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01 January 1999

Change management — let's have less of it

Early each year, the big accountancy practices take their eager beavers and get them to do untypical things, like abseiling down the sides of their glass towers. Thousands of other executives experience the thrills of white water rafting, bungee jumping, police-style confidence courses and rock climbing.

For some of those involved, this is the stuff of dreams. Outdoor thrills on an executive salary at the employers' expense - hey, who's complaining?

For starters, those who prefer canasta or chess to crampons and calouses.

But - tough luck you party poopers - card or board games don't give the adrenalin rush you need for an effective team building exercise.

Helping build and maintain team spirit is big business. For some outdoor adventure operators, it's bread and butter.

But building a corporate team requires much more than the abseiling skills of former SAS instructors. The whole-hearted support of management and owners is needed to ensure the company's overall policies are in tune with the team values being created.

They rarely are.

Every time an organisation restructures, a profitable company sheds loyal and capable staff, a corporate shareholder spins off its investment in a business, or an opportunistic merger takes place, the values of the teams involved are betrayed.

Indeed, these things happen so often, it is easy to conclude that some corporate managers and investors take an entirely cynical attitude to the teams they create and the effect this betrayal has on those affected.

Team building bonds individuals into what in effect are tribal groups. Go tramping, skiing or on an overseas trip with a group and it's amazing how quickly you develop group rituals and sense of humour.

Over longer periods, individuals within strong teams develop reliance and trust in each other, sacrificing some of their individual identity and self-reliance in return for the identity and support of the group. It's a process which goes to the core of how human beings relate to each other. Yet managers and business owners trifle with it constantly.

State sector reform is a good case in point.

Departments are combined to become super-ministries. A few years later they are broken down into focussed units. In between times, they yo-yo between being centralised and de-centralised.

Reasons of efficiency and accountability are given for these changes, but at the end of the day, the reason is to ensure that the politicians retain control.

The price for this 'business process re-engineering' is the smashing of teams and the termination of many promising careers. Bright eyed graduates - the eager team players - all too quickly become dull-eyed cynics.

The business world has more diverse reasons than the state sector for its restructurings.

Most often they are simply reflections of the inability of managers to manage. Faced with persistently poor profit levels or performance, company directors simply go for the Pol Pot option: drop a nuke on head office and run the show from the regions or divisions.

When redundancies have been paid and the scar tissue has healed, they bring in a new boss and centralise again. With former central and regional bosses now dispensed with, the process of team building and corporate identity making begins anew.

The other big driving force in business restructurings are those driven by changes in ownership - mergers and takeovers.

I have observed several corporate takeovers at close hand. Without exception they have resulted in a decline in customer loyalty, a fall in market share and - in the case of export-led companies bought by multinationals - a loss of overseas markets.

This plunge in business performance reflects the turmoil within the merged company as career paths are stymied, cultures clash and teams self-destruct (or survive in secrecy, undermining the attempts of the new management to rebuild).

The best advice for companies planning to merge is, don't, unless there's no choice.

So often, the reasons given - the need to get critical mass, the need to access new capital/technology/markets or, more less optimistically, the need to rationalise an over-serviced market - are proved after the event to have been false.

One of the few listed companies which actually managed its way back from the edge of the abyss after the 1987 sharemarket crash was Montana Group Limited (then Corporate Investments Limited). Instead of restructuring, managing director Bryan Mogridge focussed on redirecting, building and supporting his executive teams.

His spectacular success may have something to do with the advice he had pinned on his office wall from one Petronius Arbiter. Arbiter wrote in 250 BC:

"People tend to meet any new situation by re-organising; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralisation."

No prizes for what Mr Arbiter would have thought about business process re-engineering.

- Trevor Walton

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