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Event Review

"Google 'change management' and you'll get 536,000 for the UK results alone," shouted Sir Nicholas Montagu, railing against the latest fad amongst management consultants. "But only you know how to change your organisation... The only only general rule is that there are no general rules."

He should know. When Montagu joined the Inland Revenue in 1997, it had 55,000 staff and was half-way through a change programme designed to reduce that figure to 42,000. By the time he retired from its chairmanship in 2004, it had 83,000 staff. "And I still knew nothing about tax," he joked.

During Montagu's tenure, the Revenue changed more than it had done in its previous 200 years. "Almost overnight, when Gordon Brown became Chancellor, we changed from simply being the assessors and collectors of direct taxes to being a social department," he reminisced. "So, by the time I left, in addition to collecting about £230bn in direct taxes, we were paying out £30bn in what had previously been social security contributions." The same period saw the advent of e-services, he added.

But whether change is dramatic or minor, there are several tenets you must observe if you wish to make it successful. For example, Montagu said, you have to make sure that all your stakeholders understand the rationale behind what you're trying to do, and their place in it. And if you're leading the change initiative, your job is to make everyone feel a sense of ownership over the change process - to show appreciation for people's concerns, even when they can't be accommodated.

"Bring people in and tell them as much you can as soon as you can," he advised. "Otherwise, they will fear hidden agendas, they will feel undervalued and under-respected." When the Revenue began to review its departmental structure in the run-up to its merger with HM Customs & Excise in 2005, it set up an Intranet site on which people could post questions and express concerns. "It was virtually unused because we deliberately saturated [the workforce] with everything that was going on during the course of the review," Montagu said. "The measure of its success was how little it was used, because people felt they were being properly treated."

He added: "People must know throughout the process what you're doing, why and what they can expect from you as part of that process. It's absolutely impossible to give too much information." Later, an audience-member would raise an awkward question in relation to this point. He asked: "How do you balance the need to be more in touch with your people, and the need, in some instances, to limit their input into the change process?" But Montagu's reply was quick and emphatic: "By not creating false expectations at the outset... If you give them heightened expectations and then disappoint them, you've lost them, but if they know at the outset that their role is a limited one, and if you can show you've taken account of it [then they'll accept the final result], even if it's not in accordance with their wishes... People don't necessarily want to get their own way, but they want to be respected, to feel they've not gone through just a token exercise."

Consistency is Key, Montagu emphasised. "One of the things I'm not going to apologise for is the number of times that I use the word consistency. Because if you're going to manage organisational change successfully then you must be consistent. There must be no chink in your armour."

To illustrate this point, he told us a story from his time as "Champion for Diversity" across the whole civil service. He was speaking at an Equal Opportunities conference, and making the case for family-friendly policies and flexible working, when he accidentally said, "If a girl wants to give up work to have a family, she should be able to come back to work...'" To those of us in the audience who thought this sounded pretty harmless, he explained: "By using the word 'girl,' I had turned off all the young women in my audience. They thought that it was male, they thought that it was chauvinist, they thought that it was patronising. They thought, therefore, that it showed what my true mettle was. Forget all my remarks entirely sincerely made about family-friendly polices... I'd lost them. Why? Because my rhetoric had been at odds with what I had then said."

The price of failing to practise what you preach is severe, he said. "You lose people, you lose momentum, you lose conviction and effective change becomes impossible." This was why he used to "drag [diversity] into every speech I made, public or internal... so that people could not say, 'It's not on the agenda.'" Even if people were yawning and thinking "There he goes again," Montagu would keep revisiting the subject. "Had I not done so," he explained, "There wouldn't have been any lack of people saying, 'We always told you it was yesterday's flavour of the month,'" whenever a diversity initiative hit problems.

When you encounter people who are resistant to change - "rearguarders" - you should "underestimate them at your peril." The greatest resistance Montagu faced, he said, "was at middle-management levels. particularly among the technically qualified people, who thought that as an outsider and interpolater, I didn't appreciate what they were doing and I was undermining their power base." Nevertheless, he said, you can't ignore people or dismiss their concerns out of hand. So what can you do? There are basically three possible courses of action, he suggested:

You can try to understand their concerns better, then take them again through the reasons why the change is important, and why they are important to the change. "But being Pollyanna doesn't always win the day," he added. As a last resort, you can get rid of them. So, for example, if you have a manager at a regional office, whom you can't supervise continuously, and whom you know is telling his staff that they'll carry on doing things the way they've always been done, this should raise a red flag. But if you do sack them, "you want them to go as happily as they can."

Perhaps the most effective tactic, however, is to marginalise them. "If you can't convert everybody, what you want is to get your big blocks of opinion supporting you and understanding your change so that the people with resistance to it become marginalised," he said. "I'm sure that in an organisation of 83,000 people, there were people who were racist, there were people who were sexist, homophobic, intellectually snobbish - all the things that go against my values. [But] let them keep it to themselves. You deal with it when you have to deal with it."

Equally, to effect change across a large organisation, you need leaders at every location and at every rank, Montagu said. You need to "get on-side, and fully equipped, the people who 'cut the ice'". At the Revenue, he knew it would be middle-managers who would actually deliver the necessary change, so it was vital they "knew what we were doing, knew why we were doing it, and were equipped not just to cascade it down to and involve their own people but to answer the difficult questions."

At the same time, he kept his eyes and ears open for people across the organisation whom he could keep in touch with privately, to police his efforts - a "mafia," as he put it, in which grade was unimportant. Their job, he said, is to "keep you in touch with reality... ring you without inhibition and help you in that marginalisation exercise."

The other essential ingredient of success in change management is "follow-through," Montagu said. He learnt this the hard way, he confessed, in his efforts to train all managers across the civil service in "diversity awareness". "In the revenue alone, that meant 8,000 people," he explained. "We did it, it was great, then they went back [to their separate teams] to cascade it to their own people [and] it didn't really work. Why? Because we didn't do that follow-through. The material was good; there was nothing wrong with it. The infrastructure by then was good. But what there wasn't was support - an iterative process through which managers could feed back what people were saying, a help desk they could ring up and say: 'Look, they've asked me this and I don't really know what's happening. Can you help here?' So, the other great lesson of successful organisational change is that if you expect things of people, you must give them the back-up they need."

Finally, he said, you need to be clear about your success criteria for change. because "change never stops," and when you introduce new systems or processes or try to embed change of any kind, it never becomes completely "automatic" to the organisation. It requires rigorous project management and then periodic renewal.

"What I've been arguing for in organising change, is about making change part of people's jobs," he concluded. "If you continually make them realise they are essential to change, and make them realise why that change is needed, then you'll make their chests swell." In other words, your aim should be create a self-fulfilling prophecy within each of your staff, a conviction that they are "really important to the organisation."