Book of Change

Believe it or Not! Now Is the Time for Organizational Change

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If you ask an employee the question “Why are you doing it that way?” Then the answer may be “We’ve always done it this way!” Government agencies are especially notorious for being inflexible and unchangeable. Many a crusading elected official has discovered the hard way that the desired change doesn't occur overnight.

      However, what is really interesting is that if you ask individual employee "how" a particular process works, then you will get very different answers. In other words, how a process works is usually a matter of personal perspective and not a matter of procedural directive. At least it is until a procedure or process is collectively mandated in writing.

      It is hard for managers to find a silver lining in the current economy. Dwindling public resources have resulted in a fiscal triage of cutting contracts, reducing service levels, and deciding which employees are the first to be laid off because they are nonessential. In government it is hard to convince elected officials that there is any other long-term strategy for addressing the problem other than the political reality of their four-year terms. Many elected officials subscribe to President Ronald Reagan’s admonition about change: “It's hard when you're up to your armpits in alligators to remember you came here to drain the swamp.” Others subscribe to President Bill Clinton’s comment that “It’s the economy, stupid.” For the private sector it is a Solomon like choice which to cut more, sales or production.

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The Nature of Change

The reality is that small and big businesses are going through huge organizational changes that they never anticipated. Many organizational changes are forced by external forces. For government agencies it is the political upheaval of a major election and for businesses it is the economic upheaval of a recession. In any case, an organizations leadership may resist organizational change until they are faced with a political or economic crisis.

      The organizational dilemma is that there is a difference between private and public sector organizations. Private sector organizations listen to their external stakeholders because their livelihoods and profits depend on customer input. In business, if you don’t listen to your customers, then your rivals will.

      But public sector organizations don’t have any financial incentive to pay attention to their customers. This can result in a my-way-or-the-highway mentality. It also can result in government managers being blind to the political change occurring around them.

      So, where is the silver lining in today’s economic downturn? Managers have the opportunity to make meaningful organizational changes. Organizational change can be a good thing and a major opportunity to communicate with internal and external stakeholders about your organization’s future; to make behavioral, structural, and technical improvements; and to survive and prosper from that change.

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Defining Terms

Organizational change is (1) a planned, organization-wide effort to increase an organization's effectiveness and viability, (2) an organizational response to the need for change, and (3) a complex process intended to change the beliefs, attitudes, values, and structure of an organization so that it can better adapt to new technologies, outreach, challenges, and rate of change.

      Organizational development (OD) is a professional field just like public management. It has its roots in the field of industrial psychology and has grown into an interdisciplinary field that includes business management, behavioral psychology, political science, human resources, sociology, communications, and economics.

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Resources

In print:

Improvement Driven Government: Public Service for the 21st Century, by David K. Carr, Ian D. Littman, and John K. Condon (Washington, D.C.: Coopers & Lybrand, 1995);
Organization Development in the Public Sector, by David G. Carnevale (Boulder, Colo.: Westview Press, 2003).

Online:

“How to Manage Organizational Change,” BNET.com, www.bnet.com/topics/organizational+change.

 

The Change Process

Most organizational change is forced on public agencies by external forces. That is unfortunate because it creates a reactive climate of fear: members of the staff resist the change process and may even work to sabotage it. There is a better model, however, where organizational change is treated as an ongoing systematic process; in this model, staff members are at the heart of the change process and actually drive it.

      Change that comes from within and is staff driven is much more successful and productive than change imposed from outside. Dr. David Carnevale, in his book Organizational Development in the Public Sector, says, “Involving employees in structured problem solving, allowing them effective voice, and respecting their know-how are the core elements in the physics of learning.”

      One good example of external forces and positive organizational change is the recent trend for succession planning in organizations. As the working population has aged, there has been a need to find younger employees to replace those employees who have been retiring.

      Succession planning has been embraced by all employees because the result has been that as the older employees retired, they provided on-the-job wisdom to the younger employees; the younger employees were promoted and earned more for taking on more responsibility; and the management staff maintained an effective workforce. It was win-win for everyone. I talk about this in the past tense because the concept of succession planning was put on hold as older employees’ retirement funds lost value and they needed to work longer, and the younger employees often got laid off.

      To successfully accomplish organizational change, it is important to understand the difference between rhetoric and action. Creating organizational change by creating a new mission, goals, and objectives is pointless unless the objective becomes an action, and the repeated action creates new behavior.

      These actions are best carried out through a long-term strategic plan that fits together with a multiyear budget and is monitored through strong performance measures. Noted leadership trainer John E. Jones said, “What gets measured gets done, what gets measured and fed back gets done well, what gets rewarded gets repeated.”

      Unfortunately, even good strategic plans can be doomed to gather dust on a shelf. Every successful strategic plan needs a person, a team, or a committee whose job is to make sure the strategic plan is carried out at every level of the organization over time. Quite frankly, that person cannot be the local government administrator.

      The administrator is too busy in the daily swamp of responsibilities to manage the strategic plan. So I suggest you find someone who is a good project manager. That person needs to report directly to the local government administrator and have the administrator’s total support, because that person is going to need it.

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10-Step Program for Managing Organizational Development and Change

1. Establish a sense of urgency.

2. Form a guiding coalition.

3. Create a vision.

4. Communicate the vision.

5. Manage the transition.

6. Build change capacity and readiness.

7. Empower others to act.

8. Plan for and create short-terms wins.

9. Consolidate improvements, sustain momentum, produce more change.

10. Institutionalize new approaches.

Source: Thomas G. Cummings and Christopher G. Worley, Organization Development and Change, 8th ed. (Mason, Ohio: Thomson/South-Western, 2005).

 

Behavior Is the Key

First and foremost, organizational change is about human behavior. It is about how elected officials, government managers, line staff, and the public stakeholders interact. A dysfunctional organization is one where the players don’t share a common vision or have common expectations and do not work well together.

      Having greater resources will improve an organization’s ability to deliver services. Greater resources, however, will not make an organization more efficient or effective. To be more efficient means you need to use organizational change to do the best you can with what you have. And that means changing human behavior.

      Carnevale says, “The premise is that the organizational members own their own problems and are responsible for finding solutions to them. OD does not ‘fix’ people through the use of outside consultants.” Owning the problems and the solutions is important because ownership helps reduce the fear on the part of the employees that someone from outside the organization is going to fix them, in other words, blame them and fire them!

 

Small Town USA

      Cascade Locks, Oregon, is a city of a little more than 1,000 people located in the heart of the Columbia River Gorge National Scenic Area. Earlier this year, I was hired as the interim city administrator to help them (1) complete the next year’s budget, (2) evaluate and reorganize city government, and (3) hire my replacement. Since I am semi-retired, I do this kind of work because I like to integrate my academic learning with my real world public management experience.

      As the administrator, I found the city to be a quirky combination of the television shows “Twin Peaks” and “Northern Exposure.” In other words, it was full of colorful characters. The new city council was elected on a fiscal reform agenda and was a microcosm of the national mood for government reform that was fueled by the Tea Party activists. The council members wanted to cut costs. The reality was that the beginning balance of all city funds was dwindling every year. My job was to help Cascade Locks become a fiscally sound city.

      The town, however, was deeply divided. The new mayor won by five votes. The central election issue was that the new fire station was financed by numerous grants but still owed a $450,000 loan from the city’s electric utility. The loan had been based on a financial scheme, which was a house of cards, predicated on what the old fire station would sell for.

      Understand that the city administration believed the old fire station would sell for a price that would pay off the debt. Then came the Great Recession, and the financial scheme collapsed. The old fire station’s theoretical value plummeted by 60 percent, and the city was making no payments on the loan.

I arrived in time for the perfect storm between a politically skeptical elected council and a city of people who loved their fire department. The city was divided into those who were mad that the former administration—former mayor, fired city administrator, and same fire chief—had used a financing scheme that didn’t work and those who supported the firefighters at any cost.

      The council’s first public meeting on the subject of changing the fire department financially was a disaster. And I knew it would be. Angry people vented their love of the fire department and their fire chief. They also feared the council would cut funding to the fire department. After the 9/11 attack, no public official can easily question the need for a well equipped and staffed fire department.

      Step one was to publicly air the financial concerns and discuss the realistic financial options. In the academic world of organizational development, this is called an intervention. Interventions are structured activities used individually or as a group to improve an organization’s performance.

      This intervention was accomplished through a town hall meeting. The facilitator had one interesting requirement. Council members, the fire chief, and I could not participate. In other words, no political or personal agenda was allowed.

      Step two was to bring in another facilitator to take the council through a goal-setting session for the coming year. The big difference, however, was that the facilitator told council members they needed to undertake a multi-year strategic plan and financial plan. This strategic plan would be state-general goals, specific objectives, and detailed actions that spelled out what was going to happen, when it would happen, and who was accountable.

      When I left Cascade Locks to go back to working on my doctorate, I gave the council my final recommendations on how to make the city more cost effective, efficient, and politically cohesive. First, they restructured the fire station loan from a five-year to a 10-year term and started making payments from the general fund.

      The general fund loss could be offset by consolidation. In the city of Cascade Locks there is also a Port of Cascade Locks. I recommended that both entities co-locate. Although the city administrator and port general manager would maintain separate offices, they could save money by sharing the receptionist, computers/IT, phones and other utilities, and payroll. Since both organizations used heavy equipment, they could also share equipment maintenance and replacement.

      The fire department also received a large general fund subsidy and could benefit by consolidating with a neighboring and slightly larger city. By combining, the two cities could save by having one shared fire chief. The largest revenue stream for a fire department is emergency services (ambulance) charges to insurance. By combining the billings process, they could save money. They could also save money in the maintenance and replacement of similar emergency vehicles and equipment.

 

Big County USA

Clark County is located in southwest Washington and has a population of more than 425,000 people and is part of the Portland-Vancouver metropolitan area of 2.2 million people. I was hired to reinvent an agency of 165 people with a $17 million budget. To be honest, I didn’t have a clue how to do this.

The newly elected county auditor ran on a platform of doing performance audits. One day I stopped him on the street and asked him to audit my department. So began my long journey of learning about organizational development. The truth is that I knew of a city manager who had been fired after a negative performance audit. It was a lesson learned for me.

      I convinced the county auditor to hire a consultant to conduct a performance audit of my department. My theory was that calling for such an audit at the beginning of my tenure would be to my credit, but if it was forced on me later in my tenure, it would be to my discredit—as in fired.

      As it turned out, I was right. The consultants did a great job and made 44 recommendations to improve the agency. I implemented those through a five-year strategic plan and never looked back. Some of the recommended best management practices were simple. Customers' two major complaints were that no one called them back and the city lost their files.

      So we implemented a 24-hour call back rule that would be met 95 percent of the time. Everyone was given a call log book and was directed to document who called, what the callers wanted, and when they were called back. Each division reported this information monthly, and I shared the information with everyone by e-mail.

      Over time, the department's worst offenders started to improve because they wanted to shed their bad reputations. In my annual report, I was glad to note that overall we were returning 97 percent of our calls within 24 hours.

      We also tightened up the document management process by imaging many incoming documents. This meant staff could access reports via the Intranet instead of going to the records office and checking them out. It's relatively hard to lose an electronic document, so the lost document problem was greatly reduced.

      A lot of time was spent mapping such major processes as conditional use permits and subdivisions on the assumption that you can't improve a process unless you know exactly how it works. Frankly, we found that not everyone agreed on the mechanics. Once we reached agreement about how things were supposed to function, we spent time reengineering the process so it was simpler and more transparent.

      We also established a number of performance measures by which to track our success over time. In the end, however, there is only one meaningful performance measure: the number of calls that elected officials don't get! And most of the complaint calls stopped. The other important measure was a personal one: I went on to serve as the department's director for the next nine years.

      That organizational change experience became a passion of mine and led me to undertake a doctorate degree at Washington State University in organizational change and development.

Source: “Organization Development: An Integrated Approach,” Office of State Personnel, North Carolina, March 5, 2008, http://hrpeople.monster.com/training/articles/146-organization-development-an-integrated-approach.

 

What to Pay Attention To

In general, here are the areas that organizational change focuses on:

• Customer service systems.

• Performance measures and monitoring.

• Training and professional development.

• Communications.

• Technology.

• Staffing and turnover.

• Procedures.

• Cost accounting.

• Regulatory improvements.

• Document management.

• Facilities management.

 

      This is not an exhaustive or a comprehensive list of possible areas of best management practices. Each local government organization is unique in its needs, abilities, and culture. The first step in any organizational change process is to define the organization as it is. You cannot change an organization until you understand its unique characteristics.

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End Note

Organizational change requires the buy-in of line staff, top management, and elected officials in terms of embracing the need for a systematic institutional change process. It is only when the entire staff of a local government realize that they can plan for and become the masters of their own destiny that they will no longer fear change and will embrace it.

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