as well as IT specialists.

    PSE&G was able to reap the benefits of its effective use of transition leadership in several areas, including reducing the time it took to close its books. PSE&G kept its project team intact after go-live to assist end-users in their assimilation of the new technologies and processes. Transitional change should not simply end after go-live.

Eric Kimberling is a senior consultant with SchlumbergerSema's Utilities Practice. He performs consulting services in operational analysis, business case development, change management, process design, CRM and eBusiness. His specialty is providing high-level strategic and operational business analysis to SchlumbergerSema's global client base. Focusing on the engineer phase of its Engineer, Build, Manage (EBM) life-cycle management service, Kimberling also executes performance-measure development and deployment and change management relating to large IT implementations for clients.