IFRS 17: What is the impact on people?
10 October 2018
People management is hard to get right first time, and as such should be prioritised. What’s more, lessons learned from prior regulatory driven transformation programs could be crucial in your success.
So far, in my series of IFRS 17 blogs, I have focused heavily on the technical side of IFRS 17, and the impact the new standard will have on technology, tax and audit. But in this blog I want to focus on the impact IFRS 17 is likely to have on people, and how you can best prepare your employees for large scale organisational change.
As I have emphasised previously IFRS 17 is a standard that will impact many, if not all areas of your business, and hence will impact stakeholders within all areas of your business. It is important to engage with stakeholders early to ensure the scope of IFRS 17 is identified and they are aware of how far-reaching the standard is likely to be. This will primarily depend on the extent to which your company is leveraging the changes required by IFRS 17 as an opportunity to transform your business.
For example, if your organisation is planning to modernise its operations by introducing a financial analytics centre, this could potentially free up a lot of your employees time, which could then be spent on value-adding tasks such as data mining. But this is a big change from relatively repetitive tasks to forward-thinking analysis, so it is critical to ensure employees are onboard with this change.
The key point here is that in order for IFRS 17 to be successfully implemented within a company, it relies on people being accepting of, and adapting to, the change. In other words, people need to commit to the change and not just be compliant with the change. How you achieve this will depend where your company’s strengths lie within culture, vision and values.
With this in mind, it is worth considering the following:
- Organisational Change Management
- Tone from the Top
- Measuring change with real time data
Organisation Change Management (OCM) is potentially the simplest way to try and ensure commitment over compliance. This is a team of employees who are responsible for promoting adoption, providing training and making sure that the end user is represented throughout the change process, particularly during testing.
Tone from the Top is a well known concept and is just as relevant here - ensuring that your change has leadership sponsorship is often paramount to success. Employees want to hear from leadership why the company is changing, how it will impact them, and why they should care, so make sure you have strong leadership who can convince people that this is a change they want to be in invested in.
Thirdly, measuring the success of your IFRS 17 implementation with real time data (eg. end-user feedback, pulse-check surveys, adoption metrics, etc.) can help you to monitor awareness and adoption within your company. If you begin to see disparity between your change strategy and where your employees are in terms of their understanding and acceptance of the change, this data can help you to iterate your OCM approach and potentially improve level of commitment over compliance.
The final item I want to discuss is the importance of developing a change management strategy that clearly defines change principles and a change roadmap; or in other words, how you intend to get your organisation from its current state to its desired end state with minimal disruption. Part of this change management strategy should also define the communications plan for IFRS 17, which should include information on the standard, training and organisational changes. The change management team that is in charge of implementing this change management strategy should be embedded into the project and not operating from another part of the business, such as HR.
So what can we take away from this? Given the difficulty of managing people, it is essential to keep in mind the lessons learned from previous regulatory transformations, and any other projects in which people have been a critical success factor. The way in which you approach people management will depend on the strengths of your individual organisation, but in general additional steps in OCM, leadership and data can, and should be taken to ensure you are doing your utmost to support your employees and organisation throughout your IFRS 17 journey.