Organizational Change

Organizational change is one of the hardest things for leaders to achieve, whether it involves a group, a division, or an entire company. Companies are made up of individuals, and everyone knows from personal experience just how hard it is to change, whether by adopting beneficial behaviors such as sticking to a healthy diet or by ending detrimental ones such as smoking. In fact, Edwin Miller, dean of John Hopkins Medical School, revealed that “If you look at people after coronary-artery bypass grafting two years later, 90% of them have not changed their lifestyles” even though they know that changing their behavior will lengthen their lives. In short, even when told that they must change or die, these patients are unable to change. Such is the strength of resistance.

Resistance plays such an enormous role in organizational change that social scientists created a formula for change that incorporates the factors needed to overcome resistance.

D x V x P > C

D = Dissatisfaction with how things are V = a Vision for the future P = Process to reach that Vision C = Cost of change

If the product of the first three factors is greater than the cost (both economic and psychological) of change, then change becomes possible. Yet if any one of those three factors is absent, the product will be too low to overcome the resistance.

For any person, any group, or any company undergoing change, resistance is almost always due to loss (or fear of loss). Employees are afraid of losing stability, status, power as embodied in personal choice or control, relationships, trust in the company, and pride in their work—that is, they fear the end of the way things used to be. Organizations that are good at managing change make room for employees to express feelings of sadness, anxiety, anger, and even guilt (at surviving a change while others are laid off), both before a change effort begins in earnest and all the way through the process.

Yet even in the face of tremendous loss, executives do spearhead successful change initiatives. This also happens even when things, to all outside appearances, are going well. For this, implementation is key. A mediocre design, if implemented well, can be made reasonably workable over time. But even the most sophisticated and elegant designs are doomed if management fumbles the implementation.

Implementation encompasses all the steps change managers take to move employees from the current state through the transition state and then to the required future state. This process has also been described by change theorist Kurt Lewin as going from unfreezing to movement to refreezing, but whatever terms are used to describe the transformation, certain actions are required to carry a group of employees successfully from point A to point B to point C. These actions are either D, V, or P factors of the DVP>C equation described above.

Dissatisfaction: Create the Impetus for Change

Whether a company is in crisis, with plummeting sales and market share, or doing well, its change leaders need to create a feeling of dissatisfaction with the status quo. Even when a company is in crisis, its employees may not feel dissatisfied or see any need to change, particularly when communication within the organization is poor. There are two ways to surface the dissatisfaction needed to ready an organization’s members for change, which can be used either separately or in tandem.

  1. Give employees information about how bad things currently are and contrast those facts with the desired results. Alternatively, a change leader can surface dissatisfaction by surveying employees and letting employees’ own perceptions of change rumble up through the ranks.
  2. Change managers can emphasize the positive results to be gained. The key is to show employees that a satisfactory present may actually represent poor performance when compared to what is possible in the future. Companies that are not in crisis will want to present an ambitious, forward-looking concept of what performance can be achieved in order to foment dissatisfaction with the status quo.

It’s worth noting that whatever route one chooses, information must be presented as part of a dialogue, not just as a communique from leadership to the rank and file. Such dialogue takes time, but it’s also invaluable for analyzing and diagnosing what needs changing and how to change it.

Vision: Present a Compelling Picture of the Future

Behavior change happens mostly by speaking to people’s feelings. In this sense, a change leader must be somewhat like a successful evangelist preacher, constantly laying out “the promised land” ahead. However, the promised land cannot be reached without the creation of a focused, specific design of the “required future state,” which appeals to employees’ self-interest.

Process: Reach Down through All Layers of the Organization

Companies with functional or product silos need to cut across those silos to create interdisciplinary teams to help facilitate the change process. Similarly, companies must drill down through the hierarch and involve frontline employees, middle managers, executives, and VPs in the change process. The scale and rate of change required will determine how many and which people to involve. With a participatory change effort, change managers listen to everyone affected by the transformation and use that feedback; involving the most resistant employees can be particularly helpful. However, this is a particularly time-consuming process, and therefore, a company that needs to change quickly may not be able to involve so many people. In that case, a more centralized approach may be needed.

Process: Create Transition Mechanisms to Move the Process Along

To create clear tasks and targets for every employee involved in organizational change, leadership can use “report cards” so that every team has crystal clear standardized goals that make wavering in commitment to the change and reframing targets impossible. Leaders of successful organizational change efforts all point to the need for similar transition mechanisms created solely for the purpose of keeping motivation and momentum strong during the transition phase. These transition mechanisms include (but are not limited to) task teams, training programs, town hall meetings, rewards for meeting change targets, and off-site team-building sessions.

Process: Remove the Barriers to Change

Removing obstacles to change is more effective than increasing the pressure to change, which ultimately causes counterproductive stress. Sometimes the staunchest resisters to change are themselves the obstacles, and they must simply be fired. However, retiring incentive programs that reward old behaviors and putting new ones in place may be sufficient.

Process: Be Patient

Just as change managers should allow employees time to grieve the loss of the old order, they also need to allow employees time to become part of the new one. Change can come haltingly, and it may take time to get everyone on board. Patience is essential.

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