By Stuart R. Levine
Published in Credit Union Times
Experts estimate that the success rate of major change efforts in organizations is only between 30% – 54%. When a change effort fails, it not only results in financial losses, but also in decreased employee morale, lost opportunities, and wasted resources. Many researchers and experts have pondered why the failure rate is so high. Most believe it is due to the lack of a formal change management program and ultimately a failure of leadership.
Prior to the creation of a formal change management discipline, most change efforts ignored the people and the culture within an organization. Most efforts of the “reengineering” boon of the 80’s were massive projects that resulted in business process redesign and employee layoffs. They totally ignored organizational culture and failed to take into account the people side of change. A late 1990’s study showed that over 70% of these reengineering efforts not only failed, but actually made things worse. In fact, several years after the craze ended, Michael Hammer, James Champy and Curtis Davenport, the three founders of reengineering, issued written apologies to the industrial world, admitting that amidst the enthusiasm of groundbreaking change, they had forgotten about people.
Since virtually all organizations need to change in order to survive, the discipline of change management has significantly grown in both scope and importance since its inception in the 1990’s. It has also matured from its past incarnation as merely a study of how people experience and react to change and then applying these studies to individual projects, to the present-day formulation that considers organizational capacity and the ability to change as a strategic advantage.
So how can you ensure that change efforts in your organization will succeed? How do you incorporate organizational culture and the human side of the organization into the change initiatives? You need to lead change, not just manage it. Managing change implies using tools and techniques to direct the change effort and incorporate the new way of doing things into the organization. Leading change implies an overall strategy and incorporation of people and culture into your change efforts. After all, you manage tasks, but you lead people. Much has been written on change management, outlining the 8 steps or 10 principles or 5 techniques to implementing change. Because every change effort is different and every organization has cultural idiosyncrasies that must be taken into account, there can be no cookbook approach. Nonetheless, if we follow some fundamental principles, we can increase the chance of a successful change initiative:
First you must be aware of your organization’s capacity for change. How many projects or change initiatives are underway now or have been undertaken recently? Did these initiatives succeed and what scars have they left on the employees? The workforce may have “change fatigue” and, if so, even a well-thought-out change effort may fail. A “change readiness survey” is a good start to any change initiative. If your organization is not ready for change, or does not currently have the capacity, no matter how promising the new process or product is, chances are the effort will fail. You also must be aware of your organization’s capacity to sustain the change over time. A successful change effort that eventually fails can be even more devastating to an organization than an effort that failed from the onset.
Second, change efforts must be led from the top, but supported at all levels throughout the organization. Leaders must set the direction, be incredibly focused, and consistently and passionately communicate the rationale behind the change effort. Additionally, leadership and staff at all levels of the organization need to have input into the changes that will ultimately affect them. Some of the most successful change methodologies — for example, G.E.s workout and process improvement philosophies such as Lean — rely heavily on input from the employees who are directly involved in the work and processes being transformed. Leadership must engage employees deeply and meaningfully with the change efforts, and create an emotional bond that will commit employees to the initiative.
And finally third and most importantly, understanding organizational culture and working within that culture is key to the success of all change initiatives. Change efforts can in themselves help change a culture; however, this needs to be a meticulously planned effort and may need to be altered along the way.
Whatever change methodology or technique you use, by following the three principles outlined above for leading as well as managing change, it will dramatically increase your chances for success.