V 4 Implement a New Organizational Structure Reorganizations

V 4 Implement a New Organizational Structure Reorganizations are inherently disruptive. Implement your new structure with minimal pain for staff while maintaining IT performance throughout the change. Info-Tech Research Group, Inc. is a global leader in providing IT research and advice. Info-Tech’s products and services combine actionable insight and relevant advice with Info-Tech's products and services combine actionable insight and advice ready-to-use tools and templates that cover the fullrelevant spectrum of IT with concerns. and templates that cover the full spectrum © of 1997 -2016 IT concerns. © 1997 –Research 2016 Info-Tech Group. Research Inc. Info-Tech Research Group 1

This blueprint is part 3/3 in Info-Tech’s organizational design program and focuses on implementing a new structure PART 1: DESIGN IT Organizational Architecture 1. Define the organizational design objectives. 2. Develop strategicallyaligned capability map. 3. Create the organizational design framework. 4. Define the future state work units. 5. Create future state work unit mandates. Organizational Sketch 6. Assign work to work units (accountabilities and responsibilities). 7. Develop organizational model options (organizational sketches). 8. Assess options and select goforward model. PART 2: STRUCTURE PART 3: IMPLEMENT Organizational Structure Transition Strategy 9. Define roles by work unit. 10. Create role mandates. 11. Turn roles into jobs. 12. Define reporting relationships between jobs. 13. Define competency requirements. Organizational Chart 14. Determine number of positions per job. 15. Conduct competency assessment. 16. Assign staff to jobs. 17. Form OD implementation team. 18. Develop change vision. 19. Build communication presentation. 20. Identify and plan change projects. 21. Develop organizational transition plan. Implement Structure 22. Train managers to lead through change. 23. Define and implement stakeholder engagement plan. 24. Develop individual transition plans. 25. Implement transition plans. Risk Management: Create, implement, and monitor risk management plan. HR Management: Develop job descriptions, conduct job evaluation, and develop compensation packages. Monitor and Sustain Stakeholder Engagement The sections highlighted in green are in scope for this blueprint. Click here for more information on designing or on structuring a new organization. Info-Tech Research Group 2

Our understanding of the problem This Research is Is Designed For: This Research Will Help You: üCIOs üEffectively implement a new organizational structure. üDevelop effective communications to minimize turnover and lost productivity during transition. üIdentify a detailed transition strategy to move to your new structure with minimal interruptions to service quality. üTrain managers to lead through change and measure ongoing employee engagement. This Research Will Also Assist: This Research Will Help You: Them: üIT Leaders üEffectively lead through the organizational change. üManage difficult conversations with staff and mitigate staff concerns and turnover. üBuild clear transition plans for their teams. Info-Tech Research Group 3

Executive summary Situation Info-Tech Insight • Organizational Design (OD) projects are typically undertaken in order to 1. Mismanagement will hurt you. The majority of IT organizations do not manage OD implementations effectively, resulting in decreased satisfaction, productivity loss, and increased IT costs. enable organizational priorities, improve IT performance, or to reduce IT costs. However, due to the highly disruptive nature of the change, only 25% of changes achieve their objectives over the long term. 1 Complication • OD implementations can be highly disruptive for IT staff and business partners. Without a structured approach, IT leaders may experience high turnover, decreased productivity, and resistance to the change. • CIOs walk a tightrope as they manage the operational and emotional turbulence while aiming to improve business satisfaction within IT. Failure to achieve balance could result in irreparable failure. 2. Preventing mismanagement is within your control. 72% of change management issues can be directly improved by managers. 2 IT leaders have a tendency to focus their efforts on operational changes rather than on people. This is a recipe for failure. Resolution • Leverage Info-Tech’s organizational design implementation process and deliverables to build and implement a detailed transition strategy and to prepare managers to lead through change. Follow Info-Tech’s 5 -step process to: 1. Effect change and sustain productivity through real-time employee engagement monitoring. 2. Kick off the organizational design implementation with effective communication. 3. Build an integrated departmental transition strategy. 4. Train managers to effectively lead through change. 5. Develop personalized transition plans. 1 2013 Towers Watson Change and Communication ROI Survey 2 Abilla, 2009 Info-Tech Research Group 4

Organizational Design Implementation Managing organizational design (OD) changes effectively is critical to maintaining IT service levels and retaining top talent throughout a restructure. Nevertheless, many organizations fail to invest appropriate consideration and resources into effective OD change planning and execution. THREE REASONS WHY CIOS NEED TO EFFECTIVELY MANAGE CHANGE: 1 2 3 Failure is the norm; not the exception. According to a study by Towers Watson, only 55% of organizations experience the initial value of a change. Even fewer organizations, a mere 25%, are actually able to sustain change 2 over time to experience the full expected benefits. People are the biggest cause of failure. Organizational design changes are one of the most difficult types of changes to manage as staff are often highly resistant. This leads to decreased productivity and poor results. The most significant people challenge is the loss of momentum through the change process which needs to be actively managed. Failure costs money. Poor IT OD implementations can result in increased turnover, lost productivity, and decreased satisfaction from the business. Managing the implementation has a clear ROI as the cost of voluntary turnover is estimated to be 150% of an employee’s annual salary. 3 2 2013 Towers Watson Change and Communication ROI Survey 3 Inc. Info-Tech Research Group 5

86% of IT leaders believe organization and leadership processes are critical, yet the majority struggle to be effective GAP BETWEEN IMPORTANCE AND EFFECTIVENESS PERCENTAGE OF IT LEADERS WHO BELIEVE THEIR ORGANIZATION AND LEADERSHIP PROCESSES ARE HIGHLY IMPORTANT AND HIGHLY EFFECTIVE Human Resources Management 61% Leadership, Culture, Values 48% Organizational Change Management 55% Organizational Design 45% 0% High Importance 50% High Effectiveness 100% Note: Importance and effectiveness were determined by identifying the percentage of individuals who responded with 8 -10/10 to the questions… • “How important is this process to the organization’s ability to achieve business and IT goals? ” and… • “How effective is this process at helping the organization to achieve business and IT goals? ” Source: Info-Tech Research Group, Management and Governance Diagnostic. N=22, 800 IT Professionals Info-Tech Research Group 6

Follow a structured approach to your OD implementation to improve stakeholder satisfaction with IT and minimize risk • • • IT reorganizations are typically undertaken to enable strategic goals, improve efficiency and performance, or because of significant changes to the IT budget. Without a structured approach to manage the organizational change, IT might get the implementation done, but fail to achieve the intended benefits, i. e. the operation succeeds, but the patient has died on the table. When implementing your new organizational design, it’s critical to follow a structured approach to ensure that you can maintain IT service levels and performance and achieve the intended benefits. The impact of organizational structure changes can be emotional and stressful for staff. As such, in order to limit voluntary turnover, and to maintain productivity and performance, IT leaders need to be strategic about how they communicate and respond to resistance to change. TOP 3 BENEFITS OF FOLLOWING A STRUCTURED APPROACH TO IMPLEMENTING ORGANIZATIONAL DESIGN 1 Improved stakeholder satisfaction with IT. A detailed change strategy will allow you to successfully transition staff into new roles with limited service interruptions and with improved stakeholder satisfaction. 2 Experience minimal voluntary turnover throughout the change. Know how to actively engage and minimize resistance of stakeholders throughout the change. 3 Execute implementation on time and on budget. Effectively managed implementations are 65– 80%1 more likely to meet initial objectives than those with poor organizational change management. 1 Boxley Group, LLC Info-Tech Research Group 7

Optimize your organizational design implementation results by actively preparing managers to lead through change IT leaders have a tendency to make change even more difficult by focusing on operations rather than on people. This is a recipe for failure. People pose the greatest risk to effective implementation and as such, IT managers need to be prepared and trained on how to lead their staff through the change. This includes knowing how to identify and manage resistance, communicating the change, and maintaining positive momentum with staff. Staff resistance and momentum are the most challenging part of leading through change 2 Reasons why change fails: 72% of failures can be directly improved by the manager 1 Dealing with technical issues 14% Monitoring metrics to measure progress 33% 14% Amending policies and processes Coordinating with stakeholders Getting buy-in from staff 32% 29% 39% 16% Maintaining a positive momentum with staff 0% 10%20%30%40%50%60%70% Most difficult aspects of Change Management 2 Mc. Lean & Company, N=196 Management behavior not supportive of change Employee resistance to change Inadequate resources or budget All other obstacles 1 shmula Info-Tech Research Group 8

Leverage organizational change management (OCM) best practices for increased OD implementation success Percent of respondents that met or exceeded project objectives Effective change management correlates with project success 100% 95% 80% 70% 95% Of projects with excellent change management met or EXCEEDED OBJECTIVES, vs. 15% of those with poor OCM. 1 60% 50% 49% 40% 143% 30% 20% 17% 0% Poor Fair Good Excellent Overall effectiveness of change management program Source: Prosci. From Prosci’s 2012 Best Practices in Change Management benchmarking report. ROI on projects with excellent OCM. In other words, for every dollar spent on the project, the company GAINS 43 CENTS. This is in contrast to 35% ROI on projects with poor OCM. 2 1 2 Prosci Mc. Kinsey Info-Tech Research Group 9

Info-Tech’s approach to OD implementation is a practical and tactical adaptation of several successful OCM models BUSINESS STRATEGY-ORIENTED OCM MODELS. John Kotter’s 8 -Step model, for instance, provides a strong framework for transformational change but doesn’t specifically take into account the unique needs of an IT transformation. References and Further Reading GENERAL-PURPOSE OCM FRAMEWORKS such as ACMP’s Standard for Change Management, CMI’s CMBo. K, and Prosci’s ADKAR model are very comprehensive and need to be configured to organizational design implementation-specific initiatives. • COBIT 5 • ADKAR (Prosci) • CMBo. K (CMI) • Kotter’s 8 Principles • Managing Transitions • Kubler-Ross Curve COBIT MANAGEMENT PRACTICE BAI 05: MANAGE ORGANIZATIONAL CHANGE ENABLEMENT follows a structured process for implementing enterprise change quickly. This framework can be adapted to OD implementation; however, it is most effective when augmented with the people and management training elements present in other frameworks. • The Classic Change Curve • Standard for Change Management (ACMP) Tailoring a comprehensive, general-purpose OCM framework to an OD implementation requires familiarity and experience. Info-Tech’s OD implementation model adapts the best practices from a wide range of proven OCM models and distills it into a step-by-step process that can be applied to an organizational design transformation. Info-Tech Research Group 10

The following OD implementation symptoms can be avoided through structured planning IN PREVIOUS ORGANIZATIONAL CHANGES, I’VE EXPERIENCED… “Difficultly motivating my staff to change. ” “Higher than average voluntary turnover during and following the implementation. ” “An overall sense of staff frustration or decreased employee engagement. ” “Decreased staff productivity and an inability to meet SLAs. ” “Increased overtime caused by being asked to do two jobs at once. ” “Confusion about the reporting structure during the change. ” “Difficulty keeping up with the rate of change and change fatigue from staff. ” “Business partner dissatisfaction about the change and complaints about the lack of effort or care put in by IT employees. ” “Business partners not wanting to adjust to the change and continuing to follow outdated processes. ” “Decrease in stakeholder satisfaction with IT. ” “Increased prevalence of shadow IT during or following the change. ” “Staff members vocally complaining about the IT organization and leadership team. ” Info-Tech Research Group 11

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