A new survey by Booz & Company of more than 350 senior executives who have led major transformation initiatives at large organizations around the globe — those with over 5,000 employees — has confirmed that change management has come of age. Executives now understand the need for clear, credible, and carefully integrated people initiatives in business transformation programs and prioritize these people initiatives more highly than they have in the past. Change management now ranks as a boardroom agenda item.
No matter the change, change management matters
The aim of change management is ensuring people are both willing and able to adopt necessary new behaviors and skills, while letting go of those no longer relevant. While they may have previously overlooked or dismissed the people side of business change as quirky or soft, senior executives now truly understand the importance of change management. They recognize that no transformation gains traction without the buy-in and commitment of employees at all levels, particularly line managers. The survey found that four of five transformation programs now have dedicated “people workstreams” designed to engender changes to employees’ skills, behaviors, and attitudes.
Although organizations have come a long way in addressing the people side of change, it apparently is not far enough, with those leading change believing there is still room for improvement. Many senior executives stated that, in hindsight, they could have executed change better by pulling all of the key people levers earlier and more fully. The survey revealed that internal resistance remains the key challenge — especially among front- line staff, who are often the most negatively impacted by change: almost one in two are resistant to change, as opposed to only one in four senior leaders.
The evolution of change management
At its inception, a change management program was little more than a communications plan — a package of letters sent to employees, customers, suppliers and other stakeholders, as appropriate, announcing the merger or restructuring or new product line. It was an add-on, attended to after the business change had been designed and executed. Over time, it became apparent that these after-the-fact communications with constituents were insufficient. Organizations needed to be in touch with their key stakeholders earlier and more often — and not just through one-way communications but through interactive events and other vehicles designed to give a voice to those affected by the change. As command-and- control cultures gave way to more inclusive and participative modes of working, employees came to expect the opportunity to weigh in on decisions and initiatives that have an impact on their work environment. Accordingly, change management evolved from a communications plan into its own separate stream of stakeholder management activity, monitored by HR professionals or enthusiastic amateurs who focused primarily on getting senior and middle management on board.
Today’s change management: programmatic approach
The change management of today focuses 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. 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. Our approach to change management involves eight primary steps:
– Defining the change
– Creating a shared need
– Developing a shared vision
– Leading the change
– Engaging and mobilizing stakeholders
– Creating accountability
– Aligning systems and structures
– Sustaining the change
Organizations must remember that change management is not a linear process. Because it is based on human behavior, it is iterative and will constantly change based on feedback from related stakeholders.
The future of change management
Recent trends are starting to shape the future of change management: leading companies and institutions will focus on building a permanent, in-house change capability, eventually embedding it within the fabric of the organization. Change management will not be a separate workstream or function that is activated when a new transformation initiative is launched. It will be part and parcel of the organization’s culture, the way it goes to work — which, in and of itself, will change.
In order to ensure change capability is embedded into the organizational culture, three dimensions of change will be particularly critical; leading the change, engaging the organization and establishing appropriate HR systems and structures:
1. Leading the change. While people are assumed to be rational creatures, generally speaking, significant change brings out the emotional side in most of us. Part of navigating change successfully is having leaders at all levels responding sensitively to these emotional reactions. Senior executives play an important role here and need to better understand their critical role in leading the change. However, our experience indicates that the responsibility of dealing with emotional reactions falls most heavily on the shoulders of line and middle management, and they are, for the most part, ill-prepared to deal with employees’ less-than-rational responses to change. This means resistance grows unchecked and cynicism spreads. In institutionalizing an enduring change capability, organizations need to inculcate new skills, tools, behaviors, and ways of working into their employees, in particular line management and middle management. These individuals are the role models who will, in turn, inspire the rest of the organization to embrace and execute the transformation. Forward-thinking organizations are starting to put in place development programs for management to build their change capability
2. Engaging the organization. The secret to successful change management is the ability to engage the organization in a manner that involves staff and commits them to be ready, willing, and able to adopt a new way of working. This capability is not just fundamental to successful change but also to successful leadership and manage¬ment. To achieve this objective, management needs to really get up close and personal with their teams. They need to find the time to truly engage with and coach their staff, as well as acting as role models for new behaviors and ways of working, and ensure they use techniques that get their people on board and committed to action. It is no longer enough to expect people to adopt new behaviors; executives need to understand how to engage people in defining those behaviors and motivate them to adopt them and tackle inappropriate ways of working. This is all the more powerful where staff already respect and value management’s capabilities and where executives have the change management toolkit to engage, influence, and motivate their teams.
3. Establishing appropriate HR systems and structures. To reinforce the institutionalization of a change management capability, an organization needs to have the right systems and structures in place, especially around HR. Our experience suggests that this is one of the key change levers that organizations realize they have not properly exploited. Organizations can support staff skills around change management at the individual level in terms of training and development by aligning their HR levers — role descriptions, key work objectives, and rewards structure — with the need for a strong change capability. For example, recruitment processes should ensure that future hires show an aptitude for adapting to and absorbing change. Reward and recognition systems must motivate people to engage in developing the desired change management skills and behaviors. Employment contracts, performance appraisals, and sales incentives all need to be tailored to the priority of bringing in, retaining, and developing managers capable of delivering change.
Change management as a prerequisite for success
Change management — the people side of business transformation — is no longer a quirky concept poorly understood by senior executives and inevitably blamed for implementation failures. It is now recognized as integral and valuable — indeed, a prerequisite — to success. While change management has come a long way in practice, those experienced in leading these programs acknowledge there is still room for further progress.
Today, most organizations have adopted a programmatic approach; they execute change in a disciplined but sequential manner, treating people initiatives as a vital but separate workstream. In the near future, we believe organizations will focus on building a permanent in-house change management capability that can be mobilized quickly and easily.
Rabih Abouchakra is a partner and Bahjat El Darwiche is a principal at Booz & Company. This article is based on the study Change Management Graduates to the Boardroom by Richard Rawlinson, Christopher Hannigan, Ashley Harshak, and David Suarez.