Change management graduates to boardroom agenda

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

London, 17 June 2008: Change management is no longer a quirky concept little understood by senior executives; it has now become a mainstream part of most transformation programmes. And transformation programmes 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 programmes in large organisations (with more than 5000 employees) has found that change management work streams are now implemented in 82% of cases, with the same proportion declaring the programmes 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 programme.

Transformation programmes typically entail fundamental changes for employees. Take, for example, the transformation programme of a UK government agency that Booz & Company supported. The programme 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 behaviours. 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 programme 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, partner 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 programme elements were also reported as contributing to success—such as programme 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 programmes 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 organisation’s leadership is key and they need to inspire people to adopt new ways of working, skills and behaviours. HR departments also need to act as enablers to underpin this – for example using learning and development programmes and the strategic use of recruitment and reward.”

In the UK, 100 senior executives completed the survey. The key findings were:

  • 85% of respondents said that the most common objective for a transformation programme was performance improvement. 66% said it was to achieve cost-cutting.
  • 85% of respondents said that the transformation programme undertaken had a successful impact on business performance.
  • 82% of respondents said that there was a dedicated ‘people’ workstream which conducted activities to engender changes to employees’ skills, behaviours and attitudes.
  • 57% said that front line staff were resistant to the transformation programme and 24% of senior managers were resistant.
  • In all ‘people’ activities, a high proportion of respondents stated that, with hindsight, they could have done better. For example, 71% paid attention to the development and alignment of the organisation’s leadership; but with hindsight, 96% said they could have done better.

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