By Sundara Sukavanam, CDO, Firstsource
Transformation initiatives offer countless benefits, from improved efficiency to agility. However, they often cost more and take longer than expected, creating pressure for stakeholders. Leaders in financial services are under particular strain. As they need to navigate the inherent economic complexities of the sector and tough regulatory environment all while connecting inflexible legacy systems with the latest advanced technologies. As such, it’s no wonder they’re feeling pressure. In fact, Firstsource’s newly released research revealed that 81 percent of financial services business executives rated transformation projects incredibly stressful. With more than a third (35%) reporting they find them as or more stressful than the COVID-19 lockdown.
Change projects will inevitably create some degree of pressure. That being said, stress can be minimised and project success rates increased by anticipating challenges and proactively taking steps to tackle them. To help businesses with this, Firstsource conducted research with 120 executives who identified five leadership challenges that require senior executives’ attention. This research also uncovered insight on how to turn these challenges into catalysts for success, rather than thorns in leaders’ side.
Managing the paradox of business case optimism
In change projects there will always be unknown unknowns that will see timescales and costs overrun. The paradox for leaders is that despite doing their utmost to keep their transformation business case realistic and grounded they will inevitably have been over-optimistic. They must recognise this and be prepared to switch direction. As highlighted by one Head of Strategic Finance interviewed for Firstsource’s report: “You need to have a rough plan, and it needs to be a good plan and you need to know that you’ll have to re-build that plan multiple times”.
One way to manage optimism is to involve cautious stakeholders in the planning process. An approach taken in more than half of low-stress projects in the study. Senior executives also identified the following as strong methods for managing business case optimism:
- Meeting the key people responsible for delivery to assess their credibility
- Running a fully operational and implemented pilot
- Drilling down into forecasts and assumptions
The senior leaders interviewed for Firstsource’s research also advised accepting the project will not run as expected. As one CEO concluded: “Of all the business cases in the many companies I’ve either been Chief Executive or Chairman, I can’t remember one that ever delivered what was on the nameplate.”
Judging organisational readiness and impact
Change initiatives will inevitably have a ripple effect on adjacent processes, systems and company culture. Accounting for these will reduce project-related stress, especially in the financial industry. Senior executives can do this by starting at the beginning, and carrying out a detailed analysis of the impacts ahead of time to make an informed judgement on whether the business is ready to transform. Consulting senior leaders in different parts of the business and listening to their concerns will help with this. These types of reviews were present in 82 percent of low-stress projects, but only 46 percent of high-stress ones.
Encouraging and listening to opposing opinions and data
Leaders’ second-highest regret for business projects was inaccurately assessing the organisation’s readiness to transform. However, their top regret was not making sure that opposing opinions and data were heard.
It’s human nature to lean towards evidence and arguments that support our viewpoints and shy away from disagreeable opinions and data, especially under pressure. This means valid but opposing information can be missed to the detriment of the project’s long-term success. To minimise this, business leaders in the financial services can take active steps to tackle such biases, going beyond an open culture where everyone can speak up. This means implementing strategies – like steering groups – that will empower freethinkers and force teams to confront uncomfortable topics so a balance can be found.
One Head of Transformation interviewed advised: “Making sure you hear those voices means going and finding the right combination of stakeholders and some real dissenters. You know, the Ian Paisley’s, the no-nay-nevers. You get them in that room so you hear that voice. Because otherwise you do get groupthink.”
Making suppliers an extension of the team
Encouraging opinion sharing, and inclusion in steering groups, should extend to relevant external stakeholders. This includes outsource providers, external consultants, or systems integrators involved in the transformation project. The executives surveyed as part of Firstsource’s research, advise business leaders to foster a partnership approach with these groups based on openness and candour; while selecting partners who are eager to become an extension of the team. As one Digital Director noted: “In an ideal world you can’t tell who is a supplier and who is an employee, everyone is working together to get the right outcome”. This will be key to helping the company achieve its objectives while minimising conflict points.
Engaging partners who are a good cultural match and whose senior leadership team are closely involved from the start of the project is a good way to achieve strong supplier relationships. To this end, the executives surveyed advised having an informal mechanism for transparent discussions with senior executives to nip potential issues in the bud. Carefully evaluating chemistry before selecting a supplier is also key to ensuring they form a cohesive, seamless team.
Navigating project highs and lows
Any transformation project will have emotional highs and lows; as results are seen, or fail to emerge. This will inevitably mean points of low morale for all of the stakeholders. Managing this emotional journey is the most complex challenge key team members will face during the initiative. As such, it’s no surprise over two thirds (70%) of financial services leaders rate it difficult or very difficult to manage. One CFO commented: “You can become over-focused on a programme. You actually live and breathe the whole thing yourself. When it’s going badly, you’re going badly, and when it’s going well, you’re going well. You take on the personality of the stage of the programme you’re in. And that makes it very, very tough.”
The research finds that key pitfalls to look out for include:
- Teams pushing themselves too hard without taking time out to celebrate results
- Senior leaders micro-managing the project
- Technology not operating as anticipated
Surveyed executives also advised leaders pay attention to fostering a positive, collaborative culture and preventing blame placing when things go wrong. This means encouraging teams to see mistakes as opportunities for improvement and promoting empathy in the face of challenges.
Success not stress
Transformation is crucial to business survival and success. However, the process can be highly stressful for staff. Business leaders working in the financial sector can limit the emotional strain by being realistic in the planning process, conscientiously judging if the organisation is ready, then carefully choosing suppliers who will become part of the team. In addition to this, leaders can take active steps to pre-empt and manage highs and lows. By following these steps, organisations will be empowered to transform successfully while protecting their staff’s emotional wellbeing.