TIMES, THEY ARE A’ CHANGING, THE
If there’s one hard and fast rule in the business world, its dont iuait to change. Like a frog that sits in a pan of hot water and doesn’t notice the temperature rise, many businesses ignore events that are occurring in their environment. By the time they wake up, they’re boiled
As the old maxim goes, uuhen you’re through changing – you’re through.
Granted, most executives know this. Weaned on the concept and importance of change from their days at business school, busy managers know that change is the best weapon in the corporate arsenal in leveraging new opportunities. The concept of change dates back centuries. Even Columbus knew about change – with the invention of the magnetic compass, he was able to sail across the Atlantic. Until the compass arrived, ships stayed close to land and continents went undiscovered.
Now we have a new wrinkle on the concept of change as the newest buzzword in the corporate lexicon – change management – has taken on such significant proportions.
From Baylor to Boston and back to Berkeley, business leaders are weighing the concept of change management, wondering if it’s just the latest panacea or a viable corporate strategy. Specifically, they wonder whether they can use change management concepts to foster change on the three most important companywide levels: the individual, the team/organization and the wider vendor and customer system.
“Change is happening to everyone,” says Mitch Neubert, Gibson Chair in Management Development at Baylor University. “A truly global economy creates tremendous competitive pressure that reguires continuous improvement. Continuous improvement requires ongoing change, which requires effective and dynamic management at all levels.” Neubert believes the demand for change is a recipe for acid reflux for harried corporate executives. Ignore it at your own risk.
STABILITY = STALE?
It’s no secret, however, that business leaders are having a tough time dealing with change.
In the article, “10 Principles of Change Management” business consultant John Jones (along with associates DeAnne Aguirre and Mathew Calderone) argues that, for too long, senior executives have grown too comfortable with the concept of stability – a position that has placed their companies in great peril.
“Senior executives in large companies had a simple goal for themselves and their organizations: stability. Shareholders wanted little more than predictable earnings growth. Because so many markets were either closed or undeveloped, leaders could deliver on those expectations through annual exercises that offered only modest modifications to the strategic plan. Prices stayed in check; people stayed in their jobs; life was good. Market transparency, labor mobility, global capital flows, and instantaneous communications have blown that comfortable scenario to smithereens. In most industries – and in almost all companies, from giants on down – heightened global competition has concentrated management’s collective mind on something that, in the past, it happily avoided: change. Successful companies develop “a culture that just keeps moving all the time.”
That, says Jones, presents an obstacle to managers.
“In major transformations of large enterprises, they and their advisors conventionally focus their attention on devising the best strategic and tactical plans. But to succeed, they also must have an intimate understanding of the human side of change management – the alignment of the company’s culture, values, people, and behaviors – to encourage the desired results. Plans themselves do not capture value; value is realized only through the sustained, collective actions of the thousands – perhaps the tens of thousands – of employees who are responsible for designing, executing, and living with the changed environment.”
“The pressure on managers to get results is growing and is illustrated in recent research studies,” writes Neubert, along with University of Toledo business professor Clinton Longenecker in their white paper entitled “Why Managers Fail to Get Results in Rapidly Changing Organizations: Causes, Conseguences, and Cures”
Neubert and Longenecker cite a study of the factors affecting corporate downsizing decisions in 75 Fortune 500 companies, that indicated a person’s ability to get results and achieve high levels of performance ranked as the second most important factor in determining who goes and who stays (the importance of a person’s job function was ranked number one). “In a second study of over 5,000 U.S. managers on the factors affecting career survival, achieving excellent performance/getting results was cited as the single most important factor for keeping one’s job and career on track. Furthermore, Van Velsor and Leslie recently integrated a number of widely cited studies on why executives’ careers derail. A failure to meet business objectives was one of four enduring themes evident across time and cultures.”
Neubert says part of the change management problem is that executives react to events instead of prepare for them, thus triggering an inadequate response to change. Responses akin to Transylvanian villagers being locked out of their homes after sunset, when Dracula rises ensue. “Few business leaders have mastered the art of knowing what events might * precipitate change and knowing how to anticipate those events,” says Neubert. “Many are often caught unaware.”
Even if corporate executives do pinpoint the need for change, some have difficulties Grafting a change management plan and putting it into play. “It’s one thing to decide that your company needs to change,” Neubert adds. “Even if people know enough to recognize the need for change, they don’t know how to execute a change plan. How do you get people on board? How do managers successfully adapt to getting results? How do you get commitment from your workforce? Multiple tasks must be mastered to initiate change. Change is a major undertaking – and it’s not easy to plan for.”
Maybe it’s because managerial types can’t get their arms around a topic as broad and slippery as change. Like any other business buzzword, change management is known by many names and takes shape in many manifestations. If you’re at a key company strategy session and someone utters the term “learning organizations” or “systems thinking” chances are they’re talking about change management. If you’re at an offsite seminar and the speaker is bouncing around buzzwords like “process reinvention” or “communication theory” perk up and pay attention, change management is on the agenda.
“It can be daunting,” notes Cindy Wu, assistant professor of management at Baylor University. This past winter, she and Neubert traveled to China for a research project. “As part of that mission, we visited a Chinese company that was undergoing major change. It is not hard to imagine how difficult it is for a state-owned company to adapt change management tactics. But companies are beginning to realize how important the concept of change is to their fortune. In the case of the Chinese company, they knew it wasn’t enough to be a market leader in China. They needed to be a market leader globally. But they’d have to improve themselves to do that.”
How do you know your company is in dire need of an overhaul? “I would say that if your company is having trouble keeping up with its competitors and is experiencing financial difficulties as a result, you need to adapt,” adds Wu. “But that’s really more of a reactive, rather than strategic management change. Keeping ahead of competitors reguires strategic change. Strategy-driven change is different in that management realizes there is not just a need for change, but an opportunity for it.”
CASES IN CHANGE
How do companies handle change? Baylor itself is a relevant case study. Change management experts aren’t surprised that many committed and supportive constituents of the university have been hesitant to embrace the major changes of Baylor 2012.
“Change involves a sense of loss and most people resist a sense of loss. During times of inevitable difficulties in implementing change, natural resistance can lead to negativity and a yearning to return to the status quo,” Neubert says. This affirms the need for a communication strategy to disseminate plans and progress in achieving the vision. A lack of communication can damage morale and encourage rumor generation.
Neubert adds that Baylor, like many organizations, “lost some momentum by not following up a compelling vision with proactive and consistent communication regarding the successes and struggles associated with implementing Baylor 2012.”
On the other hand, communication isn’t a cure all. The substance of the change itself can lead to either commitment or disengagement. “Although communication and meaningful participation can improve the commitment of many, others will continue to reject the change due to real or perceived differences between the vision and their underlying goals and values,” Neubert explains. For some at Baylor the main issue of contention is how explicit Baylor’s Christian values should be in scholarship, teaching and hiring, for others it is differences in opinion regarding financial decisions or the enhanced emphasis on research, and for others it is perceptions of leadership. Although values, finances, and leadership are flash points for many change initiatives, what makes change at Baylor particularly difficult is that when constructive dialogue turns into destructive diatribe or sabotage, leaders have little or no recourse due to institutions like tenure that can institutionalize dissent.
“Unfortunately, significant change associated with Baylor 2012 and the challenges of its implementation suggest that not everyone will commit to change nor will every action be executed flawlessly,” Neubert says. “Adjustments to the implementation may be necessary, but to abandon change in response to dissent or difficulty is to deny the strategic analysis that stimulated Baylor’s regents to call for and endorse change. Significant and successful change requires perseverance and patience from both leaders and their constituents.”
KEY TO CHANGE MANAGEMENT: ADDRESSING BEHAVIOR
The human element is central to successful change. Jones calls it dealing with “people” issues. “New leaders will be asked to step up, jobs will be changed, new skills and capabilities must be developed, and employees will be uncertain and resistant,” he explains. “Dealing with these issues on a reactive, case-by-case basis puts speed, morale, and results at risk. A formal approach for managing change – beginning with the leadership team and then engaging key stakeholders and leaders – should be developed early, and adapted often as change moves through the organization.”
Jones says this approach calls for an abundance of data collection and analysis, planning, and implementation discipline as does a redesign of strategy, systems, or processes. “The change-management approach should be fully integrated into program design and decision making, both informing and enabling strategic direction,” he adds. “It should be based on a realistic assessment of the organization’s history, readiness, and capacity to change.
“Companies that handle change well know that to affect real change, you have to do more than minimize resistance, you need to build commitment,” says Neubert. “Our research indicates that leaders need to implement new ways of keeping people informed and helping them develop new skills. Successful change management has a lot to do with companies having clear and agreed upon expectations. If you can’t paint a vivid picture for employees, make them part of the process, and value their input, you’ll just be sowing the seeds for rumors and confusion. You combat that by offering vision, clarity and competence – and welcoming an environment of open communication.”
To Neubert, the idea of clarity is a big one. “It’s the ‘big picture’ you always hear about, but it’s also about the details,” he explains. “It’s managers sitting employees down and saying ‘this is where we are going and how you fit in’. It’s about leaders being as straightforward as possible and committing to help employees become competent to succeed amidst the challenges of change.”
Wu concurs with this assessment, adding that companies can only reap rewards from change management campaigns if change occurs at the level of the individual employee.
Neubert adds that the time needed to successfully change can be substantial. “A significant change in corporate culture can take three to five years,” he adds. “Initial acceptance and success is not enough. To maintain positive momentum, leaders need to remain committed to explicitly moving the process along, allocating new jobs and resources, changing the human resources systems, and finding people who will fit into the new vision.”
It would seem then, that the true recipe of success for change management campaigns is one part recognition, one part communication (Neubert says that overwhelmingly, 80 percent of managers in his study argued that ineffective communication leads to a failure to achieve results), and one part leadership. “You don’t get very far without these elements,” says Neubert. “And if you’re failing to deliver on any one of them, your change management process can take longer and grow more difficult. But if you can manage to identify change, create a plan and communicate it well, and provide consistent direction through leadership, you stand to have a much better chance of success.”
Copyright Baylor University, Hankamer School of Business Fall 2004
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