Change management

Introduction

Change management is a part of everyday business. Growing a business, downsizing or simply

restructuring to better achieve your goals all require change. As do new projects, products,
technologies or process improvements. It is how your business manages this change that determines
the success of your efforts.

Organisational change management is a discipline that provides a process, strategy and framework
for the organisation and the people undergoing change. It helps you to understand the likely effects
and the potential risks that the change may cause.

This guide explains the main change management models and steps involved in leading change in a
business. It describes the common types of business transformation and the advantages of following
a formal change management process to carry it out.

It also tells you how to apply change management principles to your business, initiative or project to
mitigate risks and deliver desired results.

Types of organisational change

Many internal and external factors can give rise to organisational change. For example, new
technologies, competition, market instability, reorganisation, staff initiatives and many others.

Types of change

Depending on what causes it, business change can be:

 reactive

 planned

Planned change is often implemented with the aim of improving the ways a business operates or
achieving pre-defined goals. For example, introducing new products and services or carrying out
organisational restructure.

Reactive change takes place in response to an event that is not anticipated and is outside of the
organisation's control. For example, a fall in demand for a business' product or service, or a crisis
such as the COVID-19 global pandemic.

A business' response to such an unpredictable event can be profound and can lead to a complete
transformation, altering the way people work, innovate and collaborate. In situations like this, good
change management practice can be crucial to business continuity.

As well as planned and reactive, change can also be categorised as developmental, transitional,
transformational or remedial. Each type of change has a different degree of complexity and
uncertainty, and may require different implementation methods and commitment of resources.

Levels of change
There are three main levels where change can occur in a business:

 individual level - eg change in job assignment, transfer, change in job maturity level, etc

 team or group level - eg changes due to inefficiencies, lack of communication, etc

 organisational level - eg changes due to relocation, restructuring, mergers, acquisitions, etc

Each level has its own considerations, although change can affect one or more levels at the same
time. It's important to understand the impact of change across all levels so that you can develop
appropriate measures and interventions.

Categories of organisational change

Organisational change typically falls into four distinct categories:

 strategic

 structural

 technological or process-oriented

 people-oriented

Strategic organisational change is concerned with the overall goals and purpose of the business, and
any changes in the vision and mission of the organisation. Process-oriented change focuses on new
technologies, new skills and operating processes, while people-oriented change relates to employee
performance, skills, attitudes, behaviours and relationships.

Change in organisational structure

Structural change in an organisation occurs when the business changes its:

 organisational hierarchy

 chain of command

 management systems

 job structure

 administrative procedures

A structural change may involve, for example:

 relocation or adaptation of business premises to accommodate extra staff

 relocation to a cheaper location or one nearer to customers, labour or transport links

 mergers and acquisitions to allow you to enter new markets, seize new opportunities or
increase efficiencies

 flattening of your management structure

Read more about the reasons for changing your organisational structure.

Risks associated with change

Any type of major organisational change can be stressful and risky. Potential challenges may arise in
relation to staff retention, redundancies, relocation incentives, staff communication, merging of
organisational cultures and processes, or altering your business structure.

Before you initiate change, make sure that the benefits justify the upheaval. Following a change
management process can help you to minimise potential disruption and risks.

What is change management?

Change management is a structured approach to preparing and supporting individuals and

organisations in planning and implementing change. It comprises models, procesess and techniques
to help ease the impact change can have on a business.

Change management helps you consider several critical questions:

 What needs to change within your business and why?

 What resources will you need to achieve this change?

 How will you manage and communicate this change?

 What will the impact be on your employees and organisation?

 What are the implications for your customers?

You could be implementing new software, re-engineering a process, redesigning a product or

pursuing full business transformation. Navigating change, especially a significant one, can be
difficult, so it may help to follow a controlled, coordinated and well-established process.

Importance of change management

Change management is critical in today's markets and business environment. Customers,

competition, technology and other external and internal drivers may inevitably force your business
to respond to changing conditions. A robust change management approach and agile practices can
help your business to survive even the most unexpected crises.

Even when circumstances don't impose change, businesses frequently choose to plan and adopt
change to encourage growth and improvement. If you want to succeed and stay ahead of the
competition, you have to be able to rapidly and successfully manage change. See more on
the benefits of change management.

It's important to recognise that businesses respond to change in many different ways. Depending on
how they manage it, change can either provide a platform for growth and success, or cause
problems for individuals, teams and even entire organisations.

You can follow simple change management principles to help you manage change and achieve
lasting impact within your business.
Ability to manage change in business

There are varying levels of change management capability across organisations. These can range
from little or no formal change management (with the highest rate of failure and productivity loss)
to complete change management competency (with the highest profitability and continuous
improvement process in place).

In between these two, there is a multitude of other approaches to change management, which can
be used at the individual project level or with multiple projects, or embedded in organisational
standards and methods.

Change management process

Effectively managing organisational change involves following a sequence of well-defined steps. The
process involves assessing the changes in the broader business environment, preparing and planning
for the necessary adjustment, implementing the changes and their sustainability within the business.

Key steps in the change management process

Managing change involves a number of fundamental activities:

 Step 1: Identify potential change - take time to understand the problem and what is needed to
fix it

 Step 2: Analyse change - determine its feasibility, how long it would take to achieve and at what
cost

 Step 3: Evaluate change - weigh up the benefits and costs and decide if the change is worth it

 Step 4: Plan change - analyse the impact of change, communicate the benefits and develop an
implementation plan

 Step 5: Implement change - establish a schedule, train staff, assign tasks and deploy and
communicate changes

 Step 6: Sustain change - validate, measure progress, close the process and set up a follow-up
review to evaluate success and failures

See also what is change management.

Implementing change management process in business

Implementation is at the heart of the change management process and often includes:

 communicating the benefits of the change to your employees

 training staff on the appropriate changes

 removing resistance or obstacles to change

 securing organisation-wide buy-in for the change

  coordinating transformative activities to move the business into a new way of working

As every change is different, you may find that you need to organise tasks and responsibilities in the
process differently. You may also need to carry out other activities specific to your situation or apply
different change management models to manage the process successfully.

Managing change in projects

Change management process is complementary to project management. There are several

established change control systems to help you manage changes within a project, focusing on:

 scope - eg where a project customer asks for changes or additions to the project scope

 cost - eg where the price for the items in the scope may increase or decrease

 schedule - eg when timescales are affected or project milestones delayed

 contract - eg when the relationship between the project customer and the supplier changes

Project managers will often use integrated change management control as a way of managing
proposed changes within the project.

Change management models

Change management models describe the different processes of managing change in organisations.
They give you a structured outline you can follow, serving as a blueprint to help you apply the
common change management principles.

Many different models exist, however several are considered key and most likely to be used by
businesses planning or undergoing change. These are:

 Kotter's 8-step process for leading change

 Deming's Plan-Do-Check-Act (PDCA) cycle

 McKinsey's 7S framework

 Lewin's Unfreeze-Change-Refreeze model

 the ADKAR methodology

Other popular change management models include Beckhard and Harris's change equation, Burke-
Litwin's change model and Leavitt's system model.

Choosing a change management model

Each model has a different approach and applies different principles. Some are more complex than
others, and all have advantages and disadvantages.

When considering which change management model to choose, you should take into account:

 your goals and strategies

  your corporate structure

 your staff attitudes

 the sequence of steps suggested

 the time allotted for the work

 implementation and organisational changes

Depending on the nature of your business, the type of change and the people involved, you may use
one or more models or none. Don't feel you have to follow the models precisely. Be flexible if you
need to in order to create and sustain actionable change.

Change management tools and techniques

In addition to change management models, there are other tools and mechanisms that can help you
understand, plan and implement change in your business. For example:

 the Kübler-Ross Change Curve diagram can help you understand how individuals might react
to change and how you can support them through the process

 impact analysis can help you uncover unexpected challenges or outcomes of change

 training needs assessment can help you ensure that you give the right skills to the right
people at the right time

 stakeholder analysis and management can help you maintain a good relationship and
communication with your stakeholders

With so many options available to guide change management, finding the right one for your business
can be challenging. However, understanding the change management process is key to managing it
well.

Change management principles

You can follow some tried and tested change management principles to help you transform your
business quickly and efficiently. These principles form the basis of organisational change
management best practice.

What are the principles of change management?

The ten guiding principles of change management are:

 active leadership - lead by example by accepting and embracing change or secure senior-level
backing, if appropriate

 structured approach - use the change management process and established models where
possible

 detailed change plans - specify the change you want to see and what needs to be done to
achieve it
 impact assessment - assess and address how the changes will affect your business and your
people

 strong team - involve every layer, eg executives, middle managers, project managers and make
sure they keep their teams focused during the change

 employee participation and engagement - secure buy-in from everyone involved and affected by
the changes, directly or indirectly, train and incentivise your staff

 open and regular communication - consult with staff and tell everyone what has to happen and
what their role it

 sustainability - start with small, incremental changes and build momentum as you go

 managing resistance - identify and address common barriers to change

 evaluating progress - identify what was good, what was bad and use this information to improve
your change management practice for future projects

By following these principles, you will be able to work with many change management tools and
adjust your approach according to the size and nature of the change.

Read more about the importance of communication in change management.

Main hurdles to change management

Change can be difficult, but it is important to get it right. The main hurdles include:

 poor planning

 lack of understanding of the cause and effects of change

 insufficient preparation

 hastened roll-out

 absence of buy-in and support

 lack of communication

The risks of poorly managed change include financial losses, missed opportunities, wasted resources
and diminished staff morale and performance. With such possible consequences, it is vital to identify
and avoid common barriers to organisational change management.

Benefits of change management

Change management potentially offers many benefits. It supports a smooth transition from the old
to the new and gives you a template to follow for helping your staff and your organisation adapt to
change.

Why is change management so important?

Change delivers the best results when it's meticulously planned and managed. The benefits of
change management allow you to:

 assess and understand the need and the impact of change

 align resources within the business to support the change

 manage the diverse cost of change

 reduce the time needed to implement change

 support staff and help them understand the change process

 plan and execute an effective communication strategy

 improve cooperation and collaboration in your business

 minimise resistance to change

 maintain the routine in the running of your business during change

 maintain or even increase productivity, morale and efficiency

 reduce stress and anxiety associated with change

 reduce disruptive aspects and risks associated with change

 respond to challenges more efficiently

 minimise the possibility of change failure

Finally, the change management process creates a fantastic opportunity for the development
of best practice in business.

To make the most of the benefits of change, you will have to manage many risks and challenges
along the way. Find out how to avoid the most common barriers to organisational change
management.

Barriers to organisational change management

To develop a successful strategy for organisational change, you must understand the types of
barriers your business may face.

Top reasons for change management failure

In most cases, failure to achieve organisational change is driven by one of the following factors:

 limited understanding of the change and its impact

 negative employee attitudes

 failure to involve employees in the change process

  poor or inefficient communication

 inadequate resources or budget - see cost of change management

 resistance to organisational culture shift

 lack of management support for the change

 lack of commitment to change

 past experience of failed change initiatives

Other practical barriers can involve a lack of skills, lack of staff, difficulties in establishing service,
absence of equipment required for the change, or inadequate organisational infrastructure. If key
employees leave or move around the organisation, it may also be difficult to maintain changes after
you've introduced them.

Consequences of poor change management

The costs and outcomes of poorly managed change can be significant. They include:

 financial losses

 productivity and performance drops

 a decline in quality of work

 wasted time and resources

 inability to retain staff

 increase in employee sickness levels

 poor staff morale

 inefficiencies

 impact on customers and suppliers

 missed opportunities

You should also consider the damage to your business brand, loss of credibility and general change
fatigue, as well as risks to your business continuity.

Overcoming barriers to change management

To avoid your project slowing down or derailing, you should follow the basic change management
principles. These rely on:

 leading staff through change

 communicating with staff and stakeholders about the change

  understanding the need and the impact of change

 involving all levels of staff in the change process

 sustaining the change and embedding as part of the new norm

Certain factors may nurture a business atmosphere that is conducive to change. For example, a
strong leadership team, a culture of continuous improvement and motivated staff. However, it is
likely that you will need different approaches to overcome the different barriers.

Keep in mind that change can take a long time to achieve and resistance is common in many types of
change projects. You should consider the scale of change realistically and decide if small,
incremental changes are more suitable than a quick, full-scale organisational change.

Cost of change management

For modern business, change is not only healthy but it's also essential for success. However,
managing change comes at a cost. You will have to allocate time, money and people resources to
plan, implement and sustain change.

What is the cost of change?

It's important to understand the cumulative costs of change management. Many costs may be
hidden or crop up unexpectedly.

Most costs associated with change management relate to:

Communication

You may need to explain openly and frequently the reason for the change and the actual changes
themselves. In some cases, a formal public relations strategy can help you keep employees,
customers and suppliers informed. In cases such as downsizing, you may have a legal obligation to
consult your staff.

Branding

You may need to reflect the organisational change in your branding, eg on stationery or delivery
vans. This may happen, for example, in a merger or acquisition situation, or if you relocate, add new
product lines, etc.

Training

You may have to retrain your employees or carry out development and cultural change programmes
to help them adapt to the organisational change and new business practices.

Resources

You may need to invest resources such as time, effort, new technologies, infrastructure and
particularly human resources to help with the organisational changes. This is likely to add to the
costs of change.
Restructuring

You may need to consider the costs of restructuring - for example, redundancy payments to staff or
costs of relocation to new business premises.

You may also incur additional costs, eg for consultancy, recognition and general expenses. Some of
the costs will be difficult to quantify, but others may be easier to measure. Measuring costs
accurately may allow you to find ways to reduce or avoid certain costs entirely.

A cost-benefit analysis can offer you a methodical structure for assessing the actual costs of change
against the benefits of its desired outcomes.

Budget for organisational change management

It is a good idea to work out a detailed budget for the business change programme, to avoid any
unforeseen expenses that could derail or halt the change.

Don't feel you need to follow your original plan or budget precisely when implementing any changes
to your business. You may need to modify your proposals, policies and procedures to take into
account changing circumstances in the business and in the marketplace.

Costs of managing organisational change poorly

Poor change management opens you up to risks of incurring significant costs, both at the project and
the organisational level. For example:

 loss of money needed to address staff issues

 loss of investment if the change doesn't deliver the right outcomes

 inability to realise the value you need from the project in the first place

As well as money, poorly managed change may also result in wasted time and people resources,
dented morale and confidence, and increased resistance to change.

Importance of communication in change management

Planning and communication are critical for organisational change. Getting top management support
in implementing change can significantly improve your chances of success.

Planning organisational change

Planning for any business change will help you to ensure that changes happen the way you want
them to and that you identify and control the costs of your project. To plan your organisational
change effectively, you should:

 Prepare early. Take time to understand the existing situation, the cause of issues and the
need for change, and what the expected impact of the change may be. Follow the tried and
tested change management process and models.
  Be flexible. Assess and agree priorities but don't feel you can't change them if your
circumstances change. Follow change management principles to help keep your project on
track.

 Assess and manage risks. Identify potential problems and barriers to organisational
change and find ways to overcome them.

 Draw an organisational chart. This may help you to understand existing processes, workflows
and lines of authority. Remember to update the chart if you change your business
organisational structure.

 Develop a vision. Take a long-term view of how the change will affect the company and its
competitive position. Communicating this vision can be a great motivator for your staff. See
how to lead and motivate your staff.

 Set objectives. These will help you to measure the success of the change.

 Plan resources, assign tasks and schedule timing for the change. Assess and identify all the
possible costs of change.

 Plan your communication strategy. Consider ways you will communicate the change to your
employees - it demonstrates commitment if the managing director or chief executive talks
personally to employees.

 Monitor and evaluate. Review the progress regularly against the objectives and make
adjustments if circumstances change.

Role of communication in organisational change

Ongoing communication and employee engagement are vital. Meet managers and employees
regularly to explain the reasons for the change, how it will be carried out and how it will affect them.
Tackle rumours head-on. Make sure that managers operate an 'open door' policy to any employees
who may have questions.

Talk to suppliers, partners and customers as well, and keep them informed of any changes that could
affect them. Try to give this information as far ahead as possible.

Consulting employees about the change

Depending on the nature of change, you may need to comply with the Information and Consultation
of Employees (ICE) Regulations.

Under the regulations, employees can request that you set up formal arrangements to inform and
consult them on a range of key issues, including:

 the economic situation of the business

 job prospects

 major changes in how work is organised

At least 15 employees or 10 per cent of employees, whichever number is greater, must make the
request for a formal agreement. The regulations only apply to businesses with 50 or more
employees.

If you are planning redundancies as part of your organisational change, you must comply with
relevant legislation.

Importance of change management for business continuity

Many things can put your business at risk, including pandemics, market volatility, and changes to
your organisation, people or technology. Crises can quickly turn change management from a best
practice discipline into an urgent and critical business activity.

Change management and disaster recovery

A robust change management approach can help you avoid making unnecessary or rash changes in
your business without thorough planning and analysis. This can, in turn, thus help you avoid negative
outcomes such as business interruption, loss of productivity and profits, and even closure.

The aim of change management in business continuity and disaster recovery planning is to:

 minimise potential disruptions to your business

 find a cost-effective way to use resources to achieve change

 reduce the likelihood of returning to pre-change activities

Business continuity efforts are focused on proactively managing your business processes, assets,
facilities, supply chains and human resources to ensure that, as far as possible, your business always
functions at its highest capacity.

Disaster recovery, on the other hand, focuses on ensuring that contingency plans and procedures
are in place to return business to usual as soon as possible after a crisis.

Role of change management in business continuity

Change management is a key activity in combination with both business continuity and disaster
recovery planning. Its purpose is to help you introduce and implement changes to your business,
product, process or system in a controlled and coordinated way, avoiding issues and risks along the
way. As such, change management can:

 boost your business' resiliency

 speed up recovery from critical issues

 help you create contingency strategies for situations where change doesn't go to plan

You should review all your management plans and processes regularly to ensure they are fit and
ready to use if and when you need them.
Assess the barriers to organisational change management and address them through risk
management and business continuity and crisis management planning.