Question: Change management issues during company-wide system implementation

We are a retail company with over dozen locations, growing at a location every year.

We have recently decided to upgrade our financials, inventory, etc to single ERP system. This should standardize our practices in different shops and increase real-time data visibility to our management team.

How can we ensure our 160 or so employees, in the stores, a small factory and various departments at HQ, embrace the new system? The system vendor will provide all required training.

9 Expert Insights

Let me address this by talking about the process required to engage employees from a broader perspective.  In order to successfully engage them, you must educate them, inspire them and demonstrate relevancy, obtain a commitment to changed behavior, and reward and recognize them.  I would suggest that you use this as a model to ensure that they embrace the system.

Specifically, make the effort to explain why you are making the change, what it means to the company, what it means to them personally and the tangible benefits.   Training on actual use of the system is obviously important, but if you want them to embrace this, they need to share the vision and understand the strategy.  You're not asking for their approval for the change, but people embrace change that they have an opportunity to participate in, rather than as a directive from leadership to adopt.  I don't know if you did this or not, but during the process of deciding on the upgrade and moving to a single ERP system, it would have been a great idea to get input from employees who currently use it and share it in some type of social community to demonstrate buy-in for the change.

Next, make sure they understand how this benefits the company AND how it benefits them.  Will it make their job easier?  Will it allow the company to be more profitable?  Will it drive new customer growth?  They'll embrace change if it benefits the company but generally, when you ask someone to change, they want to know what's in it for them.... and it isn't necessarily a financial impact.  Again, it may just be that it makes their job easier.

Finally, think about some kind of reward and recognition program for early adopters and for champions.  It doesn't have to cost a lot.  Intrinsic motivation goes a long way.   People are inherently motivated by the desire to have some control, the desire to get better at something, being part of something larger than themselves, and connecting with others.

You're not going to like my answer.

First, make sure the training is done right, and that no one rushes it. Usually the people within the company, not the vendor, rushes the process. This is a deadly mistake.

Second, you need to change how you pay (or don't pay) employees, so that you reward compliance and discourage (or punish) non-compliance.

Third, you need to figure out what employees WON'T do because they now have to spend time with your ERP system. In the long run it might save time, but in the short run it won't. You can't just expect employees to suck it up.

I'm reminded of what our professor said at the start of my "Information Systems Enabled Change" class

"There has never been a fully successful IT implementation..."

I think that is an exaggeration, but it does point out that the key to effective change and the mindset of effective IT system development might not be highly compatible.

I'm assuming all of the technical issues for the ERP implementation are being effectively addressed. In part because that is what ERP consultants are experts at, and in part because that isn't the critical part of a change effort. The critical thing to remember in making a change is the following (notional) equation:

C = R < DxVxF

C is the change you are trying to achieve.

It only occurs when R (Resistance) is overcome by the product of three other elements - Dissatisfaction with the current state (D), Excitement about the vision for the future (V), and clarity about the first step(s) (F).

There will be a range of resistance among your 160 people. There are probably 10 or so that are ready to go now simply because it is a new system. There are probably 10 or so that will never use that dang newfangled system. For most of them, however, there will be some resistance that can be overcome if you engage them sufficiently.

The IT consultants can give you very clear First Steps. Make sure they are well publicized and available.

The challenge will be engaging your employees emotions so that they are both dissatisfied with the current information systems, management systems, and whatever else the ERP system is replacing, and they are also excited about what the ERP system will do for them instead. If they aren't dissatisfied, they will be too busy to listen, too busy to change. If they aren't excited about what ERP is going to do instead, they will simply complain about the change and find fault with everything about it.

The head justifies decisions made by the heart - build both D and V and your employees hearts will make the change

First, congrats on your decision and commendations on your courage for taking on one of the most challenging change projects there is.  ERP projects are important, especially for a organization of your size, but they are not for the faint of heart.  :)

I will not repeat my colleagues' advice, because training and the WIIFM (what's in it for me) are critical for the success of your project.  HR measures are important too.

In my opinion, the most important thing for you to remember is that "people support what they help create."  Be sure to involve your employees in all phases of the implementation, and be sure that they are listened to as they are the experts on how your business operates.  Not only will they know where the "ditches" are (and help keep you out of them), they will become convinced that this is right (if it is, and partially because they are the ones implementing the system), and will become your "salespeople."  Once that happens, your job on selling people on the system is done.

There will always be resistance to change, but getting people involved early on is the best way I know to overcome that resistance.

Fundamental to ensuring that your employees embrace the new system is leadership's commitment to preempt uncertainty. The purpose is to minimize change-induced chaos, stress, and rumors, which tend to foster ineffectiveness. Enhance your chances of success by developing and sharing a Communications Plan that helps employees:

1.) understand the case for the planned new system i.e. strategic context for investing in the new system etc.;
2.) learn about the key implementation priorities i.e. training, etc., their roles;
3.) express their concerns
4.) manage their time and expectations i.e. provide a rough schedule of major systems-related milestones, announcements, and progress updates.

Be sure to reality check the Communications Plan with respected key stakeholders, if possible.

Throughout implementation, give employees at every level, opportunities to provide feedback about emerging issues and suggest solution.

A problem to watch for (speaking as both an IT consultant and a management consultant) is the use of the concept "change".  The reason 70% of such initiatives fail is because the leadership communicates (and thinks) "change".  However, there is no resistance to change.  The resistance is the meaning attached to the word.  When I say "We need to change" or "I'm going to change you.", what is heard is "There is something wrong with how you are (or what you are doing now.)  The resistance is to the invalidation.

So, an initiative needs to enroll, invite, people, like you would invite your friends to join you for a great event.  A future important to the workforce needs to be created (better yet, mutually created), that calls for the results of the initiative.

And always, as much as possible, speak from the view of those to whom you are talking, not from your own perspective.  Generally, employees don't care about profitability, growing the company, lowering costs, etc., except as communicated as a threat (if we aren't profitable we will have to lay people off, won't be able to give raises, etc.).  But that is not what motivates people to be creative and go to work inspired - and go through the difficulties of adopting to a new system and new procedures.  The best situation is if the workforce owns the system.

By the way, the vendor will most likely simply provide training on how to operate the system, and not the mindshift necessary to make it successful.

It is critical to engage employees in the change process long before training occurs.  People resist change when they feel they've had no input into the change.  That input should occur early.  Some key things to think about:

1)  Employees will have both intellectual and emotional reactions to the change.  Intellectually they will need to understand the system and how it will work.  Emotionally they will need to understand the WIIFM -- what's in it for me?  How will it make their life easier, better, more effective, more efficient, etc.  A communication strategy that provides ongoing communication with the employees and opportunities for conversations will drastically improve the odds of high engagement.
2)  People rarely buck their own ideas.  Involve people in the design of the system. Even if it is a package system, you will probably be customizing it to some degree or deciding how best to implement it.  Create forums where people can have input -- where they can see the system, ask questions, provide input, express concerns -- early in the process.  
3) Prepare people for what the change experience will be like.  Learning the new system may have its challenges.  Implementation will not be perfect.  It will take them a while to become proficient at it.  By being real with them about what the change experience will be like, rather than only focusing on how great it will be, their view of leadership's credibility and authenticity will increase and increase their trust that you are going the right thing.  Without trust, engagement will not occur.  
4) Remember that change is a process.  Too often we treat it as an event -- "the system is live or the decision to implement has been made so we're done."  There will be times when things are going smoothly and times when it is bumpy but the change process doesn't stop when the system goes live.  In some ways, it's only the beginning.

Make sure someone is on point as liaison with the system provider. Nothing is more problematic than to find out late in the implementation that the new system does not integrate with key processes you need to run you business.

To ensure the new system is embraced and adopted, you will need to communicate with the workforce about the case for the change, what specifically will change vs remain the same, how the new system works and the benefits and capabilities the new system will provide to the organization. Then you need to repeat, repeat, repeat, etc. through the transition period and make sure you get critical mass (30-40% of the workforce energy) adopting the change.  

Leverage early adopters of the change; turn them into advocates and ombudsman. Keep talking about the change ... even when there are no answers yet; keep your leaders connected to the workers and when the answers are available be sure and followup ... and see what other questions you get. Communication is key.  

Once you turn that corner and the work processes are in place the work focus shifts to ensuring the change is sustainable and becomes "how we do it around here now".

How can you ensure our 160 or so employees, in the stores, a small factory and various departments at HQ, embrace the new system? Here's a framework that has helped many clients of mine:

1. Give them the opportunity to not just be trained on the new system, but the permission to play with it -- off line -- so they can make mistakes, break it, learn how the system "thinks," and do more than just memorize rote procedures to follow.

2a. On the user side, give them unlimited access to someone who 'gets it' so they can ask their follow-up questions -- and get meaningful answers -- not just during training, but once they actually start using the thing, as well.

2b. On the IT side, give as much attention to fixing the bugs and system limitations as was given to the system's development phase. Key word: Responsiveness.

3. Don't get mad at them for getting frustrated; give them the support they need to work through the frustrations. Show your sincere appreciation to those trying to adapt as seamlessly as possible and ask them to help their more frustrated coworkers (as per item 2).

4. Reiterate, in as many ways you can, how the new system will make things better for the company, even if the short-term results seemingly belie that conclusion.

5. Kill the the old system as soon as you see the new one is seaworthy so everyone knows there's no going back.

Keep in mind that there will be countless Moments of Truth in how you, and those responsible for the launch and transition, handle conversations with those most affected by this change (as per items 4 and 5). Do not underestimate the importance of each and every one of these interactions.