The volume and complexity of change that organizations are facing continues to increase, and they cannot risk the negative impacts of not executing their business critical changes. Whether focused on cost reduction, process redesign, mergers, restructuring or a large IT implementation, it can be difficult for organizations to capture the full value from their change activities.
A 2008 IBM survey “Making Change Work” identified an average 22% gap between the amount of substantial change an organization expected and an organization’s success at actually changing. There may be a number of causes of this gap; it could be that these organizations are pursuing inappropriate strategies, or it could be that they are in rapid decline and unable to muster sufficient resources. It could even be that they simply lack the process efficiencies that can drive real business change. However, we would conclude that the core reason for organizations failing to execute, and realise benefits from their strategies is the difficulty getting employees to embrace the change with each new initiative.
This is the realm of change management – helping people adopt new behaviours, accept and take ownership of change, instead of resisting it. Successful project implementations rarely come from purely technical project plans that do not take into account these human dynamics of change. The qualitative impacts of poorly managed change can be seen and felt by many and effective change management is known to increase the likelihood of achieving project objectives and return on investment (ROI). The issue is how best to make change management happen in your organization.
• Should you rely on external consultants and interim managers, or should you seek to build internal capability?
• Should you build capability focused on supporting a specific project delivery, or the specific needs of different roles in change?
• How does an organization remain agile to survive and thrive in today’s competitive climate?
In this chapter we explore how organizations can ‘make change their business, with a change capability up, down and across the organization, which is commensurate with the volume, magnitude and pace of change the organization faces. We introduce our Change Maturity Model (CMM) as a way to measure the size of the gap between current capability levels and what is required for success. We consider how quickly that gap can be closed to support successful change delivery, and the best ways to ensure that this investment yields sustainable results.
Agility is critical in today’s environment
Nearly 90% of UK executives surveyed by the Economist Intelligence Unit, in the 2009 report Organizational agility: How business can survive and thrive in turbulent times, ranked organizational agility as vital for business success. The same report also highlights the research conducted at the Massachusetts Institute of Technology, which suggested that agile firms grow revenue 37% faster and generate 30% higher profits than non-agile companies. Organizations that lack agility and can’t adapt to change, can suffer more than ever before from:
• more adaptable competitors dominating the market
• business performance deteriorating rapidly – and when deterioration occurs recovery is tougher than ever before
• the engagement of employees becoming more difficult
• the term ‘change fatigue’ becoming part of regular conversations inside the organization
So, how can organizations become agile, able to deliver change at the volume, speed and accuracy required?
In a recent survey of over 50 organizations, we asked more than 2,000 change leaders what they believed was the most effective way to help their organization implement change in the current environment. The vast majority – 86% – said that internal teams were the best way to implement change.
Earlier supporting data published in a McKinsey Quarterly article [Helping employees embrace change, LaClair and Rao, November 2002] demonstrated a direct linear relationship between an organization’s change management capabilities and the value it captures from projects. They found that the organizations with high levels of available internal change management capabilities had collected, on average, 143% of the value they originally expected from their projects.
It is against this backdrop that Changefirst believe that organizations should be re-assessing their reliance on external consultancies and interims to drive major business change. Further, we believe that if an organization is to become agile; able to transform effectively through the life-cycles (see Figure 2.1 below) rather than go into decline, and able to deliver change at the volume, speed and accuracy required; it needs more than a small number of project or OD (Organizational Development) specialists trained in change management.
Rather it takes the building of change management capabilities across the entire organization, ensuring that key processes are effectively applied on all projects and business critical changes. It is this enterprise-wide perspective of capability building that is the bedrock of organizational agility and is called Enterprise Change Management (or ECM for short).
Enterprise Change Management (ECM)
ECM is the term used to describe the discipline and process of deploying change management up, down and across an organization; ensuring it can be applied to each project, and individuals have access to requisite skills to build their own personal change competency.
• A common change language that is used throughout the organization
• A shared set of change processes and tools that can be applied to different projects and in different parts of the organization
• Strong change leadership competency at all levels of the organization
• Role-based training and coaching to build and embed new skills and techniques.
• An organizational mind-set that supports the effective implementation of strategic change*
* Note: this would include, but is not limited to change capacity being assessed before projects are initiated, executives proactively managing the portfolio of change and a change management scorecard being established and reviewed.
In our experience, taking an ECM approach to change management ensures:
• time is not wasted ‘re-inventing the wheel’ for each new project
• continuous improvement of the approach, as well as the tools and training that support the approach
• consistent application on all major projects
• senior leaders are managing the overall change capability
The Change Management Maturity Model (CMM)
The successful introduction of ECM requires a level of change management maturity, which requires a significant investment of time and effort for many organizations. Changefirst developed a Change Management Maturity Model, with four levels as shown in Table 2.2 (see table 2.2 below), to help an organization:
• assess their current maturity level
• determine the gap towards being able to support ECM
• build a development roadmap for a more agile organization
At this level, there is a strong focus on the technical aspects of projects. Project implementation contains little or no change management beyond basic communications and training. Resistance is the normal outcome at this level and usually is seen as ‘anti-organization’. Employee engagement is seen as putting forward a rational case for change, and compliance is viewed as successful implementation of a change. The bottom line is that workplace productivity drops more than it should during change.
The key leadership mind-sets observed at this level are:
• “People are rational and will do the right thing. If they don’t, they have to comply anyway.”
• “All this change stuff is a bit soft and unnecessary.”
• Appropriateness to business situation.
This level of maturity only functions if change is slow and incremental in scope. We would say that there are actually no maturity standards worth noting at this level.
At this level, we observe change management being applied inconsistently across projects. Usage is typically a reaction to problems experienced during projects delivery, such as employee resistance, rather than built into the original project plan. Senior sponsors are usually active in supporting change management as an idea, but are more inclined to rely on external change management consultants for more strategic advice than the tactical support required to drive and sustain change in local areas. At best, change management is driven by a ‘coalition of the willing’ – a small group of enthusiastic early adopters working on projects.
Key leadership mind-sets at this level are:
• “Let’s try to get people’s buy-in, but if not then we’ll move to compliance.”
• “Change management is good stuff, but not as important as a detailed technical plan.”
• “We’ll do change management if we have the time and money.”
This level of maturity may be a strong fit if there are a number of significant change initiatives focused on improving ways of operating – i.e. there will be notable consequences if the business case in not achieved. There are some standards at this level, namely; different change models are available and there is often a generic change management education process in place that people can access. However, this is seldom a ‘needs-based’ or ‘just-in-time’ approach.
This maturity level is characterised by change management being tailored to align to other organizational processes, and being applied consistently on all major projects. The organization agrees on the need for a single change management methodology on major projects, and project delivery communities such as IT, Six Sigma and HR feel a strong sense of ownership of the change management methodology. There is an increase in the number of change management roles, and just-in-time workshops, rather than generic training seen as a way to help people learn and apply change management skills and processes to projects. At this level we’ve observed that external consultants are less used for change management assignments. Instead there is likely to be a core group of skilled change agents in place, plus appropriate training for local managers, and even employees, to allow them to play their active part in change.
Key leadership mind-sets at this level are:
• “We will be successful if we have project plans with a strong people component.”
• “Securing people’s commitment and helping them to shift their behaviour in support of the change are essential to success.”
This level of maturity is essential for environments where there is an agenda of change with a strong vision, sufficient capacity and resources. The level of complexity is high but not unmanageable using project planning and change management methodologies. There are definite maturity standards at this level with change management being integrated into other organizational processes and change management checkpoints being measured in the same way as other project checkpoints. At this level executive sponsorship and review processes are established, supported by a change management community of practice with a clear mandate.
This maturity level is not just characterised by change management being adopted through the organization, but also by executive sponsors managing the overall change capacity of the organization. It’s not just about ‘doing change right first time’, but also about ‘doing the right change’. Executives spend time assessing the demand for change as a whole and the level of capacity the organization possesses. Change management is built into the culture – it becomes ‘the way we do things around here’ and change agents build continuous improvements into change management.
The leadership mind-sets observed at this level are:
• “Managing change effectively is a core competency in the organization.”
• “Assessing people’s capacity and limits to change is a core part of strategic decision-making.”
This level of maturity is essential for organizations with a transformational agenda. There are a large number of changes and difficult prioritisation decisions may have to be made. Maturity standards at this level include change capacity being assessed before initiating projects, plus a change management scorecard is established and reviewed at all project review meetings. Change management is included in project and programme charter mandates and associated skills are seen as an integral part of management development programmes.
The volume and complexity of change that organizations are facing continues to increase, and they cannot risk the negative impacts of not executing their business critical changes. The qualitative impacts of poorly managed change can be seen and felt by many and effective change management is known to increase the change success and benefits realisation. The issue is how best to make change management happen in your organization, helping you to remain agile to survive and thrive in today’s competitive climate.
In this article we explored how organizational agility to effectively transform our organizations needs more than a small number of project or OD specialists trained in change management. Rather it requires enterprise-wide change capability building ensuring that key processes can be effectively applied on all projects and business critical changes, and it is this that we call Enterprise Change Management.
Excerpted with permission from Enterprise Change Management: How to Prepare Your Organization for Continuous Change, by David Miller and Audra Proctor (Kogan Page, April 2016)
To ﬁnd out more about Changeﬁrst, our PCI® People – Centred Implementation methodology or e-Change® our cloud based, end to end change management solution please contact [email protected]ﬁrst.com or visit our website www.changefirst.com
About the Authors
David Miller is the CEO and Founder of Changefirst. David has helped organizations successfully implement major change for over 30 years, as a senior executive in a global company and subsequently through his work with Changefirst. David’s first book Successful Change is a culmination of working with major clients and includes practical anecdotes and examples that illustrate how you can successfully implement change. His second book Enterprise Change Management – How to prepare your organization for continuous change will be launched in April 2016.
Audra Proctor is a Board Member and Director of Research & Development at Changefirst. For the last 20 years Audra has been helping global organizations to develop capabilities and improve their productivity to execute business critical change initiatives. It’s her strong belief that change is far more sustainable when critical skills, processes and tools are transferred inside an organization, to people who then control and deliver their own changes.