FORTUNE
February 7, 1994
RATE YOUR READINESS TO CHANGE
By Thomas A. Stewart
Some companies' cultures embrace change; others try to kill it -
and often do. Take this quiz to find out how your organization
is likely to behave.
Executives say that as many as two-thirds of total quality
management efforts flop. Michael Hammer and James Champy,
authors of the best-selling "Reengineering the Corporation",
estimate that well over half the radical change programs they
advocate fade into similar oblivion. Take a bittersweet tour of
your own company's failed attempts to shape up: Walk down to the
galley and check out the slogans on the mugs on the shelf above
the coffeemaker - "No. 1 in '91," "A team's for you in '92,"
"Qual-i-tee in '93," "and this year's "Try once more in '94."
They're almost enough to make you feel young again, like songs
from the fifties.
If it's any comfort, the problem isn't new. According to
the very first management consultant, Niccalo Machiavelli, "There
is nothing more difficult to take in hand, more perilous to
conduct, or more uncertain in its success than to take the lead
in the introduction of a new order of things." Yet some
companies do take to change readily, if not always painlessly.
Think of Motorola, which grabbed TQM in a bear hug early in the
1980s and hasn't let go, continuously raising its standards and
its profits. Or General Electric, which uses a set of management
tools--maps of its processes, the study of other companies' best
practices, and its bureaucracy-subverting Work Out program--to
build a machine that churns out change the way a turbine makes
electricity.
Why does one organization thrive on change while another
sulks like a teenager? For Andrea Sodano, who holds a Ph.D. in
psychology, the question is of more than academic interest. A
consultant at Symmetrix, a firm in Lexington, Massachusetts, that
specializes in reengineering, Sodano fretted as she saw some jobs
go smoothly while others bogged down. Says her boss, Symmetrix CEO
George Bennett: "Some places, we've gone in with our best
people and broken our backs. That's a waste of our resources and
those of our clients."
People and culture--the human systems of a company--are what
make or break any change initiative. Last year the Wyatt Co., an
actuarial and human resources consulting firm in Washington,
D.C., surveyed executives of 531 companies that had restructured
their operations. It found that the most-often-cited barriers to
change were employee resistance and "dysfunctional corporate
culture." A dysfunctional culture says Wyatt's John Parkington,
is one whose shared values and behavior are at odds with its
long-term health: For Example, a high-tech company might
celebrate individual star performers when tough teamwork produces
the innovation on which its future depends. Sodano and several
colleagues at Symetrix have studied signs of change readiness
and resistance. They looked for specific characteristics that
tend to keep things in place and fuel resistance to changing behavior,
as well as the common traits of companies that adopt new business
practices successfully.
The quiz that starts on the next page is an adaption of
their work. Its first aim is to assess your company's or your
business unit's versatility. The higher you score, the better
able you are to change when change is needed. Conversely, says
Bennett, "trying to reengineer a company that scores low is like
sending troops into battle against superior forces." The old
culture will rise up and overwhelm you.
The quiz serves a second, equally important purpose:
Because it reveals likely causes of failure, it creates an
agenda, a list of ways to make a big restructuring or
reengineering more likely to take. Says Sodano: "The problem
with the 'soft side' of management is getting good data, numbers
that business people are willing to accept. This quiz gives you
specifics." Last autumn, Sodano used the quiz with a British
chemical company, a potential client. Afterward, the company's
reengineering head realized that she needed more public support
from top management if the project was to succeed, and she used
the findings to get it.
Now to see how you measure up, pull out your pen and pencil.
Ready? Begin. A READINESS FOR CHANGE SELF-SURVEY
The right-hand column lists 17 key elements of change readiness.
Rate your organization on each item. Give three points for a
high ranking ("We're good at this; I'm confident of our skills
here"); two for medium score ("We're spotty here; we could use
improvement or more experience"); and one point for a low score
("We've had problems with this; this is new to our
organization"). Be honest. Don't trust only your own
perspective; ask others in the organization, at all levels, to
rate the company too. The consultants at Symmetrix believe--no
surprise--it helps to have an outsider do the assessment with
you.
READINESS SCORING
HIGH = 3
MEDIUM = 2
LOW = 1
SCORE CATEGORY
_____ Sponsorship - The sponsor of change is not necessarily
its day-to-day leader; he or she is the visionary,
chief cheerleader, and bill payer - the person with the
power to help the team change when it meets resistance.
Give three points--change will be easier--if
sponsorship comes at a senior level; for example, CEO,
COO, or the head of an autonomous business unit.
Weakest sponsors: midlevel executives or staff
officers.
_____ Leadership - This means the day-to-day leadership--the
people who call the meetings, set the goals, work till
midnight. Successful change is more likely if
leadership is high level, has "ownership" (that is,
direct responsibility for what's to be changed) and has
clear business results in mind. Low-level leadership,
or leadership that is not well connected throughout the
organization (across departments) or that comes from
the staff, is less likely to succeed and should be
scored low.
_____ Motivation - High points for a strong sense of urgency
from senior management, which is shared by the rest of
the company, and for a corporate culture that already
emphasizes continuous improvement. Negative:
tradition-bound managers and workers, many of whom have
been in their jobs for more than 15 years; a
conservative culture that discourages risk taking.
_____ Direction - Does senior management strongly believe
that the future should look different from the present?
How clear is management's picture of the future? Can
management mobilize all relevant parties--employees,
the board, customers, etc.--for action? High points
for positive answers to those questions. If senior
management thinks only minor change is needed, the
likely outcome is no change at all; score yourself low.
_____ Measurements - Or in consultant-speak, "metrics."
Three points if you already use performance measures of
the sort encouraged by total quality management (defect
rates, time to market, etc.) and if these express the
economics of the business. Two points if some measures
exist but compensation and reward systems do not
explicitly reinforce them. If you don't have measures
in place or don't know what we're talking about, one
point.
_____ Organizational Content - How does the change effort
connect to other major goings on in the organization?
(For example: Does it dovetail with a continuing total
quality management process? Does it fit with strategic
actions such as acquisitions or new product lines?)
Trouble lies ahead for a change effort that is isolated
or if there are multiple change efforts whose
relationships are not linked strategically.
_____ Processes/Functions - Major changes almost invariably
require redesigning business processes that cut across
functions such as purchasing, accounts payable, or
marketing. If functional executives are rigidly turf
conscious, change will be difficult. Give yourself
more points the more willing they--and the organization
as a whole--are to change critical processes and
sacrifice perks or power for the good of the group.
_____ Competitor Benchmarking - Whether you are a leader in
your industry or a laggard, give yourself points for a
continuing program that objectively compares your
company's performance with that of competitors and
systematically examines changes in your market. Give
yourself one point if knowledge of competitors'
abilities is primarily anecdotal--what salesmen say at
the bar.
_____ Customer Focus - The more everyone in the company is
imbued with knowledge of customers, the more likely
that the organization can agree to change to serve them
better. Three points if everyone in the work force
knows who his or her customers are, knows their needs,
and has had direct contact with them. Take away points
if that knowledge is confined to pockets of the
organization (sales and marketing, senior executives).
_____ Rewards - Change is easier if managers and employees
are rewarded for taking risks, being innovative, and
looking for new solutions. Team-based rewards are
better than rewards based solely on individual
achievement. Reduce points if your company, like most,
rewards continuity over change. If managers become heroes
for making budget, they won't take risks even if
you say you want them to. Also: If employees believe
failure will be punished, reduce points.
_____ Organizational Structure - The best situation is a
flexible organization with little churn--that is,
reorganizations are rare and well received. Score
yourself lower if you have a rigid structure that has
been unchanged for more than five years or has
undergone frequent reorganizations with little success;
they may signal a cynical company culture that fights
change by waiting it out.
_____ Communication - A company will adapt to change most
readily if it has many means of two-way communication
that reach all levels of the organization and that all
employees use and understand. If communications media
are few, often trashed unread, and almost exclusively
one-way and top-down, change will be more difficult.
_____ Organizational Hierarchy - The fewer levels of
hierarchy and the fewer employee grade levels, the more
likely an effort to change will succeed. A thick
impasto of middle management and staff not only slows
decision-making but also creates large numbers of
people with the power to block change.
_____ Prior Experience With Change - Score three if the
organization has successfully implemented major changes
in the recent past. Score one if there is no prior
experience with major change or if change efforts
failed or left a legacy of anger or resentment. Most
companies will score two, acknowledging equivocal
success in previous attempts to change.
_____ Morale - Change is easier if employees enjoy working
in the organization and the level of individual
responsibility is high. Signs of unreadiness to
change: low team spirit, little voluntary extra effort,
and mistrust. Look for two types of mistrust; between
management and employees, and between or among departments.
_____ Innovation - Best situation: The company is always
experimenting; new ideas are implemented with seemingly
little effort; employees work across internal
boundaries without much trouble. Bad signs: lots of
red tape, multiple signoffs required before new ideas
are tried; employees must go through channels and are
discouraged from working with colleagues from other
departments or divisions.
_____ Decision-Making - Rate yourself high if decisions are
made quickly, taking into account a wide variety of
suggestions; it is clear where decisions are made.
Give yourself a low grade if decisions come slowly and
are made by a mysterious "them"; there is a lot of
conflict during the process, and confusion and finger
pointing after decisions are announced.
IF YOUR SCORE IS:
41-51: Implementing change is most likely to succeed. Focus
resources on lagging factors (your ones and twos) to
accelerate the process.
28-40: Change is possible but may be difficult, especially if
you have low scores in the first seven readiness
dimensions. Bring those up to speed before attempting
to implement large-scale change.
17-27: Implementing change will be virtually impossible
without a precipitating catastrophe. Focus instead on
(1) building a change readiness in the dimensions above
and (2) effecting change through skunkworks or pilot
programs separate from the operation at large. | 
