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Preparing Your Cash Management Team for Automation

Automation has taken on increasing importance within financial operations in recent years, and it’s a trend that will continue to dominate. According to a McKinsey report, by 2030 the daily need for technological skills will have increased by 50 percent or more from their use in 2016. The report notes, “… there is a significant need for everyone to develop basic digital skills for the new age of automation.”

For younger employees in the cash management field, that trend may not be as daunting as it will likely be for people who have been in the field for some time. Younger generations have grown up with technology and typically aren’t as resistant to the use of automation tools in their daily lives — it’s simply an expectation.

However, that doesn’t mean there won’t be issues when introducing automation to your cash management operation — or upgrading your existing solution.

Gleicher’s Formula For Successful Change Management

Let’s get theoretical for a moment.

In the early 1960s, David Gleicher, a management consultant, created a formula to calculate what it takes to effect change. As human beings, our brains are wired to resist it, and Gleicher sought to determine what it would take to successfully introduce change to an organization that had an established method for doing something.

There have been multiple framings of this formula since Gleicher first suggested it, but let’s take a look at the Dannemiller version from the 1980s. (Warning: algebra incoming.)

C = D x V x F > R

Here, the variables equate to:

  • C: Change
  • D: Dissatisfaction with the status quo
  • V: Vision of possibility
  • F: First steps that can be taken to work toward the vision
  • R: Resistance

The reason D, V and F are multiplied by each other is because anything multiplied by zero is zero. Therefore, if any one of those factors does not exist — has a value of zero, in other words — the equation for change will also equal zero, and resistance will inevitably be greater, overcoming any change initiative.

The problem in many business environments is that while there may be grumbling and general dissatisfaction among the staff about how things work in the here and now, there is no vision. And often, while those who control cash management operations have an idea of how they want the business to evolve, they don’t communicate this information to the team. Thus, those in the trenches have no sense of the purpose behind an automation initiative. Without that, the V variable sets to zero, and the value of resistance is greater.

However, even if there is a vision communicated to the cash management team, there has to be an understanding and buy-in on what those first steps toward the vision will be. That’s an engagement issue.

Let’s break it down.

Addressing the Variables

Any cash management team that’s still working with manual processes probably has a lot to say about the inefficiencies. They may complain about the lack of challenge, the routine and repetitive nature of the work, or having to constantly monitor and correct manual errors. A new term has been coined for this level of exhaustion caused by lack of mental stimulation. Instead of burnout, which is caused by stress, there’s now “boreout,” caused by — you guessed it — prolonged periods of boredom.

That contributes to the dissatisfaction (D) variable of the Gleicher/Dannemiller formula.

However, while you might assume that the introduction of automation or AI to a staff suffering from boreout would spark their enthusiasm for the change, that’s not always the case. They may worry that they’ll have to relearn their jobs from the ground up, or that management is looking to lay people off. And while the first thing is unlikely if the solution of choice is a good fit, and proper training and transition time are accommodated, the second thing may well be a justified concern.

The reason many organizations take the leap into automation (often without considering the process disruption and down time an abrupt change can create), is that they’re looking to reduce headcount. The investment made in an automated solution needs to show a fast return on investment, right? And what better method to accomplish that than to reduce labor costs?

The problem is, an automation implementation is not an overnight process, if done properly. It takes deliberate planning, a careful transition strategy — and buy-in from the staff. That will be hard to acquire if the team assumes the automation solution is simply a means of finding a way to get rid of them. Who wants to sign up for that?

Here’s where engagement comes into play. Communicating the vision of the benefits that automation can bring and how it will improve the team’s lives serves multiple purposes. First, it shows them how much better things can be, communicating a shared vision of what could be improved. It may also offer them opportunities to do higher-value work that involves more mental stimulation and enhanced responsibility, thus reducing boreout. That assigns the V variable a non-zero value.

But engagement does more than that. If done right — as a team-building effort rather than a hard mandate to embrace automation whether they like it or not — it encourages them to offer their ideas about what could be done better and how.

That feedback is essential for the cash management leadership team to be able to choose the right solution and develop a strategy for implementation. Getting the team’s input at this stage helps them understand the first steps to achieving the vision — thus generating a non-zero F value.

If the drive to automation is managed properly, any issues are acknowledged and expressed; there’s a distinct, shared vision; and there’s a solid idea of the first steps toward that vision — all contributing to overcoming resistance. In other words, D x V x F > R.

Why Change Can Overcome Resistance

Once the desire for change defeats the resistance factors, the cash management team is much closer to achieving the transformation that automation/AI can bring about. However, an important first step is to get the staff to understand how automation can positively impact them, reduce their boreout issues, and actually improve their working lives — thereby accomplishing some of the hard work upfront.

What’s key to remember is that staff engagement is not a one-and-done matter. To keep the impetus for change greater than the resistance to it, the cash management leadership team must interact with the employees to ensure they are kept up to date about new developments; their opinions and ideas are solicited; and any concerns they have are taken seriously and addressed in a respectful and timely fashion.

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