A new CEO or a digital revolution are examples of organizational change. When a major transition occurs — whether with tools, processes, or people — businesses must ensure that operations run smoothly and that employees accept the change. Organizational change goals may not be achieved if companies are not prepared for potential disruptions in the process.
When organizational change management techniques are used, businesses can more easily navigate complex transitions. For example, if employees resist change, companies can provide clear, consistent guidance to assist them in adapting to new processes and tools. Businesses can assess progress and gather feedback along the way with a solid transformation plan to ensure that milestones are met. Here is a primer on organizational change management and some tips for navigating it.
What is Organizational Change Management?
Organizational change refers to actions taken by a company or business to alter a major component of its organization, such as its culture, underlying technologies or infrastructure, or its internal processes. Organizational change management is the process of guiding organizational change to a successful resolution. It usually consists of three major phases: preparation, implementation, and follow-through.
What are the Reasons for Organizational Change Management?
Organizational change is required for many reasons. Managers frequently encounter the following issues:
- New leadership at the top of the company or within its departments
- Team structure changes within an organizational
- The application of modern technology
- Adoption of new business models
- To ensure a smooth transition, it is critical to have an organizational change management process that can be applied to various types of change.
Types of Organizational Change
Adaptive changes are small, incremental changes that organizations adopt to address needs that change over time. Typically, these changes are minor tweaks and adjustments that managers fine-tune and implement to carry out business strategies. Leadership may add, remove, or modify processes throughout the process.
An organization that upgrades its computer operating systems from Windows 8 to Windows 10 is an example of an adaptive change.
Transformational change is larger in scale and scope than adaptive change. They frequently involve a concurrent shift in mission and strategy, company or team structure, people and organizational performance, or business processes. Because of their size, these changes frequently require a significant amount of time and effort to implement. Though not always the case, transformational change is frequently pursued in response to external forces such as the emergence of a disruptive new competitor or issues affecting a company’s supply chain.
The adoption of customer relationship management software (CRM), which all departments are expected to learn and employ, is an example of a transformational change.
Many changes will be somewhere between adaptive and transformational on the spectrum. As a result, managers must understand that the change process must be tailored to the unique challenges and demands of each situation.
How Important is Organizational Change Management?
For businesses to succeed and grow, organizational change is necessary. The successful adoption and application of change within the organization are driven by change management. It enables employees to understand and commit to the shift and work effectively during it.
Without effective organizational change management, company transitions can be unpredictable and expensive in terms of both time and resources. They can also result in lower employee morale and skill development.
A company’s reaction and adaptation to change is also a critical consideration for key stakeholders such as investors, suppliers, and prospective employees when deciding whether to work with or for a company. As a result, a lack of effective change management can result in an organization’s failure.
What is the Role of a Manager In Organizational Change Management?
Each employee in an organization plays a different role in assisting with change. While many staff members may complete highly detailed work, senior-level executives with longer tenure may have different goals. Even within management, managers and leaders have different responsibilities.
For example, leaders must be courageous in taking risks. They must look at the big picture and articulate high-level change to the company, explain why it is occurring, and motivate people to support the transition. To be a successful leader, you must be insightful and know how to delegate responsibility for implementing change processes.
Managers are more focused on the success of business transitions. They concentrate on implementing change by identifying the discrete steps that must occur and their sequence. Managers are also typically responsible for allocating resources, such as personnel, and determining how success is measured. Leaders should ideally also be managers, but it is the primary responsibility of a manager to know how to design, direct, and shape change processes.
To accomplish this, you must possess a diverse set of management skills, such as:
- Effective communication includes actively listening to your team and colleagues.
- A highly developed level of emotional intelligence
- Strong organizational abilities
- Paying close attention
- Ability to solve problems and make decisions
- Delegating without micromanaging
Organizational Change Management Preparation
To prepare for organizational change, it’s critical to first define the organizational change, understand why it’s critical, and gain support from your colleagues.
Then, develop a roadmap that clearly articulates and measures success while also explaining how the business—and its employees, customers, and constituencies—will be affected.
Ensure that the process plan aligns with business goals and outlines the implementation and sustainability of the organizational change. Be adaptable enough to adjust accordingly and take note of any potential challenges. Be sure to celebrate small victories along the way.
Once an organizational transition has been completed, change management does not end. Both during and after the process, you must continuously assess outcomes, track performance to goals, train employees on new methodologies and business practices, and readjust goals as needed to increase the likelihood of success.
Organizational Change Management Strategies
Organizational change can be difficult, necessitating careful planning and well-established procedures to gain employee acceptance and cooperation. During a transition, an organization may have to shift philosophies and goals several times, making a strong, flexible set of guidelines essential for success.
Change Management
An organization must go through several planning stages to prepare for impending changes.
#1. Create a change team:
Businesses must identify the members of management who must be directly involved in the transition plan planning stages. Top executives, human resources professionals, and managers of key departments are usually included. Executives must determine how the team will function, including assigning tasks and responsibilities to certain members, scheduling meetings, and outlining communication methods. This team will establish the vision and goals that will be communicated throughout the organization during the change.
#2. Evaluate the impact:
How significant is the change? How many departments will be affected, and how much? Which job roles will need to be updated? What costs will there be? Companies must examine their current organizational structure to see how it will fare under change. Employees with useful traits may need to be reassigned to more relevant roles, and workers and managers with new skill sets may need to be recruited.
#3. Make a schedule:
A timeline for how the transformation will be implemented with managers and employees must be developed by the change team. Some larger transitions might need to be implemented in stages. The team should also establish success metrics and identify potential roadblocks.
#4. Identify potential issues with the people:
Leaders must anticipate how employees will react to cultural or job changes, especially if workloads are increased. The adoption of new tools and processes can be extremely frustrating and necessitates extensive managerial support. Peer layoffs can also have a negative effect on remaining employees. To determine workforce readiness, a company may need to use assessment tools such as self-evaluations. They may also need to set up coaching or counseling resources to ensure that employees have the psychological support they need to navigate the change.
#5. Notify important employees:
After establishing its strategies, the change team must ensure that all of the organization’s leaders and managers are on board before implementing the change. These managers will be responsible for educating team members on the vision and expectations involved in the transition plan and must be prepared to provide additional training and moral support.
Strategies for Change
Well-developed organizational change management strategies can result in increased efficiencies, stronger teamwork, and improved financial results. Businesses must take the time to develop the appropriate strategies in order to avoid negative outcomes.
#1. Communicate honestly.
Leaders should ensure that the reasons for change are simple to understand. A sense of urgency should be created around why the business needs to transform, whether to combat competitive challenges, meet changing customer needs, or upgrade to modern technologies that will enhance the business. Communication lines should be kept open so that employees can contribute. Sugarcoating the reasons for a change and the challenges that will come with it only alienates workers and fosters distrust.
#2. Engage staff.
Employees must believe that the change will improve the company and that they will benefit from the transition. Companies can offer coaching programs, personal development tools, and reward systems to help maintain positive morale. Employee feedback should be solicited throughout the process to determine whether strategies or timelines need to be adjusted.
#3. Be upbeat.
Leaders of change initiatives can appeal to employees’ emotions by generating excitement around achieving the new corporate vision. Managers can demonstrate empathy by recognizing how anxiety and fatigue can impact performance, according to the article “10 Principles of Workforce Transformation” from Strategy+Business. When employees struggle with change, they need positive encouragement and inspiration from their managers. Leaders should avoid imposing negativity on employees by expressing their own anger or doubts.
#4. Implement revolutionary change.
Although organizational change frequently equals progress, employees benefit from a sense of stability and purpose. Leaders should connect the new, transformational vision to the company’s long-term strategy while honoring the organization’s history and past successes. When employees have a clear picture of where the company has been and where it is going, they are more invested in the transformation.
#5. Keep at it.
Organizational transformations are not achieved overnight. Most successful transitions are implemented gradually to maintain smooth operations. Leaders should be persistent in monitoring change and pivoting when it deviates from the goals. The transition team must revisit goals and timelines throughout the transition to determine whether adjustments are required.
Frequent surveys can help leaders gauge employee commitment, and interventions may be needed for groups or individuals struggling to accept the change, according to this organizational transformation guide from CIO contributor Bart Perkins. In addition to being persistent in carrying out these steps, leaders must be patient in allowing employees the time they need to adjust to change.
#6. Utilize online tools and resources.
A number of tools can be used to plan and implement organizational change.
- Prosci ADKAR Model — a model for planning change management programs
- Creately — an online tool for creating flowcharts and other change diagrams
- Gantt chart — a timeline tracking chart for change programs
- The Change Compass — a cloud-based platform for change analytics and planning
- The Change Shop — a software platform for tracking change management tasks
- John Kotter’s 8-Step Process for Leading Change — a guide for leading organizational change
Common Organizational Changes
Bankruptcies and workforce reductions to acquisitions and product transformations are just a few examples of organizational change. These adjustments are required for both huge corporations and small firms, as all organizations must continually change their strategies to keep up with competitive trends and client expectations.
According to the Society for Human Resource Management, some of the most frequent organizational changes include changes in processes, leadership changes, and company restructurings. They include;
#1. New processes or programs, including digital transformation.
When businesses adopt new technologies, like moving to the cloud or implementing a new customer relationship management (CRM) system, organizational change management programs are frequently implemented. With offices transitioning to remote work and retailers shifting to online ordering and delivery, digital transformation is becoming more common. Companies may also change a major process, such as how new customers are onboarded.
#2. New job responsibilities.
Employees may be asked to change roles as companies transition to newer products or work to improve efficiencies. Some job reassignments are the result of cost reductions, layoffs, outsourcing, or process automation efforts, making it more difficult to maintain employee satisfaction.
#3. New leadership.
When a company is struggling, the upper management structure is frequently shaken. When operations become stagnant, bringing in a new CEO, president, sales leader, or marketing manager can be an effective way of enacting new visions and breaking down the status quo.
#4. Reorganization of departments or business units.
Companies frequently restructure business units to increase efficiency. For example, a large corporation may position the marketing department more closely with sales representatives in order to improve customer messaging. Companies may also undergo restructuring as a result of regulatory change that alters how business processes can take place.
#5. Corporate merger and acquisition events.
Companies make acquisitions to expand their operations or to achieve certain financial goals. When two business cultures merge, adjustments must be made to strategies and processes in order to achieve the new corporate goals.
#6. Organizational Change Examples
Companies have varying degrees of success in implementing organizational change. According to a recent McKinsey & Company survey, more than 70% of companies undergoing digital transformation experienced slowed or stalled progress during the transition. Resourcing issues, unclear digital strategies, insufficient commitment, misaligned cultures, and a lack of core competencies were among the reasons for the derailment. After addressing challenges, 36% of organizations were able to regain momentum.
Organizational Change Management Success Stories
The following articles provide successful organizational change examples:
#1. Amazon Development.
In just a few decades, Amazon went from being a small online bookstore to a global online retail powerhouse. Amazon has always invested heavily in technology, staying ahead of the competition from larger booksellers by offering customer-friendly online sales tools. It gradually expanded its online offerings, expanded internationally, and branched out into web hosting, electronics, robotics, and other fields. Amazon now accounts for nearly half of all online retail sales in the United States.
#2. The Apple revolution.
In 1997, Apple was on the verge of bankruptcy when it received a cash infusion from Microsoft and underwent a major restructuring led by co-founder Steve Jobs. Apple gradually overhauled its product lineup, creating modern, desirable products such as the iMac and iBook. The company developed a nimble, out-of-the-box design strategy that allowed it to meet customer needs, and Jobs led the company to massive success with the launch of the Apple Store, iPod, iTunes, and iPhone.
#3. Toyota’s manufacturing process.
Toyota’s development of what is now known as the lean manufacturing philosophy is one of the most well-known transformation stories. The strategy centered on reducing waste in manufacturing processes, stocking as few products as possible, and pivoting quickly when improvements were required. Toyota became one of the top automakers in the world as a result of this philosophy, and thousands of businesses around the world have adopted lean operating procedures.
Failed Organizational Change Management Cases
There are also many examples of organizational change that was unsuccessful. These companies typically failed to consider customer desires, competitor innovations, and employee input when developing their business development plans, resulting in an ineffective vision and strategy.
#1. The Rise and Fall of Blockbuster.
Blockbuster’s demise is a classic example of a company failing to keep up with the competition. The company created an innovative business model for rapid growth in the movie rental store industry, but it was too focused on expanding its brick-and-mortar chain and failed to compete with Netflix in the mail-order and digital movie marketplace.
#2. Failure of Motorola.
Despite Motorola’s history of innovation and risk-taking, the advent of the smartphone presented significant organizational challenges. The company failed to recognize a cultural shift in how consumers wanted to use their cell phones, and internal discord among management led to a sharp decline in innovative product launches.
#3. The demise of Sears.
Like many other brick-and-mortar retailers, Sears struggled to keep up with the online competition. After closing hundreds of stores, the company declared bankruptcy. Its demise was largely attributed to top management’s unwillingness to invest in updating stores or bringing in new product offerings, instead focusing on cost-cutting in the face of slowing sales.
- DIGITAL STRATEGY: Meaning Types & Transformation
- CHANGE MANAGEMENT: Steps To The Change Management Processes
- CHANGE AGENTS: How to Identify Change Agents in any Organization
- CHANGE MANAGEMENT TOOLS: Techniques & All You Need to Know
- Innovative Ideas for Businesses to Grow in the New Normal
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