Performance and growth

Organizational change management has come a long way in the 25 years since John Kotter’s Leading Change, a foundational work on the topic. Change management is recognized as a must-have capability in all organizations, because of the speed and scale of change in today’s markets. And the principles of change management have shown to be valid across multiple functions and industries.

How should those principles apply in the context of banking and finance? In such context, organizations value reliability, predictability and control. Accountants, controllers, financial analysts and financial managers are professionals whose roles demand technical depth, business insight and operational excellence.

In banking, they deal with highly matrixed reporting structures and a web of regulatory requirements. Taken together, these factors create a working environment that is not change-friendly. Consequently, a leader can have a significant impact on the likelihood of success by choosing appropriate change management strategies. The following are identified from our experience in banking.

Even with a powerful CFO, transformations are difficult for banks to navigate. Multiple stakeholders and teams invested with substantial power may have different views about what's best for the finance function. Some stakeholders, for instance, may be pursuing conflicting agendas or competing for access to shared resources, which can stall or complicate progress.

A clear, well-presented, and well-defined purpose for change is essential to gaining alignment. In finance functions, improvement goals are often expressed in terms of service quality, control and efficiency. However, while everyone can agree to vague statements such as “Let’s be better, faster and less costly,” real alignment of purpose comes from defined statements.

“Let’s get to a 3-day close from 6.” “Let’s reduce controls by 25% with no increase in error rates.” “Let’s reduce cost of financial reporting production by 20% and reinvest the savings in financial analysis and enable our people.”

Consulting on such statements can help to align stakeholders. More often than not, consultations help uncover competing priorities and concerns about feasibility. There is value in these conversations, not only for organizational learning, but in giving stakeholders the opportunity to express their views. They may not agree fully with the goal and urgency of the change, but are more likely to execute on future decisions after their perspectives have been heard.

Organizations need to develop strategies that motivate people to learn the new ways of working, to adopt change and advocate for that change with their peers.

Professionals can be persuaded to commit to transformation if they find personal motivation in it.

The best scenario is when enterprise-change goals align with personal or career objectives. Depending on the maturity of the organization and where individuals are in their career lifecycles, personal goals and incentives to support change will vary.

In banking finance functions, we see differences between middle and upper management on the one hand, and a new stock of professionals on the other. Leaders should ask themselves: is the tenured workforce receptive to the needs and requirements of the emerging workforce? As context, people occupying senior roles often entered the profession without expecting any major upheavals, and tend to approach change with caution.

These professionals carry valuable knowledge about, and an established interest in, how things are currently done. In project-speak, these are the subject matter experts (SMEs) – their value to the organization, and often professional pride, comes from familiarity with the complexities in finance processes and data, and why those complexities exist. In contrast, workers earlier in their careers tend to have an enthusiastic outlook about how finance is changing.

These employees have different expectations around the nature of their roles, work-life balance, personal growth, and rewards and recognition. For these workers, professional development is often the most important incentive. Involving them in a change project, either dedicated or part-time, can be highly motivating if the role provides on-the-job learning, and even opportunities for formal training and certification in new professional standards and technologies.

And the experience of project work is often essential to preparing for future roles in middle and senior management. For workers more advanced in their careers, different incentives may be more meaningful. Often, tenured workers perceive a transition from a stable Business as Usual (BAU) role to a dedicated project role as a transfer to an uncertain future. They will want the security of knowing what BAU role they will return to upon project completion. They may also value financial incentives or promotion opportunities which reward them for their project contributions.