Companies make difficult decisions every day relative to launching new products or services, discontinuing products or services, merger, and acquisition strategies, going public, remaining private, and the list goes on. Yet, when it comes to decisions regarding process transformation, whether that pertains to AR optimization or any other process area that involves changes to the organization and the mechanics of how business gets done, “Analysis Paralysis” seems to kick in. Why is a change in these areas SO hard?
Short answer – human beings are involved. What happens when individuals have too many major balls in the air at once within their personal lives? They freeze. The same thing happens in organizations when they become overwhelmed by the prospect of change.
William Bridges, in his 1991 book “Managing Transitions” highlights three stages of transition that people go through when they experience change. These stages are:
1) Ending, Losing, and Letting Go
2) The Neutral Zone, and
3) The New Beginning
This first stage results in the same emotional responses from the individuals within the organization that would be experienced if they were ending or losing something within their lives outside of work. Those initial emotions are normally – fear, uncertainty, disorientation, and possibly anger. Bridges says that people will go through each stage at their own pace. Some who are more comfortable with change, in general, will move through the stages very quickly. Others may linger longer in stage one and two.
Managing through these emotional responses by providing more communication, clearer direction, and more control during the time of change is one of the paradoxes of change leadership that McKinsey & Company highlight in their quarterly report entitled, “Leadership and the art of plate spinning”.
The article observes that “A company will need more control when it must actually change direction and more empowerment when it is set on the new course. “ As the article continues the observation is made that, “it is counterintuitive to stimulate change by grounding it in sources of reassuring stability or to focus on boundaries and control when the company wants to stir up new ideas.” These are the steps that are necessary, however, to battle the emotional response within the organization to move individuals through the stages of transition.
Instead, how do most organizations respond? Leadership, either from enforcement of a top-down control structure or fear of the organization’s response (perhaps due to a failed change initiative in the past) takes a “closed-door” approach to the change. They are overly cautious about what they communicate and when they begin communication in an attempt to avoid employee and business disruption. They worry about having the strategy “correct” without realizing that no strategy can ever be correct without understanding the details within the processes. Rather than engaging the accounts receivable team in defining the problem and being a part of developing the strategy for solving the problem, they embark on the effort of devising the master plan for the “future state” without any in-depth input or knowledge of the “current state”.
A quote by Jeff Cole in his article, “Process Change – Are You Your Own Worst Enemy” paints the image the best. He reflects, “Organizations that can’t even play their scales right are attempting to play Beethoven.”
But organizations don’t have to be comprised of concert pianists, and change DOESN’T have to be so hard! Managing change effectively starts with a few simple steps:
1) Engage the team early on in the process, so that they feel like they are a part of the change effort not that it is being “forced upon them”
2) Leverage their knowledge of the processes, the current problems, and the needed improvements to frame the go-forward strategy
3) Communicate, communicate, communicate, and
4) When you think you’re done, keep going. There are most likely some individuals within the organization still working through the transition stages.
If resources aren’t available internally to support the effort, then find external resources that can help. As we’ve referenced before, this is one of the most important investments you can make to ensure your project’s success. Gartner recommends that companies allocate at least an average of 15% of any project budget to change management and training. That may seem like a lot, but if it ensures the entire cost of the AR optimization effort and technology deployment is not a total loss because it was never adopted internally and ultimately shelved, it’s a good business decision to make the investment.
Have you recently undergone any changes within your department? If so, how did you handle them? Do you have any advice for those considering a change?
HighRadius Autonomous Receivables Software Platform is the world’s only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Autonomous Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway – covering the entire gamut of credit-to-cash.