Why Companies *Need* Dedicated Change Management

Environments, tools, and organizations are evolving rapidly. Businesses must develop deliberate approaches to manage change.

“Change is the only constant,” goes the saying, and it’s only half right. The existence of change may be a constant, but its rate isn’t. Society, technology, and business shifts are accelerating, and the companies that survive and thrive will find ways to keep up.

The blistering pace of transformations is spurring a renewed look at change management. More organizations realize they need a robust process to handle rapid evolutions, and many require permanent change-management positions.

Here’s a review of what change management is, its current state, and how organizations can develop a deliberate approach.

What is change management?

Wikipedia has one of the more comprehensive definitions of the term:

Change management (CM) is a collective term for all approaches to prepare, support, and help individuals, teams, and organizations in making organizational change. It includes methods that redirect or redefine the use of resources, business processes, budget allocations, or other modes of operation that significantly change a company or organization.

Change management has been a “recognized discipline” for over 60 years, and the concept gained broad acceptance in the corporate world in the 1990s. Early efforts focused on handling transformational alterations to businesses that weren’t routine. Jack Welch’s sweeping reforms of GE in the ‘80s and ‘90s are a famous example and are considered an unusually successful change-management story.

However, change management applies to far more than corporate restructuring or integrating companies after mergers. Any change that significantly affects a business and its people must be managed. Examples include tech rollouts, natural disasters, revamping incentive plans, a leader’s death, lawsuits, new sales or operational processes, and significant events within an economy or industry.

Regardless of the precise evolution, two characteristics stand out:

1. A transition must be managed to achieve the desired outcome
2. People must be managed and supported through it.

Change management examples and avoiding failure

Attempts at change management can have significant results—positive or negative. Here are examples of successful initiatives:

• The global insurance company Zurich Life recognized it “had become bureaucratic and slow-moving,” struggling “to adapt to changing market conditions and customer behaviors.” So, it revamped its technology, “reduced bureaucracy,” decentralized decision-making, and, crucially, recruited individuals to “promote change management initiatives.” The company achieved better collaboration, customer service, efficiency, and engagement.

• Software maker Adobe shifted from selling physical software products to a cloud-based strategy back in 2011, which created a need for employees to adapt to “new working practices.” Human Resources proactively met with workers and revamped annual reviews to a continuous, two-way process. These changes significantly lowered turnover amid significant organizational upheaval.

Change management initiatives can also fail without the right approach and resources. One example:

• Taiwanese computer hardware provider Acer was the third largest in the world behind HP and Dell in 2008. Acer recognized that it needed “global reach” to grow. However, while the company acquired international businesses, it failed to “hire foreign talent with expertise in mobile technology” and increase its “number of engineers.” By 2015, Acer had fallen to sixth place in global market share and never recovered its former size.

The first step is identifying the need for change, whether it’s a market pivot, a new human resources strategy, or a supply chain alteration.

However, implementing the change is where many adaptations go off the rails. Harvard’s Division of Continuing Education highlights seven reasons change management initiatives fail:

1. Starting with an incomplete or poorly defined strategy
2. Following a strategy that is too rigid and inflexible
3. Lack of effective communications
4. Failing to identify and address resistance
5. A disconnect between strategy and culture
6. Setting unrealistic expectations
7. Not creating—and celebrating—short-term wins

Notably, most of these gaps are addressed by making change management a consistent function with a consistent process and, in some cases, dedicating personnel to shepherd adaptations.

Businesses must create a framework that enables effective change management.

Consistency, training, processes, and positions are key

Recognizing the need for dedicated change management is key. From there, success relies on empowering people to manage evolutions.

Generally, humans don’t like change and find it difficult—at first. It’s one reason leaders have historically siloed change management into distinct projects, such as a technology implementation or a procedural revision.

However, the increasing rate of adaptations calls for developing an ongoing change management approach that organizations live and breathe daily. Some tips:

Establish change management process basics

Develop a process to handle change. For example, Harvard Business School provides a basic 5-step framework:

1. “Prepare the Organization for Change
2. Craft a Vision and Plan for Change
3. Implement the Changes
4. Embed Changes Within Company Culture and Practices
5. Review Progress and Analyze Results”

That is a very high-level sequence, so the details vary based on individual efforts and organizations. Regardless, companies should approach change management deliberately, providing clarity and direction.

Make change management an ongoing function

Again, many organizations view change management as a discrete task applied to individual projects. It’s perceived as a one-and-done affair before they move on to the next thing.

Instead, change management should be a recurring function, just like operations, finance, distribution, marketing, and other areas. This function may rely on distributing knowledge and approaches among leaders or creating a change management position or department.

Address training, people, and position deficits

In the Harvard Business Review, managerial consultant Ron Ashkenas points out that “most studies […] show a 60-70% failure rate for organizational change projects — a statistic that has stayed constant from the 1970s to the present.”

Ashkenas argues that the “content” addressing approaches to change management is ok, “but the managerial capacity to implement it has been woefully underdeveloped.”

Individual unit managers are always responsible for managing change, but most don’t have explicit training in doing it; they use their best judgment. Like leadership skills, change management is something some people naturally do well, and others don’t—and most individuals can learn to do it better.

So, in addition to developing processes, training managers on how to approach adaptations can improve the failure rate. Again, companies of sufficient sizes will need dedicated change management personnel—even a department—to standardize and smooth implementations.

Embracing and leveraging change is crucial

In social science terms, businesses are “complex adaptive systems” operating within a “complex adaptive” world. The only constant in these systems (and life) is change. However, another consistent aspect of complex adaptive systems is that changes can cause outcomes to scale rapidly—for better or worse.

Thus, companies must prepare to handle change effectively, creating “antifragile” organizations that can succeed amidst volatility. Effective change management has never been more of a necessity, in addition to a competitive advantage.

Karp HR Solutions helps businesses master the mix of finance and human resources. Contact us today for a free consultation.