What Is Organizational Change Management & Why Is It Important?
- Human Resources
6 min. Read
Last Updated: 01/20/2023
Table of Contents
The life of your business will inevitably be punctuated by changes both big and small. Whether it's downsizing, an upgrade to an outdated system, or introducing new processes to address productivity levels, organizational change management is essential for business growth and profitability. But change is never easy, which is why we've outlined below what the process can look like, how organizational changes can be major opportunities for everyone, and what it takes to see change management through to its completion.
Organizational Change Management Defined
Organizational change management is a top-down approach to making large-scale changes in a business and seeing them through to a resolution, whether the change focuses on company culture, technologies and infrastructure used to keep operations running, or internal processes. The primary goal is to successfully prepare, support, and see through the execution of new processes, products, and business strategies while minimizing negative outcomes for impacted individuals.
A change management initiative is also much more than project management or technical tasks, which follow a formal structure and a defined schedule. Organizational change focuses on guiding and leading people in the organization through major shifts, which may be hard to predict in the beginning and require adjustments throughout the process.
Goals of Organizational Change Management
Since the purpose of organizational change is generally to improve a process, product, or outcome, it's critical to identify the overarching "why" of making a change in the first place. Without clearly articulating this, it will be hard for people to work together and meet expectations. A few examples of change management goals may be:
- Increasing ROI: When an organization spends money to develop or implement a new system or tool, the investment is only worthwhile if employees actually use it.
- Boosting employee morale: When employees experience changes, even minor ones, they want to know that the business has acted in their best interest. Effective change management can be the difference between disgruntled employees and employees who feel engaged, empowered by change, and willing to stay with the company for the long-term.
- Minimizing negative impact for the business: Changes are ultimately good for a business, although there may be some growing pains along the way. An effective change management program clearly addresses any negative impact to individuals or the business, and prioritizes continuous communication as needed.
- Appropriately managing risk to the business: Great change management recognizes plausible risks when implementing a change, identifies ways to handle pitfalls, and encourages employees to embrace times of transitions.
- Establishing a culture of innovation: Change and innovation go hand-in-hand. When employees resist change, it makes the entire change process that much more difficult, plus innovation and advancement can suffer. Prioritize building a culture that embraces change at all levels of the organization.
Examples of Change Management
Organizational change can take many forms and each requires its own strategy. But generally, business changes fall into one of the following types:
- Strategic transformational change: This is a large-scale shift that addresses a business's policies, structure, or processes. Examples of this type of organizational change would be changing your employee benefits package or rewriting your company's mission statement. Restructuring that results in downsizing or upsizing the workforce would also fall under a strategic organizational change.
- People-centric change: Adjustments that have a considerable effect on people, such as an adjustment to leave policies or changes to employees' roles and responsibilities.
- Structural change: Major changes to organizational structure, usually caused by mergers and acquisitions or changes in the market. Examples of this type of change include team reorganization, a change in team responsibilities, and administrative procedures.
- Technological change: Tech-focused organizational changes introduce new software or systems to improve business processes. This could include switching your customer relationship management platform or updating to a new version of your computer operating system.
- Unplanned change: This is action required following an unexpected event. Many employees quitting at once or shifting a team to remote work due to a business disruption would be examples of an unplanned change.
- Remedial change: This is a reactive, immediate response to an unexpected problem. Examples include resolving a customer service issue or a team covering for an employee who quit without notice.
HR's Role in Change Management
HR professionals are in a unique position when it comes to change management. HR is critical in bridging communications between management and employees, ensuring information is shared in a timely and transparent way, and identifying and addressing any specific concerns or risks before issues arise.
When HR is in lockstep with leadership and key stakeholders, it's possible to gracefully navigate the challenges that come with periods of change — achieving both the organization's goals and ensuring your team feels confident about the company's future direction. It's for the good of the entire organization when HR:
- Aligns with management: Understanding the vision can help HR ensure all communications align back to the company's largest goals, and assist with leading through change.
- Prioritizes communication: Take the time to establish lines of communication with employees at all levels of your organization. Share information when you can about the changes that are occurring, how it will impact employees' day-to-day situations, and the steps being taken to help ensure the changes are for the overall good.
- Assesses readiness and risk: HR can lead the way in assessing change management readiness and identifying areas of risk that may need special attention. They can use information from HR analytics, for example, to help the business make data-backed decisions.
- Provides support where needed: By having your HR department on board and focused on providing support, they can help employees at all levels successfully move through the transition and mitigate much of the concern around change.
Why It's Important To Manage Organizational Change
Managing organizational change is necessary for companies to succeed and grow. Without an effective plan in place, business changes — which again, are inevitable — can be tumultuous and costly in terms of time and resources. Whether they occur at the organizational, project, or individual level, changes can also take a toll on employee morale and productivity. In a time of transition for the business, these are things you simply can't afford. Effective change management involves giving employees the information, tools, resources, and support they need to adapt, whatever the change may be.
The Change Management Process
Organizational changes should be approached methodically, considering that the change will likely be significant and have an impact on many (if not all) people in the organization. A consistent change management process should be adopted to minimize negative impacts of change on your business and team. The process for change management generally follows these steps:
Identify Areas of Focus
Some change will be a reaction due to external factors, such as a merger or acquisition. Others will come internally, when an individual or team sees the need to improve a process, structure, product, or an outcome. Wherever the need for change originates, identify the focus and clarify goals as early on as possible. Also, who will be involved in leading the change and facilitating the process? Successful change management always takes into account the importance of building a solid foundation for clarity, ease, and successful implementation.
Secure Approval From Stakeholders
Stakeholders could be executives or upper management who both direct and finance the transition. They could also be a group of employees who are tasked with implementing the actual changes. It's important to not only identify who these key players are, but also clarify their expectations and what it will take to get their buy-in.
Make a Plan
Planning is a critical multistep process that shouldn't be rushed. A change management project plan should outline clear steps, measurement criteria, and analysis, including:
- The current state
- The initiative's objective
- Potential roadblocks
- Resources needed (this could be people and/or equipment or technology for implementation)
- Any associated costs
- Key performance indicators for measuring the initiative
Use Data To Evaluate and Monitor Progress
Knowing whether a change management plan is on the right track relies on solid data gathering and analysis practices. Insights gleaned from thorough reporting can improve communication to both stakeholders and teams involved in the change, proper and timely distribution of incentives, and measurement success and benchmarking.
Communicate About Change
Providing clear and open communication throughout a time of change is critical. Frequent, two-way communication is an effective way to identify roadblocks, celebrate wins, and get on the same page about next steps or pivots. Consider also that if employees expressed hesitancy before the change was implemented, communicating as openly and often as possible could help assuage any resistance.
Continue To Assess Risks and Pivot if Needed
Change management and the adoption of a new process, technology, or system is an ongoing process. Even with a fully laid-out plan, you may need to make tweaks and adjustments. Clear KPIs as well as solid measurement and analysis can help illuminate what is and isn't working, and help teams assess any pivots that may need to be made.
Types of Organizational Change
Organizational change can happen on different types of levels, and often overlap:
- Individual: All changes impact individuals, but at this level, an individual experiences a change that's meant to help them grow in their role or achieve specific goals.
- Project: Ensures a project achieves its intended goal.
- Enterprise: Larger-scale transformations that generally impact the entire business.
You can also classify organizational change types by their size and scope: adaptive or transformational. Adaptive changes are smaller-scale and address business needs over time. Transformational changes, on the other hand, are larger in scale and often involve a major business shift. They also take quite a bit of time and resources to implement. Of course, many changes a business will experience fall somewhere on the spectrum between adaptive and transformational change.
Benefits of Organizational Change Management
Organizational change recognizes that there's a need at the business to grow, innovate, and adapt. Without change, businesses can stagnate, fail to adapt to changing market conditions, and leave their workforce unengaged and unproductive.
There are many potential benefits of successfully managing organizational change, including:
- Reframing change as an area of opportunity, particularly as a way to address employee resistance.
- Demonstrating employees' value to the business by involving them in large initiatives that align to larger goals.
- Bringing order during a time of uncertainty or transition.
- Improved morale and engagement from employees who feel that they are part of the process and their concerns are heard.
- Process improvement and better approaches to decision-making moving forward.
Organizational Change Management Risks
Even with the change management process steps listed above, you may run into some pitfalls. To successfully see organizational change through, understand some common risk factors that can derail a change management initiative:
- Lack of support or internal buy-in: Change needs top-down support as well as buy-in from individuals who are directly impacted by the change. That's why securing stakeholder support is essential.
- Poor communication: Change at work can make employees uneasy or unwilling to embrace what's to come. Developing clear communication plan that outlines what the changes are and who they'll impact is a worthwhile step in the process that demonstrates you respect those affected by the change.
- Unclear KPIs: The ability to gauge how well a business change is being implemented relies on clearly defined KPIs. This can also help stakeholders and implementation teams understand goals, key project milestones, and end states for the initiative.
- Overlooking the human element: People will be affected by change at work. Some may be excited about changes that benefit their career, but others may just be naturally resistant to change. An organizational change may also set them back in their role. Remember the importance of assisting, communicating, and supporting employees through transitional times.
- Not enough or no training: In instances where there's an organizational change or upgrade to a new system or technology, plans need to be in place to orient employees who are expected to use these tools. Provide detailed and ongoing training for employees once a new system or procedure has been implemented.
- Losing steam: When implementation teams have been working on a change for a while, they'll naturally start losing momentum. Keep your sights set on the end state or ultimate goals so that you can see the change initiative all the way through.
Managing Organizational Change With the Right Processes and Technologies
Effective change in the workplace requires considerable time and effort to identify, implement, and maintain organizational shifts. But when it's done correctly, the rewards that an organization can reap usually outweigh any drawbacks. Whatever the catalyst — innovation, growth, or a major transition within the business — ensure that those impacted have the tools and support they need to successfully embrace change in the workplace. And, consider working with an HR Professional who can help identify and navigate the impact to employees that may arise during organizational change.