Managing Organizational Change

Background Information The content of this white paper is based on information from ODR, a consulting firm with more than 23 years of experience in helping organizations successfully implement change. ODR's emphasis is on giving organizations information about how to accomplish strategic and tactical change decisions on time and within budget.

Managing a World of Change

Why Organizational Change Management Is Important Organizational change is a reality of the modern world, and that reality isn't likely to change anytime soon. If anything, organizations can expect to face the need for even more change in the future, at an ever faster pace. Organizations have to deal with new technology and with upgrades for existing technology. They have to cope with reorganizations, process improvement initiatives, and mergers and acquisitions. So, with all that change going on, how are organizations managing to cope? Not very well. The reality is that relatively few of the organizations that institute change - or are forced into it - realize the benefits they had hoped for, and, in fact, end up worse off than they were before. That doesn't mean it's impossible to engage successfully in change. Many organizations do succeed. How? They succeed by integrating any technical solution that was part of the change mix with a thorough and proactive orchestration of the non-technical human aspects associated with the change. In other words, the organizations that succeed at change do so by considering the people who are affected by, will have to live with, and are often crucial to effecting the change in question. Even better, not only does managing the human aspects of an organizational change initiative help ensure the successful implementation and use of the technical solution, it sets the groundwork for implementing future solutions. This paper describes how organizations can be successful at change by using a framework for assessing and addressing the non-technical human aspects associated with organizational change. ODR's experience has been that applying this organizational change management (OCM) framework improves the success of technical implementations and reduces the inevitable drop in productivity and quality that typically accompanies change. And, in ODR's experience, succeeding with the framework establishes momentum for success with future versions of a given technical solution. Specifically, this paper covers the following topics:

• Defining the terms.
• The typical approach.
• Objectives of organizational change management.
• The organizational change management process.

Defining the Terms

What Are Organizational Change and Organizational Change Management? "Change" has several meanings, but for the purposes of this paper, change - or, more precisely, organizational change - will be defined this way: Organizational change is the implementation of new procedures or technologies intended to realign an organization with the changing demands of its business environment or to capitalize on business opportunities. Organizational change typically encompasses the introduction of new and perhaps unfamiliar processes, procedures, and technologies, which represent a departure from what affected individuals generally view as the established, practical, and familiar ways of doing their work. Thus, at the individual level, change can engender emotions and reactions that range from optimism to fear, including anxiety, challenge, resistance, ambiguity, energy, enthusiasm, helplessness, dread, motivation, and pessimism. Organizational change management is the process of recognizing, guiding, and managing these human emotions and reactions in a way that minimizes the inevitable drop in productivity that accompanies change.

The Typical Approach

Why Change Efforts Typically Fail It seems inevitable that advances in technology, the maturation of markets in developed countries, the integration of international economics, and the economic fallout from the fall of communism have fueled, and will continue to fuel, an escalation in the amount and rate of organizational change. 1 But the success rate for organizational change is downright dismal. Consider these statistics:

• Fewer than 50 percent of companies undergoing restructuring, de-layering, and/or downsizing realize lower costs or higher productivity as a result of those changes. 2
• About 80 percent of Total Quality Management (TQM) initiatives fail to achieve tangible results. 3
• Roughly 90 percent of Business Process Reengineering (BPR) initiatives fail to produce breakthrough results. 4
• Approximately 30 percent of all mergers and acquisitions fail outright, while most fail to realize expected synergies. 5
• Between 55 percent and 90 percent of all technology initiatives fail to achieve their objectives because human and organizational problems are not adequately addressed. 6

More often than not, change efforts fail because organizations fail to recognize and manage the human components of change. New technical solutions require involvement by individuals throughout an organization who are willing to alter their behaviors and ways of thinking. Accomplishing that takes time, motivation, skills, and practice. Yet, because changes to behaviors and ways of thinking are less tangible and typically more time-consuming than the technical solution, the human aspects don't get the attention they need. A recent article on enterprise-wide software deployments demonstrates this lack of proper focus. The article estimated that the implementation effort for a successful transformation required 20 percent information technology and 80 percent organizational change management. Yet, most project plans and budgets allocate less than 20 percent of resources for managing change.

Objectives of Organizational Change Management

How to Change Successfully Organizational change of any type will typically create temporary reductions in productivity, as people absorb and adjust to the change. Therefore, two important criteria for a successful change implementation are the amount of productivity lost as a result of the change and how long it takes for the organization to regain its original productivity levels. The figure below, based on a 1990 U.S. Department of Labor study, illustrates the change impact and recovery process both with and without the application of a formal organizational change management process. Proactively addressing and managing the non-technical, human aspects of change by means of a formal OCM process will help reduce the initial loss in productivity and will typically shorten the recovery period. As organizations seek to implement new technology and take other actions to keep themselves competitive in their chosen markets, they must ensure that the changes they implement achieve the full scope of their technical, financial, and human objectives. This is the ultimate objective of the organizational change management process: to ensure that tactics for addressing human reactions to change are fully integrated with other aspects of the implementation in order to achieve the full scope of objectives intended by the initiative.

The Organizational Change Management Process

Increasing Readiness for Change Individuals and organizations increase their general readiness for change by increasing their overall adaptability to change. This is accomplished by implementing a formal organizational change management process consisting of four critical components:

• Resilience
• Change knowledge
• Decisions and implementation
• Architecture

Each component of the process is associated with key actions that can facilitate the timely implementation of a technical solution and speed the recovery time. Weaknesses associated with any of the four components of the OCM process create areas of risk that can inhibit the successful implementation of a change initiative. An organization increases its overall readiness for change by attending to the four components of the OCM process. Each component is described below along with key actions that can be taken to integrate the OCM process with the Microsoft Solutions Framework. Improving Resilience Resilience: The ability to absorb significant disruptive change while displaying minimal behaviors that detract from quality and productivity. Because resilient individuals are better able to adapt to change, helping people to become more resilient and getting already resilient individuals involved in the change process can directly improve an organization's chances for successfully implementing a technical solution. Resilient individuals are able to stay calm in unpredictable environments and are able to recover quickly from the stress of change. In fact, resilient individuals demonstrate an ability to prosper in rapidly changing environments. The higher the level of resilience within an organization facing major change, the better it will be able to avoid or manage such unproductive or dysfunctional behaviors as the spreading of misinformation, employee turnover, or deliberate sabotage, all of which can result in significant delays and costly overruns. Individuals who are highly resilient are:

• Positive. They view life as complex but filled with opportunity.
• Focused. They have a clear vision of what they want to achieve.
• Flexible. They are pliable in responding to uncertainty.
• Organized. They develop structured approaches to managing ambiguity.
• Proactive. They engage change rather than defend against it.

The key implementation actions associated with resilience are outlined below. Key Implementation Actions Associated with Resilience Match the breadth and depth of the version release and the time assigned for implementation with the level of resilience within the organization. (Note: A preliminary diagnosis may be required to quantify the current level of resilience.) Select highly resilient individuals to participate directly in the implementation as a way to facilitate a rapid adoption of the solution among team members. (Note: Early adoption by team members can speed adoption within the rest of the organization.) Implementing Change Knowledge Change Knowledge: A practical understanding of how people and organizations respond to change. Understanding how change unfolds helps reduce the amount of unproductive behavior that may accompany the implementation of a new technical solution by reducing the amount of uncertainty involved in change. Reduced uncertainty alleviates surprises and better equips people to focus time and energy on the technical solution. The manner in which change unfolds can be broadly grouped into seven key concept areas. These areas are:

• Nature. The impact of change on the individual.
• Process. The typical flow of change.
• Roles. The positions that are central to change.
• Resistance. The reactions that accompany change.
• Commitment. The process by which individuals and organizations align with change.
• Culture. The organization's past and present ways of doing things and the influence of these behaviors on the change.
• Synergy. The impact of teamwork on the change.

A sufficient level of change knowledge can have a substantial impact on the success of change implementation. Change knowledge can either be applied to specific organizational change projects or to general education in advance of specific projects. The key implementation actions associated with change knowledge are listed below.

Key Implementation Actions Associated with Change Knowledge

For a specific project: Educate the implementation team on the key concepts of change knowledge and how they relate to the specific organizational change. Assess which concept areas are most relevant to the specific organizational change and plan for how the risks can be managed and the opportunities can be leveraged. For general purposes: Prepare individuals within the organization for what to expect from changes they will face in the future. (More information about the critical role change knowledge plays in the implementation of an initiative is available in a separate white paper titled "Concepts of Change Knowledge," which is also located on this Web site.) Making Good Decisions Decisions: The alignment of an organization's current and planned changes with the resources available for implementing the initiatives. For an organization to be successful in implementing change, it must ensure that the demands created by its change initiatives do not exceed the organization's capacity for executing the changes. When change demands exceed the organization's capacity for change, key resources become overwhelmed by the number of changes competing for their time. The result is an increase in dysfunctional behavior that detracts energy from the implementation effort and, in many cases, impedes its process. Ensuring adequate capacity for existing and planned change demands generally involves:

• Inventorying current and planned changes and evaluating them to determine their potential value, impact, and resource requirements.
• Prioritizing changes according to this evaluation.
• Determining current capacity to implement changes.
• Trimming current and planned changes as necessary according to capacity limits.
• Developing and implementing strategies to increase overall change capacity to expand organizational adaptability.

When implementing a technical solution for a customer, other ongoing or planned organizational changes can compete for required resources. This is especially true of the time and attention needed from key leaders within the organization, which frequently can be a scarce commodity. Several key actions can be taken to mitigate the inevitable risk of having inadequate resources for a technical implementation. Key Implementation Actions Associated with Resource Allocation Decisions Proactively assess other organizational changes to gauge their potential impact on the technical solution. Design an implementation plan and timeframe that takes the impact of competing changes into account. Determine the urgencies driving the implementation of the technical solution and continually leverage these urgencies with key leaders and constituencies to make the technical solution a priority within the organization. Implementing Architecture Structured Implementation Architecture: The structured plan for achieving the desired goals through implementation of the perceived change solution. Following a structured, yet flexible, implementation framework reduces errors and oversights and allows a team to proactively address issues that are routinely associated with the failure of organizational changes. Such a structured framework consists of seven phases which, when applied as a system, facilitate successful implementation of an initiative. The seven phases are:

• Clarification. Development of a comprehensive vision and measurable outcomes that are wholly shared by key leaders.
• Announcement. Development and execution of a detailed communication plan.
• Diagnosis. Assessment of critical risks and key levers associated with the change.
• Planning. Development of comprehensive strategies to mitigate risks and use levers identified in the diagnosis phase.
• Execution. Implementation of developed strategies.
• Monitoring. Continuous assessment and augmentation of an implementation sequence.
• Evaluation. Assessment of a complete implementation sequence, and documentation and transfer of key learnings.

The steps involved in this implementation architecture parallel, in many ways, the existing Microsoft Solutions Framework. The key action, then, for executing a structured change management implementation architecture for customers' technical solutions is as follows. Key Implementation Actions Associated with Implementation Architecture Integrate organizational change management concepts and practices with the Microsoft Solutions Framework to balance the technical and non-technical (human) aspects of change implementation.

References

1. Kotter, J.P. Leading Change. Harvard Business School Publishing: Boston, MA, 1996.
2. Schneier, C.E., G. Shaw, and R.W. Beatty. "Companies' Attempts to Improve Performance while Containing Costs: Quick Fix Versus Lasting Change." Human Resource Planning, 1992, 15 (3), 1-25.
3. Kearney, A.T. Study cited in Business Intelligence's report entitled "Managing and Sustaining Radical Change," 1997.
4. Ibid.
5. Maurer, R. "Transforming Resistance." Human Resources Focus, 1, October 1997, 9.
6. Kabat, D.J. "Information Technologies to Manage the Next Dynamic." In Berger and Sikora (Eds.). The Change Management Handbook. Irwin Professional Publishing: NY, 1994, 221.
7. Wall, Stephen J. and Robert S. McKinney. "Wall-to-Wall Change." Across the Board. May 1998, 32-38.

Cite this page