According to McKinsey and Company, 70% of all transformations fail.
It’s never easy to implement a sweeping C-level mandate. But one thing is certain – the worst way to do it is to send a company-wide email telling everyone to change the way they work. While change is essential for a company to grow, translating mandates into tangible action can leave team members scratching their heads. Enterprise organisations are complex, and there are many cogs — each of which has a direct impact on how mandates do (or don’t) get implemented. But making key changes is quite doable if you’re able to identify where friction points are and create a plan that’s simple for team members to follow.
How do I start at the bottom to facilitate change?
If you’ve been following our blog, you know we harp a lot on the importance of data. But there’s good reason for that – data and analytics are exactly what you need to know where to start any project. You need to look at the high-level trends and then drill into the details because as the saying goes “the devil is in the details” and that’s where change starts. Let’s look at a use case and the steps you can take to put this data into action.
What is a real-world example?
Let’s say your CEO has mandated a million dollars in savings. He doesn’t necessarily care how you go about doing it, but he’s mandated a certain amount be generated from efficiency gains (mostly across AP) and a certain amount come from being more strategic in procurement – or as we say, simplify operations and spend smarter. This is going to require building collaboration across finance leadership, the procurement department and AP teams. So, you need to:
1. Make sure everyone’s speaking the same language: Set common goals and communicate what the results mean to each team. So, for this example, one goal could be to reduce maverick (or unapproved/uncontrolled) spending. From a procurement perspective this can drastically cut down on the money being spent across the organisation and from an AP perspective this often eliminates manual work in processing surprise invoices. Explaining to each team at the practitioner level ensures that people understand why things are changing.
2. Create a single source of truth: Here’s where your analytics dashboards come in. Communicate to everyone that the analytics reflect the current state and any progress made towards goals is determined using that data. In this example, a supplier spend dashboard can be very important for both procurement and AP. This dashboard shows procurement how much they’re spending across the supply base and shows AP where processes are inefficient – how many invoices are being matched automatically and those that require human intervention.
3. Drill into the details: Once you’ve established the data and numbers everyone should following, it’s time to address what’s happening behind the trends. Drill into the details to address individual behaviors that need to be changed. In this example, drilling into the dashboard mentioned above can tell:
Procurement: Who is approving maverick spending? And who are the maverick spenders?
AP: Are there invoices without POs? Where are they coming from? Are there duplicate invoices? Who is approving duplicate invoices?
Process Owners: Who is taking the longest? What types of invoices are taking the longest? Which suppliers have the lowest e-invoicing rates?
4. Focus on the individual, not the group: Once you’ve identified the individuals’ behaviors that need to change, it’s time to present the alternative behavior that you want implemented to them directly – and not in mass communication. Send personal emails to the individuals you want to change, provide specific examples about what’s wrong with their current behavior, and outline the steps that each person should take to rectify the issue related to the process breakdown. Have managers follow up to make sure people understand exactly what’s being asked of them. And keep in mind that these individuals likely do not realise they are causing issues up the chain and that there is a better process to follow.
5. Set realistic KPIs for the practitioner level: To keep everyone on track and make the change real, it helps to set attainable goals that everyone can measure progress against. Looking at non-compliant spend indicates which categories or departments need more spend control. Get more spend control in those areas by setting a KPI to increase PO usage or to establish payment plans for recurring non-PO spending. For procurement folks, set KPIs around your top 3 suppliers so that the team is focused on optimising your largest spending areas. For AP clerks, set KPIs around process improvement targets, like increasing invoice matching and e-invoicing rates. The point is – move away from general KPIs and focus on metrics that people can directly influence by changing how they operate. Not only will you see results, you will find people become more self-motivated and compliant when they see the impact they’re having on the company.
Change is not easy for most people, but it’s especially difficult when they are unsure of what is expected or what specific actions they need to take. Real change starts with communication and moves from the bottom up through the organisation, driving transformation.
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