While organisations struggle to adapt to changing markets, some veteran leaders are learning the biggest hurdles might be their own reluctance to let go of past successes and learn new skills.
Several years ago, a global human-resources consulting firm decided to transform its successful pay and reward business into broader organisation-change services. This firm had built its reputation on a popular job-evaluation methodology, whereby it would evaluate the value of jobs and then assign them an appropriate salary range.
The decision to diversify was timely because intensifying competition and substitute services such as salary surveys and benchmarking had put downward pressure on profit margins. The premium fee offered by their brand was being eroded by lower prices.
In their search for more value-added offerings, the partners at this firm listened to their customers and learned that chief executives were frustrated with the inability of their people to improve individual and organisation performance. For example, new business opportunities were missed, customer service stagnated, innovation pipelines dried up, and employee turnover surged as frustrated younger-generation employees left for greener pastures.
To address these needs, the firm decided to reposition itself from pay-and-reward experts to organisation-change consultants. It adopted tag lines such as "transforming strategy into reality," "making change happen" and "helping organisations and people achieve their potential".
It was a sensible strategic shift, but one that that was more ambitious than real. What it revealed was a huge gap between the firm's existing services and its aspirations. More importantly, the shift demanded that the firm's partners learn new skills and break from past success.
Many of the partners believed that the frameworks, formulas and knowledge they had accrued in their pay and reward business could be applied to organisation-change projects. They also believed that the credibility and track record of years of success could be leveraged to sell organisation change.
They were completely wrong. While both reward and organisation change fell into the same practice area, they couldn't be more different.
What the partners of this firm discovered was that the formula-based methodology used to evaluating job values and assigning appropriate pay did not fit with organisation-change consulting. Organisation change is all about issue-based problem solving and does not rely on formulas. Each solution is a unique mix of organisation elements such as structure design, work processes and leadership styles, depending on strategic direction.
Moreover, the experience they gained as pay experts had limited use in discussing broader change topics.
Leaders of this firm have struggled with letting go of formula-based consulting, which had delivered so much success. But to make the transition to organisation consulting, they will need to adopt a more open mind and learn new skills. Otherwise they will not be able to create the capabilities needed to compete effectively into the future.
LARRY CHAO is managing director of Chao Group, an organisation-change consultancy based in New York and Bangkok (www.chaogroup.com).
