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Keys to Managing Organization Change
It is amazing to me how many companies undertake a major change with little preplanning, and then they wonder why the change didn’t go smoothly. By some accounts, as high as 50% of all organizational changes fail.
If your organization is getting ready to undertake a major change there are several change models that offer an understanding of what happens inside the company during a change and what you can do to make it go more smoothly.
One of the most widely accepted model of change was articulated by Lewin. He suggests that there are three major stages of change: Unfreezing (preparation and planning), Change (implementation), and Refreezing (anchoring it in the new culture). It sounds somewhat simple, right? Well, it is a bit more complicated than it sounds. With such a high failure rate, it is imperative that companies spend a great deal of time on each stage of the change process.
All the prominent change models are based on the premise that organizations are systems with each part being interdependent on the other. A gentleman named Nadler believed that an organization can only experience optimal performance when all parts of the system are congruent.
Unfreezing (Planning and Preparation):
In the first stage, the organization has to set the stage for change and prepare the organization for what lies ahead. The most important decision an organization makes at this point is to assign a change manager – someone, first and foremost, who understands the change process. In many cases this has to be an outside consultant who specializes in this area. The change manager’s role is to guide them through the various stages of change. There should also be a project manager whose role it is to make sure that the change is implemented across the organization. And it is absolutely essential that the change is not only supported by, but driven by top management.
For a major system-wide change, it is necessary to bring together a Change Team. The team should have representation from all areas of the business, and should include both those who are ardent supporters, and those who might have enough informal influence to derail the change. One major premise of change is this: “People support what they help create.”
It is critical during the preparation and planning stage that those in charge of the change first do a thorough assessment of the readiness for change. First identify and look at the drivers of the change. What makes change necessary? What are all the issues related to the change? What will happen if we don’t make this change? If we do make it, how will this change affect the various aspects of the organization such as the organizational structure, business processes and systems (technology, billing, payroll, collection, day-to-day operations, etc), and stakeholders (customers, suppliers, and employees)?
The organization needs to ask itself a few questions: What must we do to be ready for change? Are there business processes that will need to be changed before we can proceed with this change? Are employees ready to support the change? If not, what must we do to prepare them? Who has the power to make or break the change? Will this change require us to reduce or add to the work force? If so, what is our plan to do that? How will this affect our current culture (for example if acquiring and merging with another company)? Is there a sense of urgency to change what is not working? If not, how can we create that sense of urgency?
Paramount during this stage is to craft a compelling business case and an inspirational vision for the upcoming change. Having the answers to the above questions will help tremendously to craft a business case and vision. Change must make sense to the various stakeholders in order for them to buy in and support it. The old adage “what’s in it for me” (WIIFM) is crucial.
A vision statement should tell the story of what the organization will look like when the change is completed. It should outline the benefits to the various stakeholder groups. And finally it should have the “big picture” plan for how change will be implemented. The details will follow later. The message must be communicated, and communicated again and again.
Communication during a major change can be tricky. Change initiatives often flounder because not enough attention is given to crafting the communication strategy. People need to feel that they know what is going on, but too much information could cause them to “turn a deaf ear” to the messages. It is a good idea to create a communication plan outlining:
- the various targets for communication
- the message(s) they need to hear
- the best timing for the message(s)
- the communication vehicles to be used; and
- the best person(s) to deliver the message.
In addition to a communication plan there needs to be a very detailed plan for all aspects of the implementation. The first place to start is to examine “quick wins”. Are there things that can be put into place quickly to show employees that change is occurring? Are there employee concerns that can be addressed up front? Quick wins help bring on board the “fence sitters”. Statistically, it appears that about 20% of your employees will jump on board with the change right away; 30% will openly resist it, while about 50% of them will be “fence sitters.” Quick wins can help you win over a large contingency of your employee population. And it should go without saying, but don’t forget to communicate the “wins.”
Besides executing and monitoring the detailed implementation plan, this phase also involves keeping employees informed of progress, getting input on how the change is affecting stakeholders, systems and processes, and continuing communication that challenges rumors, reassures employees and reaffirms senior management commitment to the change.
During this process it is helpful to have a “scorecard” to measure and keep stakeholders informed of the progress. Companies often track and publish promised to actual implementation times, budget to actual expenses, productivity gains, or increased earnings.
Refreezing: Anchoring it in the Culture
A company’s “culture” is its shared beliefs, values, and assumptions, and norms. There can be any number of sub-cultures as well, based on work group, physical location, etc. It has been estimated by some that 70% of change management projects fail due to culture, not strategy. An organization can have a strong strategy, the best implementation plan, and a dynamic communication plan, but still fail if they failed to consider all the various aspects of a the organization’s culture (and sub-cultures).
Anchoring a change in the culture starts early in the process, by understanding what kind of culture (or cultures) you have. What are their belief systems? How strongly do they hold those beliefs? Are those beliefs consistent with the new ways of doing things, or in direct opposition? If you are merging with or acquiring a new company, this is a critical element. You need to evaluate how well the two cultures will be aligned. If there are drastic differences, some companies elect to bring on a new business product or service, but not bring the employees with it. Sometimes it is easier to take a chance on a totally new employee versus one that has become so engrossed in a culture that is not congruent with the acquiring company. Other companies begin integrating employees from the new culture early and bring them into the change process.
Changes have to be anchored into the various “people systems,” such as performance management processes, employee and leadership development, the selection and interview process. A good way to do this is to define the culture you want to create or the behaviors that need to be demonstrated in order for the change to be successful. Define the competencies (skills, knowledge, abilities, and other personal characteristics) that will contribute to the desired culture. You can then hire for those competencies, assess current employees against them through your performance management process, and create plans for developing such competence in employees.