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Private Equity ERP Success Trust Is A General and Significant Theme

When it comes to effective leadership and effective organizational change, trust is a general and significant theme.

“Similarly, some of the best business and nonprofit CEOs I’ve worked with over a 65-year consulting career were not stereotypical leaders. They were all over the map in terms of their personalities, attitudes, values, strengths, and weaknesses. They ranged from extroverted to nearly reclusive, from easygoing to controlling, from generous to parsimonious. What made them all effective is that they followed the same eight practices.” -Peter Drucker

If you want to know the eight practices, please check out the insightful article. In his article “What Makes an Effective Executive “, Drucker then goes on to state that one such common denominator amongst effective leaders is trust. Drucker states that one of the eight practices is “Think and say ‘We’, not ‘I’”.  Drucker further adds, “Your authority comes from your organization’s trust in you. To get the best results, always consider your organization’s needs and opportunities before your own.”

Trust and Constructive Conflict: Pertinent To ERP Success

Conflicts of interest among different functional departments are common in ERP organizational change efforts and lead to time delays, budget overages, miscommunications, and potentially project failure. Lee and Myers (2004) further note that conflict over ERP organizational change strategy can lead to failed efforts as well as increased project cost and failure to deliver anticipated benefits. Researchers have noted that trust advocates for constructive conflict, versus conflict avoidance or defensive or hostile attitudes. Trust also advocates for achieving the goal of learning and sharing in an organization (Ke & Wei, 2008; Kotter, 2007). Literature and research suggest that successful organizations have effective settings, processes, and support for appropriate conflict resolution. Ke and Wei (2008) suggest that healthy organizational cultural settings welcome conflicts and risks and also have employees who lack political motives and cooperate and assist each other. Recognizing the critical value and role of conflict management, Jehn and Bendersky (2003, p. 229) suggest that building trust and addressing conflict management and success lies in team leaders’ abilities to “successfully harness conflict’s constructive potential in organizations.”

Trust advocates for tolerance for constructive conflict. And, tolerance for conflicts is an important characteristic of an organization attempting ERP assimilation (Al-Mashari, 2018; Kholeif et al., 2013; Kim, Lee, & Gosain, 2005). Increased levels of organizational trust promote teamwork and behavior that increase organizational performance as noted by Evaristo (2003). Organizations with a general sense of understanding that conflict is natural but can and must be managed through a culture of trust increase their likelihood of ERP organizational change success. During an  ERP organizational change effort, the organization benefits from a culture of trust and constructive conflict. A culture that advocates tolerance for conflicts needs to also advocate for a culture of trust. Trust and conflict as a critical success factor have rightfully garnered research interest and support (Antoniadis et al., 2015; Gefen, 2004; Kim et al., 2005; Majed, 2018; Rouhani & Ravasan, 2012). In ERP organizational change efforts, a culture of trust is a significant influence that affects organizational performance. Trust plays a role in constructive conflict as well as, ultimately, organizational performance and success.

Private Equity Success: Trust Is A General and Significant Theme

The below are some additional excerpts from my formal research in private equity ERP organizational change success:

“For the participants in this study, if the value of tolerance for conflict was not understood from the onset of the project, it was certainly valued as a lesson learned. This study supports the notion that ERP organizational change success is related to and impacted by a culture of trust and constructive conflict. Moreover, there was a general sense that conflict is natural but can and must be managed.”

When discussing conflict, one participant sarcastically stated that “Yeah. We certainly had a couple”.

Additionally, “Participating stakeholders provided evidence in knowledge and value that relational conflicts can play a negative role in ERP team performance. This study demonstrates that conflict is no stranger to even successful implementations. The notion of conflict and trust was a common theme as noted by qualitative coding.”

As a further example, another participant provided insight on the topic of conflict and trust stating that “clear communications, by which evolves trust and respect between the participants vertically and horizontally, that’s the basis of it without, without, that it doesn’t matter what the details of the program are.”

“During ERP organizational change, many stakeholders face great demand and significant risks and challenges. To realize the greatest effectiveness and efficiencies, these challenges require significant trust. This study directly supports the notion that executive stakeholder groups that promote cohesiveness and manage and reduce conflict will improve overall organizational success. Moreover, this process of advocating a culture of trust needs to be continuous throughout the entire project lifecycle. This is because, as Besson and Rowe (2001) allude and as suggested by this study, is that as ERP projects progress, stakeholders can change their attitude and positions regarding the project as well as their perspective of other stakeholders.”

“The results of this study suggest that increased levels of organizational trust promote teamwork. In general, the executive stakeholders emphasized effective and consistent communication. They were quite cognizant of being aware of conflict. They were decisive in addressing conflict, and they were consistent and honest in their communications, further promoting a culture of trust. The evidence of this study supports and is consistent with results obtained by Han and Harms (2010) in that the executive stakeholders were able to promote a sense of organizational team and teamwork that reduced relationship conflict and improved trust in coworkers. This study suggests a general and consistent theme, the executive stakeholders of this study had the skills to effectively address conflict.”

Trust is a general and significant theme within organizations that realize ERP organizational change success.

Article by Dr. Jack G. Nestell

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More from Nestell & Associates on this subject

https://nestellassociates.com/erp-success-tolerance-for-risk-and-conflict/

https://nestellassociates.com/de-risk-your-portfolio-erp-project-organizational-culture/

https://nestellassociates.com/podcast/episode-23-organizational-transformation-keys-to-success/

https://nestellassociates.com/podcast/episode-4-achieve-organizational-culture-change-success/

About Nestell & Associates

Nestell and Associates is a strategy and management firm. We are one of the only organizational change and ERP strategy and management firms focused exclusively on private equity. Our niche is organizational change, organizational readiness, and digital transformation success. Our fundamental goals are to promote, connect, and foster relationships in the ERP organizational change community, contribute to the field of ERP organizational change and bring research and practice closer together.

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References:

Al-Mashari, M. (2018). “Process orientation through enterprise resource planning (ERP): a review of critical issues – Al‐Mashari – 2001 – Knowledge and Process Management – Wiley Online Library.”

Antoniadis, I., et al. (2015). “Business intelligence during times of crisis: Adoption and usage of ERP systems by SMEs.” Procedia-Social and Behavioral Sciences 175: 299-307.

Clark, R. E. and F. Estes (2008). Turning research into results: A guide to selecting the right performance solutions, Information Age Pub Incorporated.

Drucker, Peter  “What Makes an effective Executive”, Harvard Business Review. (2011). HBR’s 10 must reads on leadership. Harvard Business Press.

Evaristo, R. (2003). “The management of distributed projects across cultures.” Journal of Global Information Management (JGIM) 11(4): 58-70.

Gefen, D. (2014). “What Makes an ERP Implementation Relationship Worthwhile: Linking Trust Mechanisms and ERP Usefulness.” Journal of management information systems 21(1): 263-288.

Harvard Business Review. (2011). HBR’s 10 must reads on leadership. Harvard Business Press.

Jehn, K. A. and C. Bendersky (2003). “Intragroup conflict in organizations: A contingency perspective on the conflict-outcome relationship.” Research in organizational behavior 25: 187-242.

Ke, W. and K. K. Wei (2008). “Organizational culture and leadership in ERP implementation.” Decision Support Systems 45(2): 208-218.

Kholeif, A. O. R., et al. (2013). “ERP customization failure.” http://dx.doi.org/10.1108/18325910710820292.

Kim, Y., et al. (2005). “Impediments to successful ERP implementation process.” Business Process Management Journal 11(2): 158-170.

Kotter, J. P. (2007). “Leading Change Why Transformation Effort Fails.” Hardvard Business Reveiw(January): 96-103.

Lee, J. C. and M. D. Myers (2004). “Dominant actors, political agendas, and strategic shifts over time: a critical ethnography of an enterprise systems implementation.” The Journal of Strategic Information Systems 13(4): 355-374.

Rouhani, S. and A. Zare Ravasan (2012). “ERP success prediction: An artificial neural network approach.” Scientia Iranica.


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