Q: For those who may not be familiar with the concept, can you please briefly describe what change management is all about?
Dan Sogorka: Change management is a deliberate approach to transitioning organizations from a current state to a desired future state. It can be highly organized and orchestrated, or it can be less formal. Typically, the level of sophistication of the change management approach corresponds to the size and/or complexity of the organization undergoing change, and/or the complexity of the changes that must be made.
Change in a business can take many different forms from simple process changes to complete and/or complex system, infrastructure or leadership changes. People respond to change in many different ways. Often times, people resist change, or they are afraid and wary – of change. However, to be successful, within the business environment, it is important to create a culture that is accepting and supportive of change.
To create an organization that embraces change, it is important that everyone understands change is inevitable, and that it can be very positive, both for the employee and the business. Specifically, how a company executes on specific changes relative to the nuts and bolts of the organization depends on the size and scope of the enterprise, and the level of complexity associated with the changes that must be made. In general, there must be clarity around what the end result looks like; buy in and support from executive leadership; a solid planning process that involves subject matter experts in each impacted area; an implementation infrastructure with identified internal and external participants, timelines and budgets, and check-points along the way as changes are rolled out to ensure that up and downstream impacts are anticipated, and that mid-course corrections can be made if needed.
A foundational element to establishing a culture that adopts change well is clear, consistent and repetitive communications that outline what the change is, what it means to the audience and how they can prepare for the change. For example, if a company is implementing a new software, it is important that the audience understand 1) what the new software is; 2) why it is being implemented; 3) what benefits the audience can expect to receive from the change; and 4) how the audience can receive training on the new software and where they can go if they have questions.
If these types of communication are done consistently over various types of change, a culture of trust and support can be established. When a team is comfortable with the paradigm of change, the high and low points of particular moments in time become less dramatic and, when issues do arise, they can be resolved in a supportive, goal-oriented way.
Q: Is change management something that a company can accomplish internally, or is it better for an objective third party to come in?
Dan Sogorka: If companies have a respected, visible leader who clearly supports both the paradigm of change and the specific changes to be made, and if the organization can establish a change management infrastructure with a dedicated team of subject matter experts and strong internal communications, change management can typically be performed by the business versus utilizing outside consultants. However, for some firms (primarily larger firms) that have to make massive changes in a short amount of time, I think it can be very helpful to seek outside experts who understand the industry a company is working in, and understand the complexity of the changes that must occur. In that case, industry consultants are well-aware of the dynamics of change that must be addressed, and can help companies avoid pitfalls, streamline the change process, and work more efficiently as they turn the ship.
Q: In your opinion, how successful has the mortgage industry been in adapting to the many changes put upon it by regulators and lawmakers during the past five years?
Dan Sogorka: There are so many great examples in the industry; let’s just use the loan origination system space as an example. We have very large lenders, as well as medium-sized and smaller lenders trying to execute on changes that are needed to meet CFPB requirements, while simultaneously adapting to the big market transitions that have occurred over the past five years. Given the new world we work in, I think the mortgage industry has made remarkable progress. Admittedly, some of the changes have been easier to implement than others.
Keep in mind that it can take years to establish the infrastructure to plan and prioritize the changes that are needed to meet new regulations – and to determine the up and downstream impacts of these changes. The process of executing the plan elements – such as updating or replacing technology; making necessary process and workflow adjustments; evaluating and making needed staff member changes, including training and re-assignments; and even determining new education and communication strategies to help customers understand the changes that directly affect them – must then be completed, tested, adjusted and tested again.
To address this reality, many in the mortgage industry have adopted a change management framework that is based on a process of small iterations of change, rather than sweeping multi-year projects that may not meet the final requirements when the time comes. The industry has learned to set up multiple short-term projects – so that in the middle and at the end of each project, organizations can evaluate where they are relative to changing circumstances, and make adjustments as needed before continuing on to the next phase.
Q: Is change management something that can be accomplished in a standalone situation, or is this something that will need to become an integral part of a company’s growth?
Dan Sogorka: Some of that depends on the size and complexity of the organization, but I do believe that the companies that best understand the discipline, as well as science and art around change management will have a competitive advantage. There are many areas within a financial institution that may be called upon to “make changes while the wheels on the car are still moving,” so to speak. I believe that the organizations that can do that as a core competency will stand out in the marketplace and win more opportunities as a result.
Black Knight Financial Services is online at www.bkfs.com/.
Phil Hall has been (among other things) a United Nations-based radio journalist, the president of a public relations and marketing agency, a financial magazine editor, the author of six books and a horror movie actor. Also, as you will discover, he is not shy about stating his views.