Definition of Organizational Change Management

But “organizational change” is a broad term that encompasses different flavors of business environment optimization:

• Incremental change: Improving existing approaches and building on pre-established processes. For example, an equipment manufacturer integrating new SKU tracking tools to improve supply chain efficiency and inventory visibility. Or implementing a new performance management process to help strengthen talent development.

• Transitional change: A shift away from an existing state into a type of better, more efficient workflow. Examples may include outsourcing business processes to a third-party vendor — or two technology companies merging to provide new services and reclaim lost market share.

• Transformational change: Significant changes that fundamentally alter culture, strategy, structure, governance and operations to better support business goals. An example would be a multi-year initiative to redesign the organization, its hierarchy, defining new roles for employees and establishing new communication channels across and within departments.

What Goes Into an Organizational Change Process?

Defining organizational change is only the first step.

In practice, organizational changes are notoriously difficult to get right as it’s hard to know which factors will most influence a company’s transformation — much less how to lean on those levers and actually take action that drives results.

Experience shows that senior executives responsible for change often fall into the trap of being too focused on end results or relying on employee training as a panacea to changing behavior…

While there’s a place for these strategies, org change management can’t be approached in silos or discrete pieces. Every person and process needs to be accounted for early in the transformation to ensure that companies address the underlying reasons why organizations change in the first place.

Setting the Stage for Organizational Change

Typically, organizational change processes begin with diagnostic assessments of your company that outline your capabilities, strengths, key challenges, and performance gaps. These are audits that help leadership get to the root cause of issues and offer insight into what type of organizational change might be most helpful for the company.

Leaders typically have their favorite levers to pull, like a re-org or a cost-cutting exercise, only to find they fell short of where they wanted to get.

Successful plans should be focused on levers that support the company’s growth, uncover inefficiencies, and eliminate existing roadblocks to growth. Generally, the following areas will be outlined in a change process:

• Expected project duration
• Capabilities of project teams and stakeholders
• Buy-in from senior leadership and staff
• What efforts employees must make to deal with the change
• The importance of the change to the company’s strategy
• Competing initiatives that might need to be sunset or delayed

It sounds simple, but it’s not easy to identify and solve performance issues that make companies unable to deliver on their strategies.

Particularly in dynamic environments like healthcare, even basic integrations of new systems can create unexpected downstream changes to the way caregivers perform tasks. The bigger the organizational change, the more disruption you’ll have to contend with.

Because of the complexity, change management consultants offer scoping services that estimate the impact on the organization alongside in-depth simulations of future organizations.

This type of planning offers important insight into how new technologies, processes, values, or skills may function before rolling it out company-wide. And just as importantly, it helps stakeholders get around the organizational defensiveness barriers commonly-seen when the topic of change comes up.

Challenges to Organizational Change

According to research, as many as 70% of large-scale business change programs fail to achieve their stated goals due to a lack of planning, coordination, or collaboration.

But this doesn’t mean that effective organizational change is impossible to achieve. Provided that stakeholders have a plan to keep everything on track, an organizational change project can bring direct and measurable improvements to a company’s bottom line.

Organizational Change – Doing it Right the First Time

Effective organizational changes, even minor ones, require buy-in from stakeholders at every level of the company. There’s no other way to address the actors that drive and obstruct a company’s goals.

This can be problematic for companies, as research indicates that, typically, only 15% of a company’s workforce will embrace new change initiatives immediately.

But even with a motivated workforce, many companies struggle to take concrete actions that produce results.

Companies tend to focus on soft issues like culture or employee motivation as key change levers, but these types of initiatives fail more often than not. In our experience, there are five key challenges to managing organizational changes:

1. Leadership balance: Knowing how much direction leaders should give and coordinating decisions to align with unifying strategic themes.
2. Transition management skills: Managing overly rigid transitions against under-planned processes – and instead, creating a middle ground where goals, milestones, measures are clearly outlined.
3. Organization design balance: Balancing getting too hands-on with under-specifying, and ensuring that design decisions are driven by data rather than personality, personal agenda, or convenience can help you improve your organizational design.
4. HR and culture balance: Understanding when changes may emphasize the wrong things (such as being more “collaborative” in a company where 70% of employees are individual contributors) or not focusing enough on customers and results.
5. Diagnosis and learning: Failing to establish a systematic approach for information gathering, and then over or under-analyzing that data.

No matter what kind of change is being considered, it’s not something that can be tackled on a whim.