Organisational change

What is organisational change?

Organisational change is the process of an organisation changing how it works or operates.  In the past, organisational change was planned and episodic.  With the onset of the Fourth Industrial Revolution, the world is changing faster than ever, and this is of a scale, speed and complexity that is unprecedented.  Organisational change is now a constant reality which requires organisations to become increasingly agile to enable them to pivot and adapt on a regular basis.  The most successful organisations are those who respond – at pace – to emerging challenges and opportunities.

Organisational change comes in many forms. Types of organisational change range from relatively small-scale adaptive changes (e.g. implementing new processes, systems, IT software), to more transformational change of an organisation’s mission, strategy and culture.  This large-scale transformation change may be prompted by mergers and acquisitions, the arrival of a new CEO, entering new markets or major technical innovations.  As an example, many local, in-town retailers are having to change their business model in response to competitors that are disrupting the market and creating growing online competition. 

The objectives of organisational change are to remain competitive and to achieve strategic objectives such as maximising growth, innovation or customer service.

Why is it important to manage organisational change?

Large-scale organisational change is challenging and requires investment of time and energy to succeed and realise desired improvements in performance.  Much of the research into organisational change indicates low success rates. The stakes are high, and left to chance, the risks of poorly managed change can lead to a resistance to new ways of working, poor morale, diminishing performance and a loss of key talent.  Failure to successfully achieve change also leads to cynicism, making it harder to garner engagement in the future.

Managing change is therefore essential to ensure successful outcomes.  This requires the active involvement of leaders and managers throughout the organisation; to set direction, engage and motivate people and act as a role model and embed new ways of working.

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What is culture change?

Organisational culture is the shared beliefs and assumptions within an organisation that characterise ‘how we do things around here’.  Culture is akin to the ‘personality’ of an organisation, the enduring characteristics and preferred ways of doing things.  Climate is the feel of the organisation, how it feels to work around here.  This is akin to the emotional intelligence of an organisation, how it manages itself and engages its workforce.  Leadership climate is a subset of this, where the climate is set by the behaviours of leaders within the organisation.  Large scale organisational change often requires a change to an organisation’s culture.  Peter Drucker once famously quoted that, “Culture eats strategy for breakfast”, meaning that strategy can only succeed if the culture supports it.  For example, an organisation looking to introduce diversity and inclusion policies to increase representation of minority groups is unlikely to be successful unless they have a culture that values difference.  An organisation whose success relies on responding quickly to changing customer needs will struggle to achieve this if they have a bureaucratic culture where front-line employees are required to follow rigid rules.

Culture change can be the most challenging aspect of organisational change as it requires changes to how people, think, feel and behave, and this requires changing shared underlying beliefs.

How do you achieve culture change?

The first step in achieving culture change is to align strategy with culture by articulating the desired culture that will support the strategy.  For example, if a business wants to develop customer loyalty and trust, they will need to move from a culture of hierarchical control to one of empowerment and trust in the front line. This will ensure they have greater agility and can quickly respond to customer needs and demands.  Once this is clear, the next stage is to articulate the systems, processes, behaviours and beliefs that underpin the desired culture.  This leads to the process of managing change and instilling new beliefs and habits which reinforce the desired culture.  Changing ingrained habits and beliefs takes time, and focusing on leadership climate is a powerful catalyst in this process.

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How to successfully manage organisational change?

The three keys to successful change management are:

  1. A clear change story
  2. Engagement from leaders 
  3. Change enablement

 

To engage in change, people need to understand why it is happening and to care enough about it to make the necessary changes in how they work.  There needs to be a compelling vision or story of change – so that people understand and buy into why it is needed, and why now.  They also need to understand what it means for them – what they might need to do differently – and to be motivated and see the opportunities this presents.  People are also more likely to engage with and adopt changes when they are involved in shaping it and feel empowered during the process.  Finally, celebrating progress and wins along the way will bring much needed energy during large-scale transformational change. 

 

For successful change, leaders need to understand that their primary role is to influence employee mindsets and behaviours and that this requires providing support to the employees.  Leaders must role model the desired changes to demonstrate their buy-in to new ways of working. 

 

Organisations in transformation need to ensure that people can make the required changes – that they have the right resources, systems and support to work in new ways.  Change enablement is an effective way to reinforce the change story and win engagement. 

 

Finally, change needs to be reinforced through formal and informal means – through performance metrics, processes and ways of working, and also by how senior leaders behave and role model the desired changes (fundamentals described by McKinsey’s four building blocks of change).

 

Whilst essential, these components are not sufficient because successful change requires organisations to manage the emotions of change.  

 

Psychologically speaking, our brains seek predictability which means, whilst we may understand the rationale for change and accept it cognitively, emotional change is often experienced as ‘painful’ or a threat.  If left unattended, this can derail even the best-planned changed efforts.  All change requires some kind of loss and a challenge to our fundamental psychological needs of status, certainty, autonomy, relationships and sense of fairness.  Leadership neuroscientist David Rock calls this the SCARF model.  By recognising the emotions associated with change, leaders and change agents can support people to better understand their responses, build coping strategies and resilience, and move more quickly towards accepting new ways of working. 

Let’s talk about how Talogy can help your organisation effectively handle change