Managing Organizational Change

Scope

This article provides an overview of key considerations in planning and implementing major organizational changes. It focuses mainly on the scope and impact of change on business, steps to take to ensure the success of organizational change initiatives, and how to overcome common obstacles encountered during change. Additionally, this article highlights HR issues and challenges in handling specific types of major organizational change.

Overview

Change management is the systematic approach and application of knowledge, tools and resources to deal with change. It involves defining and adopting corporate strategies, structures, procedures and technologies to handle changes in external conditions and the business environment. Effective change management goes beyond project management and technical tasks undertaken to enact organizational changes and involves leading the "people side" of major change within an organization. The primary goal of change management is to successfully implement new processes, products and business strategies while minimizing negative outcomes. This article discusses the management of large organizational changes that may have far-reaching impacts on the organization and its workforce, including the following topics:

• The nature and extent of organizational change.
• The business case for a systematic approach to change management.
• The roles of management and HR during major change initiatives.
• Steps to take in managing organizational change.
• How to overcome common obstacles encountered during organizational change.
• Legal and global considerations in managing change

This article also highlights some of the special issues and challenges in implementing certain types of major organizational change, including mergers and acquisitions, downsizing, bankruptcy, business closure, outsourcing, and changes within the HR function.

Background

To keep pace in a constantly evolving business world, organizations often need to implement enterprise wide changes affecting their processes, products and people. Change is a fact of life in businesses today. It can be difficult, and people often resist it. But to develop an agile workplace culture, organizations should follow a systematic approach to managing major change. Organizational development experts have established approaches for successfully navigating through change. Organizational leaders must identify and respond quickly to market changes and unexpected challenges, but most are not in a position to create an agile culture. Yet agile leadership—from CEOs down to line-level managers—separates high-performing from lower-performing organizations. Companies that consistently outperform competitors in profitability, market share, revenue growth and customer satisfaction reported much greater agility than lower performers.

Business Case

The rate of major organizational change has accelerated dramatically in this decade. Global research and advisory company Gartner reports that the average organization has undergone five enterprise changes in the past three years and 73% of organizations expect more change initiatives in the next few years.1 As change initiatives have become more frequent and widespread, the importance of managing individuals through change has gained credence. Major changes can affect organizations across all levels. Many corporate leaders have concluded that failing to manage employees through change can be costly: Employees who are dissatisfied with or upset by change are generally less productive. An employer that is serious about change management should develop a communication plan, a road map for change sponsors, integrated training programs and a plan for dealing with resistance. HR should be involved in major organizational changes from the beginning and can assist by influencing the following:

• Improving employees' understanding of change.
• Increasing communication between management and employees.
• Identifying and mitigating risks.
• Enhancing employee satisfaction.
• Boosting trust between management and employees.
• Improving employee skills and proficiency through change-related training initiatives.