Change Management

What is change management? Some assume that change is something that a Human Resources department does. Others believe that good communication is synonymous with good change management. In reality, managing change requires diversified actions and the capacity to navigate uncertainty while engaging the whole organization system. Doing this well means different things in different surroundings.

Fundamentally, though, to manage change means to transform an organization from its current state to a future state using deliberate and effective practices for diagnosing, planning, structuring, delivering, sustaining, and measuring operational and organizational change, while motivating change stakeholders to come along on the change journey and enable them to work through any resistance they may experience. 

Above definition is broad because it takes change delivery (project management) into account. The below will focus on the people-side of change.

Why do Organizations Need to Change?

We can differentiate change initiatives in an organization along their characteristics. For example: developing new products or services, implementing regulatory compliance, maintaining digital platforms, improving workforce engagement, unlocking cost and efficiency opportunities, completing merger integration or entity divestitures, and so on.

The need for organizational change always originates in the external environment and impacts processes, systems, and people inside the organization. When transforming an organization, it is important to bring its personnel along on the change journey, since it is people who make organizations run (this is, of course, different in largely automated environments). 

​Change efforts constitute either a burning platform (e.g., regulatory action) or an opportunity to create a better future (e.g., profit increase). A burning platform usually creates an incentive for personnel to support the change given the potentially negative consequences of not changing. It is usually harder to convince people to support an opportunity-driven change when they believe that they stand to lose something as a consequence of the change being implemented (more on resistance below).

Another helpful contrast is to think of organization change as transactional or transformational. Transactional change is typically gradual and targets work practices, structure, policies, procedures, climate, motivation, responsibilities, and skills of an organization's system. To sustain transformational change, a disruption needs to take place at the organization's core. This means to reshape external environment interactions, leadership practices, mission, strategy, or the organization's culture, and to adopt new norms, behaviors, and incentives. Transactional and transformational change are not mutually exclusive choices. Rather, a gravity-like effect is in place. Take, for example, an organization's mission (considered a transformational organizational component). Redefining the mission almost always impacts responsibilities and skills requirements (which are considered transactional components).

Worth noting: whether the change is a burning platform or an opportunity, illustrating its purpose will provide a north star for execution and communications. Simply announcing the desired outcome and laying out execution steps does not sufficiently motivate people to support the change.

Change is Hard

It is occasionally alleged that 70% of change initiatives fail and that effective execution methods increase an organizations chances of success. A counterpoint to this argument is that there exists little supporting research. We can reason, however, that skills proficiency usually creates good results. Change management competencies are therefore a necessity in organizations.

​Change is hard because it unsettles the status quo, creating uncertainty and ambiguity. Another issue makes change even harder: whether they are for-profit or mission-driven, organizations are complex constructs. This complexity can further impede change. Consider, for example, the effort it takes to align on a project's objectives with cross-functional teams in a multi-national firm (which, most often, is helped with good leadership and governance). 

Further compounding the effects of organizational complexity is the non-linear nature of change (taking two steps forward and one step back) and that projects cause competition for attention and resources. Hence, when not evolving is not an option for an enterprise, any progress through change will involve (some) struggle.

Little can be done about the fact that impactful change must be disruptive to the status quo. What effective change management strategies can accomplish is to help organizations and their personnel to work through the disruption in the best possible way, and to cope with complexity and non-linearity.

Signs of Change Being Difficult

It is possible to observe the symptoms of an organization's difficulties to transform itself:

• • Stakeholders are not aligned on or committed to the purpose of a change, do not understand their role in the change, or fail to engage on the necessary activities

  • The delivery schedule for a change is unrealistic or a surprise, or efforts to deliver training and communications are late or incomplete

  • Teams that were asked to complete important work for the change lack resources or skills

  • The scope (i.e., expected outcomes) of the change is unclear, frequently changes, or grows significantly because of omission

  • Culturally, major parts of (or the whole organization) are locked-in to resist change due to unwritten rules, risk aversion, or structural disjointedness

When these issues lead to uneven change execution, the consequences can be impactful:

• • Finishing the project or adopting the change is delayed

  • Desired benefits of the change are delayed, reduced, or missed altogether

  • Extra investment is required for re-work or to allow more time for adoption of the change

  • Personnel exhibit low morale, increased turnover, reduced productivity, or conflict

  • Market or client opportunities are missed when critical capabilities are not delivered when they were expected

  • Reputation of the brand, company leadership, or employees is negatively impacted 

Some organization leaders with limited understanding of how change management works like to conclude that people are not doing as they were told when a transformation stalls and label them as resisters. However, when change becomes difficult, there could be other factors at work that have nothing to do with people's ability or willingness. Consider for example structural disjointedness and inadequate resourcing.

​Of course, some parts of the organization will welcome the promise of change and reaping associated benefits. Almost always, however, there are people who resist. A nuanced approach is therefore necessary to understand how resistance works and what can be done about it.

How Change Resistance Works

Imagine a scenario where a change project was perfectly scoped, planned, and delivered, but the new capability does not deliver expected benefits because people in the organization will not use it. Getting an organization ready for a change, accordingly, needs focus on its personnel in addition to having good plans and a budget.

​What causes resistance? Most organizational change requires people to adapt behaviors, adhere to new norms, and learn different skills. It also requires a mental shift to understand the change's purpose and accept that it is good for the organization. Mandating this belief rarely works. 

​The central problem is that resistance is pre-programmed in humans. When we used to live in cages, survival meant being able to scan the environment for existential threats such as a hungry saber-toothed tiger. To defend or evade the danger, we had to become aware of it first. Today, our brain is still evolutionary programmed to sense variations in the environment, to raise an alert, and to take action. Even simple variations are interpreted as uncertainty (which is the same as risk) and may be treated as a hazard. 

Changes in today's organizations are rarely of real danger and usually only result in deviations to what people know to be safe, familiar, or convenient. For example, having to learn a new IT system or being assigned to a different team. Our brain, however, reflexively assesses variability as uncertainty and a threat to the self, which can trigger fear emotions that compel the human organism to initiate autonomous responses (fight, flight, freeze, or flock) so that it survives. That is our survival instinct at work.

The types of individual resistance seen in organizational change initiatives can be categorized as follows:

• • Ideological: the person believes (intellectually) that the change is the wrong thing to do, is doomed to fail, morally inappropriate, or will not work out as well as intended

  • Political: the person is convinced that they stand to lose one or many things that are valuable to them, for example position, power, perks, pay, or promotion

  • Blind: the person is irrationally opposed to the change and may not be able to explain their reasons for resisting, perhaps out of fear, intolerance, or apathy

Resistance is not automatically bad and can be instructive since all behavior is data. Assume that (some, not all) vocal opponents care about the change in some way, why else would they engage? What if, for example, an ideological argument reveals previously unknown facts that shape the change in a favorable way? Ideally, resisters are converted into supporters for the change through early and frequent involvement since participation leads to commitment. At minimum, a dialog between change leaders and those impacted by the change helps with creating acceptance when personnel feel heard.

Change Leadership Strategies

Addressing resistance only when it is firmly established likely results in further difficulties making a change stick. Good change management therefore warrants being proactive and strategic. 

Choosing the right strategies relies on a complete understanding of the departure point for the change journey, the organization's structure and culture, what resource capacities exist (people, processes, technology, funding), the intended outcomes and desired benefits of the change being pursued, and plausible reasons why the organization is (or is not) ready to accept the change. 

The following strategies can be considered to address individual resistance and enable adoption of a change:

• • Ideological: Persuade convincingly, using as many facts and evidence as possible

  • Political: Negotiate trade-offs/compromises and distinguish short/long-term impacts of the change

  • Blind: Provide credible reassurances, allow more time to work through 'it', and create experiences that make the change real

Demonstrating future-state value, highlighting what will remain unchanged, providing an outlet (someone who listens), and giving people an opportunity to grieve their loss will be beneficial regardless into which of the above categories the majority of personnel targeted by a change fall. ​

Unfortunately, some senior leaders expect that their staff should come on board with a change immediately, despite the fact that they themselves had weeks or months to think through it. Personnel should be given a suitable amount of time to do the same. The strategy of last resort to overcome resistance is to issue a decree or remove unbending staff. Positive outcomes cannot be guaranteed when doing so.

Change Communications

A communications strategy is a vital part of a transformation's project plan but cannot be solely relied on to sustain a change.

Research has shown that staff members prefer to hear from senior leaders about their vision and the direction for the organization. The immediate supervisor, on the other hand, is expected to address job responsibilities/performance and discuss changes happening in the organization. That is why engaging the middle part of an organization as a network of change champions can be effective when executing change projects. 

Communicating during times of uncertainty and ambiguity makes it immensely important that leadership actions are consistent with messages, which should be believable and empathetic. Leaders who are not willing to make a sacrifice while asking everyone else to sacrifice something will quickly lose credibility. Key messaging should include an illustration of what will stay the same, recognizing the hurdles that are ahead, explaining how the hurdles could make the change difficult yet worthwhile, and how any challenges during the change journey could be addressed.

Measuring Change

Measuring change should take place in three areas:

• • ​Pre-change readiness: assessing people's general sentiment about the change, and the organization's competency and capacity to deliver

  • The project's outcomes: evaluating financial and non-financial benefit forecasts as documented in project's business cases

  • The impact on personnel after the change: measuring engagement, participation, and motivation

​Personnel sentiment can be assessed through surveys and by using a feedback loop that leverages the change champions. Any measurement of personnel engagement warrants enlisting support from Human Resources and using their assessment instruments. 

Organizational competency assessments should include talent, knowledge, suppliers, process, and technology. Capacity constraints need to be assessed in terms of funding, staffing, and time. 

Project outcomes can evaluated through key performance indicators, such as transactional or financial efficiency improvements. Here, it will be worthwhile to emphasize leading indicators (leads, closings) over lagging indicators (sales, profit).

Change Frameworks

Some organizations place too much emphasis on project-planning competencies when they execute change. Prioritizing tasks, milestones, schedules, and budgets in this way could mean that doing so is in the organization's comfort zone. It could also mean that it lacks the expertise or does not understand the importance of conducting organizational diagnosis. ​Example change frameworks that emphasize delivery processes include John Kotter's 8-steps and PROSCI's ADKAR. They guide planning and delivery but do not account for assessing the current state of an organization. 

However, a grasp of the organization's current state is almost always necessary when embarking on a change. The Burke-Litwin model and McKinsey's 7-S are two frameworks that enable diagnosing the current status quo. More comprehensive than 7-S, Burke-Litwin anchors in research on open systems theory and cell biology theory. These theories stipulate that:

• • Organizations, their components, and relationships between components can be affected by the environment, can affect the environment, and may affect each other

  • Similar to organisms, organization systems take from the environment, convert what was taken, and produce an output

  • An organizational assessment thus needs to develop insights about causality by taking a system-wide perspective of the organization, making sense of all its parts, and especially their relationships.

Ownership

Making Human Resources (HR) or Information Technology (IT) accountable for change is sensible when the change impact is limited to HR and IT. It makes less sense to compel either team to own enterprise-wide change. This remit would extend beyond their core competencies. Instead, HR and IT can be viewed as providers of expertise and solutions that many change initiatives rely on. 

The right team to own enterprise-wide change management is Operations. Its mandate spans across the organizational matrix, positioning it well to sponsor a team with a composite skill set.

Governance

Some organizations, rather casually and inconsistently, categorize change efforts into 'true transformations' and 'just another change we do'. In this mindset, transformations are seen as valid change projects with a defined scope, schedule, budget, and team. The other kind of 'BAU change', it is assumed, can be handled by staff members alongside their regular workload. Several problems can result from this mentality:

• • Selecting and prioritizing the right change is challenging when there no agreement about what kind of work constitutes change

  • Unrealistic assumptions about capacity and capability make it likely that new work is approved without consideration of what is important and feasible

  • The resulting resource contention can cause undisciplined shifts of capital and workforce commitments that slow down execution overall

Organizations should maintain an effective cross-functional governance body to oversee their change portfolio. Through this governance function, it can be ensured that there is an agreed definition that establishes boundaries between change and business-as-usual operations (the terms 'Run-the-Business', RTB and 'Change-the-Business', CTB can be adopted). Additionally, data that contrast the demand for change support and available capacity (funding, personnel) and capability (skills, competencies) alongside definitions that classify change opportunities by, for example, value, complexity, risk, and competency needs will enable sound decision-making about which change projects to select.

One caveat: maintaining a portfolio governance function extends beyond traditional change management responsibilities into the practice of Project Portfolio Management, there are more ideas on this here.

Where to Start

A methodical approach to delivering change must not introduce bureaucracy and can be tailored to the organization's needs. To understand organizational change management maturity, the following areas should be evaluated: 

• • History: reviewing the results of past change projects will reveal lessons about the organization's change management approach

  • Expertise: best practices and procedural support provided by experienced change practitioners can enable staff develop the expertise necessary to perform according to their role in a change initiative 

  • Funding: a percentage of project budgets should dedicated to enable change planning, assessments, transitional activities, communications, and training

  • Methods: change projects should be planned and executed using industry-standard frameworks that were tailored to the organization's context and needs

  • Adoption: strategies to sustain the outcomes of a change project should be incorporated into project plans and measured as to their effectiveness

  • Learning: after-action reviews help determining what worked well in projects and where there may be opportunities for improvement

  • Culture: an assessment of behaviors, norms, and engagement can surface what may make change hard for an organization (e.g., silos, lack of trust, weak alignment, low morale, misunderstood mission, etc.)

In an organization that has difficulties delivering change, improving change competencies will be a change initiative in its own right. In most cases, identifying one major pain point and tackling that first is manageable and builds credibility. Ideally, improvements can be piloted within an area of the organization that is receptive to new ideas. From there, a further diffusion of the new change management approach can begin.

Change is messy and difficult. Although, once it is truly understood and managed, renewal and advancement are less daunting and delivering continuous change can become part of the organization's fabric.

Reference: Burke & Noumair, Organizational Development; Pasmore, Leading Continuous Change