October 13, 2008

Change Management Graduates to Boardroom Agenda

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

Dubai— Change management is no longer a quirky concept little understood by senior executives; it has now become a mainstream part of most transformation programmes, requiring the unmitigated commitment of employees at all levels. As such, transformation programmes with their increased focus on the people side of change, are fast becoming success stories, having been notorious for their failure rates in the past.
A global survey by Booz & Company of more than 350 senior executives who have led major transformation programmes in large organisations (with more than 5000 employees) has highlighted major progress in the efficacy of change management initiatives, due to the positive impact of people-focussed activities. The survey found that change management workstreams 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 despite the tremendous progress that change management has made in terms of legitimacy and efficacy, with hindsight, they could have done better. Respondents wished they had implemented all of their six people initiatives more fully and earlier on in the programme, with 90% of respondents citing development and alignment of the leadership, and communications and stakeholder management as the most important elements that should have been executed.
The days of change management being a niche activity that’s not taken seriously are over,” commented Bahjat El-Darwiche, principal 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 elements were also reported as contributing to success—such as programme management and substantive strategy and design—high levels of staff resistance were reported, demonstrating the importance of attending to the people factors.
The survey found that internal resistance remains an issue – especially among front-line staff, who are often the most negatively impacted by change – with the survey finding almost 1 in 2 front line staff resistant to change, as opposed to only 1 in 4 senior leaders.
Furthermore, the survey revealed that senior management in North America was perceived to be less resistant than in Middle East and Europe; while middle management in Europe was perceived to be more resistant than in rest of the world.
According to the survey respondents, the most important objectives for undertaking a transformation programme are performance improvement (79%) and cost cutting (62%), followed by the desire to improve customer service (51%).
Change management has evolved over the years from a general communications plan announcing a change in the business, to something that involves communication with all stakeholders from as early as possible in the process, giving voice to those affected by change. “The process today is much more sophisticated and isn’t only an add-on after the business change has been executed, instead it is concerned with stakeholder management - as part of a dedicated workstream, with employees empowered to be involved- and have their say- during each stage of the process,” said Rabih Abouchakra, principal at Booz & Company.
Today’s change management activities focus 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. All of these levers are equally important to the success of business change, and must be integrated into the diagnostic, design and implementation stages of the program.
Organizations must remember that change management is not a linear process and because it is based on human behavior, it is iterative and will constantly change based on feedback from the related stakeholders. “We have identified eight steps that are fundamental in helping organizations manage change, which begins with carefully defining the actual change and creating a shared need and ‘buy-in’ from all related parties. This should be preceded by an initial assessment of the strengths and weaknesses in carrying out each of these steps,” explained Abouchakra.
Assessing the process of change will allow potential areas of threat to success - or potential areas of conflicts between groups - to be uncovered. Diagnostic insights help to tailor the people design and activities aptly to the transformation. Successfully done, limited resources and budgets can be rightfully allocated based on the organization’s specific need for change.
Organisations that wish to succeed at change management will focus on building permanent in-house capabilities for implementing change as and when required. This is especially pertinent given the prevalence of change in global markets, and having this capability inside organisations will allow for greater experimentation and stakeholder participation in the overall design phase.
Forward-thinking companies are building their own iterative change capability stage, which moves the responsibility of change from the organisation to the individual. “In the future, as the evolution occurs from change management to change leadership, organisations will embed change leadership into their very structures,” commented El-Darwiche.
Navigating change successfully means that leaders understand change can be an ‘emotional’ experience for those affected, with most responsibility for emotional reactions falling on front line and middle management. In dealing with employees and institutionalising an enduring change capability; new skills, tools and behaviours should be inculcated into the way people work – especially in those managers that will inspire and lead the rest of the organisation during periods of transformation.
Engaging the organisation and committing staff to be ready, willing and able to work in a new way is fundamental, meaning managers must become closer to their teams and commit them to action. “Asking employees to adopt new behaviours is no longer feasible, instead people must be engaged and motivated to be willing to adapt to these new behaviours,” explained Abouchakra. Those managers with respect from their staff will be in a better position to engage, influence and motivate their teams. Organisations valuing executives with these skills will help them to institute this new method of leading and managing.
A strategic element of change management that organisations often realise they have overlooked is HR. In aligning an organisation’s HR levers – in terms of training and development with the need for a strong change capability, organisations can efficiently support staff during the process. New recruits should be capable of adapting to change, and reward systems must be in place for motivating staff across the board to change and update their skills and behaviour.
“The second generation of change management will focus on the ‘how’, rather than the ‘what’,” commented Abouchakra. “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.” Those organisations that embed the change management capability into the culture of their organisation will have the tools to mobilize change, as soon as it is needed.
Notes to editors
The survey was conducted in January 2008 amongst more than 350 senior executives who had led major transformation programmes for large organisations (5000+ employees).