The corporate world is always evolving. In order to remain competitive, businesses need to be flexible and responsive to changes in the market, in technology, and in customer preferences. Otherwise, they will be vulnerable to disruption by start-ups who are more attuned to the current marketplace.
It seems like evolution and change would be easy and straightforward, but it most certainly is not. Inertia is a powerful force within a company, and just as in physics where larger bodies of mass are harder to move– larger companies are harder to change than smaller ones.
This is why we need change management. It provides us with a set of tools that we can use to keep our companies from going the way of the dinosaurs.
What is Change Management?
Change management is the process of preparing, supporting, and helping individuals, teams, and organizations transition from a current state to a desired future state. It involves a structured approach to managing the people, processes, and systems affected by the change. Change management helps organizations effectively plan and implement changes, minimize resistance, and maximize the benefits of the change.
Why is Change Management Essential for Business Success?
I began my career at GE. It was the time under the leadership of Jack Welch, who is considered by many to be the best CEO of all time. However, what many people might not know is that top-notch change management was responsible for much of this success. The company had a strong culture of continuous improvement. One of the most valued attributes on your performance review was whether or not you were a “change agent”. Moreover, there was a constant corporate initiative aimed at enhancing the company (during my tenure, it was a quality-first program), and failing to actively engage in this change meant risking job loss to someone who did. This strategy clearly paid off, as GE was the most valuable company in the world when Jack Welch finally retired in 2001.
On the contrary, I’ve also spent many years in my career working at an organization that struggled with change management. Such organizations, including the one I worked for, were frequently criticized in the media for being resistant to modernization, and these criticisms were well-founded. In these environments, change was discouraged. If anyone attempted to propose a new revenue-generating idea to senior leadership, they were often told to “stay in your lane,” implying they should stick strictly to their job description. Predictably, this company’s performance suffered greatly, resulting in a 50% revenue loss over a decade.
I share these anecdotes with you because I know first hand that change management is hard. The natural tendency for companies is to encourage employees to stay in their lanes, and to hope that the people and processes that enabled the company to succeed in the first place will continue to work ad infinitum. Needless to say, this worldview is entirely detached from reality. Organizations must be ready to change in response to change in consumer expectations, not the other way around.
Common Challenges in Change Management
Almost all companies would say that they want to keep up with the times, but very few actually do. Why? There have been many different studies on the causes of change failure, below are the four most mentioned reasons:
- Resistance caused by Risk Aversive Behavior: Companies consist of individuals, and individuals often prefer to stay within their comfort zones. They’re naturally risk averse. They’re afraid of looking bad, afraid of failure, and afraid of losing their jobs. People think that if they try something new, they might fail, and if they fail, they might lose their jobs. Unwillingness to leave one’s comfort zones is present everywhere in a company: including employees, customers, suppliers, investors, and even executives. Consequently, you can expect quiet resistance to any effort to change a company in any meaningful way. People will either completely ignore the initiative, or they will make excuses as to why they can’t participate.
- Lack of Resources: Adequate resources, including funding, staff, and technology, are essential for change management success. Additional staffing might be necessary to alleviate the workload during the transition. Additional training and motivational marketing materials could also be essential to keep employees engaged. Without these resources, employees might become resentful and use the resource shortage as a justification for avoiding participation in the change initiative.
- Lack of Communication: Good communication is one of the most important parts of change management. Effective communication plays a crucial role in helping individuals comprehend, trust, and engage with the change initiative. It can also help find and solve problems that may come up during the change. Jack Welch was a master at this. Even in the days before the internet, he would send video tapes to all GE offices of him answering FAQs, giving motivational speeches, and recognizing the achievements of others.
- Lack of Leadership: For change management to work, there must be good leadership. Leaders are very important for setting the vision and direction for the change initiative, getting people on board, and making it easier for stakeholders to talk to each other and work together. Employees are always taking their cues from the executives– so if they don’t perceive that the execs are passionate about change, they will be more likely to resist it.
How to Implement Change Management in Your Business
Implementing effective change management requires a structured approach. Here is a common but effective process for implementing change management:
- Define: The initial step in change management involves clarifying what you need to change. This includes understanding the reasons for the change, defining the objectives, and most importantly, establishing why it is necessary.
- Plan: Once you have defined the change, developing a detailed plan is necessary. This entails determining the required resources, estimating the timeline for the change, and identifying the individuals responsible for implementing and monitoring the change.
- Communicate: Effective communication is essential for successful change management. Informing all stakeholders, including employees, customers, and suppliers, about the change, its purpose, and the expected outcomes is essential.
- Implement: Implementing the change follows the development and communication of the plan. This phase involves executing the plan and effecting the required adjustments to processes, systems, and behaviors.
- Monitor and Evaluate: Monitor and evaluate the change to make sure it is meeting its goals. This means keeping track of progress, getting feedback, and making changes when needed.
It’s crucial to emphasize that change management constitutes a continuous process, and the steps mentioned earlier might need to be reiterated multiple times to guarantee complete integration within the organization. Furthermore, it’s essential to approach change management as a collaborative endeavor involving all stakeholders, including employees, customers, and suppliers.
Conclusion
In business, change is unavoidable, and organizations must be ready to adapt to maintain their competitiveness. Change management is essential for business success. It helps effectively plan and implement changes, minimize resistance, and maximize the benefits of the change. Hope this article helps you to have a more structured view of change management and find the right strategy for strong change management in your business.