ACHIEVING SUCCESSFUL ORGANIZATIONAL CHANGE

ACHIEVING SUCCESSFUL ORGANIZATIONAL CHANGE

October 2, 2014
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Successful organizational change is crucial for every organization. Organizations need to continually adapt themselves to a continuously changing environment in order to survive. Despite its strategic importance many organizations fail at organization change. Because of its high failure rate, achieving successful organization change remains a continuing challenge for managers and executives. This article presents the Change Management Framework – a management model that allows managers and executives to master one of the greatest management challenges – achieving successful organization change. The Change Management Framework incorporates 8 key success factors for achieving organization change. Collectively, these practices help organizations to adapt themselves to their ever changing environments and achieve sustainable organizational success..


SUCCESSFUL ORGANIZATIONAL CHANGE IS CRUCIAL IN TURBULENT ENVIRONMENTS


Organization change is even more important in current turbulent organizational environments. The environment of public and private organizations is increasingly dynamic (Volberda, 1996; D’Aveni, 1994). Developments such as the globalization of markets, rapid technological change, deregulation of industries, a shift of organizations from the public to the private sector and the increasing aggressiveness of competition have radically altered many industries (Volberda, 1996). These environmental developments have resulted in strong pressures for frequent organization change (Baden-Fuller and Volberda, 1997; Thomas, 2002) to maintain a ‘fit’ with these changing environments. In turbulent environments, the ability to successfully adapt an organization quickly and effectively may well mean the difference between success and failure for organizations (Drazin and Howard, 1984; Hauc and Kovac, 2000).

Many organizations do not succeed in successfully execute organizational change. Organization change remains a very complex and difficult to manager organizational phenomenon. The process tends to be messy, ambiguous and often involves many departments in the organization. Part of this complexity arises from the social and political aspects of organization change which need to be taken into account. Hence, there is a growing recognition that the most important challenges in management are in organization change


THE CHANGE MANAGEMENT FRAMEWORK


To contribute to the understanding of planned organization change at its reasons for success or failure, we conducted a qualitative survey of 55 executives with planned change responsibilities within 44 public and private organizations. From this research eight key factors emerged that positively influence planned organization change. Together, these eight practices constitute the Change Management Framework. Managers and executives need to take these factors into account in order to execute planned organization change within their organizations.

Change Management Framework

The Change Management Framework is a comprehensive management model that allows managers and executives to master one of the greatest management challenges – successfully achieving organization change. This powerful framework incorporates eight success factors for organization change. Collectively, these tools help organizations adapt themselves to their continually changing environments to achieve sustainable organizational success.


1 DEVELOP AN ATTRACTIVE CHANGE VISION


Successful planned organization change begins the formulation of a sound and clear change vision by top management. A change vision describes the desired future state of the organization. The vision helps clarify the direction in which an organization is to move (Kotter, 1995). A clear and well-formulated vision is a key requirement for effective organizational redesign (Miles et al., 1995). The strategic vision needs to be clearly defined and well formulated (Hussey, 1996). In addition, the vision needs to be attractive and easy to communicate toward organizational members, customers, shareholders, and other relevant stakeholders. The simpler the vision is, the easier it is to understand and execute for organizational members. A clear and attractive vision increases the confidence of employees in a successful outcome of the change initiative. An attractive and ambitious new vision can help to attract and unite organizational members and stimulate them to increase their effort (Trice & Beyer, 1991). However, must also realistic and feasible. An unrealistic vision reduces the motivation and commitment of organizational members.


2 TRANSLATE CHANGE VISION INTO CHANGE PLAN


After the vision for change is developed, it needs to be translated into a well worked out change plan. Even the best change vision is worthless when managers cannot translate the vision into operational reality. The change plan specifies the processes, activities and operational objectives that are required to achieve the goals of change effort. Measurable objectives provide an effective basis for management control of the change initiative.

Without concrete objectives and milestones, it is impossible to measure the progress of the organization change. This makes managing and improving the change effort impossible. Therefore, the change plan needs to contain clear and measurable objectives or targets. Clear and specific tasks need to be defined which are required to achieve these targets. Everyone needs to know what to do in order to make the change effort a success. Unclear objectives leave room for differential interpretation and discretion and may thus result in failure to change.Research has shown that specific and ambitious but realistic goals, which are accepted by organizational members lead to the best task performance (Erez & Kanfer, 1983). People need realistic challenges to perform well. When organizational members have decided that it is impossible to reach a goal they will stop trying to reach that goal (ibid).


3 APPOINT A CHANGE LEADER


There needs to be one clear leader who is responsible for the outcome of the organization change effort. The change leader serves as project manager and problem owner of the change effort. The change leader needs to be board member, especially for strategic change effort. The change leader is responsible for articulating and communicating an attractive strategic vision that guides the change effort. A successful leader inspires followers through the communication of a captivating vision designed to motivate followers to ambitious goals (Huy, 1999). Effective leaders have the ability to inspire confidence and enthusiasm of the new direction (Tushman et al., 1986).

Leaders need to be decisive during the change effort. Taking decisions may be considered to be is the primary task of management. When taking these decisions a manager needs to be steadfast, resolved and not allow him or her to be influenced by others. Managers who want to execute ambitious and innovative plans need to be persistent in sticking the course through thick and thin (Gersick, 1994). During reorganizations in which employees can lose their job or when established power positions are threatened, considerable resistance to change can arise. In such instances of considerable resistance to change, management has to be decisive and steadfast in taking decisions. Managers need to be able to take tough decisions when organizational members are not performing well.
Change leaders need to take decisions, which are perceived by organizational members to be fair. Research has found that organizational members are more committed to decisions, decision-makers and the organization when the procedures, which were used to arrive at the decision, are perceived as fair (Brockner et al., 2000). As Brockner et al state: ‘It’s not only what you do, but how you do it’.
Finally, when leaders practice moral virtues such as fairness, integrity, honesty, loyalty, determination, courage and responsibility increases the willingness of followers to follow a leader (Guillén & González, 2001).


4 APPOINT COMPETENT MANAGEMENT


The presence of competent employees and especially management is the most important success factor for organization change. Inadequate capabilities of managers are a common cause of organization change failure (e.g. Beer & Eisenstat, 2000; Pinto & Slevin, 1987; Alexander, 1985). Without competent organizational members, implementing the change vision successfully becomes very difficult if not impossible. Organizational members need to have sufficient skills and knowledge to implement the proposed changes. Eventually organizational members are the ones who have to perform activities to make the change effort a success.

Especially, having competent management is important. When top management is incompetent, the whole organization is affected and thus the change effort as well. Furthermore, when employees have little confidence in the ability of management to execute the change effort then their commitment to the proposed changes will be low.

Having incompetent members within a team has a negative influence on the performance of other organizational members. Well-performing organizational members have their motivation reduced when they have to work with or are dependent on poor performing colleagues. Especially the presence of incompetent managers has a very negative influence on the performance of subordinates. If a person is competent and that person’s manager is not, this is likely to have a negative influence on the level of motivation and work performance. Successful organizational members tend to leave an organization where they have to work for incompetent managers and feel that their performance is not appreciated or often even worked against.

To increase the level of competence of organizational members several practices can be used such as training and education, coaching and counseling, increasing self-efficacy of organizational members, giving feedback about performance, giving compliments for good performance, addressing poor performance, hiring and firing of organizational members and bringing in external expertise.


5 TRAIN AND EDUCATE ORGANIZATIONAL MEMBERS


Training and education of organizational members is another important lever for organization change. Adequately trained staff is one of the most critical steps top management can take to ensure successful organization change (Edwards & Sharkansy, 1978). Highly educated organizational members are more likely to adapt to intellectual demands, such as the use of information technology (Fuerst & Cheney, 1982), to be early adopters of innovations (Berry et al., 1998), are more receptive to innovation and strategic change (Wiersema & Bantel, 1992) which has a positive influence on receptivity to change.
Training and education can consist of courses, collective classes, (on-the-job) training, and individual guidance and coaching. Implementing a new vision often requires new activities and ways of thinking, which can be learned by training and educating employees. The quality of a change effort depends on the quality of the people who have to implement it. Thus, the quality of organizational members may need to be improved by educating them. Training and education can improve employee knowledge and skills and make them perform better. Training and education may allow employees to execute their tasks in a professional and skillful way. In addition, educating and training employees can increase the self-confidence of employees and thus increase their performance.


6 INCREASE SELF-EFFICACY OF EMPLOYEES


When organizational members have a high sense of self-efficacy and believe that they can perform the new tasks which are part of the change effort successfully, they are more likely to perform well. Contrary, organizational members with low self-efficacy have little ambition to perform new tasks, especially more complex and unfamiliar tasks. As organization change often entails new and unfamiliar tasks, this negatively influences the change effort. Even when organizational members do have the required capabilities they can be afraid to take on a job with more responsibility, which entails more risk. Another result of low self-efficacy may be that, organizational members can become afraid to make mistakes, take initiative, and participate in decision-making. They are not confident that their endeavors will be successful.

A low level of self-efficacy may stem from a lack of self-confidence and self-esteem. An authoritarian management style may be another source of low self-efficacy. Being in a subordinate position with little power has a negative influence on the level of self-efficacy of organizational members. In addition, when organizational members are not rewarded when they perform well but do get criticism when mistakes are made this may lower their self-efficacy as well. Finally, organizational members may have low implementation self-efficacy because they have seen many things fail (including past implementations). When they see others fail, they are more likely to expect that they will fail as well.

Managers can increase the level of self-efficacy of employees through coaching and counseling, rewarding performance, a people-oriented management style and by creating an organizational culture in which people are able to make mistakes and learn from them.


7 ACHIEVE VISIBLE RESULTS


Achieving visible improvements in performance, especially in the beginning of the change effort (quick wins) increases the motivation and commitment of organizational members. When employees see that the change effort leads to visible results, they get more confidence in the change effort. Furthermore, people are more inclined to accept new things when they see that these things work and lead to results. There is often a significant fear for novelty. Consequently, organization change is often perceived by employees as threatening. However, when the changes lead to results, this fear of change can be overcome.
During the change effort it is important to make change visible to organization. By making change visible (such as new logo, uniforms and offices) management van show the organization that they are committed to the change effort and things are really changing.

It is especially important to achieve results in the beginning of the change effort, in order to gain the confidence of the employees that the proposed organizational changes might work. This is even more important when the company is in crisis and short-term results are needed to let employees regain confidence. Another reason for achieving results is that it motivates people. If they see that the changes lead to results then they become more motivated. Conversely, if employees get the feeling that the change effort does not yield any results, they may even sabotage the effort. Finally, a change effort can rundown when the people see little results.


8 REWARD CHANGE PERFORMANCE


Organizations need a reward system that monitors the progress of the change effort and demonstrates top management’s interest and investment in attaining the vision and goals of the change effort. Reward systems are essential for motivating staff and ensuring appropriate behavior in relation to the proposed changes.Rewarding good implementation performance and addressing poor implementation performance has a positive influence on the outcome of a change effort due to the following reasons.

First, rewarding performance increases the level of motivation of organizational members. When organizational members perform well during a change effort, they want to be rewarded for it. When persons are not rewarded based on their performance they are not likely to be motivated to make an extra effort and achieve results. Second, when organizational members see that another organizational member performs well and is rewarded for that, they may want those rewards as well. Consequently, they can become motivated to perform better as well. Conversely, organizational members are not motivated to work hard when their badly performing colleague gets the same salary. Finally, when organizational members are rewarded for their performance during the change effort their implementation self-efficacy may be increased. When they perform well and receive rewards such as compliments from management, they may be become more self-confident and more motivated to perform well during the change effort.

The following reward best practices have a positive influence on the performance of employees during the change effort. First, feedback is one of the most effective methods of increasing individual and group performance (Moss & Martinko, 1998). ‘Feedback allows employees to assess their performance accurately, learn from errors, see how they are perceived by others, replace unproductive work habits, examine alternative modes of behavior, and increase self-awareness’ (Vinton, 1987). Second, informal rewards (pats on the back, a sense of pride, enthusiasm) are a very effective even more so than financial rewards. Giving compliments, praise, and recognition is really appreciated by organizational participants. By giving compliments to organizational participants when they perform well during the change effort, management can increase their level of motivation and self-confidence. However, employees often do not receive compliments when they perform well but do get criticisms when they make mistakes. This has a very negative influence on the motivation, self-confidence, self-efficacy and performance of employees. Third, the use of collective rewards (such as profit sharing or bonuses with which an organization or a department as a whole is rewarded for its collective performance) has a positive influence on the performance of organization members. Rewarding collective performance increases the level of motivation of organizational members. Collective rewards can give organizational members the feeling that they partly own the company increasing their commitment to the organization. When organizational members are partially rewarded for their collective performance they have more incentive to make their department and the organization as a whole perform better. The aim is to convey that an organization is an interdependent system – individual performance is linked to organizational performance.


ABOUT THE AUTHOR


Dr. Arnoud van der Maas (arnoud@strataegos.com) is a strategy consultant and author in strategy execution. He is an international expert in strategy execution. Arnoud is owner of Strataegos Consulting – a strategy consultancy with a focus on strategy execution. Arnoud received a PhD in Strategy from Rotterdam School of Management, Erasmus University – one of the top business schools in Europe. This article is based on his PhD thesis on strategy execution in an international context. Connect with him on LinkedIn or follow him on SlideShare or Twitter for articles and presentations on strategy and strategy execution.


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