What SOX Taught the Change Industry

When Sarbanes-Oxley burst onto the scene in 2002, it was an unwitting poster child for effective change management. In less than a year, the “SOX” reforms swept through American industry; thousands of companies implemented the stringent, at times even draconian, provisions with nary a whimper. Sarbanes-Oxley slammed full-force into corporate America - and then just noiselessly slid in.

For anyone really watching, the experience was a change management Rosetta Stone. Sarbanes-Oxley's rapid and easy implementation offered a striking template.

What worked?

The legislative mandate, and its particulars, were exceedingly clear. Companies invested liberally in making sure that the message was not only heard, but understood.

Employees were drilled on the new provisions. And the threat of jail time for breaches loomed large in the C-suite, so CEOs and CFOs drummed accountability into their work forces in a way that left no room for either doubt or protest.

Where are we now?

A decade later, many of the same companies – and their consultants – seem to have forgotten this lesson. Organizations that adopted SOX flawlessly are struggling to get traction for new ERP, digital commerce, shared services or other transformation initiatives. And they're struggling because, in many cases, they are doing the absolute inverse of what worked so well in 2002.

Instead of taking a pragmatic, tactical approach to changing employee behavior, most companies are chasing an elusive quarry called "buy-in". Rather than making sure that employees are clear, prepared, and accountable, they are making sure employees are happy and aligned.

Because the focus is misplaced, employees too often are confused about what's expected, frustrated because they lack new skills or the confidence to apply them, and emboldened to ignore expectations because they know there is no accountability.

What's wrong with Buy-In?

There's nothing wrong with happy employees. But the issue with buy-in, when you’re changing fundamental business processes, is time.

Buy-in is essentially an unwavering confidence that a new system will work. How do we get there? Proof. Proof that a system works, that processes perform as promised, that training is adequate, that jobs are secure – in short, proof that the individual will be as successful in the new regime as in the old. In other words, buy-in follows adoption, rather than driving it.

So most transformation programs, which focus on buy-in, are putting the cart before the horse. You can't expect buy-in until you’ve achieved the promised gains.

Right Action

For most business transformation programs - the vast majority - the focus needs to be on what we call "right action." Again, the Sarbanes-Oxley experience holds the key.

Good change management doesn’t focus on tracking how people feel, or on making them feel happy - it focuses on making sure that they take right actions in a critical time frame.

It means getting people ready to execute flawlessly on Day 1 of the new business environment. And being ready means being crystal clear about their obligations, mastering the skills to succeed, and accepting hard accountabilities that tie choices to personal outcomes.

Learning from SOX

Countless published studies have demonstrated that people problems are the number one cause of failure in large-scale business transformations.

And we submit this is because the change industry has been approaching people problems in the wrong way for the past 20 years.

What we have is not a psychological, lie-down-on-the-couch, how-are-you-feeling-about-your-new-job problem; it's a leadership problem

that requires more of an "on the bus or under the bus" approach.

When it came to Sarbanes-Oxley, corporations invested in training employees on exactly what they needed to do. They were trained in classrooms, and online. Employees knew what they needed to do (or sign) on Day 1

In addition, there were clear consequences. Do this, or go before the SEC. Any questions?

This experience teaches us that, however counterintuitive it may seem, a hard-lined approach to the supposed "soft stuff" is the number one way to make sure business case benefits flow to the bottom line.

When Buy-in Works

Interestingly, buy-in based change programs can work – but only in a singular circumstance. They work when the time frame is open-ended. Based on the science of product diffusion – how product innovations diffuse through a marketplace – these programs focus on attracting end-users to a future state, and on enticing a critical mass of early adopters as quickly as possible, who ultimately create a tipping point.

Consider, for example, a familiar device. In the '80s, a novelty called the "car phone" hit the scene. A province of the super-wealthy it was only to be used in dire emergencies. Over time, the car phone was adopted by more and more business people as a convenient way to return calls while driving to meetings. And then one day, the car phone became untethered. Even reluctant technophobes bought in to the convenience of having what was now called a cell phone. And thirty years later, 77% of the world’s population (5.3 billion people) carries a mobile device.

The defining attribute of the car phone story and other buy-in based change programs that work is their open-ended time frame for adoption. In reality, this is anathema to most major business transformations, where there is a hard go live date and a requirement that every person perform as expected on Day 1.

About the author
Holly Benson

Holly Benson
Holly is a Partner in the Organizational Transformation practice of Infosys Limited. She is also an expert in Shared Services strategy and design.