In 1995, General Electric CEO Jack Welch knew that to take his company to the next level he would have to shake things up. He called for GE to adopt a new process methodology, called Six Sigma, which would help shed its wasteful tendencies and streamline operations.
Welch couldn’t just flip a switch though. He had to get his people to embrace the new way of doing things. If they didn’t feel equipped and supported during the transformation, he feared they might resist the new process.
GE required employees to take 100 hours of training sessions to adopt the new methodology, and learn under full-time mentors — called black belts — to develop their skills even further.
General Electric’s transformation, which took five years to implement, is a case study in organizational change management — a practice that ensures employees adopt the processes and technologies required of a larger organizational change.
What Is Change Management?
Before change management became a more formalized discipline in the 2000s, businesses that tried to reinvent themselves often narrowly focused on the new technologies and processes — neglecting to focus on the employees such changes affected the most.
They did so at their own peril. People have a tendency to resist change when it’s foisted upon them without adequate support. So when a company asks them to adopt a new tool or workflow that affects their daily lives, they may not get on board. And that makes it difficult for organizations to transform successfully.
“If your people don’t accept or adopt that change, you consider it a failure,” Kim Phan, a change management leader at Deloitte and director of operations at the Midwest chapter of the Association of Change Management Professionals, told Built In.
Change managers like her are tasked with helping to smooth the process and drive expected organizational outcomes by getting employees to prepare for, and accept, the change.
“We really focus on the people aspect [of change],” Phan said. “That’s truly what drives success for transformation projects.”
Is Change Management Worth It?
For decades, change management was seen as a nice-to-have, according to Phan. But lately, as technological disruptions and economic shifts force workplaces to rapidly change, companies are coming around to the idea that investing in change management is good for productivity and cost-savings.
According to one McKinsey study, companies that invest in excellent change management programs for their initiatives enjoy much higher ROI than companies with poor or no change management programs in place.
Initiatives with excellent change management are six times more likely to hit objectives than those with poor change management, according to Prosci, the change management research and training firm.
“If your people don’t accept or adopt that change, you consider it a failure.”
Ultimately, though, “it’s hard to quantify the ROI for change management,” Phan said, “until you see the behavior changes.”
If a company introduces a new process, for example, which some employees adopt and others resist, the company’s “operation costs go up, maintenance costs go up, human resources costs go up,” Phan said.
In other words, businesses that want to undergo transformation can’t afford to neglect change management. It’s too expensive for their employees to reject the transformation, and too inefficient for multiple status quos to co-exist. It’s altogether too risky to ignore.
When Do You Need to Do Change Management?
The most common type of change for which change managers are relied upon is a system implementation (think ERP-based projects like SAP, Oracle, Office 365, Salesforce). Organizations want their people to adopt and use these new, expensive systems, so they look to change management to help get everyone on board.
It could be as simple as preparing and training employees on a new way to log their hours — a repeated process that they’ve developed muscle memory for, where a new system is likely to throw some people off.
There are other business transformations — including altering company culture, shifting areas of focus, bringing in new senior management, reducing headcount, acquiring or merging with another company — for which organizations may turn to change management. These transformations all likely involve initiatives that require system and process changes.
In each case, “you need change management to be able to integrate all this new stuff together,” Michelle Davies, who serves as Centric Consulting’s people and change practice lead in the Chicago area, told Built In.
“We’re kind of like the glue in some aspects,” she added. “You can come up with the best idea and the best processes and redo your systems, but none of it is going to come to life if the people don’t really get on board.”
How Does Change Management Work?
Central to change management is listening and empathizing with the people whose daily work the change affects. Typically, change managers will first meet with various stakeholders and conduct interviews, hold focus groups and run surveys. Then they summarize the findings and use them to create a roadmap — a document outlining the strategy of where the organization’s people are, where they need to be, and how they’re going to get there. It’s never one-size-fits-all.
Managers have to break change up into campaigns, Davies said. When she consults clients on change management, she relies on a four-step process that includes driving (1) awareness, (2) understanding, (3) adoption and (4) sustainment (sometimes called commitment or ownership).
“You’re taking [employees] through a journey. It’s not about sitting them in a classroom and expecting them to remember all of it.”
The awareness stage is all about communicating the need for change, building a burning platform (a grim but popular metaphor used to make the status quo look unacceptable) and explaining the benefits of the proposed change.
In the understanding stage, Davies clarifies what the roadmap to change looks like — what the timeline is, what’s expected of everyone. It answers “what happens now?”
The adoption stage is where training comes in.
“You’re taking [employees] through a journey. It’s not about sitting them in a classroom and expecting them to remember all of it. It’s about giving them what they need at that moment. That could be a video, a work instruction, some sort of gamification thing that they’re learning over a period of time,” Davies said. “We call it bite-sized learning.”
After about six months or a year, Davies said, you arrive at the fourth and final stage — sustainment. This is where you start to see success stories of the change taking hold and working.
Communication is paramount through every stage of the process, and may take several forms, including email correspondence, intranet announcements, town hall meetings, group meetings and one-on-one meetings between employees and supervisors.
What Are the Different Models of Change Management?
Some of the more popular change management models include Kotter’s 8-Step Process for Leading Change and Prosci’s AKDAR Model, both outlined below.
Kotter’s Change Management Model
- Create a sense of urgency.
- Build a guiding coalition.
- Form a strategic vision and initiatives.
- Enlist a volunteer army.
- Enable action by removing barriers.
- Generate short-term wins.
- Sustain acceleration.
- Institute change.
Prosci founder Jeff Hiatt created the ADKAR model. Each step describes an outcome people need to achieve for lasting change to take place.
Prosci’s AKDAR Change Management Model
- Awareness of the need for change.
- Desire to support the change.
- Knowledge of how to change.
- Ability to demonstrate skills and behaviors.
- Reinforcement to make the changes stick.
Every organization has their own preferred methodology for making change management happen. “But if you boil it down,” Phan said, “it centers around many of the same things. It’s creating awareness, building a burning platform, enabling your people to adopt that change and reinforcing it.”
Do I Need to Hire an Outside Consultant for Change Management?
It depends, according to Phan. Bigger companies — think 1,000 employees and up — will often retain the services of management consulting firms, which have consultants specializing in change management who are familiar with the latest methodologies and frameworks.
Sometimes, though, smaller and medium-sized companies buy pre-packaged templates and workbooks to help them deploy changes on their own. Or they might send one of their employees to get their Prosci certification in change management and return to build out the program in house.
Over the past decade, Davies has noticed a trend in which businesses shift away from bringing in management consulting firms and toward building change management skill sets internally — the idea being that third-party consultants won’t know the company nearly as well as people who have been there for a while.
There’s also the option of a hybrid approach, Davies added, in which companies will have an in-house change management program but will bring in outside consultants when particular needs arise.
For her, change management is 40 percent science and 60 percent art. There’s no one-size-fits all approach to it. Companies have to decide what they think works best for their specific situations.
Do I Need Executive Buy-In?
For change management programs to work, an organization needs leadership alignment and engagement at the right level.
If it’s a smaller change, it may only need signing off at the director level. But if you’re trying to change the company culture, “you have to go all the way to the top, to the C level,” Davies said.
Not only that, though, effective change management requires broad-based participation, Davies said. Borrowing from Kotter’s principles, she said that building a coalition and rallying employees of all levels around the change, and creating two-way communication with them, is key for change management’s success.