Difference between revisions of "The Importance of Change Management (Group 2) Part 1"

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Companies can’t just implement every change they want without some kind of structure. This is what we see within both small and big companies. The economy will be influenced when there is no change management. There will be no innovations and this could finally cause the collapse of the economy. When companies/organizations aren’t capable to adapt themselves to their own working goals and can’t meet with the needs of their consumers, the consumer’s costs will rise and there will be a higher risk that they leave the company. This will lead to an unacceptable loss of income and other effects.
 
Companies can’t just implement every change they want without some kind of structure. This is what we see within both small and big companies. The economy will be influenced when there is no change management. There will be no innovations and this could finally cause the collapse of the economy. When companies/organizations aren’t capable to adapt themselves to their own working goals and can’t meet with the needs of their consumers, the consumer’s costs will rise and there will be a higher risk that they leave the company. This will lead to an unacceptable loss of income and other effects.
  
Every few years we see that companies experience major changes. However small changes are almost continuously taking place. These changes are important for companies to remain in control and stay alert. The world around us is continuously changing, people are getting smarter and increasing their demands on products and services, companies can’t stay behind. For example, when you look at the use of mobile phones, consumers want even more and more better and smarter phones. Expectations are continuously adjusted, because companies keep refreshing their products. They have a correlation with each other. Companies need to adapt their products/services to the people around them if they want to be able to survive within the current society.  If they refuse to change, there will be a loss of income and in this could in the worst case lead to a bankruptcy. With change management it is namely about culture, processes and people. The most difficult part of implementing a change is to maintain a trustworthy relationship with the consumer and at the same time keep the consumer satisfied with the new implementations. Companies need a guideline or framework to successfully implement a change. Change management can offer these guidelines or framework.
+
Every few years we see that companies experience major changes. However small changes are almost continuously taking place. These changes are important for companies to remain in control and stay alert. The world around us is continuously changing, people are becoming critical and increasing their demands on products and services and companies therefore can’t stay behind. For example, when you look at the use of mobile phones, consumers want even more and more better and smarter phones. Expectations are continuously adjusted, because companies keep refreshing their products. They have a correlation with each other. Companies need to adapt their products/services to the people around them if they want to be able to survive within the current society.  If they refuse to change, there will be a loss of income and in this could in the worst case lead to a bankruptcy. With change management it is namely about culture, processes and people. The most difficult part of implementing a change is to maintain a trustworthy relationship with the consumer and at the same time keep the consumer satisfied with the new implementations. Companies need a guideline or framework to successfully implement a change. Change management can offer these guidelines or framework.
  
 
When companies will implement changes and dare to refresh, the risks of losing incomes or consumers will be significantly reduced. That is why change management is important.
 
When companies will implement changes and dare to refresh, the risks of losing incomes or consumers will be significantly reduced. That is why change management is important.

Revision as of 03:42, 26 December 2012


Introduction

We gave a student lecture on the 15th of December 2012 about the importance of Change Management and how this is related to the adaptive cycle.
The lecture was given by Renzo Hoogendoorn, Karim Camara, Vincent Tseng, Gweta Markosian and Sander Zijlmans.

The sheets from our lecture can be viewed here Media:Change_Management.ppt

Change Management

Nowadays companies are growing more and more by expanding into new competitive space with the aim to meet the needs of the different customers. However, this way of approach may be not always enough to survive. We think that the major challenge facing businesses are the need to manage these changes in order to achieve the desired goals. Everywhere around us we see change management models, each with a different perspective on the changes that take place within an organization. These models all claim to be useful to carry out a change smoothly within an organization. Before proceeding to treat change management models, it is useful to first know what is exactly understood under change management and its importance. We can therefore ask ourselves the question “what is change management?

According to the World Bank change management can be defined as a process involving unfreezing, moving, and refreezing values, practices, and procedures within organizations. Unfreezing refers to the creation of a perceived discrepancy between the existing and ideal state of an organization that generates a desire for change and lowers people’s resistance to change. Moving refers to the various processes such as training, education, and restructuring that lead to the development of new behaviours, attitudes, and beliefs. Refreezing regards re-establishing a new state of equilibrium within the organization by stabilizing the new patterns through a variety of support mechanisms (The World Bank). A second definition of change management that we found very interesting says the following: Change management is a structured approach to transitioning individuals, teams, and organizations from a current state to a desired future state, to fulfil or implement a vision and strategy. It is an organizational process aimed at empowering employees to accept and embrace changes in their current environment. There are several different streams of thought that have shaped the practice of change management (Ryerson University).

Relation between change management and the adaptive cycle

We think that all four phases of the adaptive cycle have something to do with change and that the adaptive model therefore can be seen as change management model. If you look in the crisis phase for example, before a company totally moves from the crisis situation to the new combination it first has to deal with some kind of change. An organization that is in the new combination phase and wants to implement a solution against the crisis would also face change. This means that this organisation whether they want to or not, should have to adopt a new way of approach or need to customize the existing business processes to realize the new solution. The phases of the adaptive cycle model are so clearly defined that an organization should know exactly what stage it is in at a certain moment. Determining the position of an organization through these phases ensures that changes in the organisation will only be made at the desired level without unnecessarily charging other levels of the organization. One can therefore conclude that the adaptive cycle model is a form of change management that helps organization to implement changes successfully.

Why is change management important?

Some familiar quotes that we found about the indirect importance of change management are from Charles Darwin and A. De Gues.

According to Charles Darwin “it is not the strongest species that survive, nor the most intelligent, but the ones who are most responsive to change”

A De Gues said the following: “To cope with a changing world, an entity must develop the capacity of shifting and changing – of developing new skills and attitudes; in short, the capability of learning“


Nowadays we live in a changeable world and each business leader who want to survive has to be change friendly and the organization that want to survive also has to be change friendly.

Changes are taking place in different kind of levels. This is also happening within companies, for example the redundancy of employees and the recruitment of new employees. By doing this companies try to maintain or improve the quality of their services/products.

Companies can’t just implement every change they want without some kind of structure. This is what we see within both small and big companies. The economy will be influenced when there is no change management. There will be no innovations and this could finally cause the collapse of the economy. When companies/organizations aren’t capable to adapt themselves to their own working goals and can’t meet with the needs of their consumers, the consumer’s costs will rise and there will be a higher risk that they leave the company. This will lead to an unacceptable loss of income and other effects.

Every few years we see that companies experience major changes. However small changes are almost continuously taking place. These changes are important for companies to remain in control and stay alert. The world around us is continuously changing, people are becoming critical and increasing their demands on products and services and companies therefore can’t stay behind. For example, when you look at the use of mobile phones, consumers want even more and more better and smarter phones. Expectations are continuously adjusted, because companies keep refreshing their products. They have a correlation with each other. Companies need to adapt their products/services to the people around them if they want to be able to survive within the current society. If they refuse to change, there will be a loss of income and in this could in the worst case lead to a bankruptcy. With change management it is namely about culture, processes and people. The most difficult part of implementing a change is to maintain a trustworthy relationship with the consumer and at the same time keep the consumer satisfied with the new implementations. Companies need a guideline or framework to successfully implement a change. Change management can offer these guidelines or framework.

When companies will implement changes and dare to refresh, the risks of losing incomes or consumers will be significantly reduced. That is why change management is important.

Reasons why employees are resistant to change

As we all know, people are somehow always resistant to change. The question which we can ask our self is, why are they resistant to change?

Bellow we have listed here some reasons why employees are resistant to change.

  • Not enough competence: sometimes, changes that are made in organizations necessitates changes in skills of the employees, and some people will feel that they won’t be able to make the change very well.
  • No trust: When employees don’t believe that they can manage the change they will develop resistance.
  • Unknown business need: If employees of an organization are not aware of the underlying business need for change, they will develop some resistance.
  • Afraid for Lay-offs are announced or feared as part of the change: employees can be resistant to the change in this case because they are afraid of losing their jobs.
  • Employees were unsure if they had the needed skills for success in the future state.
  • Lack of communication: If there is not enough communication about the change that will happen within an organization employees will be resistant.
  • Comfortable with the current state: When individuals are comfortable with the current state within an organization, they want to maintain their personal position.
  • Benefits of rewards: Employees felt they were being required to do more with less, or do more for the same pay.

Advantages and disadvantages of change

In this section the advantages and disadvantages of internal and external changed will be summed up.

Advantages

Internal: Internal change has many advantages for an organization, including increased morale among the employees, a sense of employee empowerment and control and a high likelihood of the change becoming permanent. Because the change originates from the group, it is more easily accepted and becomes the norm.

External: While external change is harder to accept than internal change, there are some distinct advantages for external change in an organization. This type of change can help jump start a declining organization and can change its course completely. Another advantage of external organizational change is that many organizations tend to reach a plateau level if left unchanged for too long. People become comfortable in their ways and stop seeking new and better ways to accomplish things.

Disadvantages

Internal: If a team or organization has a very domineering member, the internal change will often be a result of that single person and will therefore be too single-minded to be good for the organization at large. Additionally, when teams have been working together for too long in the same environment, the group mentality can take over and create unproductive change within the organization. 

External: When change is forced on an organization, often the organization will rebel. One of the main disadvantages of externally imposed change is that it is unsuccessful in the long term. Often, external resources can force the change for a while, but when those people move on to different roles, the organization will return to its previous behaviors. Additionally, the change process itself can cause temporary chaos within the organization and actually reduce productivity for a couple of weeks or months.  

Becoming a change leader

In order to become a change leader four trivial steps need to be taken. Although these steps are trivial, organizations have trouble to implement these steps. The models discussed in the upcoming sections will provide a means to implement these steps.

1. Policies to make the future.

2. Systematic methods to look for and to anticipate change.

3. The right way to introduce change both within and outside the organisation.

4. Policies to balance change and continuity.


Benefits of effective change management

The benefits of effective change management are worth the effort. The following benefits are gained in general.

Return on investment

  • Economies of scale as the approach to change is re-used for each initiative saving the number of days spent

defining a unique approach to each change initiative.

  • Faster implementation of change as those involved have the confidence to know where to get started, who to

involve and can estimate with greater certainty the impact on their workloads and the level of impact in their departments.

Quality of the outcome achieved

  • Increased understanding of the impact of the change which ensures that all processes, systems and people that

are impacted are consulted, and their requirements incorporated into the change plan.

  • Appropriate levels of involvement with agreed responsibilities for making the change happen reduces the

resistance to change and increases the rate of adoption, leading to greater realisation of benefits.

Efficiency of resources

  • Clarifies the roles and responsibilities of all those involved in the change effort, ensuring that those with the most relevant

skills and experience are given appropriate activities to manage.

  • Reduction in the number of ‘failed’ change initiatives and the waste of resources involved in making changes that ‘run out

of steam’ or get overtaken by other events which had not been assessed when the change was conceived.

  • Reduction in the level of activity that is duplication of effort or that is running at cross purposes to other changes

being made elsewhere in the organisation.

  • Enhanced employee morale and a reduction in recruitment and retention costs.

Change Management Models

Nielsen (2008) quoted that organization change is complex and even little changes are not easy to undertake. In order to make the management of change easier a lot of change management models have been developed that all have their pros and cons. It is argued that the main problem with change management models is that no framework works “best” in all situations. However, some models are widely accepted and popular in the industry like the following three:

  • McKinsey 7-S Model
  • Lewin’s Change Management Model
  • Kotter’s Eight Step Change Model

In the following sections these three models will be discussed. Firstly we will describe the model, than discuss the advantages and disadvantages of each model and last but not least, the models we be linked to the Adaptive Cycle of Abcouwer et al. (2012).

McKinsey 7-S Model

About the model

Developed in the early 80’s by Tom Peters and Robert Waterman (two consultants from the McKinsey & Company consulting firm), the McKinsey 7-S Model remains a popular model to use for change management.

7SModel.png

The model consists of seven elements, which can be divided in both hard and soft elements. The ‘hard’ elements consist of strategy, structure and systems while the ‘soft’ elements consist of skills, staff, style and shared values. The main difference between these types of elements is the way to identify and influence them. Hard elements are easier to identify and management is able to directly influence them. These are for example strategy elements but also reporting lines and IT systems. Soft elements however are more difficult to identify because they are less tangible and often influenced by culture. Here is a short description of all the elements of the model:

  • Strategy: the plan devised to maintain and build competitive advantage over the competition.
  • Structure: the way the organization is structured and who reports to whom.
  • Systems: the daily activities and procedures that staff members engage in to get the job done.
  • Shared Values: called "superordinate goals" when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic.
  • Style: the style of leadership adopted.
  • Staff: the employees and their general capabilities.
  • Skills: the actual skills and competencies of the employees working for the company.

The idea behind the model is that all the different elements have to be alignment with each other. If there is some type of change like new IT-systems for example, the element ‘Systems’ might not be aligned with the other elements anymore. For situations like this, you can use the 7S model to analyze your current situation and make a proposed future situation. This way you can identify how each element is alignment with each other and identify possible gaps or inconsistencies.

Advantages of the model

  • All parts are interrelated, so all portions must be addressed and focused on (12Manage, 2007).
  • It is an effective way to diagnose and understand the organization. By asking yourself all the questions related to the elements you are able to cover all the elements of your organisation.
  • It is a guide for organizational change

Disadvantages of the model

  • When one of the parts is changed, all parts change because they are all interrelated (12Manage, 2007). The model is complex.
  • This model ignores differences (Morgan, n.d.). After five years many of the companies that used this model fell from the top (Morgan, n.d.).
  • Companies using this model have been known to have a higher incidence of failure.

While this model can give you a complete understanding of the whole organization, the model is also really complex to handle. A lot of literature has been written about this model as well which can give more insight in how to successfully adopt the model.

Link to the Adaptive Cycle model

While it might not look straightforward, the McKinsey 7-S model can be linked to the adaptive cycle in our opinion. This will be explained with an example and the following image.

7SModelAdaptive.png

Within the Equilibrium phase of the Adaptive Cycle we can argue that the all the elements of the McKinsey 7-S model are aligned with each other, for that reason they are all green-colored. When we shift to the Crisis phase, there will be uncertainty and not all the elements will be aligned (red-colored). The company for example has to change their strategy and become more innovative, but they might lack the skills to do become more innovative. In this case, the elements ‘strategy’ and ‘skills’ are not aligned anymore with the rest of the elements.

From there, we move to the Exploring phase. There are some ideas that might help us align the elements (orange-colored) again but there is still some uncertainty so the elements are not green yet. In the Entrepreneurship phase we are looking at how these ideas can be implemented to achieve our ‘alignment’ goal again. If we are able to reach to goal, eventually, all the element will be aligned again and we will be back at the Equilibrium phase.

Lewin change management model

About the model

Kurt Lewin developed in the year 1947 a change management theory and a change management model. The change management model of Lewin is one of the most commonly applied models within the field of change management. The change management model consists of four phases. These phases are the Unfreeze phase, the Change or Transition phase and the Freeze or Refreeze phase. During the Unfreeze phase, the employees within the organization are recognizing that change is becoming necessary. Within this phase the organization is getting ready to change. In order to prepare for the change, the organization is creating the environment to change and the necessary steps are taken to inform and involve the employees with the change plans. During the Change phase or sometimes referred to as the Transition phase, the organization is in the process of changing to a new way of being. This phase is usually a very difficult phase for the employees of the organization. The reason is that learning to behave differently or to change is usually associated with resistance, which is based on fear. Usually one refers to the fear of the unknown. Providing support to the employees is thus very important during the Change phase. The employees have then the opportunity and the time to learn and understand the changes that are made within the organization. Support can be given in the form of education, coaching and training. During the Freeze phase or sometimes referred to as the Refreeze phase the organization is starting to establish stability. The changes have been implemented, accepted and have become the new standard within the organization.

Lewin2.gif

Advantages of the model

  • The change model of Lewin is a simple and easily understood model for change.
  • The Lewin model has a fewer steps that have to be followed.
  • The Lewin model is done through steps and thus can be considered as an efficient model that is used within the field of change management.

Disadvantages of the model

  • During the Refreezing phase, many employees are worried that another change is coming, so they are in a change shock. This change shock causes employees to not be as efficient or effective regarding their jobs.
  • There is some criticism regarding the Refreeze phase. Organizational change is continuous and change may occur within several weeks. There is thus no time to settle down into confortable routines.

Link to the Adaptive Cycle model

The change management model of Lewin (1947) and the Adaptive Cycle model of Abcouwer et al. (2012) have some similarities. However, these similarities are made in a straightforward manner. The Crisis quadrant of the Adaptive Cycle model refers to that the organization’s equilibrium is disturbed and the organization has difficulties finding new balances again. During the Unfreeze phase of the Lewin change model, the organization has recognized the need for change. One may argue that the Crisis quadrant of the Adaptive Cycle model and the Unfreeze phase of the change model of Lewin resemble in this manner. The New Combinations quadrant and the Entrepreneurship quadrant of the Adaptive Cycle Model can be compared to the Change phase of Lewin’s change model. The characteristics of the New Combinations quadrant and the Entrepreneurship quadrant of the Adaptive Cycle Model are similar compared to the Change phase of Lewin’s change model. It’s all about the change process and finding a new way of being. The Equilibrium quadrant of the Adaptive Cycle Model and the Refreeze phase of the Lewin change model have similar characteristics as well, since it is all about accepting the new changes and establishing stability.

Change.jpg

Kotter's 8-step Model

About the model

In order to successfully react to opportunities change leadership is required. John Kotter proved with his research that 70% of all major change efforts in organizations fail. They fail because organizations most of the time do not take the holistic approach required to see the change through.

When organizations follow the 8-Step model, they can avoid failure and become adept at change. Their chances of success can increase when they improve their ability to change. Following the 8-Step model, can help organizations succeed in an ever-changing world.

STEP 1: Create a Sense of Urgency
Help others feel a gut-level determination to move and win, now.

To make change happen, it helps if the whole company really wants it. You need to develop a sense of urgency around the need for change in order to help trigger the initial motivation to get things moving.

STEP 2: Creating the Guiding Coalition
Putting together a group with enough power to lead the change

It’s important to convince people that change is necessary. Beside managing change, you also have to lead it and to lead change, you need to bring together a coalition of influential people whose power comes from a variety of sources.

STEP 3: Developing a Change Vision
Clarify how the future will be different from the past

You need to link the ideas and solutions about change to an overall vision that people can understand and remember easily.

STEP 4: Communicating the Vision for Buy-in
Ensuring that as many people as possible understand and accept the vision

Your success depends on that you do with your vision after you created it. You need to communicate the vision frequently, powerfully and embed it within everything you do.

STEP 5: Empowering Broad-Based Action
Removing as many barriers as possible and unleashing people to do their best work

You have to put in place the structure for change and constantly check for barriers to it. The people you need to execute your vision can be empowered when you remove obstacles and help the change forward.

STEP 6: Generating Short-term Wins
Creating visible, unambiguous success as soon as possible

Success is the best motivation. Create short-term targets, not just one long-term goal. You have to give your company a taste of victory early in the change process, because without it critics and negative thinkers might hurt your progress.

STEP 7: Don't Let Up!
Consolidating gains and producing more change

According to Kotter, many change projects fail because victory is declared too early. Quick wins are only the beginning. To reach that multiple successes, you need to keep looking for improvements.

STEP 8: Make It Stick
Anchoring new approaches in the culture for sustained change

In order to make any change stick, it should become part of the core of you organization. The values behind you vision need to be visible in day-to-day work, that why it’s important to make continuous efforts to ensure that the change is seen in every aspect of your organization.

Advantages of the model

  • This is a step by step model, which is easy to follow
  • It does not focus on the change itself, but rather on the acceptance and preparedness for the change which leads to an easier transition

Disadvantages of the model

  • It is a top-down model and opportunities can be missed, because not everyone is involved in co-creation of the vision.
  • You cannot skip a step because the change process will then completely fail. As with the other two models, change still takes a lot of time.


While you should not skip steps, some steps are not required or useful as stated in literature. Replacement of major software for example is often irreversible, and therefore steps 7 and 8 of the model might not be relevant.

Link to the Adaptive Cycle model

The 8 steps of Kotter’s model can be linked with the adaptive cycle. The 8 steps start at the end of the Crisis phase and end just before entering the Equilibrium phase. When in a crisis situation, it’s necessary to change. The first step of Kotter’s model is when you go from the Crisis to New Combinations phase. Step 2 till 5 of Kotter’s model can all be placed in the New combinations phase of the adaptive cycle. The last 3 steps fit in the Entrepreneurship phase. You can say that organizations can use the 8 steps of Kotter to come out of the crisis and go to the Equilibrium phase.

Kotter.jpg

Common Factors to Successful Change Management

  • Planning

Develop and document the objectives that need to be achieved with the change and the means to achieve it.

  • Defined Governance

Establish appropriate organizational structures, roles and responsibilities for the change that engage stakeholders and support the change effort.

  • Committed Leadership

Ongoing commitment at the top and across the organization to guide organizational behavior.

  • Informed Stakeholders

Encourage stakeholder participation and commitment to the change by employ open and consultative communication approaches that will create awareness and understanding of the change throughout the organization.

  • Aligned Workforce

Identify the human impacts of the change and develop plans to align the workforce in order to support the changing organization. The extent to which each of these five factors is exhibited in successful change projects will vary depending on the nature of the change involved.

Conclusions

Change management is of strategic importance and companies cannot exist without it. Their ability to change and adapt quickly brings enormous market advantages.

Each change management model has it’s pros and cons, however none of the models is the "best" in all situations. Most change management models are made to help the change management be more effective.

Common factors to successful change management include planning, committed leadership, aligned workforce, informed stakeholders and defined governance.

References

  • Quinn, E.R. & Weick, E.K. (1999). Organizational change and development. Annual Review of Psychology, 50, 361-386.
  • Steven H. Appelbaum, Sally Habashy, Jean-Luc Malo, Hisham Shafiq, (2012),"Back to the future: revisiting Kotter's 1996 change model", Journal of Management Development, Vol. 31 Iss: 8 pp. 764 - 782
  • De Geus, A. (1997). The living company: A Recipe for Success in the New Economy. Harvard Business School Press. Boston, Massachusetts
  • Taylor, J. (2010). Business rules and decisioning for process experts. Decision Management Solutions
  • Manchester Metropolitan University (2010). Change Management an introduction
  • World bank (2012). Communication for governance and accountability towards a new agora