Michelle Gibbings recently appeared in the Governance, Risk and Compliance (GRC) Institute’s monthly magazine, talking about the importance of change management skills for GRC professionals.You can read the full article here.
Want to be more influential? Move beyond the technical to a behavioural focus.
Governance, Risk and Compliance (GRC) professionals want to make a difference, and to protect the organisation and its customers. They know that, done well, compliance and risk is a competitive advantage for the organisation.
Despite this, it can be hard to get traction – particularly when the business leaders view GRC as disconnected from the organisation’s strategic agenda and GRC processes as lacking value or failing to deliver the outcomes they need to achieve.
In today’s increasingly complex business environment, this means the role of the GRC professional is only becoming harder. At the same time, the function faces increasing expectations from boards, executive teams and regulators.
GRC professionals want to be seen as a critical part of the business. They know they add value. In order to add more value, however, and to have still greater impact, they need to embrace a new way of thinking and acting.
In their book, Execution: The discipline of getting things done by Larry Bossidy and Ram Charam state, “We don’t think ourselves into new ways of acting, we act ourselves into a new way of thinking.”
The GRC professional needs to be willing to do things differently – to go beyond a technical focus to a behavioural focus. This is where change management techniques can help.
Change management is the art of using tools and selective interventions to help guide people through a change to a position of acceptance.
Fundamental to this is understanding what motivates people, both in how they react to change and how behavioural changes may be driven. By understanding the relevant techniques, the GRC professional will not only be able to engage with stakeholders more effectively, but can secure better outcomes and manage CRC-initiated changes decisively.
The most effective approach to change management recognises that, whilst every person is unique, common forces exist that drive how people think, react and act.
For example, people can be intrinsically or extrinsically motivated. Extrinsic motivation is characterised as being motivated to behave in a certain way to either secure a reward or to avoid punishment. Intrinsic motivation is driven from within the individual, and the reward is the action itself.
It is important to understand the difference between these two motivational types, and also how and when each may – or should – be used.
There is a growing body of research that shows the “carrot and stick” approach to motivating behavioural change is ineffective. Instead, the focus needs to be on what motivates behavioural change intrinsically.
Experts once thought that, in order to motivate people, some form of monetary incentive or punishment was needed. This approach was based on agency theory, a belief that organisations are collections of individuals, each trying to maximise their own interest. An illustration of this would be that principles (shareholders) and agents (managers) may have different goals or risk tolerances, causing each to favour different courses of action. This is highlighted when executives make decisions that benefit themselves and not the shareholders – for example, giving themselves large pay rises when the organisation has performed poorly.
Pay-for-performance systems attempt to minimise agency theory; specifically, they aim to get employees to do what those who own the organisation want them to do. However, this strategy can result in unintended consequences, as people try to game the system. Thus, it has been found to be an ineffective method of motivating effectual behaviour.
Jeffrey Pfeffer, an academic from Stanford University, found that focus on compensation resulted in diminished team work, caused people to focus too much on short-term goals and encouraged political behaviour (such as managing up).
Additionally, research from psychologist Edward Deci found that monetary incentives demotivated people. Deci found that incentivising students with money to solve puzzles actually made them less interested in working on them after being paid. Conversely, students who had not been offered money worked on the puzzles longer and with more interest.
This suggests that, in order to achieve sustained behavioural change, greater emphasis should be placed on intrinsic motivational tactics.
GRC professionals are faced with constant change, driven from external regulatory or market forces, as well as internal requirements. To succeed, GRC professionals need to be able to get these changes embedded in the organisation’s processes and in people’s behaviour, and to ensure the message stick!
GRC professionals need to consider how people can be motivated intrinsically. This involves paying attention to how roles are structured, how work is monitored, levels of empowerment and autonomy, levels of organisational capability and capacity and organisational culture.
It is also important for GRC professionals to consider the three lenses through which a change should be examined.
These three lenses ensure that changes are managed with a focus on the strategic, process and people requirements.
- The strategy/content of the change – understand what is changing, why it needs to change, the options considered, the potential impacts, the system in which the change is occurring and the path forward.
- The process to implement the change – consider how to best construct the way in which the GRC change program is planned, monitored, governed and executed.
- The people side of the change – consider the mindsets, values, emotional reactions, behaviour, and political and cultural dynamics, and what strategies and interventions are required to ensure stakeholder support and end user acceptance. This happens at an individual, team and organisational level.
Taking the people’s side of the change, there are actions that should be considered, planned for and acted on at the individual, team and organisational level. A skilled practitioner knows what needs to be done for each of these levels to build buy-in and, ultimately, acceptance.
For example, at the individual level, it is useful for the GRC professional to ask what is being done to make compliance easier for staff.
This involves thinking about the specifics of the workplace environment, including how closely people are involved with the change, their skill level, capacity to adopt the change, their role and degree of working autonomy and how feedback is provided.
Successful change requires a delicate balance. People need to feel the right amount of challenge regarding the change, but they must also feel both supported during the change and equipped to handle the change. There must be a clear set of goals, progress updates, immediate feedback and good balance between the perceived challenges of the task and the person’s perceived skill level. It is also important to create a sense of ownership of the work being undertaken, balanced with the right amount of schedule pressure to deliver.
However, often these elements are overlooked when a change is being applied in an organisation.
The process of change and securing acceptance is challenging, complex and fascinating. Knowing how to analyse, understand and manage it is a skill that is essential for today’s GRC professional.