Change Behaviours by Making Costs Visible

Posted by Shawn Callahan - April 9, 2010
Filed in Changing behaviour, Communication

IMG_7642_2.jpgThis post is by our guest blogger, Kevin Bishop, who recently was in Australia and ran a series of workshops with Anecdote on Influencing Change. Shawn met Kevin last year in London. Kevin was responsible for the change program for 40,000 people at the Royal Bank of Scotland.

I was working with a programme team recently who were preparing a detailed business case for Executive agreement and sign-off. During this process, the team have become very frustrated with the number of review meetings and discussions which were being held with each member of the Exec. team, and the number of times they had to go back through the loop when minor alterations were requested in the business case.

There seemed to be a disproportionate amount of time spent making very minor changes to documents and presentations and then having to meet with each Executive to talk through the changes to ensure they were happy with them. An example was when a request came through to change the font colour on a diagram, and the size of the font; “as it would have more impact”. After making these changes, the whole pack had to be re-printed and re-issued.

A culture therefore existed where huge amounts of time and resource were invested in making sure the Exec. felt involved, engaged and listened too before key meetings, were expecting to provide detail on the minutiae in the pack, and every time a change occurred, they expected to be reengaged and be able to comment all over again.

It got me thinking about what you could do to potentially change these behaviours, behaviours I believe were:

  • disempowering and disengaging people;
  • not making the best use of the expertise in the organisation;
  • adding little or no value; and
  • costing the organisation financially.

I believe one strategy that could work is to help make the financial costs of these behaviours visible and known to all involved. I thought back to two examples where this has worked.

In ‘The Heart of Change’, ( John Kotter recounts a story about a purchasing manager who was convinced that a great deal of money was being wasted on their purchasing processes. The change required to reduce these costs would not be possible unless top management saw the opportunity, which for the most part they didn’t.

To get a sense of the size of the problem, he did a small study looking at one item being purchased across the whole organisation – rubber gloves. When the study was complete, it showed that the company brought 424 different kinds of gloves! Every factory had their own supplier and their own negotiated price. The same glove could cost $5 at one factory and $17 at another.

They collected the gloves, literally all 424, put price on each one, took these to the Boardroom and invited all the division presidents to come visit the room;

“What they saw was a large, expensive table… stacked high with gloves. Our executives would stare at this for a minute. They would say, ‘we buy all these different kinds of gloves?’ Well, as a matter of fact, yes we do… Then they would walk around the table… They could see the prices. They would look at two gloves that seemed exactly alike, yet one was marked $3.22 and the other $10.55. It’s a rare event when these people don’t have anything to say. But that day, they just stood with their mouths gaping. Even today, people still talk about the glove story.”

Another example was told to me by a friend recently. He was asked to assess the effectiveness of a programme’s change request process, including understanding its costs. The change request process can be vital in any large programme, particularly those that have a significant IT component. It provides a degree of control around changes that may have impacts on budgets, timelines, and scope.

There were questions in this programme about the value the change request process was adding. In his analysis he found that the vast majority of change requests had no material impact on the programme, and were in fact minor, cosmetic changes. These were things like dates that had not been updated properly in master plans, even though everyone knew the correct dates and were working towards these.

When he worked at the cost of assessing each change request – and remember these were requests that for the most part had no material impact on the programme – he was staggered to find that, on average, it cost $20,000 to action each one! The vast majority of this cost was people’s time and effort to discuss, complete the appropriate documentation, and meet to approve each change request – requests that added little value to the overall programme.

Once the costs were visible, there was an immediate focus on improving and changing the change request process within the programme. Having the $20,000 figure staring people in the face certainly seemed to contribute to a change in behaviour.

So back to the problem at hand, how do you get the Executive team to change some of their behaviours around reviewing and signing off business cases? My idea is to put the amount spent in preparing a presentation, pack or business case, clearly visible on the first page of anything that goes to the Exec.. You would calculate the cost of everyone’s time (programme team, support staff, Exec. etc.) in drafting papers, setting up and attending meetings, reviewing, making changes, and printing the packs etc. and then clearly show this.

You would need to ensure the number is accurate and backed up with the details behind it if challenged (e.g. the cost per resource, the numbers of hours spent on every process etc.). It would require a degree of work to set it up, but I would not see this becoming a permanent need, more like a one off to stimulate debate.

I have seen examples of this around what a meeting actually costs (see ), but have never seen it around preparing documentation. Can you imagine the different conversations in that Executive meeting if they were confronted with a figure of say $25,000 in preparing a pack for their approval? A figure which could equate to employing a person, full-time, in the organisation for six months.

2 Responses to “Change Behaviours by Making Costs Visible”

  1. Roberta Says:

    Great post, thanks. I’ve actually used this to demonstrate the problem of rubbish dumping on road sides while at a road authority. I used a wheelbarrow full of rubbish in the staff tea room to say that we pick up the equivalent of 100 of these every day at a cost of $x. We needed staff to be aware of the issue to be advocates for the cause and to report any offenders they saw. It really gets people talking…

  2. Rosemary Says:

    This is a strategy that people working to address family violence in North America have used to great effect. Making the real costs, system-wide, of violence visible creates a definite incentive for governments and businesses to change their policies. Then money spent on domestic violence activities and programs becomes an investment in reducing the costs to the entire system (courts, prisons, police, health care, social welfare, education, etc) costs, thus saving money, rather than being seen as ‘just’ an expenditure.