Leading and Managing Change

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Editor: Miranda Herbert Ferrara
Date: 2013
Gale Business Insights Handbook of Cultural Transformation
Publisher: Gale, a Cengage Company
Series: Gale Business Insights
Document Type: Topic overview
Pages: 9
Content Level: (Level 5)

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Leading and Managing Change

In This Essay

■ Overview

■ Motivating change

■ Creating a vision

■ Developing political support

■ Managing the transition

■ Sustaining the moment

Overview

Companies facing internal and external pressure undergo many changes in their business operations, even transforming themselves structurally and strategically. The success of such a transformation or overall change program depends upon the successful implementation of change initiatives and the ongoing monitoring and evaluation of the impacts of the program. As marketplace dynamics change, a company's existing strategy and business operation might become obsolete or might not provide the desired outcomes. The pace of change in technology and other socio-economic variables pressures companies into constant changes. Management must be well equipped to lead the necessary changes, have a strategic vision, and be capable of guiding people through a changing environment.

Leading and Managing Change Organizational change impacts various systems and subsystems of a company, so in order to execute visionary change programs, leadership must manage all the elements of organizational change, including

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Change management: A set of basic tools or structures intended to keep any change effort under control.

structure and corporate culture. Change management is complex in large companies with global operations, because extra attention must be paid to local and national cultures, values, and structures. Even highly sophisticated change frameworks can fail due to an inability to successfully deal with the size, scale, and complexities of global, cross-cultural, and cross-generational change (Cheese, Gossage, & Silverstone, 2008). Management must be able to define an appropriate change strategy, developing capabilities for the change and managing the change process on an ongoing basis.

Developing an appropriate change strategy is just one aspect of the change process, the major part of which lies in the successful management of change programs. Managing change includes strategy, process, people, and culture in most modern companies. It is not a onetime event but one that must be managed continuously because demographic trends, technological innovations, and globalization require companies to change at higher rates than ever before. A growing number of companies are undertaking the kinds of organizational changes needed to survive and prosper in today's business environment. They are streamlining themselves and thereby becoming more nimble and responsive to external demands, involving employees in key decisions and paying for performance rather than for time, and taking initiative in innovating and managing change, rather than simply reacting to what has already happened (Worley & Vick, 2005).

After identifying the cause of a problem or opportunities for development, company members can begin planning and subsequently leading and implementing the changes necessary to improve company effectiveness and performance. A large part of organizational development (OD) involves interventions for improving a company. Changes can vary in complexity from the introduction of a relatively simple process to the formation of a small work group to the transformation future strategies and design features of the whole company. Although change management differs across situations, the aim is always to identify a vision and desired future, gain political support for them, and manage the transition of the company toward them (Cummings & Worley, 2009).

Motivating Change

People are the carriers of organizational change, and unless they are motivated and internalize the change, sustainable change is almost impossible. People are generally resistant to change and perceive it as disruptive and Page 221  |  Top of Articlepotentially dangerous as the existing conditions change and the company is moved toward a new, unknown future stage (Mackenzie, n.d.). Leadership plays a significant role in changing company members' attitudes about change. Leaders should convey how organizational change will help to achieve the strategic future vision of the company, as well as outline the strategy and work plans. They should educate employees about the changes, including how they affect every element of the company and what benefits are associated with the change programs. The more people know about the changes, the more they can form educated opinions about them, and by conveying the importance of change in the company, leadership can help to create a sense of ownership in employees, who will eventually internalize and implement the change process.

Unless people are dissatisfied with their current status, they are not likely to accept changes. Making people ready for change is one of the hardest tasks in the organizational change process. Management should have a plan to remove the boundaries that keep employees comfortable and complacent. By demonstrating the benefits of change and explaining how it will enhance employees' performances, management can make employees more inclined to changes. By revealing the discrepancies between the current state of the company and the desired future state, management can create a positive feeling toward the change (Brown & Harvey, 2006).

During change, a company moves toward a future that cannot be entirely predicted. Unless uncertainty and fears about the changes are addressed, employees will never accept those changes. When members of a company expect success, they are likely to develop greater commitment to the change process and to direct more energy into the constructive behaviors needed to implement it. The key to achieving these positive effects is to communicate realistic, positive expectations about the organizational changes (Cummings & Worley, 2009).

Among the factors that contribute to resistance to the change process are ambiguity in the process, failure to consult people before making changes, destruction of the existing relationship among people, and the fact that change threatens jobs. Employees may react to the coming changes by requesting transfers, reducing their output, or even quitting (Lawrence, 1969). Management must try to identify the root causes of resistance and apply effective strategies to overcome it. One of the best policies is to involve the resistive people in a change management team, because participation and active involvement helps a company design the Page 222  |  Top of Articleappropriate change model and assist in implementation of the change process. This will also help in developing alternate viewpoints or perceptions about the change program, which can then lead to overcoming resistance (Cummings & Worley, 2009).

Creating a Vision

A vision is the desired future state of a company. Managers or leaders should have a strategic vision of the company and be able to outline the framework of how changes in the company will make it possible to achieve the desired state. Leaders should seek input and opinions from their members about what kind of company they are looking for and the improvements required to achieve that (Brown & Harvey, 2006). Based on the future status of the company, executives can direct company activities and make planned changes. Without a specific vision of where the business is heading, however, employees are less likely to be motivated for the change process. Thus, vision guides the change process, and it is necessary for management to clearly define the strategic vision and align the change process to the strategic vision of the company (Darbi, 2012).

Leading and Managing Change A strategic vision of a company is driven by the core values of the company, its culture, the beliefs of its members, and the external environment. Therefore, a company should provide inputs to encourage its members and stakeholders to craft a vision. The active participation in the process of people who are directly impacted by the changes helps leaders to gain company-wide support to create ideas and develop core values that make the vision a success, not just a dream (Cummings & Worley, 2009). Although developing a vision is a complicated task that is connected to the mission and core beliefs, it is possible when members of a company actively participate and internalize the new vision in their daily tasks. However, the vision must be attainable as well as measurable (Kaplan, Norton, & Barrows, 2008), because an unattainable and unrealistic vision will discourage employees.

Strategic vision is linked to overall organizational direction, mission, and purpose, and in the absence of a strategic vision, employee goals and organizational goals are isolated because employees cannot channel their efforts toward the overall mission of the company. Therefore, the desired strategic vision of the company must be connected to the company values and mission (Olk, Rainsford, & Chung, 2010), which must be created by top management. While creating a vision, management should listen Page 223  |  Top of Articleto what company stakeholders such as customers, suppliers, employees, and partners have to say about the vision of the company. Management must identify the gap between the company's vision and its image in the eyes of its stakeholders (Hatch & Schultz, 2001) and try to reach a point where the two align. By adopting a strategic vision, companies can achieve more success than their resources or competencies alone would allow (Hamel & Prahalad, 1989).

Developing Political Support

Companies interact with elements of both the internal and external environments, and systems and subsystems. Different levels, structures, and groups exist in every company, so it is not uncommon for varied goals and visions to exist as well. The strategic vision of lower-level employees may differ from that of top-level employees, and they may disagree on the procedures needed to achieve those strategic visions. While trying to fulfill its own goals, each group or department will compete with each other for resources, and conflicts will likely arise. During the change process, individuals and groups will be concerned about how their status will be affected by the changes and what the status of their power and influence will be after the implementation of the changes (Cummings & Worley, 2009), and they will resist the change process if the outcomes will be against them.

Management must try to obtain support from all parties, not only from those who are in favor of changes. Management must also have the ability to balance two forces of change acting in opposing directions, while keeping the strategic direction in mind and making some sacrifices along the way. Managers should build coalitions, form alliances to overcome resistance, and garner company-wide support. As in politics, management may need to negotiate and develop agreements to neutralize the resistance. While restructuring and downsizing, a company can transfer existing employees to different locations or provide early retirement and fringe benefits for involuntary termination (Brown & Harvey, 2009).

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Ad-hoc: Formed to address a specific problem or need.

To attain helpful political support in a company, external consultants should know which group or department in the company has strong enough power to influence the direction of change. Unless the consultants are able to get positive support from powerful groups, successful change implementation is almost impossible. Generally, it is not a good idea to use force or simply coerce the members of a company toward change, because it leads to more negative consequences than positive ones. Page 224  |  Top of ArticleHowever, indirect power motivates people because they follow the powerful groups within a company to fulfill their goals. By understanding the power structure in a company, consultants may persuade the members that the strategic changes can be positive (Brown & Harvey, 2009). Organizational change also brings a shift in power across management levels, functions, and groups, so leadership must develop a network of power-players and listen to their concerns and recognize their recommendations while creating change agendas (Authentic Consulting, n.d.).

Managing the Transition

Companies implement specific interventions to improve existing business operations or to achieve the desired strategic vision and goals of the company. With the implementation of change programs, companies shift from one state to another, a difficult process that requires changes not only in company structures or tasks but also in the mindsets of people. Williams Bridges (1991) explains the transition as a psychological process in which people make a transition through three different phases: ending, neutral zone, and new beginning. People may be frustrated, show anger, and avoid the change at first, but with strategic guidance from management they can make themselves neutral to the change instead of resisting. In the neutral phase these people will learn about the future state of the company and make connections to the past. The more knowledge people have of the change process and the positive outputs associated with it, the quicker they will make the transition to the new phase.

Leading and Managing Change The most challenging task for management is getting people through the transition, so managers must have strategic guidelines and action plans in place about how to make a smooth transition. They should inform employees about how they will be affected by the changes and how they can make themselves ready by altering their behaviors and adopting new ways to perform given tasks. Transition is a lengthy process because it takes time for employees to master the new practices of the company and also internalize the new settings. Many companies lose control of initiated change programs because of unsuccessful transitions (Collerette, Schneider, & Legris, 2003). For successful transitioning, companies should identify key people or groups and try to ensure their full commitment to the change process, in addition to forming an ad-hoc change management structure (Cummings & Worley, 2009).

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Formation of an ad-hoc change management structure in a company facilitates the change and transition process by mobilizing the available resources in the area in which they are needed the most. By including the influential people in the structure, a company may improve the change visibility. In addition to facilitating the transition process, the aim of such groups and their members should be to maintain the quality of products and services because disruptions are likely to occur in the transition period (Collerette et al., 2003).

Sustaining Momentum

Sustaining change momentum is the process of aligning organizational elements to the newly implemented changes (Quintero, n.d.) so that the company does not revert to its previous state. It is the task of making changes permanent by reinforcing new behaviors in people using various human resource tools (Cummings & Worley, 2009). Sustaining the implemented changes requires continuously improving the systems and subsystems of a company while maintaining their congruency. Significant emphasis must be given to employee behaviors because people are the carriers of change within a company. Instead of seeking only participation from members, companies must create a change-oriented work atmosphere in which people motivate themselves and internalize the planned changes. By developing and retaining influential people, companies can streamline the change process by transforming those influential people into change leaders and supporting them.

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Barriers: Factors inhibiting the free movement of resources, e.g. restrictive laws relating to the movement of goods, capital, and labor.

Leading and Managing Change Another way of reinforcing positive attitudes toward change is letting people know about the success of previous related change programs. When people see how a similar change process was successful, they will develop a positive attitude toward the change program and continuously strive for the success of the program. Additionally, rewarding employees for their change efforts and behaviors will motivate them for continuous involvement. As the company changes, people should develop new skills to perform the required tasks. They will gradually develop these skills over time, but training and mentoring are still necessary during reengineering, which leads to more complex tasks requiring highly skilled employees (Hammer & Champy, 1993).

Depending on the nature of the changes, a company may need to adjust roles, culture, organizational structure, or information technology if they are deemed to be barriers to dynamic changes. These systems Page 226  |  Top of Articlewere designed for a previous state of the company, so they may not be fully operable in the new state. Similarly, large-scale change requires a considerable amount of time, energy, and financial resources, so, companies must be well prepared for any challenges that may arise over the course of the process. By taking into consideration people's behavior and developing strategic planning, companies can initiate required actions to sustain the changes. However, the lack of knowledge, skill and practice, managerial commitment and a support system, and transformational leadership, along with a negative work culture and the pursuit of short-term gains have been the biggest problems of change management and have led to the failure of almost 70% of changes (Maurer, 2010).

General Electric Company, a multinational conglomerate, focuses on both top-down and bottom-up changes in its companies. GE relies on teams to manage change, educating team members about the change process, its effects, and how to manage it. It also wants its leaders to energize people by carefully and strategically articulating the vision of change (Prokesch, 2008). Unless everyone in a company is aware of changes, they cannot be implemented smoothly. Companies that develop a systematic change process with visionary executive role models are bound to be successful. Both executives and members of a company need to fully embrace the changes for there to be a successful outcome.

SOURCES OF ADDITIONAL INFORMATION

Leading and Managing Change American Institutes for Research, www.learningpt.org

Positioning Public Child Welfare Guidance, www.ppcwg.org

National Association of State Chief Information Officers (NASCIO), www.nascio.org

BIBLIOGRAPHY

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Bridges, W. (1991). Managing transitions: Making the most of changes. Cambridge, MA: Perseus.

Brown, D. R. & Harvey, D. (2006). An experimental approach to organizational development (7th ed.). Upper Saddle River, NJ: Prentice Hall.

Cheese, P., Gossage, W. G., & Silverstone, Y. (2008). Leading and managing change in multi-polar world. Retrieved December 3, 2012, from http://www.accenture.com/us-en/outlook/pages/outlook-journal-2008-globalization-change-management.aspx

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Collerette, P., Schneider, R., & Legris, P. (2003). Management of organizational change: Part 6: Managing the transition. ISO Management System, 3(6).

Darbi, W. P. K. (2012). Of mission and vision statements and their potential impact on employee behavior and attitudes: The case of a public but profit-oriented tertiary institution. International Journal of Business and Social Science, 3(14).

Hammer, M. & Champy, J. (1993). Engineering the corporation: A manifesto for business revolution. New York: Harper Business.

Hatch, M. J. & Schultz, M. (2001). Are the strategic stars aligned for your corporate brand? Harvard Business Review, 79(2).

Kaplan, R. S., Norton, D. P., & Barrows, E. A. (2008). Developing the strategy: Vision, value gaps, and analysis. Balanced Scorecard Report Jan-Feb 2008. Boston, MA: Harvard Business School. Retrieved November 15, 2012, from http://www.exed.hbs.edu/assets/Documents/developing-strategy.pdf

Lawrence, P. R. (1969). How to deal with resistance to change. Harvard Business Review, 47(1).

Mackenzie, M. L. (n.d.). Senior leadership's role in the change process. Retrieved December 3, 2012, from http://www.dowling.edu/faculty/Mackenzie/docs/change.pdf

Maurer, R. (2010). Why 70% of changes fail. Retrieved December 4, 2012, from http://www.reply-mc.com/2010/09/19/why-70-of-changes-fail-by-rick-maurer

Olk, P., Rainsford, P., & Chung, T. (2010). Creating a strategic direction–Visions and values. In C. Enz (Ed.), The Cornell School of Hotel Administration Handbook of Applied Hospitality Strategy. Thousand Oaks, CA: Sage.

Prokesch, S. (2008). How GE teaches teams to lead change. Harvard Business Review. Retrieved December 05, 2012, from http://www.ge.com/pdf/innovation/leadership/hbr_crotonville.pdf

Quintero, J. S. (n.d.). Organizational change: Formulating, implementing, and sustaining a fundamental organizational change in South American central banks, pilot study Colombia. Retrieved December 4, 2012, from http://www1.unisg.ch/www/edis.nsf/SysLkpByIdentifier/2766/$FILE/dis2766.pdf

Worley, C. G. & Vick, Y. H. (2005). Leading and managing change: Leading change management involves some simple, but too often forgotten rules. Graziadio Business Review, 8(2).

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Gale Document Number: GALE|CX2759200028