Change communication during zero-based restructuring

Have you ever wondered why your organization is not as agile & innovative as a startup despite having so much young & talent peeps. Is your organization turning into bunch of lazy copy cats, repeating the same old tactics year after year. Then you must turn to this zero based mindset. It is a behavior change that result into agility along with massive savings to the organization. It has arrived from the budgeting concept of Zero Based Budgeting. Let’s see what is zero based budgeting first before moving to zero based mindset.

What is zero-based budgeting (ZBB):

Zero-based budgeting is a way of starting on a clean sheet every year to prepare a budget based on the goals and objectives of the organization. It is an agile way of allocating our spending, making it a very disciplined approach towards how resources are being used and, on the sidelines, also ensuring that we are continuously improving culturally towards a sustainable corporate entity.

The primary issue with ZBB:

One way of doing it is the traditional way – going by every project and function. With abundant research being available on the subject, companies can leverage on it. It is not just a cringe-worthy cost-cutting exercise. With the right kind of communication strategy Companies can project it as a transformational intervention to ensure its longevity. Principally it a assumption-testing and problem solving, matching investments with activities.

It is created to analyze every spending. The leaders must ensure that people are given all the information required to do their tasks. Zero-based budgeting should not take the focus away from critical support functions like safety, R&D, etc.

Zero-based mindset (ZBx):

A zero-based mindset is a behavior change that culturally ZBx becomes a new normal. This[1] can be done by creating a purpose-built organization.

Following are the ways to do so:

Ensuring structural visibility and consistency: It is important to find the reductant activities and positions in the organization. Assessment of every role throughout the organization should be done. Skills and competencies related to each job should be mapped to what business objectives they are fulfilling.
Holistic Benchmarking: By holistic I mean both internal and external benchmarking is needed.
1. Internal benchmarking involves a comprehensive review of everyday activities, a deeper understanding can be gained into areas like productivity org. structure, the span of control, etc.
1. External benchmarking involves a benchmarking with the competitors, external environment, companies outside the areas of industry & taking feedback of experts within the organization, the company work on ensuring efficiency and effectiveness.

Change Announcement

The initial announcement in any change can be painful. It has with a lot of effects post announcements. Stakeholders might take it the other way. There is grapevine going around regarding the negative effects of the change. There can be a varying degrees of negative effects of the proposed change ranging from technology change where one needs to put efforts to learn organization restructuring where one might end up getting the pink slip. Hence the leaders of the organization have to think properly about how to introduce change keeping the type of change in mind. Some researches also says that formally updating the stakeholders about the negative consequences can improve the credibility of the implementors and initial buy-in. Such refutational messaging helps us understand the reactions of the stakeholders and create a more persuasive communication strategy. It also heightens the perception of trust & openness about the leaders. The extra effort on the change announcement becomes even more important because delivering bad news is never an easy task. In medicine, doctors do try using various ways like alternate terms for the procedure, explaining the credibility of the professional, understating the certainty of the procedure or speaking just about the disease not about the person. But no one wants to associate it in any way with the stakeholder i.e. the patients and the family. But people do expect a certain degree of honesty and openness, leading to more cooperation.

This realistic announcement can also create a good sense of size and scope of change among the stakeholders. This is very closely linked to how the buy-in was taken before the change was planned or later. This puts the stakeholders in the position of a decision-maker and behave like a partner in change rather than a victim of it. Also, one has to keep in mind the persuasion can’t work after the negativity related to change reaches a certain threshold. When the risk associated with change announcement is low people can take a risk of not acting on it and waiting for the thing to take some time. But when the risk associated with the change is higher, people get active and try to take control of the situation and change the outcome of the change in their favor. Hence subsequent actions and communications must be planned accordingly.

Conclusion:

Winners are those who know where to play the big bets but to play those bets you need big bucks. ZBB helps you do that. Moving a step further ZBx can help you further align your organization capabilities that matter.

[2] References:

McCafferry, J. (1981). The transformation of zero-based budgeting: program level budgeting in Oregon. Public Budgeting & Finance, 1(4), 48-55.
Callaghan, S., Hawke, K., & Mignerey, C. (2014). Five myths (and realities) about zero-based budgeting. McKinsey & Company.
Ishikawa, A., & Sudit, E. F. (1981). Selective sequential zero-base budgeting procedures based on total factor productivity indicators. Management Science, 27(5), 534-546.
Onno Boer, Shaun Callaghan, Mita Sen, and Alexander Thiel, (2018), Zero-based productivity—Organization: Using zero-based principles to forge a purpose-built organization. McKinsey & Company.
Søren Fritzen, Matt Jochim, Carey Mignerey, and Mita Sen (2018) Zero-based productivity: The power of informed choices