PEX Guide: What is change management?

Implementing change seems like a difficult prospect, but it does not have to be. Change is all about taking small and continuous steps to ensure that your current business state is moving closer to your ideal business state. This guide explains what change management is, the difference between change and transformation, and the steps you need to take to successfully implement change at your organization.

What is change management?

In a business context, change management is a broad term that encapsulates any process changes made within a business. As a result, change is continuous and incremental and the barometer for useful change is how much better your ideal business state is compared to the present state of your business. This means a continuous push is needed to maintain the change.

The difference between change and transformation

Change is sometimes used interchangeably with transformation, but these are two very different concepts. Without having a firm understanding of both, you may find that change management is more difficult than it should be.

Change can be considered a continuous process that may be small or incremental, while transformation alters the reasons why organizations take the actions that they do.

It is important that businesses understand the fundamental differences between change and transformation as implementing change is more manageable because it can often be reversed.

For example, when a car manufacturer introduces a new model, we might consider that to be a change. When it automates its factory and back office, drastically reducing its costs to become exponentially more profitable and productive, forcing its competitors to adopt the same process or become obsolete, this is more indicative of transformation.

Ultimately, change management entails altering the systems, processes and organizational structures that are proper to how the business operates. Change can come in two ways: as a reaction to external circumstances and change that is adopted to encourage improvement.

With transformation, you may lose the structure for a component of your operations that many processes depend on. Implementing and reversing transformation takes a substantial amount of resources and time.

How change management can drive business transformation

Effective change can be tied in with transformation so that incremental improvements become part of a wider strategy to overhaul and optimize processes across the enterprise, changing the way the organization conducts business.

According to Katherine Dillon, automation process analyst and developer at Nokia, one of the best methods for ensuring that change management and business transformation are intrinsically linked is to tie change management in with internal business goals.

Five key steps to successful change management

Successful change management involves a systematic approach to guide individuals and teams through transitions. Here are five practical steps to achieve successful change management.

1. Determine the aspect of your business that needs improvement

Organizations should implement change when there is an identifiable process that needs improvement. As with all process excellence plans, it is vital that their goals are laser-focused with a clear structure, with resources allocated and individuals ready to take ownership.

They then recommend the adaptation of business offerings to meet these needs through agile methodologies and customer-centric design thinking as the proposed change.

Any sign of trouble is a good reason for change. Customer defection, inability to attract new customers and clients or even something as simple as declining sales. The key response at this junction is to recognize that there is an opportunity to attain significant process improvements and to enact change.

2. Ensure buy-in across the organization

When implementing change, internal resistance is natural as fear of risk and the unknown are common responses. From stakeholders to upper management and all frontline employees, the entire enterprise needs to be on board with the change.

This is vital for breaking down silos and maintaining collaboration between different departments, ensuring that everyone is geared toward the same objective.

Nokia’s Dillon believes that all business roles need to be brought in on the process. She says there is no one viewpoint or approach that is conducive to optimal change management and explains that any management requirements can shift from situation to situation.

The best chance of getting your organization onboard is to determine who exactly will be impacted by the change at all organizational levels. Companies should analyze the potential effect on each business unit and deduce how best to limit the disruption.

3. Establish planning, readiness and data management

Organizations should create a multistep strategy outlining the process change with incentives, measurements for success and scope for reflection and analysis. Whether this entails new hardware infrastructure or process management tools, any model adopted must have clear data gathering systems in place to illuminate visible success and completed milestones.

The ability to celebrate success is one of the most important aspects of change management, as it will strengthen company-wide buy-in and validate the initial reason for implementing the change.

When the change is in effect, it is important that all affected personnel have the training and knowledge required to carry out the change. Whether this entails webinar sessions, online learning modules or face-to-face training, it is vital employees are ready for the change.

4. Implement through training

Implementation consists of two elements: training and the support structure. Once organizations have these in place, and the change has been planned, they should be ready to implement.

Chris Hetrick, director of the digital transformation office’s change management center of excellence at Gap Inc. notes that major change should be accompanied by on-the-job training, microlearnings and small, digestible communications around modifications ingrained into employees’ day-to-day activities in order to keep them engaged.

At this stage leaders mandate new processes. It is natural for feelings of uncertainty and confusion to ensue, but it is up to leaders to stick to the strategy and keep all departments working toward the same goal. One of the biggest hurdles to overcome is working with the current process while trying to implement the new one.

5. Implement continuous change and review change efforts

Change should be an ongoing process. Even mid-strategy, it is useful to consider the benefits of change and to remove roadblocks and unhelpful processes that were not discovered at the initial launch of the change management cycle.

The measurement of progress in a transformation initiative should be defined in the key performance indicators (KPIs) of the project and the overall business objectives. his is how the process of change is made continuous as the organization can make necessary adjustments to the project based on the measurements taken.

To this end, tools such as dashboards and business reports can play a critical role in enabling visibility over the effectiveness of the implemented change.

Leaders in charge of change management will need to apply any tools at their disposal, such as dashboards and reports, to ensure a constantly updated view of how the transformation is progressing.

This information can be fed back to employees to demonstrate the benefits the transformation is achieving or to highlight areas where there are obstacles to change.

Managing change in the switch to hybrid work

The Covid-19 pandemic and the ensuing lockdowns and restrictions that were forced upon businesses across the globe, brought with it one of the biggest changes many organizations have had to manage in their lifetimes: the switch to remote- or hybrid-work models.

In hybrid-work models, the foundational principles of change management are conducted remotely, as opposed to in-person as it has been done traditionally.

Soraya Abdelmageed, change management lead at Asahi Europe & International, believes that change management is now far more challenging than before the pandemic.

According to Gap inc.’s Hetrick, change communications should focus on how to navigate the transformation and how it will impact employees individually.

Managers and supervisors should lead the change in small groups or one-to-one meetings that are, according to Hetrick, “much more impactful on the personal level”.

Change management in action: Real world examples

How Equilibrium Financial Planning implements structured processes

An example of successful change management comes from Equilibrium Financial Planning, which came to realize that the business was in need of more structure processes after reaching more than 1,200 managed accounts and identifying the risk of inconsistent customer service.

Toby Ellington, head of systems and processes at the firm, explains: “We are heavily regulated and we have found that mistakes made through poor understanding of processes can cost the business a lot of money.”

The business selected a business process management and mapping tool to address the need to document its processes, that would allow for control, management and review of business processes in a visual and online format.

The format generated initial interest and the business has now mapped nearly 300 processes with more than 200 published and in use. Wide adoption of the tool has, in turn, improved the client onboarding and document management processes while increasing response times through enhanced communication.

Carglass Belux improves speed to market

Carglass Belux wanted to support its growth by improving speed to market for products and services and decided on the creation of one internal platform to achieve this goal.

It was decided that such a platform would need a top-down and bottom-up structure to manage business processes, centralize the organization’s knowledge and bring total transparency to the customer journey. However, the initial response to this initiative across the organization was doubt in its efficacy.

Stefaan Hermans, IT and digital technology director at Carglass Belux, explains: “This was due to previous attempts where employees were asked to deliver significant amounts of documentation without ever seeing the fruits of their labors managed centrally.”

After fully documenting all customer touchpoints, installing an organization-wide transformation structure that included the IT landscape, legislation and compliance and people’s roles and responsibilities, the mind-set began to change and employees began to apply for key roles in the initiative.

Key trends in change management

Change management is now the number one solution supporting operational excellence initiatives. Maneesh Subherwal, executive director of business transformation, commercial bank at JP Morgan Chase & Co. explained that change management has become critical to OPEX efforts in hybrid-work models that operate with disparate teams.

He noted that this was due to the fact that the internal rollout model of new products, campaigns and strategies that used to be conducted in town halls has “turned on its head”.

Academic and author Bob Emiliani says that change management, and approaches to implement it such as Kaizen are relevant to every industry. "The fast changing digital world is no different than the fast changing manufacturing world, because tomorrow is different to today," he explains. "You orders change, equipment changes, so the idea behind Kaizen is to make small adjustments in real time so you don't have to have that big step function change."

[inlinead-1]

This guide was originally published on 23 April 2019 and updated on 9 August 2023.