By: Roy E. Chitwood, CSP, CSE

"Re-engineering," the hottest buzzword of the 90's is not working. In the United States, about four out of every five corporate change efforts fail regardless of the buzzword. "Re-engineering," "reinventing," "downsizing," "rightsizing," "empowerment," "wake-up-call," "level playing field," and the "information superhighway" are mere buzzwords and fads attempting to cover up the incompetence of management.

The reality of today's marketplace is change or fail. The major reason that change is not working is because managers are managing in a period of change the same way they managed before, and the old way doesn't work. Many companies today are "downsizing" and calling it "re-engineering". Companies are getting rid of massive numbers of people; the people left are working twice as hard and twice as long, while top management is reaping the financial rewards of improved profitability.

Change in the form of re-engineering or restructuring cannot be managed. Only leaders can effectively lead a department, a division or a corporation through the journey of change.

Let's examine the seven myths of change:

1. Change starts at the top.

   Many of the greatest failures of change started at the top - Westinghouse, Whirlpool, AT&T, IBM, Mobile, Texaco, Johnson & Johnson and many others. A recent study by the Academy of Management of Fortune 100 companies downsized during the time frame of 1983 - 1995 showed 18% of the companies actually grew in volume; 25% declined in profitability and 44% went on to additional mergers, acquisitions or financial ruin.

2. Starting with a clean slate.

   The new CEO comes on board with his/her vision for the enterprise. Management doesn't show the employees the justification for change, or what is required by the company and employees to meet the challenges of the change. It's a new slate. Employees are required to submit resumes, undergo interviews and testing, go through employee orientation and sign a new employment contract.

   Management probably claims to their employees that "Our people are our most important assets." A total lie. They treat people as any other raw material. This leads to the inevitable downsizing, elimination of jobs, and destruction of any degree of loyalty, trust or confidence in the future.

3. Develop the vision, and they will come.

   The CEO and his/her executive team develop a vision for the enterprise. They publish a mission statement and formulate a plan for company-wide implementation. They will push the change throughout the enterprise with a new management structure, a new pay plan, training program, customer surveys, etc. However, after a couple of years nothing has happened.

   Leaders need to get commitment to change in order to handle specific business problems and develop a shared vision of how to organize and lead the change necessary to solve the business problem. Every employee needs to be considered in the change process. As Raymond Smith, CEO of Bell Atlantic said, "When we created our vision, we had to include 22,000 people."

4. Getting everyone committed.

   A major misconception about change is that everyone in the organization, from the top CEO to the assembly line worker, must be involved in the change. It has to be a company-wide program that includes changing corporate culture, mission statements, training courses, new compensation programs, etc.

   Management thinks all this organizational structure change will turn an outdated, bureaucratic organization into a high-flying, state-of-the-art, fast track company. History shows us that very little change typically occurs in these organizations as program after program that promises "change magic" continues to fail.

   In companies where we see change taking place, it usually started in small units, departments, divisions, plants, etc., many times far removed from corporate headquarters. These units are invariably run by leaders who carry the title of supervisor, manager, divisional manager, or general manager. In most cases it is not the CEO.

   These individuals do not focus on cultural, organizational, or structural changes. They create change to solve concrete business problems. They focus their work and energy on the work itself, not on the culture or the buzzword of the week.

5. Total change.

   The CEO and his/her executive staff go to some mountain top retreat led by some change guru who focuses the management on reexamining their business, their culture and develop a vision and mission statement.

   They return to the real world with a determination to succeed in spite of all obstacles. They land on the beachhead of change, burn the ships with the cry of, "Win the battle of change or perish!" The philosophy is, "We're going to fix them." The Human Resource department rolls out program after program to educate the employees as to why change is necessary, giving them additional knowledge. Believing that knowledge and attitude of individuals will change behavior. They have the process backwards. The best way to change behavior is to put people into a new organizational structure with new rules, responsibilities and relationships.

6. Train our way to change.

   It is change you want, not training. First, the training responsibility must be taken out of the hands of the Human Resource Department and given back to the leaders where it belongs. As an example, Jerre Stedd, CEO, started a new global manufacturing and sales strategy for Square D. He created Vision College where he, his managers, and workers, all worked as trainers to help veteran employees and newcomers understand the new corporate vision.

   "I told companies they need to quintuple their investment in education," says "re-engineering" guru, Michael Hammer. "Training is about skills; education is about understanding broad knowledge. Everybody who works in a company needs to understand the business."

   The company's greatest asset is not its people. Any company's greatest asset is the undeveloped potential of its people. The most important aspect of any company's desire to change is its people. According to a recent study by Harvard University and Wharton Business Schools, the surest way to profits and productivity is to treat employees as assets to be developed.

   People move forward and make change happen, but they maintain a vision of the company's overall strategy that has been effectively communicated to all employees.

7. Must manage change.

   Managers don't make change happen, leaders make change happen. Under the old management method, management makes the decision and then communicates that decision down through the ranks. The goal is to build awareness and buy-in so employees will implement the decision. At the same time, management makes any changes in organizational design required by the decision. Under this style of management, people are told about the decision and that's it.

   Today it's different. Changes such as re-engineering, total quality, or becoming a learning organization require everyone to change their skills, behavior and working relationships. Such changes are behavior driven and the old methods fail to change anyone's behavior.

   Managers of the past were watchdogs and police officers. Leaders of the future will be nurturers and teachers, judged on how well they take care of their people. Are you a manager or a leader? Your answer to this one question will tell you. Are your people working for you, or are you working for your people?

ROY CHITWOOD is an author and consultant on sales and motivation.
He is currently president of Max Sacks International, Seattle, (800) 488-4629, www.maxsacks.com, and past president of Sales & Marketing Executives International.