Change management graduates to boardroom agenda

People initiatives now feature in most transformation programs but the verdict is “could do better”

June 17, 2008—Change management is no longer a quirky concept little understood by senior executives; it has now become a mainstream part of most transformation programs. And transformation programs are fast becoming success stories, having been notorious for their failure rates in the past.

A global survey by Booz & Company of senior executives who led major transformation programs in large organizations (with more than 5,000 employees) has found that change management work streams are now implemented in 82% of cases, with the same proportion declaring the programs as having had a positive impact on business performance (82%).

However, most companies say that, with hindsight, they could have done better. Respondents wished they had implemented all of their people initiatives more fully and earlier on in the program.

Transformation programs typically entail fundamental changes for employees. Take, for example, the transformation program of a UK government agency that Booz & Company supported. The program goals aspired to a fundamental change in how the department was operated. Turnaround times for certain activities were cut down from several weeks to only a few minutes. In order for this to take place, the front line staff had to learn how to operate very differently: new processes, new team structures and systems, new skills and behaviors. Change management activities focused on pulling together a programmatic and practical approach to change, with an emphasis on leadership development, staff engagement, changing critical HR systems and processes and most importantly building up the agency’s internal change capabilities. The business results of this approach to date have been impressive.

According to the survey respondents, the most common reasons for undertaking a transformation program are performance improvement (79%) and cost cutting (62%), followed by the desire to improve customer service (51%).

“The days of change management being a niche activity that’s not taken seriously are over,” commented Richard Rawlinson, vice president at Booz & Company. “Executives now ‘get’ the idea but our survey shows that more attention is needed in the execution - and initiatives need to be implemented earlier on and more fully.”

Although other program elements were also reported as contributing to success—such as program management and substantive strategy and design—high levels of staff resistance were reported, showing the importance of attending to the people factors:

  • Front line staff are significantly more resistant to transformation programs than senior leaders – with almost 1 in 2 front line staff being resistant as opposed to only 1 in 4 senior leaders
  • Senior management in North America was perceived to be less resistant than in Asia and Europe; middle management in Europe was perceived to be more resistant than in Asia and North America

“The second generation of change management will focus on the ‘how’, rather than the ‘what’,” commented Ashley Harshak, principal at Booz & Company. “The attitude of the organization’s leadership is key and they need to inspire people to adopt new ways of working, skills, and behaviors. HR departments also need to act as enablers to underpin this–for example using learning and development programs and the strategic use of recruitment and reward.”

The survey was conducted in January 2008 among more than 350 senior executives who had led major transformation programs for large organizations (5000+ employees).

A copy of the survey results is available for download here.