By Tim Bradley, managing director, Pecaso UK

‘Change Management’ refers to the psychological and physical adjustment necessary to accommodate any sort of organisational change. HR departments have realised that staff will not fall in with large change on pat: a strategy needs to be implemented to smooth the way for the transition to new working methods.

Despite the evident benefits of change management, it is often neglected or not conducted thoroughly enough. Research by Pricewaterhouse Cooper has shown that 75% of all change management procedures fail. Many organisations are guilty of paying lip service to it yet failing to deliver it in reality.

Although budgetary concerns and other priorities often stand in the way of change management, business leaders are all too aware of its importance. In a 2002 study of board level executives and senior managers, 82% believed they could improve their understanding of the relationship between change and business success.

This proves that organisations are aware of shortcomings in their ability to broach change management. It also suggests that many organisations, at board level in particular, require education on the benefits of change management to organisational reform.

One of the most effective ways to illustrate the importance of change management is to think about what happens when change is not properly managed.

In the short term
Direct Costs:

• Objectives not achieved: change is in vain if people are not prepared for it. If an organisation fails to communicate the aims of the change it is unlikely that employees will pick up on objectives automatically and translate them into their own working processes.
• Wasted resources (time/money/people): substantial costs can be wasted if the organisation is not carefully steered through the change process. Waste can have a dire effect on reputation and as a result a negative effect on a company’s share-price. Similarly in a public sector environment, the organisation is ultimately answerable to the taxpayer. Explaining that wastage has occurred through a lack of foresight will not sit easily with the electorate.

Indirect Costs:

• Job security suffers: take outsourcing as an example. If a company decides to outsource one department and implements this change with no explanation; staff across the organisation may start to have doubts about their own job security. If the organisation effectively communicates its intentions and possible repercussions, then staff will feel much clearer about their own positions.
• Morale suffers: An internal reputation for having little connection with employees and communicating poorly can have serious repercussions. Employee retention ratios may fall, recruitment strategy may suffer as reputation suffers; and morale will undeniably impact on job satisfaction levels, which will in turn affect productivity.

In the long term
Direct Costs:

• Resistance to change increases:An element of resistance is inevitable, even with a sound change management programme in place. Without change management, resistance will grow exponentially as unhappy staff vent their concerns. This can often kick-start an “us and them” mentality.
• Future change is more likely to fail: The challenge to overcome the resistance hurdle next time round will be much greater. If a second change is badly handled, this will only reinforce the resistance behaviour and so the chain goes on.
• Financial performance affected: Whispers of ineffective management techniques and possible falling productivity could well affect shareholder confidence and share price could start to take a tumble.

Indirect Costs:

• Lower confidence in leadership: If change is implemented without communication it will leave a legacy of dwindling confidence in leadership capabilities as staff flounder in uncertainty.
• Company objectives are less likely to be achieved: As disillusionment and lack of confidence grow, people become less focused and productivity levels drop.

The fundamental benefits that an organisation can realise from the implementation of good change management procedures are the converse of these risks:

• Rapid achievement of goals and objectives




• Seamless transition




• Early increase in performance




• Motivated, positive staff




• Retention of the right staff




• Continued development and increasing performance

Steps to Change Management
Prepare: every organisation needs to be 100% prepared for all facets of the
change.

Blueprint: organisations have to build their own equivalent of a ‘blueprint’ before embarking on the change. This can be adapted (and ideally measured) over time, to ensure that it enables clear agreement between all people involved in the project.

Realisation: this involves the organisation coming to terms with the changing environment and identifying and implementing the necessary procedures to do this. Factors such as the cultural set-up of the organisation, how it will adapt to change and how individuals will react to it are all important at this stage.

Final preparation: this looks at the communication procedures that are necessary when implementing an organisational change, the training that is required and the final preparation of the organisation for the change.

If each stage is handled correctly and carefully integrated with overall project phases and processes, an organisation should be able to make change happen in the best way possible. The people in an organisation should never be underestimated.

If harnessed in the correct way and facilitated properly, the right people will ensure that an organisation sails seamlessly through changing times and the benefits of the project are fully realised. Change management ensures that change is for the better.