The 3 Ways People React to Change and Why Procurement Leaders Need to Take Note!
I remember vividly the time when a leading Utility firm in the UK asked me to review a major delivery contract that they just negotiated with a series of contractors. Their expectation was that this new contract format would deliver significant cost savings. In fact, costs were going through the roof and the Major Contracts Director was in danger of being exited from the company!
After an initial investigation, it became clear that although the contract was ‘sound’ the approach taken to embedding the new ways of working left a lot to be desired. I remember having a meeting with the Contract Managers and asking them, “What do you think about the new contract?”
What do I think? I think it’s terrible, completely not required. There was nothing wrong with the way that we have been managing maintenance for the last 15 years. The Contractors, however, love it — it’s so much more weighted in their favour!
Even as adults, most of us don’t choose change. We get comfortable with our routines, our lives, our friends, our cocktail of choice, even our routes to work, and any detour can be a source of frustration, fear and stress — we prefer the security of what we know. But change is unavoidable, and how we react to it determines the outcome, good or bad.
There are usually three ways that people react to change:
• Be non-active.
These are the type of people who keep their head down, carry on doing what they’ve always done, assuming that this ‘latest initiative’ will eventually go away and be replaced with the next big thing! Unfortunately, they are often right. Basically, they resist the change and choose to remain in denial. If I don’t address the issue, it’s not really there. It won’t happen to me, so I’m just going to continue to go about my business. Or they cop an attitude and say, It’s not fair. Why me? Either way, they don’t move forward and stay stuck.
• Be reactive.
I’ve seen examples of department heads, upon hearing that the Chief Executive is pushing for a 20% reduction in budgets frantically start calling all their core suppliers and demand that they reduce their prices and pressures them to make a fast decision. These types of department heads don’t have all the necessary facts but make a decision anyway to eliminate their immediate stress and worry. It’s a knee-jerk reaction. The challenge with this approach is that they can cause massive pressure within the supply chain that can ultimately (and often does) come back and bite them in due course.
• Be proactive and positive.
Earlier this year, I was working with a company that was growing rapidly. As such, their needs were changing on a monthly basis and historically they had adopted a ‘we’re bigger now, so give us a bigger discount’ approach to supplier engagement! They had achieved savings but the basic ‘lets squeeze the lemon’ approach had its limitations.
To ensure that the supply chain was fit for purpose, we invited all of the core suppliers in for a discussion, explained to them the future direction of the business, asked them for ideas and recommendations, and did research on the Internet around innovative approaches. They prepared a budget and shared this with the core supply base. They outlined and shared a joint vision of what success would look like. They put their focus on what they could do, focused on the positive outcomes and took action.
Obviously, the ideal way to deal with change is to be is proactive because you feel more in control. And the more we feel we have control over the situation, the less stress and frustration we feel. It doesn’t matter what the subject is — when we take charge of change, the journey feels more comfortable and ends up more rewarding.
Easy to say, but how do you choose to be proactive when it’s so easy to freak out or hide under the covers?
• Acknowledge that change is part of life. Nothing would exist without change. It’s inevitable.
• Accept your emotions. Tell the truth on yourself to allow all your feelings. Cry the crocodile tears and release the energy as it comes up. Be patient, as it takes time to sort through all your emotions and adjust to change. Too often we skip over this step, shove our emotions down and that ends up slowing us down.
• Reframe the situation to see the positive. After I explained to the Contract Managers the rationale for the change in Contract and how we can embrace it to create a true Win Win across the full maintenance regime, they started to understand more about the possibilities ahead. They could work in partnership with the contractors, they could be more proactive in the financial management and ultimately have a more fulfilling career.
• Action is required because decisions, not conditions, determine your path. By deciding to move forward and trust the process, we put our focus on what is available.
Change Management is a key ingredient in my C.O.S.T. Optimisation Formula. Download my book for free here. One of the modules that I cover is the Change Accelerator, an illustration of which is given below;
Your ability to effectively manage the change across your organisation will determine the level of the benefits that you realise from your procurement activities. I’ve seen examples where forecast savings were completely wiped out by not managing the change effectively. Equally, with the case of the Utility company mentioned above, by actively managing the change process and embedding new ways of working, we delivered over £30m of savings over the next 12 months.
Originally published at tonylockwood.com on January 14, 2016.