What Is Change Management and How Does It Work?
Change management is described in Wikipedia as “any approach to transitioning individuals, teams, and organizations using methods intended to re-direct the use of resources, business process, budget allocations or other modes of operation that significantly reshape a company or organization”. But what does this really mean and how do business consultants implement successful change programs for their clients?
Let us first understand why change is needed and why change management has evolved as a skill that consultants like us need to be able to offer to our clients. Change within organizations has largely resulted from globalization, and the need for businesses to become more flexible, so that competitiveness and financial performance can be maintained or improved upon. The main drivers of change are:
From a political perspective, there has been a major move over the last 40 years to remove tariffs on trade and for trade pacts to be put in place to facilitate international trade. Trade tariffs are only a fraction of what they were just 20 years ago and institutions and trade pacts in the international space will continue to erode these tariffs over time. The EU is just one of many geographic trade blocs that removes barriers to trade. Other treaties and trade agreements that contribute to globalization include the North American Free Trade Agreement (NAFTA), the Transpacific Treaty, the African Union Treaty, The ASEAN Free Trade Area, and the Transatlantic Treaty – which is due to come into force in 2017/18.
Technological innovation continues to accelerate and this not only drives down costs for businesses but also creates new opportunities and new industries that are not hampered by international boundaries.
Markets are no longer local or regional and have become global. As domestic markets become saturated, companies become global and follow customers wherever they might be. This has increased the evolution of multi-national corporations (MNC’s) and multi-domestic companies (MDC’s) with a true global presence, wherein differentiated products can be produced and marketed in individual markets globally.
Manufacturing businesses seeking lower costs have increasingly migrated to countries where lower labor and production costs are available. As skilled labor becomes available in low cost economies, MNC’s and MDC’s move from one low cost location to other ones with an even lower cost structure.
Competition is truly global now for all businesses, even SME’s. Small and medium businesses now have the ability to source materials and skills right across the globe and to market their products globally when using the Internet as a delivery channel. This was not possible 20 years ago.
Take for example my own business analysis software firm – GrowthOracle. Although I am based in Ireland, I use skilled software developers in India, web developers in the Philippines, project managers in the United States and I sell my products globally.
Change management looks primarily at how people and teams are affected by organizational change while taking the following into account:
- Organizational structures
- Infrastructure (including Information technology)
People must remain at the center of all change initiatives because if there is no buy-in by the people affected by the change, then the project is doomed to fail. Firstly, everyone must understand the reasons for the change and agree that the changes are necessary. Secondly, employees and executives need to be trained in the change process, get involved in the implementation and exhibit the new skills and desired behaviors. Thirdly, change management consultants need to provide feedback to the change management sponsors and help to overcome any resistance to change initiatives.
Not everyone welcomes change and there can often be significant resistance that can derail a project. These include:
- Company culture
- Embedded work practices
- Trade Union power
- Fear of implications of change
- Lack of required skills
- Career aspirations
It behooves us to take a structured approach to managing change projects for our clients so that the process can be smooth, seamless, and that it generates long-term benefits for our clients with the minimum of disruption. Most of us follow well-defined change management process models, which may include the following ones:
- Lewin’s Change Management Model
- McKinsey 7 S Model
- Kotter’s Change Management Theory
- Nudge Theory
- ADKAR Model
- Bridge’s Transition Model
- Kubler-Ross Five Stage Model
Cleverism does a useful evaluation of these models and highlights their benefits and disadvantages in a blog article of June 18, 2015 – http://www.cleverism.com/major-approaches-models-of-change-management/
Change does not happen in a vacuum and it cannot be rushed. Phase one involves preparation wherein the business consultant works with the project sponsor to define the scope of the change management project, how & when it should be rolled out and who shall be the key players in the roll out. Phase two involves the development of a detailed implementation plan, assigning of key roles, training and implementation of the agreed plan. Phase three requires the consultant to keep his/her finger on the pulse, listening to feedback, re-adjusting, managing resistance and ensuring that rollout and buy-in is successful. Good communication and openness will be at the heart of any change management initiative and feedback loops must be provided so that any difficulties can be reported, analyzed, and corrective actions taken.