Hard and soft aspects of change
Using the concept of sensemaking to identify
underlying values and their implications for change
Name
Bastian Staiger
Student number
S3294781
Course
MSc Thesis BA Change Management
Supervisor
Dr. Cees Reezigt
Co-assessor
Drs. Heleen van Peet
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Abstract
In the presence of numerous approaches to change, success of a change initiative was linked to the congruence between the organizational values, the values of the change approach, and the values of its content. This study investigates these underlying values in the context of the implementation of agile methods by taking hard and soft aspects of project management into account. For a comprehensive understanding of the findings, the concepts of sensemaking and organizational learning regarding the theory of action were included. Data collected from one large financial institution show that the organization was characterized by hard values which, in turn, was reflected in the change approach and the specific change content. As the change approach aimed at fast structural changes, soft issues and social processes were neglected which led to negative change responses. A lack of top managerial sensegiving activities caused uncertainty and change opposing behavior of powerful stakeholders. Organizational traits and change opposing forces interfered with the change content. As a result, change proposing persons in charge were put in a difficult situation as they had to encourage soft values to their teams on the one hand, and had to meet a hard organizational setting on the other hand. Finally, the lack of alignment of organizational stakeholders’ interests towards a commonly accepted and workable interpretation of the desired reality led to an overall organizational setting and value system that remained hard and traditional. The connection of the findings to the concepts of theories of action and organizational learning substantiated these assumptions as actual theories-in-use and governing variables have not been questioned, thus the organizational setting was not changed.
Keywords
Hard aspects of change, soft aspects of change, values in change, power, politics, sensemaking, sensegiving, theories of action, theories-in-use
Word count
2
Introduction
Approaches to change are diverse and based on assumptions about how change works (Burnes, 2014; Smith & Graetz, 2011). Classical approaches to organizational change typically follow a rational, linear model which focuses on the controllability of the change process through strong guidance (Graetz & Smith, 2010). The underlying assumption is that reality can be measured objectively and thus there is “one best way” (Burnes, 2014; Smith & Graetz, 2011; Locke, 1982). Organizational change follows a certain series of predictable and reducible steps which can be planned and managed in a tayloristic manner (Graetz & Smith, 2010). A similar notion is advocated by the hard aspects in the context of project management which is increasingly used to manage organizational change initiatives (Pattington, 1996; Pollack, 2007). Popular in project management, hard approaches tend to adopt a perspective on organizations which is mechanistic and focuses on organizational structure and centralized control (Pollack, 2007). It commonly assumes that there is strong causal relation between the action of management and the organizational outcomes implying that orders are well understood and executed according to a predefined plan. As goals and methods are already determined, the emphasis is on designing and controlling organizational structures in a way that enables highest efficiency for project delivery (Crawford et al., 2003; Pollack, 2007). With increased performance and higher efficiency as ultimate end goals, rational and hard approaches towards change and projects focus only on half the story. They tend to ignore the human factor, the multiplicity of various distinctive stories unfolding in the organizational narrative by treating organizational members as enthusiastically and uniformly change responding machines rather than active agents in the change project process respectively (Crawford et al., 2003; Graetz & Smith, 2010; Smith & Graetz, 2011).
3 The research presented herein takes place in the context of transforming a traditional financial institution towards an agile way of working and managing. Agile values promote fast responses to change instead of following a strict plan to cope with increasing environmental dynamism and competition (Beck et al., 2001). The emphasis lies on individuals and interactions instead of processes to build projects around motivated people within a supportive environment. Trust and close communication are essential to encourage collaboration and self-organizing teams. Indeed, these principles and values have a lot in common with the soft paradigm. At the same time, the investigated organization exhibits rather hard and traditional qualities in terms of structures, processes, and the management of projects and day-to-day operations. Considering that an organization’s preferred change approach is likely to reflect or to be a component of its culture (Burnes, 1996), the purpose of this research is to identify the underlying values according to three dimensions (organization, change approach, change content) by using the concept of sensemaking and to reveal their impact on the organizational change process.
Organizational change poses a particularly critical and difficult setting for sensemaking as it is the process through which individuals try to understand issues and events in their environment that are ambiguous, novel, confusing, or in some other way violate expectations (Lüscher & Lewis, 2008; Maitlis & Christianson, 2014). Sensemaking can be understood as a conversational and narrative process through which people create and maintain an intersubjective world (Brown, 2000; Lüscher & Lewis, 2008; Weick, 1995). The idea of narratives is especially useful in this research setting since narratives are accounts of events to indicate causality and vehicles through which organizational beliefs and values are produced, reproduced, and transformed (Dawson & Buchanan, 2005; Putnam et al., 1996). Thus, they are a significant source of individual and organizational sensemaking, and of valid scientific comprehension in their own right (Boje, 1991; Dawson & Buchanan, 2005). The concepts of sensemaking and narratives will be complemented by the theories of Argyris & Schön (1974; 1978), in particular the idea of the espoused theory, the actual theory-in-use, and the potential incompatibility between them.
4 As this research leveraged grounded theory procedures, the following literature review is kept brief and serves as a theoretical framework for the data analysis and the subsequent discussion. After the theoretical framework is outlined, the method section presents information about the philosophical lens of this research, the research site, and the methodology how the data was collected and analyzed. After the presentation of the results, these findings will be linked to related literature and in greater depth discussed. For reasons of simplification, the male compellation is usually used. Of course, both genders are always addressed equally.
Literature Review
As mentioned above, grounded theory methodology commonly discourages to conduct a literature review before collecting and analysing data (Ramalho et al., 2015). This early engagement with existing literature about the researched area is considered as rather constraining than guiding. Instead of using it as a theoretical background, it should be rather used as data or input for the analytical strategies of the research to avoid a priori bias or tendency of the researcher. Strauss and Corbin do not recommend a strict dissociation from the literature but to engage with it and use it during all phases of research (Ramalho et al., 2015). Furthermore, in a constructivist grounded theory methodology, the researcher cannot be eradicated from the data collection and analysis because both are based on shared experiences and relationships with interviewees and other sources of data (Charmaz, 2014). Thus, the resulting theory is strongly influenced by the researcher’s stance. In this sense, the following section outlines my conceptual framework of the research and provides an insight of the theoretical playing-field.
Hard and soft aspects of change
For having a holistic theoretical overview about the researched phenomenon in terms of “hard” and “soft” aspects, Crawford & Pollack (2004) provide a framework that helps to clarify these terms in the context of project or program management. Because “hard” and “soft” are commonly used in practice and literature in an ambiguous and loose way, the authors explored what it means for a project to be hard or soft. Their investigation identified seven dimensions as encapsulating the key issues for analyzing hard and soft aspects of projects:
(1) Goal/objective clarity: How clearly defined are project goals and objectives? (2) Goal/objective tangibility: How tangible are project goals and objectives? (3) Success measures: Kinds of measures used to judge project success.
5 (5) Number of solution options: The project approach to exploring and refining the goals.
(6) Degree of participation and the practitioner role: The roles which team members take in managing the project.
(7) Stakeholder expectations: What influential stakeholders consider to be a valid application of project management.
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Fig 1: Interrelationship between attributes of the hard and soft paradigm (according to Pollack, 2007).
Although project management is widely influenced by hard factors, a negligence of soft issues was often perceived as cause for failing projects (Evaristo & Fenema, 1999; Wateridge, 1999). Consequently, soft issues have a high impact on projects and were identified as key success factors (Jaafari, 2001; Pollack, 2007). In this context, the success or failure of change projects was furthermore linked to the alignment of underlying values.
Alignment of values
7 members and finally constitute an organizational culture, have a strong influence on their behavior as individuals rely on these values to guide their behavior and decision-making (Schein, 2010; Sosik et al., 2009). Consequently, effective organizations are those where values and goals are congruent and commonly shared by the employees and leaders of the organization (Burnes & Jackson, 2011; Hofstede & Hofstede, 2004). Change in cultural philosophies is normal in so far as it is a response to changes in the human environment (Morgan, 1997). However, no change is value free (By et al., 2012; Macleod & By, 2009). As a result, imposing change often means questioning and fighting entrenched sets of beliefs and values shared by the organizational members (Graetz & Smith, 2010). As a result, employees are more likely to show commitment and enthusiasm for a proposed change intervention if it is congruent with their own values (Neves & Caetano, 2009).
8 of active and passive resistance and readiness to change as a response to a change approach which challenges existing individual and organizational values (Burnes & Jackson, 2011).
Organizational learning
A similar notion is represented by Argyris & Schön (1978) and their concepts of organizational learning and theory of action. They attribute theories of actions to human beings by supposing that all deliberate action has a cognitive basis and reflects norms, strategies, models, and assumptions of the world which have claims to general validity. The authors further distinguish between the espoused theory and the theory-in-use. The theory-in-use actually governs the organizational members’ behavior and may or may not be compatible with the espoused theory (Argyris & Schön, 1974). This espoused theory is the “official” theory of action and the answer to the question how an organization member would usually behave in a certain situation. It is given allegiance to and upon request, communicated to others (Argyris & Schön, 1974). As the espoused theory might or might not be compatible with the actual theory-in-use, the specific individual may or may not be aware of the incompatibility between both theories. The aware incompatibility between both theories can be linked or compared to the resistance caused by changes challenging existing beliefs and values.
Each organization member constructs his image or representation of the organizational theory-in-use (Argyris & Schön, 1978). As this picture is always incomplete, the members continually strive to complete it and to understand themselves in the context of the organization. By interacting with others, they try to describe themselves and their own performance and when conditions change, they test and modify that description. The others are continually engaged in a similar inquiry which leads to a continuous, concerted meshing of individual images of self and others, of collective interaction and one’s own activity that finally constitutes an organization’s knowledge of its theory-in-use (Argyris & Schön, 1978).
Sensemaking
9 (1) grounded in identity construction,
(2) retrospective,
(3) enactive of sensible environments, (4) social,
(5) ongoing,
(6) focused on and by extracted cues,
(7) driven by plausibility rather than accuracy.
Applied to organizations, their members concerned with identity in the context of others engage ongoing events in their environment from which they extract cues and retrospectively make plausible sense of what has happened to reduce previous equivocality of the enacted displays. The selection of plausible meanings is typically based on existing frameworks or cause maps which were built and retained from past experiences. Through this frame of reference, they enact more or less order into those ongoing events and their environment. An enacted environment is a connected and punctuated summary of a previously equivocal display and a sensible version of what the equivocality was about. Anyhow, other versions could have been constructed (Weick, 1995).
Fig. 2: The process of sensemaking (according to Weick, 1995).
10 comprehend (Maitlis & Christianson, 2014). Balogun and Johnson (2004; 2005) described sensemaking as primarily narrative and conversational process involving various genres of communication through which individuals create and maintain intersubjective realities. Following such a perspective on sensemaking, organizations are narratively constructed, and narratives are constitutive of organizations (Bruner, 1990; Dailey & Browning, 2014). Narratives are ubiquitous symbols which exist in all organizations (Dawson & Buchanan, 2005; Putnam et al., 1996). As usually chronologically and sequentially developed accounts of events, narratives indicate causality and constitute a vehicle through which organizational beliefs and values are produced, reproduced, and transformed. They shape organizational meanings through functioning as retrospective sensemaking, acting as implicit mechanisms of social control, and serving as premises for argumentation. Finally, narratives constitute a distinct frame of reference for the interpretation of organizational action. In the context of this study, they provide a valuable concept to gain deeper insights about the underlying values in the researched organization.
After outlining the theoretical framework of this study, the following section describes the methodological approach of the research.
Methodology
The impact of organizational changes on underlying values is complex and ambiguous. On an organizational level, such changes affect culture, shared values, familiar routines, habits and work flows, just to name a few. To examine and uncover the implications on the organizational sensemaking process occurring from such a transformation, we (a fellow student and me) stayed for eight weeks as researchers at the research site in Amsterdam. Instead of visiting the organization for single interviews, the permanent stay at their headquarter allowed us to gain a more detailed picture of the researched phenomenon.
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Field Site
ING Wholesale Banking is an international corporate bank headquartered in Amsterdam and has a local presence in 40 countries worldwide. It provides financial services and banking to corporations and other institutions, whilst mostly working according to traditional methodologies (i.e. waterfall model). In 2013 and 2014, the implementation of agile structures (“One agile way of working”) started at ING Retail Banking, another brand of the ING group. The IT departments within ING Wholesale Banking also started working according to agile methodologies in 2014. To further unify the Wholesale Banking organization and facilitate the cooperation between countries and departments, an organization-wide transformation to the “one agile way of working” has been put on the agenda for mid 2018. Since 2017, several pilots in different departments across the organization have been initiated to gain experiences with agile structures. Most employees in the pilots are currently facing agile and old structures simultaneously. After the full implementation, around 5.000 out of 10.600 employees across the globe and several partners and suppliers will be affected by the transformation.
Data Collection
During the eight weeks of our stay in the headquarter in Amsterdam, we collected our qualitative data through formal interviews. In addition to these interviews, we had rather casual conversations as we participated in meetings and presentations. There were regular feedback sessions about the progress of our research with employees involved in the transformation process and we also had the opportunity to listen in on group conversations, both formal and casual.
12 potential biases (Swanborn, 1996; Yin, 2014). Recording the interviews also supported us in being an objective observer as the extensive transcription was done afterwards.
Interviews generally lasted from 40 to 60 minutes. By doing unstructured interviews, we started each interview with the question “How would you describe ING and what is your role within ING?”. Additionally, we prepared a studiously vague list with subjects of interest for the further course of the interview. This list was refined in the further process of the research as patterns and relevant subjects emerged. Apart from that, we restricted ourselves to asking predominantly clarifying questions. In doing so, the respondents could answer in every direction they deemed possible which enforced construct validity (van Aken et al., 2012). As we also maintained a list about our interview activities throughout our stay, the research is being controllable and can be replicated and evaluated by other researchers (Corbin & Strauss, 2008; van Aken et al., 2012).
Data Analysis & Coding
Consistent with procedures of the grounded theory approach, the data collection and analysis occurred iteratively. After the interviews were transcribed, they have been coded. Due to this early analysis, arising issues and interview subjects could be identified and addressed in later interviews.
The first five interviews were coded mostly inductively and partly deductively by both researchers. We then met to discuss the codes, ensuring that we used similar codes to label the corresponding passages. As we conducted all interviews together (alternate in main and assistant researcher), later interviews were assigned randomly among us and coded by one of us according to mutually agreed conditions. The ATLAS.ti 8 software package was used to support coding and analysis and to manage the large volume of data (Richards, 2015; Woods et al., 2016). By partly coding the data with both researchers to achieve a common basis and using a software program to aid working systemically, the research’s reliability was further enhanced (van Aken et al., 2012).
In the first step, first order coding, each passage (from one to several sentences in length) in every interview was assigned one or more codes reflecting what the coding researcher perceived the speaker to be talking about. Where possible, these labeling codes were suggested by the words used by the interviewee to ensure an inductive approach. After coding, the list of our codes consisted of 231 first order codes. At this point of the research, my co-investigator and me separated to conduct each an own research study with the gathered data.
13 subcategories and relationships between them. A comprehensive interpretation and elaboration of the second order codes aided by the literature to generate third level codes took place in the discussion afterwards.
Through this process of collecting and analyzing our data, the inter-subjectivity agreements of the research results presented in the following section was further advanced (van Aken et al., 2012).
Results
This section outlines the findings that were derived from the data analysis of the interviews. As mentioned in the previous section, the interviews did not follow a strict protocol. Hence, each interview was an individual, highly subjective snapshot in time of the issues the participants attached value to in the broad context of the researched phenomenon. This resulted in valuable, but very heterogeneous pieces of information. Still, common issues and patterns became apparent and were finally classified in the deductive categories under which the issues could be coherently further elaborated. In some areas, the data analysis revealed different perceptions of emerging issues depending especially on the participant’s position in the organizational hierarchy and the degree of involvement in the transformation process. Wherever significant differences could be identified, this will be emphasized. Furthermore, this section is strongly data-oriented to the effect that the organizational narratives were tried to be presented in a way that they can speak for themselves.
Perception of the organization
The perception of the organization and its underlying values is the first important dimension in the context of organizational change derived from literature. The emerging issues reveal how the employees make sense of their organization and what they conceive as distinctive for their organizational environment. Planning & Control
14 ignore changing conditions became apparent. Furthermore, the scope of planning was described as long-term oriented and ironically regarded in connection to agile values (LS03: “And still each year, we have the MTP. And I have to assess what type of work I am going to do next year. And on the change perspective, I have to detail all the changes (projects) we think we should do, or continue next year. So how agile is that? [laughs].”). Although several participants expressed a need for flexibility to quickly react on changing demands, the organizational narratives revealed rather hard underlying values when it comes to the prevalent planning behavior as it tries to reduce uncertainty by assessing and quantifying all kinds of risks and costs upfront at the expense of adaptability.
Like the planning behavior, the way of controlling was perceived rather hard as well. Having a tight control on the activities was seen as very important for the management and deeply embedded in the reward structure (TS05: “I think, the most difficult part for our senior managers is to give up control. If you see how the reward structure is, that you have to meet your KPI's. It is steering on list. You need to take this box and that box and so on. Actually, you want to have grip on the day-to-day operations via all kind of mechanisms.”). The organizational environment seems to require a strong emphasis on control to prevent mistakes or even a low degree of experimentation (TS04: “The thing is that ING is a regulated company. What we do is highly sensitive. And people are not always aware of it, but IF something goes wrong within ING, we will definitely hit the news. Depending on what goes wrong. But if names, or payments or something goes wrong, people will start looking at the bank. So we just cannot take the risk that something goes wrong. So that means that we have to put checks and balances in place.”). The emphasis on control and consequently the high value of minimizing risks spans through all hierarchical levels (TS06: “That management allows it? No, don't believe it. They are not ready for that. In appearance yes but not in the way they are managing. Following, tracking, monitoring the things, on top of everything...No they are not ready for that [laughs] For sure. It is the same for everybody, I suppose. It is coming from the top as well [...] Me neither as well if I am totally honest about it. Because it is something new. We are not educated or in the environment that allows that kind of freedom or failure, no.”).
Finally, in terms of planning and control, the highly sensitive organizational environment is a predominant factor in the organizational sensemaking process. Although a higher degree of flexibility is desired (espoused theory), it is commonly accepted to avoid any risk by tightly planning and controlling organizational actions towards a predefined goal (theory in use).
Management style
15 somewhat old-fashioned style of management (TS05: “That is also the reason why sometimes innovations face a lot of hurdles inside the bank because our senior managers are recruited 30 years ago, right. Based on the competences that were required then. Of course, they have been trained for 30 years in a certain way. They have been rewarded with a salary or bonus. They have been promoted because they did the things they were hired for so long ago. And now we are in an agile environment. It is really a disruptive change for them, for the top management."). Several respondents referred to “the top” in a distinctive way, perceiving high level managers as directive leading experts instead of facilitators who encourage participation. At the same time, a manager from the highest level acknowledged that his impatient, challenging, and content-oriented managing style may be perceived as too confrontational or creates too much pressure but described the general management as pleasant (RP02: “I think we are a slightly friendly bunch than probably how I operate everyday.”).
Confirming the notion above, the management style (the terms “leadership” and “management” are used synonymously in this context) was perceived as directive by some respondents (TS04: “These guys can clearly say: I want it this way or that way. They do not see: self steering team, what do you think? They do not do that. They will make clear what they want. Or what the end result will be. And people do not dare to go against them."). It was added that this proposition could not be generalized for the whole organization but the presence of such a management style and its negative consequences for the empowerment and participation of employees were confirmed by other participants (LS02: “They shut up. And that means that they are not correcting, not providing their input into steering things into the right direction.”). Furthermore, it appeared that discrepancies in the perception of such issues exist and strongly depend on the individual personality and organizational position and context. Finally, the previous examples emphasize the clash of underlying values, managers being rather directive experts and the need for participation and empowerment. Nevertheless, this kind of management style is also subject to change which can be noticed at the description of the feedback culture.
16 changing but it will take time to establish an adapted frame of reference that encourages equal interaction across the hierarchy.
The above describes findings revealed ambiguous but rather hard perceptions of the managerial behavior which implies a prevalence of hard underlying values. Being a manager means being an expert who holds an explicitly superior hierarchical and content wise position that grants and promotes directive behavior. As a result, employees feel less empowered and participated to enrich organizational decisions and activities with their views.
Structures and hierarchy
The organizational structures were commonly associated with complexity and bureaucracy. Complexity seemed to be an inevitable component of the organization (TS02: “Complexity is only increasing. And the people think that if we have less systems we reduce complexity. But it is not even the systems. It is the organization itself. The system is also the symptom, not the cause.”). The need for bureaucracy and administration was linked to the aforementioned risk aversion within the sensitive environment through tight control of organizational activities. In connection to the previous section, the organization was described as rather hierarchical with negative effects on empowerment (TS03: "The standard is more hierarchical organization. Especially if you go outside the Netherlands. So in Belgium, in Eastern Europe, very hierarchical. So the manager speaks, the rest listens [laughs].”). The hierarchy was compared to a reverse pyramid with a top-heavy overhead and several management layers (FM07: “There is a very strong hierarchy. As I explained, layers, we have 8 or 9 management layers. [...] That means that there are many people at very high salary scales, at very high levels, and it is like a reversed piramid. That means quite a number of people are in very high levels, while who does the actual work, that is up to a smaller group of people so to say.”). As a result, change and decision-making processes were perceived as enormously slow. Another consequence of the structural and hierarchical design is the pervasively perceived importance of power and politics.
17 (TS04: “And what I see as well is that the top management from the different department, they do not like each other. For the outside world they are quite friendly to each other. But you can see the tension underneath. You can feel it, you can see it. Every opportunity to make a joke on each other in public they take.”). In connection to the previous section in which a high-level manager considered his management colleagues as “friendly bunch”, discrepancies between the espoused theory and the theory in use become obvious. Especially in higher hierarchical levels these rather negative aspects of power and politics seem to play a relevant role which in turn can affect lower levels (TS02: “You really see who are the big stakeholders. And you see the powerplay between them. And you see it forced on the staff belonging to these tribes [laughs]. Let’s call it that way."). Furthermore, the ability to advance organizational initiatives and changes was also linked to the personal power within the hierarchy (FM07: “And it is most often the person who shouts the hardest or has the most power, or has the most money, he gets things done.”). In this regard, the complexity of the organization and its environment promote a behavior that relies on personal power and politics to assert individual interests (FM07: “And politics really play, an important game. [...] Everybody has their own sort of BNL, everybody has their own business, it is very difficult to get stuff done. That is what I try to say. So then politics is very common to play. Everybody is trying to defend their own island. And working in silos.”).
Finally, although the negative aspects of the prevalent complex and bureaucratic structures are widely acknowledged, they are deemed necessary to cope with organizational and environmental demands (e.g. risk aversion). Thus, personal power and politics appear to be a subliminally accepted, legitimate, and important tools to assert one’s interests within a strong hierarchy. As increasingly complex structures and highly sensitive environmental demands seem to be mutually dependent, the underlying value and importance of power and politics will most likely persist. In this sense, the emphasis on politics and hierarchical position and power seems to hamper soft values such as empowerment, participation, and cross-departmental collaboration.
Silo-thinking
18 question of culture. I also believe that normally successful managers are not really the best team players.”). This statement indicates that a successful career development in management is associated with rather selfish behavior. Additionally, this kind of behavior was also associated with an expert-driven culture (RP07: "People do not like to share necessarily. If you look to the most experienced people that are in ING for a long time, they like to have very much their own work in their cubicle and there we are coming to the silo-based approach.”). Beside structural reasons, silo-thinking seems to be among others caused by hard values underpinning a successful career development, as a manager, an expert, or both. Although the commonly espoused importance of collaboration, it is currently not linked to benefits in terms of individual development upward the career ladder.
In connection to silo-thinking, several respondents reported about the negative aspects of side-steering. Often caused by conflicting KPI settings, side-steering has a negative impact on the collaboration (TS05: “This is a very personal opinion but due to all kind of KPI settings, people are not always cooperating in the most efficient way. Because sometimes these KPIs are conflicting.”). Coming from higher hierarchical levels, individual interests are enforced throughout the organization against previously agreed on goals (TS07: “KPI setting in the top is different. So if we change that, that will also help. So for example, we have the IT boss. And his KPI is that the IT Risk needs to be reduced. He does not do this personally, but you know, people. They say: this is an IT risk thing, you have to implement it because this is my KPI. So everybody pushes to get this through the teams.”).
Keeping the previous findings in mind, being capable to side-steer could be linked to the occupancy of power and influential relationships. Anyway, side-steering can be clearly related to KPIs. The KPIs are commonly measured in quantitative terms and traditionally aim at assessing and improving individual performance and efficiency. In this sense, the assessment of work is deemed necessary and based on hard and individual factors which undermine the reinforcement of soft factors like collaboration and pursuing a common goal. Ironically, this was perceived as having the reverse effect (TS05: "Everybody in this bank has a KPI and they are not all aligned. For me, KPI's are a root cause for many inefficiencies.").
Interaction & social processes
19 not. Because we are overwhelmed by the number of activities to perform. Simple and clear answer, no. [...] It is often the first thing you skip, the non work-related stuff, the more personal, the non-professional thing you just skip it. Because you want to deliver the content so you skip a bit the How, the How you do things together part."). Although the importance of collaboration was commonly expressed, the firmly established need for running the business and delivering the content on time in a sensitive environment was ever-present and prioritized. In this sense, the high content-orientation leads to the perception of being overly busy with daily business and high workloads which was regarded as a major obstacle for enhancing interaction and cooperation.
A different view was displayed by a high-level manager who considered a further reduction in the number of employees (most probably leading to an even higher workload) would improve cooperation (RP03: “It is better to have a little bit space so people are forced to help others as well. So if you have a bit stress in terms of numbers, it enforces cooperation quite a bit. It makes the organization more effective. That is sometimes hard. That is what it is."). Evidently, the underlying main argument for enhancing cooperation is increasing effectivity meaning a prevalence of hard motives. Regarding employees as social beings who need social processes to enrich the organization and to genuinely add value does not seem to be a common attitude in higher levels. Even if it is hard for the employees, cooperation and helping each other must be enforced to be more effective despite the social and individual consequences.
Finally, high content-orientation and workloads interfere with an emphasis on interaction and social processes. Delivering on time is of highest importance to the employees. Enhancing collaboration is commonly desired but rather as a means to an end for achieving hard goals such as effectivity than being worthwhile in its own right in respect of valuable social processes.
Perception of the change approach
The perception of the change approach and its underlying values is the second important dimension in the context of organizational change derived from literature. The emerging issues reveal how the employees make sense of the applied change approach and which elements they conceive as distinctive.
Translation of vision
20 what that means for each and everyone. For the change that need to happen, the change in all of our IT and infrastructure and processes, do not forget the processes around that. I don’t think what we are aiming for is really well translated down into all of that.”). Interestingly, the concerns were mostly addressed in terms of hard issues. Anyway, the interpretation of the change is rather less supported and guided by the management. On the question when the “inspiring journey” should be starting, an agile transformation lead expressed similar concerns (TS07: “To be honest. I do not know when this will start. I think it should maybe have started already.").
The lack of translation of the vision was linked to the management layers below the top (LS01: "From top management, [CEO] is sending the right messages. I think the levels below…running the business is key. And if you have to run the business with this kind of risks, payment processing, administrative processes, very complex IT environment, if you have to control that, it is hard. The key attitude is risk avoiding. And your key attitude is running the bank of today. And perhaps the bank of tomorrow. But do I have to think about the bank of the future? Yes, of course you have to. But how do you do? And we need the top management also. [...] I do not think, at this point in time, when you look at the behaviour and attitude of the senior management, they are more dealing with the bank of today and the shit of yesterday, then thinking of tomorrow or even the future. And when you do not do that, you don’t make the change."). Again, running the business and avoiding risks seem to be highest priority for the management. As a result, there is a perceived lack of guidance from the management which is needed to set out the path for the future.
21 lack of understanding for the behavior of the employees who are more concerned with the implications of change.
All in all, the translation of vision is perceived as inadequate meaning many employees are rather unguided in their interpretation of the change and its individual implications. The perceived lack of managerial engagement can be linked to a strong focus on hard goals namely running the business and reducing operational uncertainty instead of organizational ambiguity in the presence of change.
Top-down vs Bottom-up
The previous section already indicated a poorly translated vision due to a lack of management engagement. On the one hand the top management decided to implement agile as part of a wider digital transformation of the bank but then on the other hand tried to make the change a bottom-up approach (FM07: “[...] I think by April, it was announced between the sentences, so to say. That we were going to work agile. That was it. And then a very small team was formed, including myself, with a program manager. People from the sort of top of ING wholesale banking said: you go figure it out and make a plan.”). As a result, it was up to the bottom to plan a way to achieve the predefined goal. Keeping in mind the complex structures and the importance of power and politics, this already led to problems as stated by an agile transformation lead (FM07: "Well, the people that have been appointed to lead this transition, they come from the lower ranks within the organization. So to say, including myself for example. Which makes it very hard to get something on paper, that is approved by everybody above it. Because everybody sees it as a danger to their own environment, to their own role, or even to their own job. So that makes it quite hard.”). In accordance with previous findings, the statements demonstrate that the several management layers are quite heterogeneous with different interests. Consequently, if the top decided to implement the change towards agile, it does not mean that this decision and the related efforts are welcomed and supported across the hierarchical levels.
As the organizational values are typically based to a significant degree on command and control behavior and the exercise of influence, the bottom trying to promote the change against various interests across the hierarchy needs more guidance and commitment from the influential top (FM07: "I think it should be a top-down transition, so it should be guided from the top, with commitment, with communication, with presence, with passion. This is the way we are going to do it! And then make people at the bottom, make them part of this journey. And make them build the model together. But now the people at the bottom are trying to build something, without strong commitment at the top. So it misses one element, which is quite important.”). Without the required support, a bottom-up approach to design the change is hardly feasible in a top-down organization.
22 as mainly management driven (TS06: "You have fairytales, so things they tell us which will never happen. That is the overall ambition. [...] I think they want to push this up in the organization without getting the people onboard of this ride. That is a bit my concern. In the past it was a good old fathers bank but they want to, and I fully believe in it, to make this fully digital revolution shift. We want to become from the old daddies bank to the Google of the banks. But the way how it is done and the speed with it, my perception is that they do not have enough people onboard on this journey."). Along these lines, it appears that one of the main concerns of the agile transformation team is to sell the top-down decided change to wider parts of the organization and make them want it (TS07: “How are we going to make these people begging on the door of their bosses and their bosses bosses: why do we not have this yet?”).
Another rather “change distant” respondent complemented the perceived impression of a mainly management driven change and related it to the directive management behavior prevailing in previous changes (LS02: “I have compared this in the past to building the first spaceship to the moon. You do not do that by yelling people around, telling them they are all idiots and saying: I control the whole process and I know exactly how to do what by telling one or two persons. That is not how this went. The only reason why this actually came about is because people were listening in to the feeds that were coming in by all the various parties that could bring their piece to the table.”). Consequently, a real involvement of the bottom does not seem to be the cultural norm.
This impression is supported by the change experiences of a pilot product owner. It became apparent that a real upfront involvement of the bottom and its interests did not take place. Consequently, the PO perceived the change as driven by management interests (LS03: “It is driven by management, not by the teams. Some of the changes were initiated by the teams, most of them is initiated by the management for completely different reasons. [...] I think that the teams had clear ideas about how to be more effective as a team. By basically having clear, and smaller scopes. While management says: I want to change this, because I want to have a more secure end result. More predictable end result. So more predictable end result in forecasted times."). Although both parties are driven by hard goals, they are perceived to be conflicting. It seems that the relevance of power in the organization which is possessed by higher levels enables them to assert their interests against the interests of the teams.
23 Mindset vs Structures
This section elaborates on in how far the change aims at changing structures or behavior. Whenever the subject of behavioral and structural change was broached, the respondents consistently stated that the mindset is of most importance (FM07:"Agile is the most a behaviour, a mindset. And then you need the right profiles, or people, that have this mindset to the fullest, to execute it. If you do not have that, if you still have a dictator at the top, for example, who does everything he wants in his own way. Then you can have an agile environment, but he will decide everything. And that is one of the challenges within this culture."). To what degree this is a real challenge was experienced by a pilot product owner in an “agile environment” who was confronted with old behavior and emphasized the need for influential role models to encourage the desired behavior (RP05: “What is contradicting is: Are we all want to work Agile? But I am the boss and I say now we do IT risks. Then it takes twice as long as the original timeframe to get people in there to believe it again because people just have learned that what you have told them before is not true. So what is needed is that people acting up and showing this behavior consistently and not when things get tough because they will get tough because we are doing a change, an organizational change and a change in mindset that is very natural that people will need to make that way of working their own instead we refer back into old ways.”). In this sense, it requires strong commitment and motivation of people in charge to prevent a regression to directive behavior and to promote a behavioral change.
24 In addition to the relevance of committed and motivated role models, a change department employee pointed out that providing a safe environment is the key change for the organization compared to a rather irrelevant change of structures (LS01: “And if you do not have a safe environment where you can be open, of course you will fall down in this kind of attitudes and behaviour. And that, for me is key. That is the change ING has to make. Not these structures and one way of working. It is meeting each other, sharing knowledge."). The notion was confirmed by an agile transformation lead who is part of the design team for the “new” organization (TS07: “And I think creating the right environment for people to feel comfortable, to actually take the decisions. And to make mistakes.”). Given a significant degree of directive management and risk avoidance within a sensitive environment as highest priority, there were no concrete plans yet how to translate this environment into practice as the focus laid on hard structural issues (TS07: “We think a lot about how tribes and squads should be organized. Structures. But mindset is I think, one of the things we should really be worrying about.”). It appears that the espoused theory which expresses the need for establishing the right environment conflicts with the actual theory in use which is concerned with structural changes. As the respondent seems to be aware of the incompatibility, it causes worries about the purposefulness of the organizational actions. The incompatibility also conveyed on the question when the sensemaking journey of the employees will be started through a goal-oriented change communication (TS07: “To be honest. I do not know when this will start. I think it should maybe have started already.”).
Finally, the importance of changing behavior and the mindset is well-known and was related to having the right environment and influential role models consistently encouraging the desired behavior. Still, it appears that the higher management underestimates the complexity of a behavioral change and disregards soft issues. As a result, the direction from the top emphasizes on rapidly changing structures although there is a commonly expressed need to be concerned with the mindset and providing a safe environment. In how far the change of structures will finally support the behavioral change was truly doubted (FM07: "The danger that I see is that once we go to the implementation phase, is that the people that are currently in the roles, they will have the opportunity to apply for the new roles first, and then if top-down the selection procedure takes place, nothing will happen. People will stay at their own current positions. And nothing will change. [...] The way I see it, the way we are designing the current organization, it looks 90% like what we already have.”).
Perception of the content of change
25 Providing a safe environment
The previous section highlighted the need for having a safe environment. At this point, it will be elaborated in more detail how the change is perceived as congruent with a safe environment. After several reorganizations in the recent years, respondents reported about a significant degree of skepticism and change tiredness towards the upcoming change and its content. The point to adapt to an increasingly dynamic and digitized environment is seen, but as past organizations often went hand in hand with FTE reductions, employees are quite afraid of losing their jobs (FM07: “But on the other hand, change fatigue, or tiredness, that will play a role. Because as I said earlier, we are in a cycle of reorganization after reorganization. Some units are being hit every 18 months. That is quite heavy. And every time your job is on the line. And your mortgage is on the line.”). Due to a lack of translating the vision into concrete implications for the employees, a significant level of uncertainty was stated. Although there were no explicit information about FTE reductions for this transformation, employees assumed a hidden agenda in the presence of past experiences and annual reduction targets to reduce costs (FM07: “And agility, or moving towards towards an agile environment, is also a good reason you could say, for slimming down the organization. And enhancing another reorganization. That is also what may be behind it.[...] Because there is always a sort of hidden agenda. That is just the way it is. Just to back this up, within the Dutch reorganization in NL, they reduced staff by more than 30%.”). In accordance with a previous statement of a high-level manager that a reduced number of FTE increases effectivity and cooperation, employees perceive a discrepancy between the management’s espoused theory and its actual theory in use which offers a valid explanation for the degree of negative change response.
26 The issue of the ongoing reorganizations and their impact were also seen by a senior project manager of the change department (LS01: "Combining teams, that is also the agile way of working. But how does that impact people. So when you say: this is the team you have to work in and then after half a year you say, oh no we do not like this way of organizing, we shift the organization and we do it differently with other scopes of teams. And after half a year, you do it again. Agile way of working is also working together, trusting each other, teamwork. [...] That should be stabilized first, then you could work on collaboration. For me is that safety you as ING have to offer. Otherwise it will not become a success. It will become a success from a senior management perspective, they will do the headcounts. But not from a workfloor perspective."). As stated, paying attention to soft values like social processes is a precondition for having efficient collaboration which cannot be activated on demand. Moreover, the statement supports the impression that the management is interested in saving costs through reducing staff numbers.
In this sense, there seems to be a conflict between a cost-driven interest of the senior management to increase efficiency by reducing staff and shifting teams according to the current organizational demands and creating the environment that pays attention to the change impact on employees and provides safety and trust to genuinely enhance collaboration. In accordance with the previous finding, the higher management focus lies on hard goals which leads to a negligence of soft issues and social processes impacting the people.
Enhancing collaboration
27 A tribe lead in an agile working part of the organization stated that efficiency was already enhanced through the close allocation of colleagues which facilitated personal communication (RP06: “And that is mainly due to the fact that we have no long communication lines anymore. People are all on the same floor now! In the past, people were in four buildings! Email is totally different, and a call is also different. Here you can sit together and help each other. And they sit together here, or somewhere else and they solve it. In that way you see an enormous improvement in efficiency.”). This pilot example demonstrates the positive influence of interpersonal relationships and social processes on rather hard economic objectives like efficiency and is in line with the agile values which emphasize face to face communication.
The collaboration across hierarchical structures, across teams, tribes, and departments was described more problematic. Confirming the above-mentioned concerns in terms of silo-thinking, in a recently transformed part of the organization, people fell back to old behavior as silo-thinking remained and new silos were created (RP04: “What I think the main issue is, we wanted to go away from certain silos that we have. We mixed, but what you see now happening is that we have new silos. [...] I think in the tribes for me at least in data, there is not that much silo. There we also had demarcation with PO's talking to each other. But especially between tribes because they have a dependency with each other and then you see that one tribe is saying "I delivered my piece. It is you who is not delivering". Let's do it together but you see new silos in the organization rising."). A genuine collaboration towards common goals and collective responsibility between tribes could not yet be established. Still, the example also depicts that talking to each other made things better and led to mutual understanding, a quality encouraged by the soft paradigm.
The reason for a lack of cooperative behavior and collaboration on a wider level was related to the persistence of traditional KPI settings on higher hierarchical levels (RP05: “At a higher level you see that people are not inclined to work that particular way yet, for obvious reasons, because if their KPI are in a certain direction they also steer in that direction. I expect that to change and then have less discussion and more time to actually do the work. Because 50% of my time is talking to people [...]”). In this context, respondents reported about adapted KPI settings for teams which aim at enhancing collaboration, but nothing was mentioned to encourage collaboration on higher levels. Following this line of argumentation, the subject of collaboration is addressed unilateral across the hierarchy. The focus lies on fostering collaboration on team levels while a wider collaboration in higher levels especially in terms of setting mutually aligned goals and priorities seems to be left unattended (RP03: “What is missing, where we can do better, that is also important in the organization, that more managers are understanding what is really important, what needs to happen first.”). In what way this issue will develop is left to conjecture.
28 understanding. In so doing, efficiency was increased. As the collaboration enhancement efforts seem to be restricted to the team level, less aligned KPI settings in higher levels were still perceived as a threat for overcoming silos, collective responsibility, and lastly efficiency (in accordance with previous findings). Management in agile
The new way of working aims at empowering employees and implementing self-steering teams. Keeping in mind the significant degree of directive management within the current organization, a different management style would be required to empower people and encourage self-steering teams. Still, there seem to be quite different perceptions of that issue across the hierarchy.
A high-level manager explained that the presence of the complex organizational environment does not allow an adapted management style (RP02: “But I don't believe that leadership necessarily is changing dramatically or it should be changing dramatically. I actually believe that there is probably even more reason to be very aware of mistake we are making and potentially are going to make when you give people more room for maneuvering in a complex operational environment like a bank."). It appears that risk avoidance through the emphasis on control will remain the dominant factor of influence transferred down to lower levels. The possibility to have a say in such matters seems to be quite restricted (RP03: "If we can have effective teams that work for a purpose and the teams do understand what they need to do to get there, I think they can be left alone but they need some high-level guidance, because the bank needs to decide for them what is more important.). In connection to previous findings, the high-level guidance through “the bank” can be quite heterogeneous and conflicting as the higher-level interests are not necessarily well-aligned.
Middle managers outside of the pilots expressed serious doubts in how far self-steering teams within the organizational conditions could work out (FM03: “For example you have self-steering team. But you are asking me. A project manager. Who needs to manage teams, and projects, and initiatives. I know what I need to do on a daily basis to get people involved, to get people doing things on the right time. That has to be self-steering. I would say: good luck.”). Consequently, there remains a perceived need for a higher authority to coordinate and control team activities. A similar notion was expressed by a product manager (TS04: “You need leaders. You just need it. You can say, well self-steering teams… it will become as mess. I am sure of it. People will start fighting if there is no judge.”). The underlying values do not seem to give employees much credit for independently managing their work in a responsible and adequate way.
29 try to change. And you see that is not from one day to the other day. As a manager you can not let it all go easily. And then everyone is suddenly self-managing. There is a certain time frame that is needed for this.”). Given the above outlined direction from the top, it is debatable in how far managers are willing to “let it all go” in the future as the emphasis lies on risk avoidance. The reactions of lower levels to such behavior were depicted by the head of strategy & roadmap of a pilot department (RP04: “I have somebody who was formerly really top.... various people here, I am not mentioning names...squads that are working on a directive approach. The top is telling me what to do. But the squad is not agreeing with it, the PO is not agreeing with it. And they are really struggling. You see they are all unhappy and want to leave.”). Consequently, the motivation and commitment were significantly decreased.
It appears that there is still a high tendency by higher levels of falling back to a familiar directive approach and to interfere with the team’s autonomy. Thus, the pressure on middle managers and PO’s is increased as they want to support and empower the teams but are often lacking the required functional competence or authority which was expressed by a PO (RP05: “[..] but at the same time there is no autonomy because we have the old world with a value chain and a lot of senior management attention of what is important. [...] The priority shift was actually caused by different objectives and different stakeholders having different ideas about what is the most important thing. Within ING that changes a lot.”). This statement also confirms the previous findings about less aligned objectives of high level stakeholders leading to side-steering, priority shifts, and finally less empowerment of the teams which cannot necessarily be prevented by the middle management (RP05: “For the moment there is a lot of side-steering and I do not feel fully mandated to really control it currently as a PO.”).
30 (FM04: “Manager is really needed when I have to discuss things with stakeholders from outside the department. [...] So for outside, I am still the manager. But for inside, I try to be more the coach. And sometimes you have to approve things. We are a very agile. The teams need to solve things themselves. But the systems from ING are not managed that way. So every approval still comes to me. That should be different. The teams should be able to approve things themselves”.). In how far the systemic landscape of the organization will be comprehensively adjusted to support genuine empowerment of the teams and their managers can be doubted in the presence of a continuing strong direction from the top (RP02: “Some people confuse the new way of work with "I can just have my own team with my colleagues and I can decide what my agenda is going to be and I am just going to be my own little company within the company". That is probably not going to happen.").
31
Discussion & Conclusion
The previous section encompassed a comprehensive analysis in terms of issues that were perceived as important and distinctive by the respondents and revealed underlying values and assumptions. Taken as a whole, the organization exhibits underlying values that resonate with the hard paradigm which is also reflected in the perception of the change approach and the change content. Despite a strong congruence between predominantly hard values and organizational ambitions in the investigated three dimensions, the change is challenging organizational values and routines leading to resistance and negative change responses. This confirms afore-mentioned assumptions of Burnes and Jackson (2011). Moreover, as soft issues and social processes are playing a tangential role within the organization, anticipated difficulties in terms of behavioral changes were often not addressed yet which will probably aggravate the commonly desired mindset change. This conjecture is enforced by an ascertained discrepancy between the espoused theory and the actual theory in use which became apparent in certain cases.
For a better understanding of the findings and the impact on the change process, they will be further elaborated and related to appropriate literature. The deductive categorization of the issues facilitated a comprehensive analysis and will now serve as a framework for the further discussion.
The Organization – Domination of hard values
Code Second Order Code
Planning & Control 1)Sensitive Environment requires risk avoidance through pursuing a
predefined solution and tight control
2) Espousing need for flexibility but commonly accept risk avoidance through strict planning and control mechanisms
Management Style Expert-driven, directive leadership leads to single solutions and hampers empowerment and participation
Structures & Hierarchy
1) Administration and bureaucracy are needed to meet environmental demands
2) Structural complexity and strong hierarchy legitimize and require emphasis on power and politics to assert interests
3) Power and politics hamper empowerment, participation, and collaboration
Silo-thinking 1) Divided structures and hard values underlying career development and KPI settings lead to silo-thinking
2) Silo-thinking leads to side-steering which hampers collaboration towards aligned goals
Interaction & Social processes
1) High workload and content-orientation interfere with social processes 2) Cooperation and collaboration are a means to an end for increasing effectivity
32 According to Burnes and Jackson (2011), the values of those organization members undergoing the change is one relevant factor to assess the value alignment between the organization and the change. As the change aims at an organization-wide transformation towards an agile way of working, the research focus laid on investigating and exposing common organizational values and qualities.
The sensitive environment of the financial industry seems to be decisive for the hard qualities of the organization. Most of the hard underlying assumptions could be linked to the overarching goal of risk avoidance and preventing mistakes which seems to be the most dominant cue in the organizational frame of references. As stated by a team manager, higher management might be espousing to give more freedom to meet the need for more empowerment and flexibility but their theory in use remains to be on top of everything. At the same time, he admitted being not able to allow a higher degree of experimentation either and was aware of the incompatibility between his theory in use and the espoused theory in regard to the change. As pointed out by Argyris and Schön (1974), the theory in use finally governs the actual organizational member’s behavior. As a consequence, the current organizational situation leads to a not yet bridged gap between common behavior and the espoused theory and values in regard to the change. This issue will be taken up more in-depth in the later discussion.
33 findings support this assumption as respondents reported about a lot of silo-thinking and side-steering due to conflicting KPI settings which was described as a main impediment for a better collaboration.
Fig. 3: Causal relationships of organizational traits and values of the investigated organization.
34 The change approach – A lack of sensegiving
Code Second Order Code Translation of
Vision
Strong management focus on hard goals leads to less interest and guidance for the change needed by the employees
Top-down vs Bottom-up
1) A directive top-down organization does not support a genuine bottom-up approach as power and influence are needed
2) The interests (although both driven by hard but different interests) of the more powerful party (management) were asserted
Mindset vs Structure
1) Behavioral change requires time and committed people in influential positions
2) Expressed need to provide the right environment for behavioral changes is conflicting with the emphasis on fast structural changes (discrepancy between espoused theory and theory in use)
Table 2: Summarized findings about the change approach.
Values of the approach to change are the second relevant factor to achieve congruence (Burnes & Jackson, 2011). In accordance with the findings about the organization, the change approach rather exhibits rational and mechanistic qualities. The implementation of agile structures is part of a wider transformation strategy to align the organization with an increasingly dynamic environment and was decided by the top. The approach is characterized by an emphasis on fast structural and processual changes. In general, these qualities match the organizational culture and resonate with literature as tayloristic-mechanistic approaches are considered suitable for organizations with a top-down, command-and-control culture (Burnes, 2014; Burnes & Jackson, 2011). On the one hand, such an approach will support the ambition of rapid transformational changes in structures, comparable to a bold stroke approach (Burnes, 2014; Kanter et al., 1992). On the other hand, the findings showed that most respondents related successful change to a change in mindsets, a behavioral change, whereas human factors, social processes, and political behavior which should be taken into account for the desired behavioral change are understated by higher management. From top level perspective, employees embrace the change and will more or less easily and quickly adapt their behavior to new structures and processes. In this context, findings from the pilots already proved otherwise. Consequently, although this kind of practice is congruent with traditional hard, content-oriented organizational values, it appears inappropriate for the ambition of the change which was commonly associated with a required change in behavior across the hierarchy. To gain deeper understanding of the encountered phenomenon, the findings are connected to the concepts of sensemaking and sensegiving hereafter.
