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    Change Management for State Retirement Systems

    February 5, 2014 / by Beth Hart

    Change Management in IT Sagitec Case Study

    Summary

    A  State Retirement System (SRS) contracted with Sagitec to develop and implement a new pension administration solution. Although the project began with excitement and the overwhelming support of the SRS staff, these waned over time as the challenges of the transition became increasingly difficult to manage. Recognizing the need for professional assistance, executive project leaders from the SRS and Sagitec implemented a formal Change Management (CM) strategy. This CM strategy succeeded in helping both the SRS and Sagitec mitigate project risks and move forward without misstep. Today, the project is on track for a successful conclusion.

    Backstory

    In 2001, the SRS partnered with an outside consulting firm to evaluate the organization’s aging IT infrastructure and identify opportunities for improvement. The result was a five-year “Strategic Technology Plan” that, when implemented, would enable the SRS to enhance customer service, reduce operating costs, and achieve long-term business objectives through improved technology.   At that time, total staff consisted of forty-five people and they served more than 140,000 active and retired members. The updated technology was eagerly anticipated.

    The most critical aspect of the SRS’s plan was the successful replacement of the organization’s then 30-year-old pension administration system. Procurement began in 2009 and the project began in 2010. The requirements for the new system were ambitious and included:

    • Integrating all existing and disparate IT systems  to facilitate a seamless sharing of data and information
    • Tightening of internal security controls to  protect data
    • Eliminating reliance and dependence upon  single individual(s) for programming and  internal system changes
    • Providing information electronically to, and  from, local governmental entities and retirement boards
    • Implement web self-service to allow submission  of data to and from members and employers

    A formal procurement process yielded proposals from several bidding firms. After a thorough evaluation, the SRS selected Sagitec Solutions, LLC—a leading IT consulting firm serving the public pension industry—as the best option for modernizing their organization’s information technology. Sagitec possessed a strong track record of success, having implemented their Neospin™ pension administration software on time and within budget for multiple retirement agencies. In 2009, with widespread excitement and support across both organizations, SRS and Sagitec together launched the project.

    Project Begins, Challenges Emerge

    The project kicked off with strong momentum. Project participants were excited about the prospect of new software that would improve their ability to serve customers, respond to legislative and business rule changes, and evolve their infrastructure as time went on. Initial project planning had gone well. SRS employees were adjusting to their new roles. Everyone felt confident about the project’s success.

    Yet it wasn’t long before the organization began  to feel the effects of large-scale change. Staff showed signs of fatigue.  Eagerness and excitement were replaced by a cloying sense of doubt and  frustration. Employees began asking themselves, Will this new system really provide us with the benefits as promised?  Is it worth the extra effort?

    Strain bore heavily on all staff members: those pulling  double duty working on the project while attendingto their own day-to-day responsibilities, and those  who absorbed the extra workload of coworkers increasingly preoccupied with the project.  . Subject matter experts struggled to prepare for design sessions. Whether due  to miscommunication or a lack of it, the rumor mill began to churn, and  messages like these began to circulate: What  if I can’t figure this stuff out? Will I still have a job when this new system  is in place?

    The SRS’ Senior Management team worried about  the general morale in the office. Physical and budgetary constraints had forced  an early decision not to increase staff for the project. The Executive Director  feared he would not be able to keep up with daily operations, and a growing  sense of frustration threatened the retention of capable staff members. The two  programmers who had created SRS’ legacy system were only able to participate on  a part-time basis. The project goal the SRS had worked so hard to achieve seemed  at risk. It was clear something had to be done.

    Seeking Help to Manage Change

    With roughly 40% of the project complete, SRS’ executive  leadership took action to mitigate any further risks related to the “human component” of their project. Together with Sagitec, they implemented a Change  Management (CM) strategy that would guide the SRS organization to a successful  conclusion.

    The first part of this CM strategy involved bringing in a  certified Change Management Consultant to serve on the project. From the start,  the consultant worked closely with Project Managers to develop an integrated  strategy aimed at helping them reach milestones on time and on budget. Together,  they mapped transition-related risks and produced a detailed plan that balanced  the need for strong leadership, project management, and change management.

    Why Change Management?

     

    What is often overlooked in a large transition effort is the human component: the process of getting people on board to participate fully in design, to look at the modernization project as a creative opportunity to improve, and to champion the new system. Whenever you change existing structures or processes people naturally experience anxiety. If not managed, that anxiety can sabotage the transition. Change Management is the process, tools and techniques to manage the people-side of change to achieve business results. Ultimately, change management exists to help transition a current state of business to a new state of business.

    What I provide is a deep understanding of individuals’ responses to change and how group dynamics either support or subvert a project. I clearly see how leadership patterns that worked in the past or are tolerable during times of work-as-usual, are damaging to successful projects. I can identify areas of the organization that are ready for change and those that are unprepared. I can see the strengths of an organization and its leadership, and recommend simple and elegant yet powerful adjustments that will reap huge rewards. I can take the burden of trying to figure out how to fix the problems off the shoulders of the leadership team. When you are enmeshed in your organization’s culture it is impossible to see the interconnectedness of issues.

    ~Beth Hart, Sagitec CM Director

    The Process

    The Change Management process began with a Needs Assessment. The assessment involved distributing online surveys for staff and management, interviewing SRS’ executive leaders and holding focus groups with staff members both in and outside of the project. The assessment sought insight into a full complement of issues and potential challenges faced by the project and the organization.

    The Needs Assessment focused on several aspects of SRS’ experience with change as an organization. These included:

    • Past  change efforts – This included the question, “How had major transition efforts  played out in the past and what had the organization learned from the process?”
    • Readiness  of individual departments – This would identify potential areas of risk at  the department level and would allow comparisons with risks at the organization  level.
    • Alignment  of the organization to project vision and goals –The information gathered  here would help kick-start an Organization Re-Design project to define the current  state of the organization structure, discuss and create a structure for the new  state of business, and execute steps to reach and maintain a new organization  structure. As is common in organizations who have made only incremental change  in the recent past, organization structure was not often re-assessed and  re-vamped to meet present-day operations
    • Strengths  and weaknesses – The information gathered here would identify strengths  critical to successful project implementation and transition management. All  interventions must be based on real, known strengths so that individuals feel  recognized and can see ways in which they are capable of being a champion for  the new environment and system. Understanding the root causes that lead to  weaknesses provides leaders and others with the perspective of why current ways  of operating, although adequate under normal conditions, are inadequate or  become detrimental for successful transition.

    What the Needs Assessment Revealed

    The Needs Assessment identified a number of issues that were contributing to the lowering morale of staff and the difficulty of SRS’s transition. Those issues included the following:

    IssueDescription
    Lack of Resources
    • Early decisions not to staff-up for the project  (due to budget, spatial constraints) were having negative consequences as the  project went on.
    • Decision making authority was not adequately distributed  among managers.
    • Managers were doing the  daily processing work of department members, leaving little time for managing.
    Lack of (or Errors in) Communication
    • Only key resources knew the entire scope of the project;  the timeline had not been shared widely; so assumptions were being made and  spread through the rumor mill.
    • No structure existed to support ongoing two-way  communication between project leadership and the rest of the organization.
    • Not enough communication was  happening regarding project development and daily department issues.
    Inconsistent Decision-Making Leadership was having difficulty working as a  united front. Employees would move from one Director to another until they got  an answer they wanted.
    Project Delays
    • Decision-making was taking too long because many  SME’s did not understand the “why” behind certain processes, only “how” they  got their work accomplished.
    • Time was needed to explain previous design  decisions. Threatened staff would try to delay decisions to hold on to their  existing power within the current organization structure.
    • Delays meant more money  spent and more time taken away from key resources.

    Negative Attitudes

    • System documentation proved too technical,  intimidating for those not directly involved in the design process.
    • People felt “left out” of important  meetings/sessions.
    • The belief was that only “key people” got to  work on the project.
    • Staff members were uncertain of their future  with SRS once the new system was in place; there was a belief that a staff  member would be fired if they couldn’t immediately learn the new system.
    • Staff was not being rewarded for taking on  additional work.
    • Staff members were not made  aware of the training plan so there was much anxiety that they would receive  adequate training, and that staff would be responsible for training themselves.
    Lack of Buy-in
    • Leaders saw some evidence of  staff   sabotaging the project.
    Loss of SMEs / Lack of Knowledge Transfer
    • Because most SMEs didn’t understand the “why” of  pension, they came to JADs feeling unprepared and inadequate.
    • Without someone to guide them through the  personal transition, many SMEs felt that their position in the organization and  their very jobs were at risk.
    • Champions of the project got tired of battling  the resistors.
    • Once a key resource left SRS,  their knowledge left with them.

    Strategies to Manage Change

    With SRS’s challenges and project risks clearly identified, the project leaders and Sagitec’s CM consultant moved to design and implement a strategic Change Management Plan. Based upon the findings of the Needs Assessment, they initiated a three-pronged strategy for overcoming the project’s challenges and moving the project forward. Those three key areas are summarized below.

     

    #1 Prepare Leadership for System Adoption

    The first step was to prepare the Leadership Team to lead the organization through the upcoming transition to the new environment. This preparation included:

    • Leadership Team training on managing transition  through the lifecycle of the project
    • Leadership Team development on new management  skills, utilizing the project for organization-wide improvement, communication  skills and a more complete communication plan
    • Individual coaching with a focus on skill  development and resistance management
    • Work with the project sponsor on taking a more  active role in transition management

    Outcome:

    The leadership team coalesced quickly around vision, mission, values and goals while actively exploring the individual member’s particular strengths and consciously using the strengths to advance a more unified and successful leadership image. This important work served the Leadership Team well when about four months into the Change Management effort the project sponsor passed away suddenly. Although devastated the Leadership Team was able to rally around the Change Management plan and re-assign the critical duties and leadership role played by the project sponsor.

    SRS now has a reorganized structure that allows for the  Member Services department to be more agile in managing workflow, work volume  and to actively develop staff members. The three other departments are  organized around purpose – Support, Financial, and Legal Services. Each  department is run by its own director allowing for a more manageable workload  for the Executive and Deputy Directors and more face-to-face contact between  leadership and staff members.

    “With in the turmoil of project development and change  management, we’ve never lost our ability to serve our customers. It is a core  value and strength that we have worked to maintain and to build into our new  organization structure.”
    SRS Executive Director

    #3 Improve Communication

    Another aspect of the Change Management strategy focused on building robust channels for two-way communication between staff members and executive leaders. This involved:

    • The implementation of regular monthly staff  meetings with mid-month “stand-up” staff meetings as needed
    • The establishment of a Change Network Group who  monitored the Change Management activities and acted as a communication conduit  between leadership and staff and across units
    • The creation of an internal  newsletter for sharing project information, keeping staff abreast of project  developments, Change Management activities and other important information

    Outcome:

    As SRS has implemented more and more ways to involve staff members in planning, development, and implementation of the change management plan and in the project, morale has increased and staff members feel more a part of the organization with a clear stake in the success of the project.

    The Change Management Initiative helped reinstall transparency in the SRS organization. Staff members became more trusting of leadership. Sharing challenges with staff not only reduced staff anxiety that they were in the dark about important decisions but also encouraged staff to share their ideas with led to greater creativity, ownership, and a much better IT system, business processes, organization structure and morale.

    Examples of successes include:

    • A clear reduction in misinformation and wild  rumors
    • Many employees searching out opportunities to  participate in both the project development and change management plans. Staff  members are much more verbal about their career goals within the organization.
    • The tide of experienced staff leaving SRS for  other opportunities has been stemmed which becomes more critical as SRS  approaches Go-Live.
    Our early limitations hampered our ability to fully engage in the design and development of our new system but change management has helped us to identify opportunities for improvement that will serve us for a long time to come.
    SRS Project Manager

    The Future for SRS and Change Management

    SRS is now on the cusp of a bright future as an agile, aligned organization, equipped with an IT solution that meets their strategic business objectives for years to come. They are closer than ever before of reaching their Executive Director’s vision of each staff member seeing themselves as “a retirement professional.”

    As for Sagitec, the importance of adding change management to our existing suite of services should be evident enough given the success it has helped SRS achieve. With formal CM programs, Sagitec can now offer clients a truly comprehensive scope of services to aid them not only in implementing state-of-the-art IT solutions, but evolving as modern organizations capable of taking full advantage of their new technology. Sagitec believes Change Management is of critical importance for every client.

    We will continue to drive vision into action for our clients.

    Managing Change in IT Modernization Projects