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Stakeholder Relationships“ERP-implementations challenge vested interests and lead to opposing views from various players. Implementation includes multi-level activities, which are not the exclusive area of a single project manager. Outcomes of decisions are not always products of rational considerations but shaped by the interests and commitments of individuals and groups, forces, and momentum.” Boonstra (2006), “Interpreting an ERP-implementation project from a stakeholder perspective.”

The Stakeholder Group Challenge

Stakeholder group diversity as well as stakeholder group relationships often have a profound and significant impact on ERP organizational change. Furthermore, being unaware of and mismanaging stakeholder group diversities can manifest itself into a level of political turmoil. Multiple stakeholder groups often exist in any large-scale ERP project that has varying degrees of influence on the organizational change effort. The relationships and roles of each level are important to understand because it helps explain and sheds insight on how to best manage the challenges of organizational change. As Lewis (2011) states, the challenge is that goals are likely to be held differently by different stakeholder groups and that goals within stakeholder groups are dynamic and can change over time. Boonstra (2006) supports this notion by adding “ERP-implementation is a dynamic process, which means that views, which are held by stakeholders at one point in time, may change during the project. This may depend on various reasons, including cognitive, political, and opportunistic ones”. This provides a challenge in organizational change because stakeholders are essentially able to rewrite history and also persuade themselves, and others, that the real goals (the current goals) existed from the onset of the project (Lewis, 2011). Lewis (2007) also notes that interactions, good or bad, among stakeholders, are influenced by assessments of each other and stakeholders’ concerns about change. Significant diversity among stakeholders groups can contribute to significant misunderstandings and misalignment. A key point is that within any given organizational change effort, stakeholder interactions deserve careful understanding and consideration in an effort to provide corrections and effective communication that is in the best interest of all the stakeholders.

Leadership Awareness and Management of Stakeholder Group Diversity and Relationships

Effective stakeholder group reflection and management is an absolute key influence of organizational change. Therefore, understanding the value of, techniques, and mechanisms for managing stakeholder group diversity and relationships is crucial. Nordin (2013) states that leaders within organizations incur great pressure as a result of organizational change driven by competitive factors. These competitive factors can be external but also internally driven. Regardless of the organizational change model deployed, an organization needs to be mindful and reflective on the fact that understanding and then effectively managing stakeholder dynamics is a crucial part of any ERP organizational change plan.

Manage Stakeholder Diversities with an Organizational Change Model Founded in Principle

In order to minimize stakeholder group diversities and to improve and promote stakeholder group relationships, start with an organizational change model rooted in principle. Often, as Gilley, Gilley, and McMillian (2009) state, group, and individual acceptance rates of organizational change adaption vary. This is because the individual or group’s adoption of the change is contingent upon the perception of the degree of the change (Gilley, Gilley, & McMillian, 2009). Not only are there multiple and often diverse stakeholder groups, to complicate matters, each group often also has its own strata as describe by Gilley, Gilley, and McMillian which includes innovators, early adopters, early majority, late majority, and laggards. As a result, organizational stakeholder dynamics can be quite complex making effective organizational change a challenge in any environment. All legitimate models of organizational change are intended to assist leaders through an effective process (Gilley, Gilley, & McMillian, 2009). One such organizational change model is that of Kotter’s Eight-Step Model (see below link for more information). For starters, this model articulates and emphasizes some of the incredibly important influences behind successful organizational change such as communicating the vision, forming coalitions, creating short term wins, and creating a positive corporate culture. And I would layer in another key influence and emphasize the idea from Lewis (2007), to minimize negative politics that can often exist between each stakeholder group. Effective organizational change approaches and models bring awareness to and include tangible mechanisms that help address and advocate for positive stakeholder group relations (especially through effective communication). An effective organizational change model founded in principle offers organizations and practitioners guidance on the practical application of an effective process that addresses stakeholder group diversities and relationships.

Manage Stakeholder Diversities with Effective Communication

Due to the impact of stakeholder diversity and relationships upon organizational change, effective organizational communication is a critical tool. An effective communications strategy needs to effectively and specifically address stakeholders’ concerns, interactions, and ultimately outcomes for change (Lewis, 2007). In the ERP organizational change practice, stakeholder dynamics include disparate ideas of expectations, organizational change realities, and significant diversity in terms of knowledge, value, and motivation. Therefore, the interaction and management of communication between stakeholders are critical.  One actionable item as noted in  Olding (2013) is to be mindful that effective stakeholder communication is bottom-up, top-down, and middle out. That is, communication is not just something to be pushed down from the top. In particular, in communicating about organizational change it is important to reflect on two points; fear of the unknown and uncertainty and lack of choice (Denning, 2005). Effectively communicating how the change is intended to drive positive outcomes and results is key. Sharing a consistent message but tailoring that message delivery for each stakeholder group is effective. That is, speak the language of that group. Tell the group the value of change in terms of what matters to them.

Manage Stakeholder Diversities by Understanding What Drives the Diversity and Relationships

Effectively understanding stakeholder group diversity in its many forms and relationships is a concept that is of great importance. Many times, individuals in a group are simply following the lead of others in their group. Lewis (2005) explains that individual connections and influences have a profound influence on how an individual reacts to supporting a change effort. In other words, understanding stakeholder group dynamics among and throughout all stakeholder groups can help minimize the impact of individuals reacting to change more as a “monkey see monkey do” response instead of through a clear understanding of the vision, value, and purpose of the change. Lewis (2011) notes that it is important to recognize that belonging to a specific stakeholder’s group alone can influence an individual’s support for or against the change. What if that stakeholder group leader is simply a transactional mindset oriented leader?  Simply being more of a transformational leader would be more supportive of the organizational change endeavor. As supported by much great work, a transformational leadership mindset is a significant influence in ERP organizational change. Another point of Lewis (2011) that needs to be layered in when reflecting on stakeholder groups is the notion of salience by default (Lewis, 2011). For example, the introduction of a new computer system in a workplace might raise the salience of identities related to expertise or technological qualifications and lower the salience of that less technical savvy (Lewis, 2011).  Stakeholder group leader influence, sheer association with a stakeholder group, and salience by default are just three potential influences and important notions to be mindful of in terms of understanding stakeholder group diversities and relationships.

Manage Stakeholder Diversities by Understanding the Basic Principles of Stakeholder Theory

This is an idea mentioned in previous posts but worth repeating. If one is to truly understand and support stakeholder group diversity and relationships and therefore improve organizational change, then stakeholder theory is critical to understand. Stakeholder theory attempts to explain how organizations understand stakeholder groups and then strategically determine action most effective at managing the relationships between those stakeholder groups (Lewis, 2011). In understanding how best to improve organization change success, it is also important to layer in some ideas as discussed in Lewis (2011). These ideas are; understanding existing relationships with stakeholders, understating how organizational actions shape stakeholder relationships, and understanding obligations of managers to various stakeholders. Stakeholders are constantly accessing the degree to which their interests are competitive or complementary with other stakeholders (Lewis, 2011).  Organizational leadership would benefit to act as mediators, or “spanners” as noted by Lewis (2011), between stakeholder groups and encourage and help relationships between stakeholder groups…this is the premise of stakeholder theory.

Manage Stakeholder Diversities by Understanding and Making Visible that Which is Often Not

Stakeholder group diversity and relationship management is an often forgotten influence in many ERP organizational change efforts despite its significance. Furthermore, stakeholder group diversity and relationships are often the more abstract and intangible influence of ERP organizational change. But, the key lies in making that which is more subjective, intangible, and informal into something that is more formal, visible,  and open for discussion and reflection. Boonstra says it well, “The case history clearly illustrates that different stakeholders can interpret ERP-systems in different ways, given their own histories, interests, self-images, prospects, and views. Some groups perceive the system as a means to realize certain new company-wide objectives, while others see the system as a way to regain lost power or as a threat to legitimate local interests. The case study shows how these different interpretations may easily lead to differences in priorities and ways of implementation. These differences are not all clear at the start and are not all expressed and discussed during formal meetings” (Boonstra, 2006). Understanding and reflecting upon the notion of stakeholder group diversities and relationships and then addressing in a meaningful, productive, and concrete way is a valuable ERP organizational change practice.

Learn More and References:

Boonstra, A. (2006). “Interpreting an ERP-implementation project from a stakeholder perspective.” International Journal of Project Management 24(1): 38-52.

Denning, S. (2005). The leader’s guide to storytelling: Mastering the art and discipline of business narrative (Vol. 269). San Francisco, CA: Jossey-Bass.

Gilley, A., Gilley, J. W., & McMillan, H. S. (2009). Organizational change: Motivation, communication, and leadership effectiveness. Performance Improvement Quarterly, 21(4), 75-94.

Kotter’s Eight-Step Model: https://www.kotterinc.com/8-steps-process-for-leading-change/

Lewis, L. K. (2011). Organizational change: Creating change through strategic communication (Vol. 4). Hoboken, NJ: John Wiley & Sons.

Nordin, E. J. (2013). Exploring effective communication for organizational change (Unpublished doctoral dissertation). Walden University, Minneapolis, MN.

Olding (2013) (“Communicating for Effective Organizational Change” from the Gartner Symposium in Spain)

Ravanfar, M. M. (2015). Analyzing organizational structure based on 7s model of McKinsey. International Journal of Academic Research in Business and Social Sciences, 5(5), 43-55.

Wheeler, D. S., Maria (1998). “Including the Stakeholders The Business Case.”

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