By PHILIPPE ARRATA, ARNAUD DESPIERRE and GAUTAM KUMRA
From The McKinsey Quarterly
When a company attempts a transformation focused on its operations, a sound plan and a robust execution strategy are not necessarily enough. Another important factor in the success of this type of initiative -- involving everything from simplifying processes and improving the efficiency of equipment to modifying an entire supply chain -- is the designation of specific employees as "change agents" who lead the organization through the journey.
Change agents are leaders who cut across the organization and its business units without regard to the traditional hierarchy. Often these men and women are freed from day-to-day tasks in order to focus solely on leading and driving change. Directly or indirectly, they implement new processes, train employees on new procedures and act as role models to demonstrate new and better ways to work. For example, change agents might spend more than 50 percent of their time visiting areas undergoing change, auditing progress, or advising managers on how to improve performance.
Organizations that overlook the importance of an appropriate change agent program risk paying a high cost. Consider, for example, an Asian pulp and paper company that created a change agent team to drive its lean-operations program. The group reported directly to top management and was staffed with new hires. However, senior executives failed to recognize and combat the tenacity of the operating group's silo mentality and culture.
Plant managers, who held the real organizational power, resisted what they saw as intrusion by a team of young outsiders, leaving management with no choice but to abandon the change program after several months. The change agents could not establish themselves as a credible force in an organization that valued experience and seniority over youth and innovation.
Our experience suggests that a carefully constructed change agent program is essential to any reorganization effort. Such a program requires three elements: a thoughtful design, the careful recruitment and development of personnel and close integration between the change agent team and the organizational areas targeted for transformation.
DESIGNING THE PROGRAM
Two of the most important tasks when creating a change agent team are defining the roles of its members and establishing a reporting structure.
As in any organization, each individual on the change agent team has a specific role. For example, executers are responsible for implementing solutions, experts use their extensive knowledge to solve difficult problems, coaches train line employees in the new processes, custodians ensure that knowledge is shared across organizational units and controllers track what's been done and what must still be accomplished.
How much emphasis an organization places on each of these roles will depend on the nature of the change program and the existing culture of the organization; for instance, an organization with a weak culture of accountability will need more coaches and controllers in order to ensure consistency.
As for reporting structures, there are two possible models. One is to create a centralized change agent team that reports directly to the top team. The other, decentralized option is to keep change agents in their respective groups so that they report through a dotted line to a central change agent leader. In our experience each of these approaches has its advantages and drawbacks, and no one plan will work for everyone. A centralized change agent team encourages new ideas, the thorough development of new thinking, and a standard set of solutions across the organization.
Alternatively, the decentralized model tends to foster greater skill building, the quicker dissemination of the program's values and better customization of solutions for each site or group. Short-term priorities, the long-term rollout plan and the culture of the existing organization are all factors that must be considered when determining which change agent structure will be most effective. For example, at the Asian pulp and paper company mentioned previously, where plant managers saw the centralized model as an outside intrusion into their operations, a decentralized plan might have been more effective.
RECRUITING AND DEVELOPING THE BEST TEAM
With a change agent organizational structure in place, the next step is to identify and recruit the best team possible. A crucial component is spelling out the benefits and opportunities members will receive as a result of moving outside their existing career paths.
A useful litmus test when considering possible change agents is to anticipate the reaction from other staff members when an appointment to the new position is announced. Selecting high-performing people who are already well respected within the company sends a clear signal that management takes the program seriously. Moreover, a credible set of team members will be better able to drive change and implement recommendations.
Change agents need more than raw analytical power to solve complex business problems; interpersonal skills are also critical if they are to lead others through change. Important traits for a potential change agent include empathy, strong communication skills, perseverance in the face of challenge or ambiguity and an ability to deal with conflict constructively.
Change agent teams must also make a strong effort to hire people with an appropriate mix of skills. A balance should be struck between young "academic types" who have strong analytical capabilities and seasoned managers who have proven track records within the organization. Working together, these two types of employees complement each other, broadening the team's skill base and providing for the two-way transfer of knowledge and capabilities within the team.
Potential change agents need to understand the explicit benefits and career opportunities that will be open to them as a result of joining the change effort. The best employees often hesitate to take an assignment that may last only 18 months -- which is usually the minimum amount of time required for a transformation -- fearing that it will damage their careers in the long run.
To counter these fears, high-performing organizations tend to develop a formal career plan for change agents. Some make participation a requirement for promotion to senior management; others build a career-development track within the program. Such mechanisms can prove to be highly effective recruiting tools, motivating potential candidates by offering short-term benefits -- including opportunities to build new capabilities and exposure to new areas of knowledge -- as well as the longer-term payoff of career advancement. Companies with traditionally weak human-resources processes may find it worthwhile to invest in a distinct HR system for change agents, including specific recruiting, development and compensation schemes.
INTEGRATING WITH THE FRONT LINE
The third important requirement for a successful change agent program is active support from line management. Time and again, change leaders discover that an "80 percent right" solution embraced and implemented by line managers beats the "100 percent right" solution that fails to win their acceptance. This buy-in rate is a critical indicator of success for a change program. Change agents should typically spend more than half of their time working collaboratively on the "shop floor," maintaining open, two-way communication and keeping abreast of the latest developments on the front line.
Line managers need to be actively engaged from the beginning of the change process, and they should participate in problem-solving sessions with change agents, senior managers and other employees. Such sessions encourage openness and the sharing of ideas, allow difficult issues to be raised early on in the change process, and build personal connections between line staff and change agents.
At one oil and gas company, for example, the change agent team created a group of "sparring partners" staffed with midlevel production managers. The team jointly tested proposed ideas, won approval for standardization of tools and processes, and acted as a conduit to the rest of the organization. In such sessions, communication barriers are removed and collaborative teamwork becomes the norm.
Philippe Arrata is an associate principal in McKinsey's Calgary office, Arnaud Despierre is a consultant in the Singapore office and Gautam Kumra is a director in the Delhi office.