Change Management

Change is the only constant in business – yet change initiatives are often cited to fail a staggering 70% of the time.

Although business leaders frequently introduce change into their organizations, many find it difficult to translate the statistics and proposed gains into an actionable plan that motivates employees to embrace the change.

And without support from the people that make up the organization, no leader will be able to make the change work on their own. Enter change management, the way for business leaders to instill change that motivates their team.

The following is a guide that explains what change management is, the 10 principles of change management, and the other factors that go into making a change management program either a success or a failure.

What Is Change Management?

Change management is a systematic approach and use of resources, knowledge, and tools to instill change in an organization. The goal is to change the way a business is connected to adapt to challenging or growing markets.

It may be easy for business leaders to assume that with the best product management strategy and the most cutting-edge solutions, any new initiative will achieve success.

However, when a seemingly perfect project fails, it may be difficult for leaders to determine what went wrong.

How could something so well-planned do so poorly when another similar project achieved such success?

In most cases, this failure is caused by an inability of leaders to focus on everyone who will be impacted by the changes. And large change has more to do with the people involved than the change itself.

Change management takes people into account directly by creating effective management change for every member of every level of an organization.

However, just like any other initiative, effective change management can be misused or misinterpreted by leaders. Executives may not dedicate enough time or budget to comporting the project.

Why Change Management is Important

Change management is key for a successful business. A few key reasons why change management is so important to include:

Raising employee morals: When employees are included throughout the change process, they feel as though they are a more valuable asset to the company.

This is key to keeping them engaged and motivated to grow in their positions. And feeling valued will make them more loyal to the company when it experiences growing pains throughout a change.

Saving money in the long run: Any large change in a company will be a financial risk.

Setting up a change with change management gives you the framework to modify and improve the change as you go, which will save you on reworking or rescoping your project later.

Meeting delivery results: It is common for a transformation to meet the outlined requirements without the results.

For example, a digital marketing initiative may get all employees to start using a company’s new software, but the intended results of higher customer satisfaction don’t happen.

Change management initiatives focus on the benefits of the solution for everyone, rather than just implementing the solution, so it’s more likely that the results will actually happen.

Principles of Change Management

Any executive who has been responsible for a major change program that even with proper planning, programs fan fail. Turning a plan into a feasible outcome isn’t easy, and no amount of numbers or statistics can determine what will make a product successful.

But what factors make some companies leader in change implantation, while others seem to miss the mark every time?

Research from McKinsey shows that three themes play a critical role in the success of a program.

  1. Organization-wide commitment to change
  2. Ability to focus on the changes
  3. Deployment of the right resources

Google recommends a similar approach for implementing change. It says that the three most important elements of a successful transformation are

  1. A fun, engaging communications plan
  2. Executive sponsorship
  3. Innovation councils to sustain the change

Both Google’s and McKinsey’s approaches prioritize commitment to change that is organization-wide. But just how that’s done can be explained by using the following 10 guiding principles for leading change management.

1. Mold with Team Culture

The first part of any change management strategy is leading with the company culture. What are the shared goals and passions of everyone on the team?

Instead of trying to change the existing culture – which is a difficult feat – leaders should draw energy from it instead. Use what team members already care about to inspire change, instead of trying to redefine what they care about.

It’s important to understand that when trying to initiate large changes, people will be more receptive to it if the change is aligned to the ways in which they already think, work, behave, and feel. Work with the cultural current instead of against it, and it will feel like less of a battle to implement changes.

2. Start at the Top

Changes should begin at the top with management and top leaders. The CEO needs to create a well-aligned group of executives who are willing to put on a united front in order for changes to be effective.

If just one member doesn’t follow the same standards as everyone else, their attitude will trickle down the company until fewer and fewer people adapt to the new strategies.

Work must be done before making a change to get top team members on the same page.

Executives should engage in discussion and listen to others’ points of view to come up with one final plan that reflects the concerns of everyone. No change can go into effect without proper collaboration.

3. Involve Everyone

But getting top executives involved is only the first step to implementing changes company-wide. Leaders need to include every single member of every single layer within the company.

Many strategic planners often don’t take into account how important mid-level and frontline employees are to put a change into action. People on the front line have the closest connections with customers and will be able to give input about customers’ reactions and logistical issues that need to be considered.

In addition, having mid-level and frontline people on board will make the transition much smoother. If they are resistant to change, it will show in the end product.

Top leaders can involve every employee by leveraging the roles of those employees for the best possible outcome.

For example, employees who work directly with customers should have outlets for making suggestions on customers, while those working in research should be able to use those skills to implement the change.

4. Use Rational & Emotional Logic

Leaders will often try to promote change on purely a strategic basis. For example, they’ll use phrases like “we’ll enter new markets” or references statistics or future growth.

While using logic-based objectives is certainly necessary for implementing change, they shouldn’t be the only metrics to encourage employees to get on board.

Statistics aren’t effective at reaching team members emotionally. And it’s an emotional commitment that will ensure that individuals stay loyal to the cause.

In general, team members will respond well to calls to action that will both evoke mental stimulation and engage their hearts. They need to feel as if they’re part of something larger than themselves.

To reach employees at an emotional level, leaders should draw on the company’s culture and traditions. Having a personal connection to team members through shared values will be far more effective for overcoming obstacles than just a number.

5. Lead with Action

Many directors of change assume that people will begin to alter their behaviors once they’re presented with it and company-wide measures are put into place. While these formal measures are necessary, they may be too broad of an approach in the earliest stage.

Daily behaviors are the most critical part to getting a change initiate off the ground. Once smaller behaviors change, employees understand their role in the more formal elements – like training or reward systems.

For instance, say a formal element of a change process would be a new reward system for team members. They get a bonus once they reach a certain number of 5-star ratings from customers who are satisfied with their customer service experiences.

Employees will want to reach this level of competency, but may not know where to begin. They may feel frustrated after negative customer reactions.

Leaders could establish a few critical behaviors for these employees. Some could include opening the conversation with a positive phrase, listening without accusing a customer, and reaffirming customer feelings.

Small actionable steps will make it easier for employees to begin implementing the change.

It’s key that senior executives visibly model these behaviors as a way to motivate team members.

In this example, the leader of the customer service team should use the actionable steps in each customer service interaction. Doing this will demonstrate to his team members what is effective.

6. Keep Everyone Engaged

Leaders often believe that conveying a strong message of change at the beginning of a program will show people what they need to do and keep them involved.

But it takes active communication and attention – especially during longer initiatives – to keep employees engaged with a project and motivated to work hard.

Even without a change initiative, employee engagement is difficult to maintain. Year after year, Gallup polls show low employee engagement statistics – in 2021, the number of engaged employees was just 36%.

What this means during a change management program is that leaders need to create a special strategy to keep engagement levels high.

Engagement can be improved in a number of ways:

  1. Living by team culture
  2. Investing in employee’s success
  3. Training employees properly
  4. Recognizing and rewarding employees
  5. Asking employees for feedback

During a chance initiative, all 5 of these engagement strategies should be implemented. Leaders should view relationships with employees as an investment in the company.

Consider how expensive a change management program costs; it can range from hundreds of thousands to millions of dollars.

Disengaged employees cost a business 34%  of that employee’s salary in lost productivity. With the stakes already being so high, disengaged employees could be the difference between a successful and a failed change strategy.

7. Let Others Lead

Change has the best chance of transforming an organization when everyone has some power in implementing it – research from Gartner shows that shifting implementation planning to employees can raise the chances of success by 12%.

In addition to the formal members of an organization who hold power, executives should look for other opportunities to involve employees in change that will give them duties that are appropriate to their current level of the company.

These informal leaders are special forces who will encourage the more reluctant team members to get involved.

Respected field supervisors, well-liked receptionists, and experienced project managers will be able to reach mid-level and front-line members in ways that top executives won’t be able to.

And people at the lowest levels can be given duties that will reflect how changes are made on upper levels.

For example, a company looking to institute a new customer service software could ask front-line team members to track their interactions with customers both before and after using the software, then provide recommendations to their supervisors about changes that may need to be made.

8. Integrate Formal Solutions

Persuading people to change their behavior won’t happen unless formal elements of the company support the change. Otherwise, the change just seems like additional work with no benefits.

Formal elements that leaders should take into account are training programs, operational changes, structural changes, reward systems, and development opportunities. Change management should present new ways for employees to move up within the company or learn new skills, so they feel like they’re getting returns on their efforts.

For example, take a firm that wants employees to learn more about new software in order to perform their tasks more efficiently. A training program was introduced. In the beginning, it was successful.

Members were interested in learning about the software but soon realized that the program would require 4 hours a week to complete within 6 weeks. In addition to their full workweek, these 4 hours didn’t seem like a reasonable time investment. New training without a reward made them feel like volunteers.

When the company introduced a reward system for employees who mastered the software, though, employees began to learn the software within a few weeks. Because the formal structure of the company recognized their efforts, they were incentivized.

9. Integrate Informal Solutions

But even with the formal elements of a change program in place, informal solutions like the established culture can undermine them if people don’t want to change their behaviors. Formal and informal solutions must work together to encourage team members to go out of their comfort zones.

Take a technology company trying to improve the quality of relationships with customers after focusing on cutting costs.

New procedures were put into place, like training courses for team members and rewards for those who receive positive feedback, but employees didn’t fully embrace the changes until informal measures happened.

When the company asked every team member to live by the new motto of “quality first”, change leaders encouraged every employee to have a personal stake in the change and embrace it into their work styles.

Customers won’t embrace changes in a compact until employees embrace them first, and informal approaches will be the turning point for reluctant team members.

10. Assess and Adapt

Effective leaders will assess and adapt their change management strategy both during the implementation and after the initiative is complete.

Leaders should leave room for some flexibility in their programs so that certain components can be amended to better fit employees’ and customers’ needs.

After a change program is successful, it will be natural to claim victory and move on.

But even a program with great results still has room for improvement. Executives should take time to analyze what worked and what didn’t so future initiatives are even smoother.

Failing to assess a program following its competing will lead to inconsistency in the next program. All organizations will go through multiple large transformations during their life cycles, and previous change efforts should be able to provide insight into the next ones.

The 10 above principles provide a comprehensive guideline for leaders who are dedicated to creating effective change within their organization.

The rest of this article will discuss the necessary components necessary for change management execution, how change management works in the digital age, and why programs fail.

Key Components of Change Management

The 10 principles above are the guidelines to implement a change program. But before the change is introduced to employees, certain elements of the program need to exist already.

Those elements are ready preparation, sponsorship willingness, a structured method, applicable strategy, communication plan, and management training.

Readiness Preparation

Once a set of changes has been agreed upon, top executives need to expect that these changes will not be accepted by team members, right away, and will also not occur as planned. They should sit down and begin planning for contingencies.

Leaders should first consider how employees will receive the change:

  • What challenges are we expecting to face?
  • How big of a change will this be for which groups?
  • Which groups will be affected?
  • How do we expect different groups to react?
  • Which team members could we work with to get more difficult groups on board?

What incentives will encourage individuals to support the change?

Leaders should also think about how they will face setbacks:

  • What are the weaknesses of this plan?
  • What is the riskiest element of our strategy?
  • How will we handle setbacks?
  • What will we say to frustrated team members?
  • Where will we direct complaints or suggestions?
  • How will we modify the change as necessary?

Answering these questions will help leadership decide how ready the organization is to begin.

Sponsorship Willingness

CEOs and other company leaders will play key roles in implementing the change. They need to be prepared for their roles before changes occur.

Team leaders should meet and establish their commitment to the program. Who will be able to handle a larger role? Who will step out and let other leaders take the lead?

Once leaders have established their responsibilities, they should create their own actions plans and roadmap for participation. Certain executives will work closely with one another, and others may work more independently.

The leader of the initiative, likely the CEO, should establish a way for all management officials to communicate with each other as they plan the initiative. Executives need to be all-in before the changes are underway.

Structured Methodology

Depending on the size of the change, a structured methodology will need to exist for leaders to work with their teams.

A structured change methodology will ensure that teams don’t have a “hit or miss” approach when it comes to change. If one team does all the right things and the other misses key steps, it will lead to imbalanced results and friction among team members.

Leaders should establish with each other which parts of the program can be flexible based on the department, and which elements of the change need to be standardized for every employee.

For example, if a change is designed to reduce waste via a new inventory system, leaders need to agree on what steps will be required for all employees. Maybe each leader will oversee mandatory training that needs to be completed by a certain period.

In other areas, leaders could have more flexibility, like choosing different ways for team members to express feedback.

Applicable Strategy

But a methodology shouldn’t be so structured, so it makes it too specific for most departments of the organization. A change management program needs to be applicable company-wide.

The goal of change management shouldn’t be a step-by-step “what to do” guide, but rather to establish a set of core values that guide you on how to approach a variety of situations.

The change tools should be repeatable to achieve similar results, but not one that requires a strict following of every step.

Team members should be allowed to use their judgment on a case-by-case basis to determine which parts of the change methodology will work for each situation.

Team leaders should think of effective change management as a malleable solution that can be molded to different needs and customers. While the core stays the same, it can take on different forms as needed.

Communication Plan

Communication is the central issue of any change management program. How information is delivered could be the difference between a hostile department and an open one.

Leaders should establish a communication plan that has a unique structure for the change program.

Communication plans need to involve planning for company-wide messages and department-specific memos. Plans should include how to reach all members of the company, typically through an email or company portal.

Change program leaders could plan for departments to meet once a week to discuss progress, and then report these findings to upper-level management. On an individual level, team leaders should establish ways for employees to reach out either openly or anonymously.

Management Training

A survey taken by the Society for Human Resource Management revealed that 84% of U.S. workers say that poorly trained managers create the most unnecessary work and stress.

The majority of these individuals say their managers would benefit from more training.

All levels of an organization need to be adequately trained on both their current positions and the additional responsibilities that change initiatives will require. It’s best that they complete this training before any changes are officially rolled out to lower levels.

How Change Management Works in the Digital Age

From small program changes to complete overhauls, it’s more likely than not that your change management program will include digital elements.

For a change management strategy to be successful in the digital era, you’ll have to approach it as you would any other part of your business: with a future-looking mindset that embraces technology.

Consider how change management historically operates. The change was always top-down and took slow and deliberate efforts to achieve.

Change always occurred linearly and was often executed without a test for how well they matched the organization. And training always matched the top-down approach, with lower-level employees acting as the learners and upper-level employees acting as the teachers.

In the digital age, change has become a process that involves all levels of the organization, with information able to be accessed by every team member.

Because access to information is much more open, change has to be accepted by bottom levels in order for it to fully work.

Change can happen much more quickly, and change activities can happen in parallel with one another instead of from the top down.

Most importantly, learning happens on many levels. Peer learning and web-based education are the new way for company members to acquire new skills, rather than requiring leading – perhaps unrelatable – team members to convey information.

To make a change management program successful, executives will need digital leadership skills that include the following:

  • An understanding of the digital market
  • Knowledge of who will be affected by which digital changes
  • Analytic-based decision-making skills
  • Ability to adapt to different employees’ skillsets
  • Leading changes with digital elements
  • Provide feedback in real-time on digital programs

Understand that the digital age requires a flexible approach that caters to multiple learning styles, lifestyles, and work styles.

Change Management Secret: What’s in It for Me?

Even the noblest causes will always have an element of self-interest and self-actualization. Change management program leaders should embrace that everyone has these tendencies and cater to their programs to give employees as much self-satisfaction as possible.

Individual employee motivation is encouraged by appealing to different levels: individual growth, company culture, customer satisfaction, and community impact.

“What’s in It for Me?”

The change program strategists will always start with the smallest level first: what’s in it for the individual? How will single employees be motivated to embrace change?

Here strategists will conduct research into what team members want and where the company may be lacking. For instance, employees may have expressed a desire to pursue online learning opportunities.

One route for an effective change management program would be to integrate these online learning programs into the intended change.

“What’s in It for the Company?”

Next, strategists will leverage individual motivation into a collective goal: caring about the company.

Employees will learn about the benefits of change management to the company, and how that will benefit their work experience.

For instance, introducing a new digital customer service platform will increase retention rates and reduce stress at work.

“What’s in It for the Customer?”

Once employees embrace how their lives will improve by accepting the program, they’ll be open to learning about how their actions will make others’ lives better.

Adding an additional layer of helping others will give workers a deeper sense of purpose – it’s why 96% of people who volunteer say it enriches their lives.

Top executives should explain how customers will benefit when the employees embrace the chance. For example, one benefit to a new digital customer service platform will be the ability for customers to interact at any time, increasing satisfaction and retention rates.

“What’s in It for the Community?”

The highest and most expansive level of motivation is the community. Contributing to the community will give many employees a feeling of self-actualization.

Change program leaders should discuss the clear benefits to the company when the program is successful.

For instance, they could discuss how the company will be to hire more jobs in the community, how product waste will be reduced through better customer communications, or how the company will initiate a charity program with the money saved from the initiative.

Why Change Management Programs Fail

The most difficult roadblocks to change management are not usually the frameworks or plans, but typically the mindset of the people or the psyche of the company.

Here are the top 8 reasons why change management programs fail – most of which have to do with the people involved, rather than the plan itself.

1. Hyprocital Instructions

Commitment from all levels is necessary for change. Otherwise, a rule put into place from top executives that only mid-level and frontline team members have to follow will just become a source of resentment.

Lower-level team members feel as though senior company members are hypocritical, while those top members will feel as if their people have become more hostile.

Remember that employees are perceptive and will pick up on the messages top executives send through their adherence or lack of adherence to their policies.

2. Avoiding the Change

Another common problem in company leadership is approaching change with a “business as usual” mindset. Executives avoid dealing with the change and hope it will go away on its own.

However, this barrier to change will mean that when a leader does try to implement a change management policy, the team will be more resistant to it.

Because they’ll have been used to avoiding changes or dealing with problems, they’ll be reluctant to get on board with this one.

3. Company Politics

The larger the company, the more faction that will exist within it. Even with strong company culture, there will be informal and formal cliques among it that will dictate the social norms.

These groups may make it difficult for a change management program to be effective. Even if everyone agrees on the intended results, the execution of how to reach those results might lead to friction.

Change leadership needs to address the politics of different groups and harness dissenting opinions for change management programs to work. Occasionally, snubbing certain groups or working around individuals may be necessary in order to work past roadblocks.

4. Addressing Symptoms Instead of Solutions

Leadership will often be reluctant to change and would prefer to treat the symptoms of a problem rather than implement a necessary transformation solution. It is always easier to treat the outward symptoms instead of the cause.

But by failing to solve the root problem, a change management program won’t be successful. It may work in the short term, but team members will soon experience the same difficulties as before.

And in some cases, addressing the symptoms maybe even worse than doing nothing at all. Employees may harbor resentment because they feel like executives care more about appearances than their experiences with customers.

5. Using the Wrong Team

A change initiative will require a dedicated group of team members with specific responsibilities.

Company leaders may be reluctant to pull their best players away from their routine to take the lead on a change. They’ll instead fill the change team with misfits or less popular employees.

But doing this will send a negative signal to the rest of the organization. It will show that the change program is not a valuable endeavor of the company.

Instead, leaders should mix well-liked, notable employees with ones who are newer or less sociable. This will create a team that is representative of the whole company.

6. Forgetting the Individuals

Company leaders may be so eager to implement a change in their company that they focus too much on the big picture, forgetting that it’s the individual employee who makes a change management strategy possible.

At the end of the day, a company is the collection of its employees, corporate culture, leaders, and the broader implications of what they do for society.

When a company leader focuses only on what the big changes will look like, without thinking about how those changes will feel for individual employees, there’s a disconnect between the elements of what makes that company a complete unit.

Any change starts with the individual: their motivations, skills, and aspirations. They also need to overcome their fears and doubts.

In order to access these emotions, company leaders must integrate change in a way that matches the culture. They need to establish strong relationships and encourage them among co-workers.

7. Underbudgeting

Leaders may view change management as just one step on a long list of goals on their checklist. To them, initiatives may just be an afterthought and be funded accordingly. Change programs are thus often underfunded, but expected to yield maximum results.

But without funding the change adequately, its impact will be minimal. It will likely fail and leave a negative impression on company officials when a future change program is suggested.

8. Losing Morale

Any transformation is going to involve setbacks. Leaders may get so caught up in their hopes for an initiative that they may not be prepared for when something does go wrong.

They may end up losing morale or showing a lack of faith in the project, both of which will harm the project greatly.

If leaders don’t believe that successful change is a likely outcome, their employees certainly won’t believe it.

And as soon as a momentary setback occurs, they’ll disengage en masse, says a University of Chicago study. The project will surely become a failure.

Leaders need to expect setbacks and treat them as what they are: small obstacles that can be overcome. Keeping a cool head during the moment will lead to changes that stick in the long term.

Implementing Change Management

Change is never easy, but implementing it with the proper change management strategy will transform how an organization operates. Once the culture and team members embrace change, a company can grow to new levels.

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