1. Copyright © 2014 Prosci Inc. All rights reserved. “Double” ABC Tree Services Company Sales/Lean/Safety Improvement Initiative: The need for Change Management 1

2. Copyright © 2014 Prosci Inc. All rights reserved. Who Am I? Jill Kelby Focus on Human (People) and Business (Systems) performance Tools of my trade: Lean, Human Factors, Ergonomics, Six Sigma, Systems Thinking, Change Management, … “I’m the glue that holds the gears in alignment and the grease that keeps the business and projects moving” 2

3. Copyright © 2014 Prosci Inc. All rights reserved. 3 Project description and background Double revenue (15M to 30M) and increase profit margin within 3 years Total scope is entire company; however focus of this presentation is with the production team Current profit margin is 1-2%; Goal for production group is to increase to 10% Assumed allocation of improvements is: 50% increase in sales, 35% increase in work efficiencies and 15% improvement in safety To do this will require significant changes in the way people work—from executive team through frontline employees

4. Copyright © 2014 Prosci Inc. All rights reserved. What is Expected to Change? New Sales bid process New CRM software New order entry software/process, reduction in CSRs New scheduling process Change in production staff foremen, crew members and staff numbers Training on Lean methodology, safety practices/behaviors, new work processes/systems New hiring/onboarding process New performance evaluations & accountability 4

5. Copyright © 2014 Prosci Inc. All rights reserved. 5 Organizational attributes “Culture of Same”: organization is very change resistant –And we are asking for a high level of change (perceived as very disruptive and/or unnecessary) Several long term employees (executive team through frontline employees) who think “why fix what isn’t broke”—lack of awareness Only one effected group has desire (however has little influence on business systems)

6. Copyright © 2014 Prosci Inc. All rights reserved. 6 Change characteristics

7. Copyright © 2014 Prosci Inc. All rights reserved. 7 3 Primary Anticipated Points of Resistance Production group: Find 1-2 employees who are change ready and train them to help with CM with their co- workers Long term employees (production and sales): partner with change ready (less time with company) employees who have been exposed to other work flows; be sure to address WIIFM Sales manager: Need to convince him the solution is “his” idea and that it won’t lead to much, if any “additional work” and won’t interrupt their selling

8. Copyright © 2014 Prosci Inc. All rights reserved. 8 Risk Assessment Findings Medium riskHigh risk Low riskMedium risk Change characteristics Organizational Attributes Change resistant Change ready Small Incremental Large Disruptive Low risk Medium risk High risk Medium risk Large Disruptiv e Summary: Organizationally we have LOW readiness for change; However, We are asking for LARGE scale change and disruption

9. Copyright © 2014 Prosci Inc. All rights reserved. 9 What’s Missing From The Current Project Plan? The proposed way to achieve the results currently lacks any inclusion of change management All Successful projects include 3 things: 1.Leadership/sponsorship 2.Project management 3.Change management Research has shown that by including CM into the project the likelihood of meeting project objectives on time or ahead of schedule increases significantly

10. Copyright © 2014 Prosci Inc. All rights reserved. PCT Assessment Results 10 Scores: L/S: 20 out of 30 PM: 15 out of 30 CM: 10 out of 30

11. Copyright © 2014 Prosci Inc. All rights reserved. What Is Change Management? Managing the People Side of Change 11 Research Finding The number one obstacle to success for major change projects is employee resistance and the ineffective management of the people side of change. Data from 327 companies undergoing major change projects; Prosci Best Practices in Business Process Reengineering benchmarking study.

12. Copyright © 2014 Prosci Inc. All rights reserved. Why Include Change Management? 1.Increase probably of project success 1.Meet project objectives, on time/on budget, ROI 2.Manage employee resistance to change 3.Build change competency into the organization 12

13. Copyright © 2014 Prosci Inc. All rights reserved. 13

14. Copyright © 2014 Prosci Inc. All rights reserved. 14

15. Copyright © 2014 Prosci Inc. All rights reserved. Turnover of valued employees Tangible customer impact Active resistance Opt-out of the change Turnover of valued employees Tangible customer impact Active resistance Opt-out of the change Productivity loss Employee dissatisfaction Passive resistance Productivity loss Employee dissatisfaction Passive resistance 15 We Want to Prevent—the Valleys of Despair! a Prosci ® Flight Risk Model

16. Copyright © 2014 Prosci Inc. All rights reserved. ADKAR Model of Change Management 16

17. Copyright © 2014 Prosci Inc. All rights reserved. ADKAR Analysis: Production Staff A: Awareness of the need for change is very low –Building awareness of the need will be difficult due to entrenched perception that they are doing all they can do and the current state is good D: Desire for change –Motivating factors: methods to make their work easier; have accurate sales bids –De-motivating factors: no improvement in their work or by sales K: Knowledge gaps –Efficiency is seen as working fast and decreasing safety; lack of knowledge and skills for different ways to work (latest technology & equipment/techniques); Overall gaps between now and future is moderate A: Ability for change –Older employees may not be physically capable for performing increased work demands R: Reinforcement –Celebrate success meeting new production goals and implement corrective action for gaps; change may not be sustained if staff reverts back to the old ways of doing things 17

18. Copyright © 2014 Prosci Inc. All rights reserved. 18 Who “Does” Change Management? Each ‘gear’ plays a specific role based on how they are related to organizational change

19. Copyright © 2014 Prosci Inc. All rights reserved. How does Change Management fit in with Project Management? 19

20. Copyright © 2014 Prosci Inc. All rights reserved. Integration of Project Management and Change Management 20 Solution is designed, developed and delivered effectively (Technical side) Solution is embraced, adopted and utilized effectively (People side) + Project management and change management have a joint value proposition oriented toward business results. = Success Project management Change management Current state Transition state Future state

21. Copyright © 2014 Prosci Inc. All rights reserved. 21 Our Company’s Unique Risks and Challenges AA (Accountability Avoidance): –Lack of clearly defined project milestones and performance expectations for all levels of employees –Therefore; no one is held accountable for performance Lack of change management included as part of project 2 Groups being asked to change the most are Production and Sales –Note: both groups blame the other for the revenue/profit margin issues High Risk for Unsuccessful Project completion

22. Copyright © 2014 Prosci Inc. All rights reserved. 22 Potential consequences to the organization if this change is poorly managed No ROI—outcomes of project won’t be achieved Lowered moral and increased disgruntlement from frontline employees with executive team High performers may leave company If revenues/profits do not increase, may result in company being taken over by rivals

23. Copyright © 2014 Prosci Inc. All rights reserved. Proposed Combined Team Structure/Sponsor Model including CM 23 Project team Mid-level manager sponsor Executive sponsor CM

24. Copyright © 2014 Prosci Inc. All rights reserved. 24 Change Management Team Preparation Strategies Propose the project team take on the responsibilities of CM with the facilitation of a consultant Largest gaps: –Varied business influence –Majority have fair communication skills –Minimal, if any CM experience –Little training and skills in leadership, coaching and managing resistance

25. Copyright © 2014 Prosci Inc. All rights reserved. 25 Sponsor Assessment Diagram Sales Prod Sched Main CSR HR NG JG AM A1 BC GK TC TW BC DM

26. Copyright © 2014 Prosci Inc. All rights reserved. 26 Unique Sponsorship Challenges Lack of knowledge of the benefits of CM to project success Sponsors have AA (culture of “do your job however you want to do it”) High level sponsors have not mentored low level sponsors on leadership, coaching and managerial skills to lead change Greatest resistance will be from Sales sponsors

27. Copyright © 2014 Prosci Inc. All rights reserved. 27 Steps for Educating Sponsors High level sponsors: –Sponsorship training –Direct coaching –Provide messaging assistance Low level sponsors: –Course on change management which includes coaching, resistance management, communication –Provide tools & templates –Provide messaging assistance

28. Copyright © 2014 Prosci Inc. All rights reserved. 28 Target Audiences for Communications Plans Production Staff Sales Staff Scheduling CSRs Maintenance HR

29. Copyright © 2014 Prosci Inc. All rights reserved. 29 Communication plan for Production Staff TimingMessage content Delivery mechanismSender First indications of change General information about business performance & potential for upcoming changes Verbal—All employee meetingPrimary Sponsor (COO) Early stages of the project Business issues and opportunities to create a need for change High level overview about the project, goals, objectives, and timeline Verbal—all production employees meeting Primary Sponsor (COO) During the design of the change Initial information about scope, who is involved, what groups within company will be affected, what changes are possible/probable Review of current state, the vision of the future state and the gaps between where we are today and the future Verbal—townhall for production staff Secondary Sponsor/Project team (Production Manager) Before implementationWhy is a change needed, what is the change, how will change impact me, what training required Verbal—production staff meetings (weekly) Emails Production Supervisor During implementationHow change impacts you, training required Early success stories Verbal-production staff meetings & emails, staff room posters Production Supervisor COO (early success cheerleader) Post-implementationSuccesses, continued challenges, Lessons learned Verbal—all employee meeting Email COO

30. Copyright © 2014 Prosci Inc. All rights reserved. 30 Sponsor roadmap for Next 8 weeks (Start Up) Target GroupActivity with the project team Select best project team members and leader Provide required funding for team, including training Provide clear direction and objectives for project, what does success look like Est. a commitment to CM Jointly develop high level view of future state-link to bi strategy Meet weekly with proj team until implementation with managers Educate biz drivers for change and risks for not changing Create a coalition of sponsors Work directly with mgrs. Who show early signs of resistance Provide training on CM Define accountabilities for mgrs./supervisors Solicit & listen to mgr feedback with employees Describe current state and share issues/opportunities Explain why change is needed and risk of not changing Share vision for future Answer WIIFM, how will change affect me Be visible—”GO SEE”

31. Copyright © 2014 Prosci Inc. All rights reserved. The Question: Do We Have Alignment on Adding Change Management to the Project? 31