Leading Organizational Change
Today's economy is typified by change, but is this anything new? An ancient Greek philosopher is quoted as having said, "There is nothing permanent except change." And that was thousands of years ago.
Change is here to stay, and to survive we must all understand it, embrace it, and learn to use it to our advantage. Your human resources and change management strategies can have a significant impact on the organization's bottom line and you must ensure that your workforce is flexible and responsive in order to meet changes in market and business demands. For instance, did you know that:
- If employees are motivated 4% more, this leads to customers being 2% more satisfied, leading to a 0.5% increase in profits.
- 10% of your best customers most likely produce 20% of your revenue, resulting in 70% of your profit.
Organizations are changing continuously as they strive for more efficient and effective operations. The global wave of mergers and acquisitions illustrates how organizations are attempting to find new ways to reduce costs and increase productivity. Merger and acquisition activity in 2000 was $3.41 trillion. This follows subsequent and substantial increases in activity over previous years. For instance, in 1997, merger and acquisition activity was $1.6 trillion.
Consider the impact that this continuous change is having on the people-side of your business. With all the mergers taking place, organizations are concerned - or should be - about losing key talent as workforces are realigned. Did you know that approximately one-quarter (or one in four) of top performers leave within 90 days of the announcement of a major change event?
Research indicates that 70% of organizations view human resource-related initiatives as critical during organizational change. The reality, however, is that less than 10% of organizations actually give human resources issues top priority during a change event. While focusing on the financial implications of the change initiatives being implemented, many managers and human resources professionals fail to identify the impact that change can have on their people.
The following six steps are critical to address in order to implement change events successfully:
- Assess Organization and Staffing Needs
- How will the selected organizational changes affect staffing requirements?
- What should be the timing of the organization and staffing changes? Who should be responsible for them?
- What functions are duplicated and might be areas for replacement/ reassignment of talent?
- What areas of corporate knowledge/expertise need to be protected? Many companies in the past have acted rashly and lost much of their history.
Specific to mergers, cultural and human resource issues are vital to integration:
- How significant is the overall culture change predicted to be?
- What are the management philosophies of the two companies?
- Are there differences in the values held by each management team?
- What are to be the values of the new organization?
Change creates uncertainty for employees, customers, and suppliers. A well-conceived, clear communications program beginning in the early phases of any change event is one of the most successful ways to raise morale, and to help retain customers and key employees.
A thorough communication strategy should address:
- What are the main concerns of the employees?
- How can messages be formulated to address employee concerns?
- What media are most appropriate for various messages and target audiences?
- How can negative impacts of events such as transfers, staff reductions or demotions be reduced?
- How should internal communication programs be orchestrated and coordinated with other activities?
Those people who will be instrumental in leading the organization through transition hold a critical role in the success of the organization. Managers must generate employee participation and be responsible for driving the change and, as such, need to know the skills and goals of each employee and how to gain buy-in to the change.
Managers must evaluate where their employees are in the change process (their emotional health) and facilitate them through each stage.
Recognize that some people will never make the transition and may be targeted for retrenchment. For these employees who face losing their position, provide career transition support and assistance to ensure trauma is minimized and accelerate the time taken to re-employment.
An essential objective of any change event is to ensure key managers and staff remain after the change. Often turnover rates increase dramatically during change with many high performers leaving, either to escape uncomfortable circumstances, or through competitor poaching, or because, like everyone else, they are concerned about the future of their job with the company. To retain talented employees during organizational change, organizations need to ensure the implementation of a sound retention strategy that addresses the career needs of their key staff.
We are surrounded by profound change in our lives, both personal and professional. The world is undergoing many major transitions, some of which involve redefining the meaning of business and the character and shape of the organizations that carry it out. Change is here to stay. To achieve the desired results from change events (such as mergers and acquisitions), transition strategies need to be carefully planned and managed. If they are not, change can have a negative impact on bottom line profitability.
The challenge lies, therefore, in understanding change, its effects on individuals and organizations, and working with it to create what we all aspire to: an adaptable, productive and responsive organization that is successful now and in the future.
Bob Critchley is President - International of Drake Bream Morin (DBM). In his role, Mr. Chritchley provides strategic and business planning advice to DBM's 201 offices across 41 countries outside North America. Bob has more than 30 years' experience in the financial services sector and a depth of understanding in a broad range of industries due to his extensive consulting experience.
This article appeared on and was reprinted by AccountingWEB with permission from Hr.com