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What is Change Management? What are its Best Practices?
Change is an accepted and expected aspect of business today. Consider that financial institutions are allocating 14 percent of their annual operating costs for change management functions to drive productivity gains, as per a PwC report. Further, the global digital transformation of industries makes it essential for organizations to embrace change in their development roadmap. What is change management’s significance in addressing critical organizational challenges and the practices that drive continual change, let us find out.
What is Change Management?
Change management is the entire set of processes, actions, and decisions organizations make to align with a variety of internal and external changes. Often called the soft side of organizational change, change management deals with the end-to-end handling of modifications within multi-faceted company processes. They may comprise new technology implementation, changes in existing technology and procedures, or permuting hierarchy within the organization. Change management can be triggered by a lot of internal and external factors such as shifts in competitor strategies or economic trends or regulatory laws and compliance orders, as well as significant catastrophes and natural calamities.
What Exactly is Change Management?
Depending on the intensity and functional levels of change, organizational change can be of three types:
- Adaptive changes: This involves smaller yet consistent iterative changes to undertake the smooth evolution of products, workflows, and strategies over time.
- Transformational changes: Drastic departures from traditional work modules characterize transformational changes in companies. Such changes typically have a radical effect on every other aspect of the organization.
- Individual changes: They refer to the changes surrounding one individual to effectively integrate their contribution within the pool of company resources and support the person through the transition.
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Why is Change Management Important?
A 2021 Gartner survey reported 69 percent of organizations have accelerated their digital business initiatives, therefore increasing the frequency and complexity of change. From the nascent stages of change conception to preparing for the change, its implementation, and the final resolution, a comprehensive change management strategy makes a project a success or a failure. Change management regulates control over a seemingly overwhelming process, breaking it down into docile chunks of implementation, monitoring, and reporting. Knowing how to coordinate, measure, and fix the change roadmap is a crucial skill for managers and business leaders.
Benefits of Change Management
A changing culture helps in the following ways:
- Streamlining the company workforce to attune with the explosive changes of the times
- Driving greater benefits realization and higher productivity for critical projects
- Using data on past performance to address the historical faults of the organization
- Aligning the workforce with the overall vision of the organization
- Raising the standards of company goals and minimizing risks while adapting to disruptive transformations
- Reducing employee anxiety and stress
- Aligning organizational values with operations
How to Implement Change Management
To understand what is change management’s role in a business environment, let’s find out how changes are implemented within a system:
- Organizational preparedness: This involves logistical and cultural preparation for the prescribed change within the organization
- Crafting plans: This step is about highlighting the main ingredients of the plan of change – strategic goals, KPIs, project stakeholders, and project scope.
- Implementation: Change managers inspire and empower their subordinates to actively collaborate in the process.
- Preventing reversion: Once changes have been initiated, change managers resist the natural inertia of company processes to get back to the status quo.
- Result analysis: Recent changes will stick only if one undertakes a project post-mortem to evaluate whether change management is successful as completing change initiatives does not mean project success.
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What are Popular Change Management Models?
The following models are crucial to crafting a multi-dimensional roadmap for change management:
The founder of Prosci, Jeffrey Hiatt, proposed the ADKAR model in 2003. ADKAR stands for:
The ADKAR model is an outcome-oriented individual change management methodology comprising a three-phase framework focused on the soft side of organizational change. The first phase of awareness and desire helps individuals move out of the current state that no longer serves their needs. The second phase defines the transitory stage informed by knowledge and strengthened by individuals’ abilities. Reinforcement or the third phase is a culmination of all the knowledge and behavioral systems that successfully integrate into the transformed individual.
Prosci 3-Phase Model
Prosci was founded in 1994 and it emerged as the global leader in change management practices that combines scientific research with business practices to boost the capacity for change in organizations. The Prosci 3-phase model is an organization-oriented methodology and works in conjunction with the ADKAR model across different stages:
1. Preparing Appropriate Approach
- Defining success: Change managers establish their project-specific targets and visualize all elements of successful change.
- Defining impact: This phase highlights the effects of these changes and studies their impact on individuals as well as organizational health.
- Defining approach: This step clearly articulates the change roadmap while engaging in risk assessment and defining project requirements.
2. Managing Change
- Planning and acting: Practitioners establish detailed plans on how to equip and support people to bring the change management strategy to life.
- Tracking performance: Once the processes start, change managers identify the performance strengths of employees to keep track of the master plan and its serial development.
- Adapting actions: In accordance with the results of the performance, managers adjust their strategies to test the practicality of the new change design.
3. Sustaining Outcomes
- Reviewing performance: This phase entails a thorough introspection of employee performance and documenting the pitfalls of the stated ADKAR outcomes.
- Activating sustainment: Practitioners shift their focus to actions that encourage comfortable transition and also identify functional gaps in the processes.
- Transferring ownership: This phase involves transferring the knowledge of the best sustainment efforts so that they can continue reinforcing the culture of change within the organization.
Kotter’s 8-Step Change Model
The world-renowned change expert and professor at Harvard Business School, John Kotter devised an 8-step change model that focuses on sustaining an environment conducive to change. These steps are:
- Creating Urgency
- Forming a Powerful Coalition
- Creating a Vision for Change
- Communicating the Vision
- Removing Obstacles
- Creating Short-Term Wins
- Building on the Change
- Anchoring the Changes in Corporate Culture
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Reasons Why Change Management Initiatives Fail and Tips to Overcome Them
A LinkedIn report indicates that close to 70% of change management projects fail to meet professional standards or reach successful completion. Although companies have their unique challenges, here are some of the main broad-stroke reasons behind management initiatives’ failure:
- Strategic shortcomings
- Lack of endurance
- Neglected stakeholders
- Lack of vision
- Active resistance
- Poor communication and leadership
- Strong mental inertia
- Lack of understanding of project scope and scale
Six Best Ways to Overcome Challenges
- Use knowledge and research as antidotes to vagueness and anxiety
- Establish change as a core company principle
- Establish a strong collaborative vision
- Select a go-to person for all change-related variables
- Reward efforts and recognize all contributions
- Communicate and collaborate to remind the team about staying on course
Faced with immediate challenges of relentless transformation across all avenues, industry leaders are actively seeking empowering change management strategies in a volatile and complex digital market. Emeritus offers a wide range of business management courses in collaboration with the world’s best universities. Sign up and become a better leader in change management.
By Bishwadeep Mitra
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