Change Management Strategy for Implementing Shared Services

Table of Content

Table of Figures

1. Introduction

2. Change Management Strategy for implementing Shared Services
2.1. Analysis and Objective Setting
2.2. Planning
2.3. Realisation
2.3.1. Unfreezing the present level
2.3.2. Moving to a new level
2.3.3. Re-freezing the new level
2.4. Control

3. Summary and Conclusions

Bibliography

Textbooks / Handbooks / Encyclopaedias

Journal Articles

Websites

Table of Figures

Figure 1: Shared Services - Proposed Change Management Strategy

Figure 2: Types of Change – Implementation Shared Services

Figure 3: Stages in the Force-Field Analysis

1. Introduction

Nearly all managers seek to improve the bottom line of their business in different ways. After off shoring of production facilities and outsourcing of processes, the Shared Services ap- proach has heavily been discussed in previous years. With regard to Bergeron (2003, p.3), the Shared Service business model can be defined as follows:

“Shared Services is a collaborative strategy in which a subsets of existing business functions is concentrated into a new, semi-autonomous business unit that has a management structure designed to promote efficiency, value generation, cost savings, and improved service for in- ternal customer of the parent corporation, like a business competing in the open market.”

Following Wißkirchen (2006, p.7), organisations try to achieve in general the following ob- jectives via the implementation of Shared Services:

- Cost reduction due to economies of scale and scope, based on the standardisation and ac- cumulation of internal processes in one unit
- The parent company can concentrate on the core of the business
- Creation, expansion and maintaining of process know-how
- Services are charged by transfer prices and are put into competition to external service providers
- So-called service level agreements exactly define what the parent company can expect

Hence, by implementing Shared Services, the back office functions, such as finance, account- ing, controlling, human resources, regulatory affairs, etc. are becoming a strategic driver (A.T.Kearney Inc., 2006, pp. 1-3).

The present assignment proposes a change management strategy, in order to overcome resis- tance to change, implement a new system and take the organisation back to equilibrium by referring to some of the basic models of management. Where appropriate, change manage- ment tools are recommended which might be used in order to make the right decisions at the right time.

2. Change Management Strategy for implementing Shared Services

The proposed change management strategy takes up the ideas from the general management model as explained in Schweitzer, M. (1997, p. 33) or Götze, U. (1999, p.9). This general management model consists of the analysis, objective setting, planning, realisation and con- trol phase. In order to put special emphasis on the requirements of behavioural change, the realisation phase from the general management model will be replaced by Lewin’s three step behavioural change model (WIKIPEDIA, 2007; BCUC, 2000, Sec. 1, p. 10). Furthermore, the different steps of the model will be supported by Kotter’s “Eigth-Stage Process of Creating Major Change” (Kotter, 1996, p.21). Figure 1 illustrates the proposed model:

illustration not visible in this excerpt

Figure 1: Shared Services - Proposed Change Management Strategy (own illustration)

2.1. Analysis and Objective Setting

The assignment in present is based on the general assumption that the decision makers have already analysed the situation and already made the decision to integrate the functions into a Shared Service Centre.

2.2. Planning

Following the classification of Nadler and Tushman (1989, pp.196-197) the implementation of a Shared Service Centre can be seen as a planned transformation. The decision towards the implementation doesn’t appear from nowhere; contrariwise it is the result of deep analysis and evaluations. It can be classified as a transformational change, because the implementation of a Shared Service Centre requests major changes in the behaviour of the members of the organisation and a fundamental reappraisal of values, beliefs and attitudes. Maybe the biggest change with which the employees are confronted with during the implementation of shared services is that they are requested to develop a service-mentality, as their previous colleagues are now their customers (Frey, Pirker, Vanden Eynde, 2006, p.287). The placement of the Shared Service Centre in the framework of Nadler and Tushman can be taken from the fol- lowing illustration:

illustration not visible in this excerpt

Figure 2: Types of Change – Implementation Shared Services

(own illustration, following Nadler, Tushman (1989, p.196))

It has to be mentioned, that the planned transformation is a strategic change with the luxury of time. Anyhow, even if it is a planned transformation and time should be available, a sense of urgency should be established. With regard to Kotter (1995, pp. 60-62; 1996, pp.35-49) such sense of urgency is extremely important in order to gain the necessary cooperation. People involved into the change process or affected by the change have to realise, that the defined change is essential for the further development of the organisation. Following Kotter (1996, pp.42-45), the initiators of the change program or the change team should even think about pushing up the urgency value artificially, e.g. by allowing a financial loss, eliminating exam- ples of excess (e.g. expensive company cars), set unachievable targets, held people more ac- countable, etc.

Especially in the planning phase of a change management project, special attention has to be paid to the hard side of change management, as Sirkin, Keenan and Jackson (2005, pp.110- 113) call it. They developed the DICE-factor system, consisting of four key factors which can in the early beginning direct a change management project towards success. These four fac- tors will in the following briefly be explained.

Duration

At the early beginning of a project, the time-frame in which the project should be “real- istically” completed should be estimated. Milestones should be scheduled and fre- quently reviewed to identify gaps, new risks or other factors influencing the change program at the early beginning.

Integrity

Integrity means the ability of organisations to form a team that is capable to handle and complete the change program on time. Here, organisations have to free-up their best people in order to achieve the requested results

Commitment

Commitment refers to the top management team of an organisation, the executive or management board, who has to “walk the talk”. Furthermore it refers to the people who have to deal with the system in the future.

Effort

At the early beginning of the project, the project team would also need to calculate how much work employees would need to do beyond their current or existing responsibility. Following Sirkin, Keenan and Jackson, the work load should not increase by more than 10% in order to avoid conflicts or fall of morale. Here, the top management would need to decide whether to take away some regular work of employees who have to play a major role in the change management project.

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