What is Change Management and How Does it Work?
While it is sometimes called the soft side of change, managing the people side of a change is often the most challenging and critical component of an organisational transformation. Please refer to our blog titled: 'The Best Way to Help Your PEople Change, is to Know Your People.'
Take a merger or acquisition for example. The technical side of the change, or the hard side, if you will, will most certainly be complex. Issues surrounding the financial arrangements of the deal must be worked out. Development will have to take place to integrate the business system. Decisions will be made about the physical arrangements of the newly formed organisation.
But getting people on board and participating in the change will make the difference. Individuals will have to do their jobs differently, and it is the degree to which they change their behaviours and processes that will make or break the merger or acquisition. The soft side of change is many times actually the harder side of change. Learn the what, why and how of managing the people side of change with a structured approach to change management.
What is Change Management?
Change management takes care of the people side of change. It does little good to create a new organisation, design new work processes or implement new technologies if you leave the people behind. Financial success of these changes will be more dependent on how individuals in the organisation embrace the change than how well you draw organisation charts or process diagrams.
Change management is the process, tools and techniques to manage the people side of change to achieve its required business outcomes. It is the systematic management of employee engagement and adoption when the organization changes how work will be done. Ultimately, change management focuses on how to help employees embrace, adopt and utilize a change in their day-to-day work.
Change management is both a process and a competency:
The Change Management Process
From a process perspective, change management is the set of steps followed by a team member on a particular project or initiative. For the given transformational effort, it is the strategy and set of plans focused on moving people through the change. Prosci’s research-based methodology includes three main phases:
Preparing for change (where readiness assessments help guide the formulation of a strategy)
Managing change (where five change management plans integrate into the project plan)
Reinforcing change (where compliance audits and mechanisms deploy to cement the change)
Change Management Competency
Change competency is a leader or manager’s ability to effectively lead their people through change. The notion of a leadership competency is universal, but what that competency entails depends on a person’s relationship to change. For senior leaders, change management competency means being an effective sponsor of change and demonstrating their own as well as the organization’s commitment to the change (read more about the sponsor role and training). For frontline supervisors, competency is related to coaching direct reports through their own change journey (read more about the supervisor role and training). While competency varies depending on one’s relationship to change, organizations are more effective and successful when they build change management competencies throughout their ranks.
Change management is not just communication or training. It is not just managing resistance. Effective change management follows a structured process and uses a holistic set of tools to drive successful individual and organizational change.
Why Change Management Matters
There are numerous reasons to employ effective change management on both large- and small-scale efforts. Here are three main reasons to employ change management:
Organizational change happens one person at a time
Poorly managing change is costly
Effective change management increases the likelihood of success
Organizational Change Happens One Person at a Time
It is easy to fall into the trap of thinking about change exclusively from an organizational perspective. When one thinks about a merger or acquisition, they can focus on financial structuring, data and system integration and physical location changes. However, organizational change of any kind actually occurs one person at a time. Success of an organization effort only occurs when Adam and Betty and Charles and Deborah (for example) do their jobs differently. Organizations don’t change; people within organizations change. It is the cumulative impact of successful individual change that results in an organizational change being successful. If individuals don’t make changes to their day-to-day work, an organizational transformation effort will not deliver results.
The Cost of Poorly Managing Change
There are countless consequences of ignoring the people side of a change:
Productivity declines on a larger scale for a longer duration than necessary
Managers are unwilling to devote the time or resources needed to support the change
Key stakeholders do not show up to meetings
Suppliers begin to feel the impact and see the disruption caused by the change
Customers are negatively impacted by a change that should have been invisible to them
Employee morale suffers and divisions between “us” and “them” begin to emerge in the organization
Stress, confusion and fatigue all increase
Valued employees leave the organization
Projects also suffer as due to missed deadlines, overrun budgets and unexpected and unnecessary rework to get the effort back on track. In some cases, the project itself is completely abandoned after large investments of capital and time. All of these consequences have tangible and real financial impact on the health of the organization and the project. And each of these consequences can be addressed and mitigated if a project includes a structured approach to the people side of change.
Effective Change Management Increases the Likelihood of Success
There is a growing body of data that shows the impact that effective change management has on the probability that a project meets its objectives. Prosci’s longitudinal benchmarking studies show a strong correlation: Data from the 2013 benchmarking study showed that 96% of participants with excellent change management met or exceeded objectives, while only 16% of those with poor change management met or exceeded objectives.
In other words, projects with excellent change management were six times more likely to meet objectives than those with poor change management. Regardless of the change at hand, focusing on the people side of change increases the likelihood of being successful. Additionally, Prosci’s research shows a direct correlation between effective change management and staying on schedule and on budget.
How to Implement Effective Change Management
Effectively managing change requires two perspectives: an individual perspective and an organizational perspective.
Individual Change Management
The individual perspective is an understanding of how people experience change. Prosci’s ADKAR Model describes change as successful when an individual has:
Awareness of the need for change
Desire to participate in and support the change
Knowledge on how to change
Ability to implement required skills and behaviors
Reinforcement to sustain the change
If an individual is missing any of these five building blocks, then the change will not be successful. The goal, then, in leading the people side of change is ensuring that individuals have awareness, desire, knowledge, ability and reinforcement.
Organizational Change Management
The organisational perspective of change management is the process and activities that project teams utilize to support successful individual change. If ADKAR describes what an individual needs to make a change successfully, then organizational change management is the set of actions to help build awareness, desire, knowledge, ability and reinforcement across the organization. Based on over a decade of research, Prosci’s organizational methodology utilizes readiness assessments and strategy development to support the creation of five targeted plans:
Resistance management plan
Each of the plans has a specific ADKAR element as its focus (read more about the Prosci methodology).
The Importance of Change Management Roles
While the change management resource on a project can work to develop the strategy and plans, much of the work of change management is done by senior leaders, managers and supervisors throughout the organization. Benchmarking data shows that in times of change, employees have two preferred senders of change messages:
Someone at the top of their organization
The person they report to
Change management practitioners are enablers of these employee-facing roles. And, in times of change, it is the effectiveness of senior leaders as sponsors of change and of managers and supervisors as coaches of change that will determine if a project succeeds or fails.
So what can you do to become a more effective change leader? The bottom line is this: begin applying change management on your projects and begin building change management competencies in your organization. These are the first steps to ensuring projects deliver their intended results.
The people side of change is not the soft side of change; in reality it is the harder side of change. Investing the time and energy to manage the people side of your organizational efforts pays off in the end – in terms of success of the effort and avoidance of the numerous costs that plague poorly managed change.