Project Report on Contemporary Management Issu1

PROJECT REPORT ON CONTEMPORARY MANAGEMENT ISSUE “CHANGE MANAGEMENT”

Submitted in partial fulfillment of the requirement for theAward of degree of

MASTER OF BUSINESS ADMINISTRATION Academic Session 2009-2011

SUBMITTED TO: SUBMITTED BY:

M.B.A DEPARTMENT Mr. GAURAV NAGPAL LIET ALWAR MBA-2nd Sem

LAXMI DEVI INSTITUTE OF ENGINEERING AND TECHNOLOGY

DECLARATION

I hereby declare that the project report on contemporary issue entitled,

“CHANGE MANAGMENT” is based on my original work and

indebtedness to other work / publication has been duly acknowledged

at relevant place.

Submitted By:

GAURAV NAGPAL MBA -2nd sem.

ACKNOWLEDGEMENTSI would like to express my deep sense of gratitude to all those who helped me directly and indirectly in completing this project work.

I am heartiest thankful to Mr. Ankush singla (Faculty) for giving me valuable information , support and guidance during my project work. Without which it would have not been possible for me to work on this project.I would like to express my gratitude to Principal Laxmi Devi Institute of Engineering and Technology Alwar and other Faculty members for giving help and support.

GAURAV NAGPAL

CONTENTS

HISTORY AND EVOLUTION OF CHANGE MANAGEMENT

INTRODUCTION

IMPORTANCE AND CHARACTERISTICS

THE PROCESS

ACTIVITIES

BENEFITS OF CHANGE MANAGEMENT

COST-BENEFITS ANALYSIS OF CHANGE MANAGEMENT

EFFECTIVE MANAGEMENT OF CHANGE

SUCCESSFUL CHANGE

BUSINESS DEVELOPMENT DRIVEN CHANGE

PRINCIPLES OF CHANGE MANAGEMENT

RESISTANCE TO CHANGE : IT’S REASONS

CASE STUDY

SUMMARY

BIBLIOGRAPHY, WEBLIOGRAPHY

Overview

The field of change management can be confusing and sometimes complicated to research and study, for new practitioners as well as more experienced practitioners. Change management is the application of many different ideas from the engineering, business and psychology fields.  As changes in organizations have become more frequent and a necessity for survival, the body of knowledge known as “change management” has also grown to encompass more skills and knowledge from each of these fields of study.   While this may be a good trend overall, the result for many change leaders is growing confusion about what change management really means.  This tutorial is designed to help explain the history and evolution of change management, and discuss why change management has become a leadership competency that is here to stay.   

History and evolution of change management

To understand change management as we know it today, you need to consider two converging and predominant fields of thought: an engineer's approach to improving business performance and a psychologist's approach to managing the human-side of change.

First, students of business improvement have been learning and practicing how to make changes to the operations of a business as a mechanical system since Frederick Taylor’s work in the late nineteenth century. This mechanical system perspective focuses on observable, measurable business elements that can be changed or improved, including business strategy, processes, systems, organizational structures and job roles.

The other side of the story begins with psychologists. Concerned with how humans react to their environment, the field of psychology has often focused on how an individual thinks and behaves in a particular situation. Humans are often exposed to change, hence psychologists study how humans react to change. With his 1980 publication of Transitions, William Bridges became a predominant thinker in the field of human adaptation to change and his early text is frequently cited in Organization Development books on change management. However, only once or twice in this book does Bridges relate his theory to managing change in the workplace. It was not until later that Bridges began to write a significant body of work related to his theories of change and how they relate to workplace change management.

The net result of this evolution is that two schools of thought have emerged. The table below summaries the key differences and contrasts the two approaches in terms of focus, business practice, measures of success and perspective on change.

  Engineer Psychologist

Focus Processes, systems, structure People

Business practices

BPR, TQM, ISO 9000, Quality Human resources, OD

Starting point Business issues or opportunities

Personal change, employee resistance (or potential for resistance)

Measure of success

Business performance, financial and statistical metrics

Job satisfaction, turnover, productivity loss

Perspective on change

“Shoot the stragglers, carry the wounded.”

“Help individuals make sense of what the change means to them.”

Observers of business changes in real life have realized that the extreme application of either of these two approaches, in isolation, will be unsuccessful. An exclusively “engineering” approach to business issues or opportunities results in effective solutions that are seldom adequately implemented, while an exclusively “psychologist” approach results in a business receptive to new things without an appreciation or understanding for what must change for the business to succeed.

What does this mean for the definition and field of change management? First, that it is important to recognize that both the engineering and psychological aspects must be considered for successful change. Second, that business improvement methodologies must integrate these two disciplines into a comprehensive model for change. Finally, that when you read or study change management literature, be sure to identify how the termchange management is used so that you can effectively apply that work to your current body of knowledge.

Today, the term “change management” takes on a variety of meanings. The most practical and useful definition is:

Change management is the process, tools and techniques to manage the people-side of business change to achieve the required business outcome, and to realize that business change effectively within the social infrastructure of the workplace.

This definition allows practitioners to separate change management as a practice area from business improvement techniques. So whether you are doing Six Sigma, BPR, TQM or some other technique to improve business performance,

change management can be viewed as an essential competency to overlay and integrate with these methods.

Evidence change management is the new leadership competency

The concept of change management is here to stay.   Change management is the new leadership competency for five reasons. 

There will always be people Project success will always be a business goal A changing environment is now 'business as usual' Empowerment has created a shift in values which is irreversible Businesses are focusing on measuring the impact of change management

People

Projects and change initiatives would go smoothly every time if it weren't for the people.  There will continue to be projects and there will continue to be people involved in those projects.  Change management is not the touchy-feely, "warm and fuzzy" soft side of a project.  It is the structured, action-oriented process focused on addressing the people as an essential component in making successful projects. 

Project success

Businesses world-wide have become very good at finding the right answer or business solution for a particular project.  Research with more than 327 project teams site the number one item project teams would do differently next time was utilize an effective and planned change management program.  Project teams also stated the top implementation obstacle for a project was a  lack of understanding of the need for change and general resistance to the change (Best Practices in BPR).  In other words, the inability to manage the people side of a business change in the presence of a new culture and new values is a major contributor to failed business changes. Failing to manage the human side of change results in inefficient and unsuccessful change projects and an inability to realize new business strategies and objectives.  If project success is a business goal, research shows you must use change management. 

Environment

Organizations are facing larger and more frequent changes in the current economic climate.  A changing marketplace, empowered workforce and technological advancements have created an environment where change is becoming 'business as usual'.   Since change is becoming 'business as usual' successful businesses will need the flexibility to meet these changes head on and come out victorious.  This is done by success in each project initiative within the business.   In order for projects to be successful they must in turn address the people side of the change. 

Shift in values

Over the past 50 years, organizations have made dramatic shifts in roles and values of front-line employees. Predictably and control have been replaced by values of accountability, responsibility and empowerment. In an environment with an empowered workforce, change competency becomes a critical skill at all levels. When employees were expected to follow the rules, leaders had to only identify the rules and communicate them down. Now, employees have been given the ability to make the rules. For empowerment to be effective when change is needed, organizations must provide the change management skills and tools at all levels to quickly and efficiently respond.

Focus on measuring impact

Proof of change management becoming an essential component of business is the desire of people in the field to measure and have statistics and benchmarking about the impact of change management on the bottom line of an organization.  This trend to measure and research change management's impact not only proves change management's importance but also creates the ability to prove it should be an integral part of 'business as usual'.     

Summary

Recognize that both the engineering and psychological aspects must be considered for successful business change. While many techniques can be employed to design the solution to a business problem or opportunity (i.e., the business change), change management is the process, tools and techniques to manage the people-side of that business change to achieve the most successful business outcome, and to realize that change effectively within the social infrastructure of the workplace.

Change management has created quite a buzz in today's business environment.   No matter what it is called, the concept of change management is here to stay.   Change management is a required leadership competency to excel in business today.  

CHANGE MANAGEMENT

Change management is a structured approach to the change in individuals, teams, organizations and societies that enables the transition from a current state to a desired future state.

THEORIES OF CHANGE:

The evolution of the change management field stems from psychology, business and engineering. Hence, some models are derived from an organization development perspective whereas others are based on the individual behavioral model. For this reason, this section is divided into two sub-categories: Individual Change Management and Organizational Change Management.

DYNAMIC CONSERVATISM:

This model by Donald Schon explores the inherent nature of organizations to be conservative and protect them from constant change. Schon recognizes the increasing need, due to the increasing pace of change for this process to become far more flexible. This process being one of 'learning'. Very early on Schon recognized the need for what is now termed the 'learning organization'. These ideas are further expanded on within his frame work of 'reflection-in-action', the mapping of a process by which this constant change could be coped with.

INDIVIDUAL CHANGE MANAGEMENT:

An early model of change developed by Kurt Lewin described change as a three-stage process.

The first stage he called "unfreezing". It involved overcoming inertia and dismantling the existing "mindset". Defense mechanisms have to be bypassed.

In the second stage the change occurs. This is typically a period of confusion and transition. We are aware that the old ways are being challenged but we do not have a clear picture to replace them with yet.

The third and final stage he called "refreezing". The new mindset is crystallizing and one's comfort level is returning to previous levels. Rosch (2002) argues that this often quoted three-stage version of Lewin’s approach is an oversimplification and that his theory was actually more complex and owed more to physics than behavioural science. Later theorists have however remained resolute in their interpretation of the force field model.

This three-stage approach to change is also adapted by Hughes (1991) who makes reference to: "exit" (departing from an existing state), "transit" (crossing unknown territory), and “entry" (attaining a new equilibrium).

Tannenbaum & Hanna (1985) suggest a change process where movement is from "homeostasis and holding on", through "dying and letting go" to "rebirth and moving on". Although elaborating the process to five stages, Judson (1991) still proposes a linear, staged model of implementing a change:

(a) Analyzing and planning the change;

(b) Communicating the change;

(c) Gaining acceptance of new behaviors;

(d) Changing from the status quo to a desired state, and

(e) Consolidating and institutionalizing the new state.

The ADKAR model for individual change management was developed by Prosci with input from more than 1000 organizations from 59 countries. This model describes five required building blocks for change to be realized successfully on an individual level. The building blocks of the ADKAR Model include:

1. Awareness – of why the change is needed

2. Desire – to support and participate in the change 3. Knowledge – of how to change 4. Ability – to implement new skills and behaviors 5. Reinforcement – to sustain the change

ORGANIZATION CHANGE MANAGEMENT

Organizational change management includes processes and tools for managing the people side of the change at an organizational level. These tools include a structured approach that can be used to effectively transition groups or organizations through change. When combined with an understanding of individual change management, these tools provide a framework for managing the people side of change. People who are confronted by change will experience a form of culture-shock as established patterns of corporate life are altered, or viewed by people as being threatened. Employees will typically experience a form of "grief" or loss.

THE ROLE OF MANAGEMENT

Management's responsibility (and that of administration in case of political changes) is to detect trends in the macro environment as well as in the microenvironment so as to be able to identify changes and initiate programs. It is also important to estimate what impact a change will likely have on employee behaviors patterns, work processes, technological requirements, and motivation. Management must assess what employee reactions will be and craft a change

program that will provide support as workers go through the process of accepting change. The program must then be implemented, disseminated throughout the organization, monitored for effectiveness, and adjusted where necessary.

Organizations exist within a dynamic environment that is subject to change due to the impact of various change "triggers", such as evolving technologies. To continue to operate effectively within this environmental turbulence, organizations must be able to change themselves in response to internally and externally initiated change. However, change will also impact upon the individuals within the organization.

Effective change management requires an understanding of the possible effects of change upon people, and how to manage potential sources of resistance to that change. Change can be said to occur where there is an imbalance between the current state and the environment.

The change management process in systems engineering is the process of requesting, determining attainability, planning, implementing and evaluation of changes to a system. It has two main goals: supporting the processing of changes and enabling traceability of changes, which should be possible through proper execution of the process.

INTRODUCTION OF CHANGE MANAGEMENT

There is considerable overlap and confusion between change management, change control and configuration management. The definition below does not yet integrate these.

Change management is an important process, because it can deliver vast benefits (by improving the system and thereby satisfying customer needs), but also enormous problems (by ruining the system and/or mixing up the change administration). Furthermore, at least for the Information Technology domain, more funds and work are put into system maintenance (which involves change management) than to the initial creation of a system.

In the same way Hinley describes two of Lehman’s laws of software evolution: the law of continuing change (i.e. systems that are used must change or automatically become less useful) and the law of increasing complexity (i.e. through changes the structure of a system becomes ever more complex and more resources are needed to simplify it).

The field of manufacturing is nowadays also confronted with many changes due to increasing and worldwide competition, technological advances and demanding customers. Therefore, (efficient and effective) change management is also of great importance in this area.

It is not unthinkable that the above statements are true for other domains as well, because usually, systems tend to change and evolve as they are used. Below, a generic change management process and its deliverables are discussed, followed by some examples of instances of this process.

In the process below, it is arguable that the change committee should be responsible not only for accept/reject decisions, but also prioritization, which influences how change requests are batched for processing.

IMPORTANCE OF CHANGE MANAGEMENT

Change is the only thing permanent in the world.Change is inevitable, but pervasive too.Life itself is almost synonymous with the concept of change.

Humans and organisms, ‘grow up’ leaving behind the characteristics of earlierstages of development and adopt new behaviours with age, environments andexpectations.An organisation too cannot and should not remain constant/stagnant all the time.Even if the management does not want to change, the external pressures force it tochange.Change encompasses leadership, motivation, organisational environment, roles ofpeople, etc.Change produces emotional reactions too.To many it is threatening, it has visions of revolutions.If throws up also a dissatisfied person, a trouble maker.

CHARACTERISTICS OF CHANGE MANAGEMENT

Vital if a company were to avoid stagnation.A process and not an event.It is normal and constant.Is fast and is likely to increase further in the present competitive business.Many a times it is a ‘top down’ management directive.Sometimes it is also a ‘mutually agreed’ plan for change in various groups ofmanagement.It is a ‘natural’ and ‘adaptive’ change as a consequence/reaction to the externalcircumstances and pressures.Sometimes is an ‘incremental’ change, step by step.Sometimes it is a ‘radial’ shift from the current to a new process.It is dependent upon the organisational environment and or culture.

THE PROCESS

For the description of the change management process, the meta-modeling technique is used. Figure 1 depicts the process-data diagram, which is explained in this section.

BENEFITS OF CHANGE MANAGEMENT

Working through a list of benefits of change management can be a really useful process and is a step I insist those tasked with planning change should take. Why? Well, often we get so deep in the planning process that we lose sight of the forest and only see the trees.

Reading through a broad list of benefits, such as those listed below, can spark really useful thoughts and ideas about the change process you are working with.

You can use it like a checklist to hold against your planning.

As you run through these benefits of change management have a pen and paper nearby so you can write down ideas that come to your mind, or areas of the change you'd like to pay more attention to. You can ask "in what ways does this benefit correspond to my plan"?

The greatest importance of change management is that it providesconceptual scaffolding for the people, the process, and the organisation implementing change. It is a framework used to support and understand the change and its effect on the organization and its people.

Benefits of change managementto the organization:

Change is a planned and managed process. The benefits of the change are known before implementation and serve as motivators and assessment of progress

The organization can respond faster to customer demands 

Helps to align existing resources within the organization

Change management allows the organization to assess the overall impact of a change

Change can be implemented without negatively effecting the day to day running of business

Organizational effectiveness and efficiency is maintained or even improved by acknowledging the concerns of staff

The time needed to implement change is reduced

The possibility of unsuccessful change is reduced

Employee performance increases when staff feel supported and understand the change process

Increased customer service and effective service to clients from confident and knowledgeable employees

Change management provides a way to anticipate challenges and respond to these efficiently

An effective change management process lowers the risk associated with change

Managed costs of change: change management helps to contain costs associated with the change

Increased return on investment (ROI)

Creates an opportunity for the development of "best practices", leadership development, and team development

Benefits of change managementfor individuals / staff:

Effective change management supports a smooth transition from the old to the new while maintaining morale, productivity, and even company image

Provides management and staff support for concerns regarding changes

An efficient change management process creates the correct perception of the change for staff and public

Helps to plan efficient communication strategies

Minimizes resistance to change

Improves morale, productivity and quality of work

Improves cooperation, collaboration and communication

A carefully planned approach to change reduces stress and anxiety and encourages people to stay loyal to the organization

Increased employee acceptance of the change

Personal loss/gain to individuals is acknowledged and addressed

Change management reduces disruptive aspects and emphasises positive opportunities in the change process

Change management reduces disruptive aspects and emphasises positive opportunities in the change process

Further benefits of change management

Careful planning helps to ensure that the change process is started and managed by the right people at the right time

Planned change management allows you to include specific tasks and events that are appropriate for each stage in the change process

Change management ensures that customers, suppliers and other stakeholders understand and support the change

COST BENEFITS ANALYSIS FOR CHANGE MANAGEMENT

 Prosci is releasing a four-part series on "why change management" to provide several different perspectives on how to make the case for applying a structured approach to manage the people side of change for organizational initiatives. This series includes:

Correlation data on the impact of effective change management Cost-benefit analysis for change management Case study on project impact of effective change management Emergence of change management

This tutorial presents a cost-benefit analysis for investing in change management. It presents five perspectives on the "benefits" of applying change management on projects in the organization. Given the importance of change in today's environment, these approaches to making the case for change management can help ensure that change management is viewed as a "must have" and not a "nice to have" on the projects you support.

Cost-benefit analysis overview

When evaluating whether or not to undertake an effort, many leaders and decision makers conduct a cost-benefit analysis. This process involves identifying and listing out the potential costs of the undertaking and the expected benefits of the undertaking. When discussing the value and importance of change management, a cost-benefit analysis can be a powerful framework. Below is a simple table showing likely costs and five different perspectives on the benefits of applying change management on projects and initiatives.

Change management cost-benefit analysis

Costs for applying change management

Benefits from applying change management

Dedicated resource(s) on project team. For a small change to a change-ready group, the project manager may take on the responsibility. For a large change to a change-resistant group, this might be a team of people with supporting subteams. In either case, there needs to be someone dedicated to the people side of change working on the project.

Procurement of methodology and tools for use by change management resource(s)

Purchase of source

Perspective 1: three "people side" ROI factors - faster speed of adoption, higher ultimate utilization and higher proficiency; change management drives project ROI

Perspective 2: cost avoidance - poorly managing change is costly to the project and the organization; change management is a cost avoidance tactic

Perspective 3: risk mitigation - individuals, the project and the organization are all put at risk when

materials for use by managers and supervisors in their coaching exercises

Training time and costs for everyone involved - managers and supervisors as coaches of change, senior leaders as sponsors of change, change management resource(s), project teams

change is poorly managed;change management is a tool to mitigate risks

Perspective 4: benefits realization insurance - consider how much of the value of the project ultimately depends on people doing their jobs differently; change management provides benefits realization insurance

Perspective 5: probability of meeting objectives - data shows that projects with effective change management in place are more likely to meet objectives, stay on schedule and stay on budget;change management increases the probability of meeting objectives

Benefit perspective 1 - three "people side" ROI factors

Prosci's ROI of change management model describes the three "people side" factors which contribute to, or limit, the value a change delivers to the organization. The foundation of the three factors is that any time a change requires individuals to do their jobs differently, it is how effectively those individuals make the change that determines the business value the project

delivers for the organization. The three ROI factors are:

Speed of adoption - How fast do people adopt the new processes or behaviors?

Ultimate utilization - How many impacted employees made the change (and how many did not)?

Proficiency - How effective were employees at following the new processes or behaviors?

These three factors are universal - whenever a change requires employees to change how they do their jobs there are elements of how fast, how many and how effectively. Unfortunately, many project teams do not consider, or make implicit assumptions about, the people side of their change. A team supporting a large IT implementation that gives users new interfaces might implicitly and erroneously assume that all users (100% ultimate utilization) will begin expertly using the system (extremely high proficiency) the day that the system goes live (instantaneous speed of adoption). When the three people side factors are added to the business case and ROI calculations, the importance of change management is highlighted. The three factors can even be used to conduct sensitivity analysis to generate actual numeric values for the impact the people side factors have on ROI (for instance, if speed of adoption was over six weeks instead of three and 15% of users did not adopt the system, then the ROI for the project would actually be X instead of Y).

The three "people side" ROI factors can help you to:

1. More clearly define the individual changes required by a project at its initiation.

2. Calculate the impact of slower speed of adoption, lower ultimate utilization and lower proficiency - and position change management as a tool for delivering business results in concrete terms.

3. Elevate the discussion and document assumptions early on in the process related to the people side of change

The worksheet below helps you to think about a change you are supporting and identify the thee "people side" ROI factors.

Three "people side" ROI factors worksheet

Name of project:  

One group that is being impacted by the change:

Identify the specific changes in behaviors or processes required of this group.

Speed of adoption:What does "adopting the change" mean for this group? How would you measure if someone had "adopted" the change in their day-to-day work?

Ultimate utilizationDefine utilization for this group. How would you measure how many people in the group have adopted the change?

ProficiencyWhat would adopting the change proficiently mean? How would proficiency be demonstrated? How would you measure it?

Benefit perspective 2 - cost avoidance

When changes are poorly managed - there are real and tangible costs to the organization. When change management is applied effectively, these costs can be avoided or minimized. Some of the costs are difficult to quantify - such as morale declines - but some of the costs are very concrete and easily quantified. One way to characterize the benefits of change management is as a cost avoidance mechanism.

Costs to the organization if change is poorly managed (those that can be more easily quantified are italicized):

Productivity plunges (deep and sustained)

Impact on customers Impact on suppliers Loss of valued employees Morale declines Decline in quality of work Resistance (both active and passive) History of failed change Stress, confusion, fatigue Change saturation

Costs to the organization if the change is not implemented:

These costs are tied directly to what the change was aiming to do.

These costs could include: expenses not reduced, efficiencies not gained, revenue not increased, market share not gained, waste not eliminated, regulations not met resulting in fines/penalties, etc.

Additionally, the organization loses the investment made in the project when the project does not deliver results.

Costs to the project if change is poorly managed:

Project delays Missed milestones Project put on hold Resources not made available to

project team Budget overruns Obstacles appear unexpectedly Rework required on project design Project fails to deliver on objectives Project is fully abandoned Loss of work by project team

The worksheet below gives you the opportunity to define - in as specific terms as possible - the costs you can avoid on your projects by applying change management.

Cost avoidance worksheet

Identify costs to the organization of poorly

managing change(where possible, estimate a dollar

value)

Identify costs to the project of poorly managing change

(where possible, estimate a dollar value)

Identify potential costs to the organization if the project is not 

fully implemented (where possible, estimate a dollar value)

Benefit perspective 3 - risk mitigation

Another perspective, similar to the cost avoidance perspective, is to outline the potentials risks to the project and the organization associated with the people side of change. Risk management on projects is a well-developed discipline. The Project Management Institute even has a PMI Risk Management Professional® credential complete with an application, audit and examination process. If your organization already conducts extensive risk assessments on projects, work to position "people-side risk" as one of the risks that is considered along with other risks like financial risks, technology risks, schedule risks and dependency risks. If a project is being planned and has a high "people-side risk" component, then applying a structured approach to change management is the right risk mitigation technique. 

The worksheet below helps you identify the people side risks and potential consequences for the project and the organization.

Benefit perspective 4 - benefits realization insurance

The fourth perspective is benefits realization insurance. Here, the context for showing the value of change management is tied to an examination of the potential benefits the project is working to achieve. The objectives of the project - as outlined in the project charter, business case or project plan - are a good starting point. For each objective, ask yourself, "is meeting this objective dependant on people doing their job differently?" For some of the questions the answer might be "no" - such as lower maintenance contract costs for a new piece of technology. But, many of the objectives will be tied directly to the people side of change. For these objectives, you can ask the follow up question of, "what percentage of these benefits result from people doing their jobs differently?" This is the amount of benefit you can "insure" by applying a solid change management approach - and the amount of the benefit you are leaving uninsured by not investing in change management.

The worksheet below walks you through the process of estimating a percentage of benefits tied to the people side of change.

Benefits realization insurance worksheet

How much "people change" will this project require?

Identify several of the primary process and behavioral changes required by the project.

List five of the objectives of this particular change and identify if they are dependent on the people side of change and how much of the benefit is tied to people doing their jobs differently.

Objective: Is meeting this objective dependant

on people doing their job

What percentage of these benefits result from people doing

their jobs

differently? differently?

1.    

2.    

3.    

4.    

5.    

What percentage of the overall project benefits are tied to people doing their jobs differently?

How effectively have you insured this portion of the project benefits? 

Benefit perspective 5 - probability of meeting objectives

The final benefit perspective is probability of meeting objectives. This is tied to the growing body of data which shows that more effective change management results in a higher likelihood of delivering intended results. A 2002 McKinsey Quarterly article titled "Helping Employees Embrace Change" shows a direct correlation between value delivered to the organization and the effectiveness of change management - with projects featuring effective change management delivering five times the value of projects with poor change management. Likewise, Prosci's last three benchmarking studies included correlation analysis on the relationship between meeting objectives and effective change management. The first tutorial in this series shared the 2009 benchmarking data correlating change management effectiveness to meeting project objectives, staying on schedule and staying on budget. Below is the graph showing change management effectiveness correlated to meeting or exceeding objectives. Projects with "excellent" change management in place were six times more likely to meet objectives than those with "poor" change management - and even those using "good" change management were five times more likely to meet objectives. 

Summary of five "benefit" perspectives for change management

Perspective 1: three "people side" ROI factors

Change occurs at the individual level. The value that a project delivers to the organization is ultimately tied to how quickly we can get individuals to make the changes required (speed of adoption), how many of them do their work the new way (ultimate utilization) and how effective each one of them is when they have adopted the change (proficiency).

Perspective 2: cost avoidance

We incur significant and quantifiable costs when changes are poorly managed, at both the project and the organizational levels. In addition to the extra costs of fixing the people-side issues that creep if we ignore

change management up front, the organization also fails to derive the value it needed from the project in the first place. Change management is an effective cost avoidance technique we can apply on our projects. 

Perspective 3: risk mitigation

Ignoring the people side of change results in numerous risks to the project and to the organization. We leave ourselves exposed to these people risk if we do not use a structured approach for managing the people side of change. When applied effectively, change management can help to mitigate or eliminate many of the numerous risks associated with the people side of change.

Perspective 4: benefits realization insurance

For the most important and most strategic changes in the organization, much of the value that is expected is tied to how people do their jobs. Applying a structured change management approach is like taking out an insurance policy against the goals and objectives of the project.

Perspective 5: probability of meeting objectives

There is a growing body of data showing that the more effectively the people side of change is managed, the more likely the project is to meet objectives. Prosci's benchmarking data and the McKinsey Quarterly article "Helping employees embrace change" show that projects with effective change management were five to six times more successful than projects that did not address the people side of change effectively.

ACTIVITIES

There are six main activities, which jointly form the change management process. They are: Identify potential change, Analyze change request, Evaluate change, Plan change, Implement change and Review and close chan

These activities are executed by four different roles, which are discussed in Table 1. The activities (or their sub-activities, if applicable) themselves are described in Table 2.

Table 1: Role descriptions for the change management process

Role Description

Customer

The customer is the role that requests a change due to problems encountered or new functionality requirements; this can be a person or an organizational entity and can be in- or external to the company that is asked to implement the change.

Project manager

The project manager is the owner of the project that the CHANGE REQUEST concerns. In some cases there is a distinct change manager, who in that case takes on this role.

Change committee

The change committee decides whether a CHANGE REQUEST will be implemented or not. Sometimes this task is performed by the project manager as well.

Change builder

The change builder is the person who plans and implements the change; it could be argued that the planning component is (partially) taken on by the project manager.

Activity Sub-activity Description

Identify potential change

Require new functionality

A customer desires new functionality and formulates a REQUIREMENT.

Encounter problem

A customer encounters a problem (e.g. a bug ) in the system and this leads to a PROBLEM REPORT.

Request change A customer proposes a change through creation of a CHANGE REQUEST.

Analyze change request

Determine technical feasibility

The project manager determines the technical feasibility of the proposed CHANGE REQUEST, leading to a CHANGE TECHNICAL FEASIBILITY.

Determine costs and benefits

The project manager determines the costs and benefits of the proposed CHANGE REQUEST,

resulting in CHANGE COSTS AND BENEFITS.

Evaluate change

Based on the CHANGE REQUEST, its CHANGE TECHNICAL FEASIBILITY and CHANGE COSTS AND BENEFITS, the change committee makes the go/no-go decision.

Plan change Analyze change impact

The extent of the change (i.e. what other items the change effects) is determined in a CHANGE IMPACT ANALYSIS. It could be argued that this activity leads to another go/no-go decision, or that it even forms a part of the Analyze change request activity.

Create planning

A CHANGE PLANNING is created for the implementation of the change. Some process descriptions illustrate that is also possible to ‘save’ changes and process them later in a batch. This activity could be viewed as a good point to do this.

Implement change Execute change

The change is ‘programmed’; this activity has a strong relationship with Propagate change, because sometimes the change has to be adapted to other parts of the system (or even other systems) as well.

Propagate change

The changes resulting from Execute change have to be propagated to other system parts that are influenced by it. Because this and the above sub-activity are highly dependent on each other, they have been modeled as concurrent activities.

Test change The change builder tests whether what he has built actually works and satisfies the CHANGE

REQUEST.

Update documentation

The DOCUMENTATION is updated to reflect the applied changes.

Release change A new SYSTEM RELEASE, which reflects the applied change, is made public.

Review and close change

Verify change

The implementation of the change in the new SYSTEM RELEASE is verified for the last time, now by the project manager. Maybe this has to happen before the release, but due to conflicting literature sources and diagram complexity considerations it was chosen to model it this way and include this issue.

Close change This change cycle is completed, i.e. the CHANGE LOG ENTRY is wrapped up.

Examples: A good example of the change management process in action can be found in software development. Often users report bugs or desire new functionality from their software programs, which leads to a change request. The product software company then looks into the technical and economical feasibility of implementing this change and consequently it decides whether the change will actually be realized. If that indeed is the case, the change has to be planned, for example through the usage of function points.

The actual execution of the change leads to the creation and/or alteration of software code and when this change is propagated it probably causes other code fragments to change as well. After the initial test results seem satisfactory, the documentation can be brought up to date and be released, together with the software. Finally, the project manager verifies the change and closes this entry in the change log.

CHANGE MANAGEMENT IN INDUSTRIAL PLANTS

Since complex processes can be very sensitive to even small changes, proper management of change to industrial facilities and processes is recognized as critical to safety. In the US, OSHA has regulations that govern how changes are to be made and documented.

The main requirement is that a thorough review of a proposed change be performed by a multi-disciplinary team to ensure that as many possible viewpoints are used as possible to minimize the chances of missing a hazard. In this context, change management is known as Management of Change, or MOC. It is just one of many components of Process Safety Management.

EFFECTIVE MANAGEMENT OF CHANGE

Organizational and personal change management, process, plans, change management and business development tips:

Here are some rules for effective management of change. Managing organizational change will be more successful if you apply these simple principles. Achieving personal change will be more successful too if you use the same approach where relevant. Change management entails thoughtful planning and sensitive implementation, and above all, consultation with, and involvement of, the people affected by the changes. If you force change on people normally problems arise. Change must be realistic, achievable and measurable. These aspects are especially relevant to managing personal change.

Before starting organizational change, ask yourself: What do we want to achieve with this change, why, and how will we know that the change has been achieved? Who is affected by this change, and how will they react to it? How much of this change can we achieve ourselves, and what parts of the change do

we need help with? These aspects also relate strongly to the management of personal as well as organizational change.

Instead, change needs to be understood and managed in a way that people can cope effectively with it. Change can be unsettling, so the manager logically needs to be a settling influence.

Check that people affected by the change agree with, or at least understand, the need for change, and have a chance to decide how the change will be managed, and to be involved in the planning and implementation of the change. Use face-to-face communications to handle sensitive aspects of organizational change management. Encourage your managers to communicate face-to-face with their people too if they are helping you manage an organizational change. Email and written notices are extremely weak at conveying and developing understanding.

If you think that you need to make a change quickly, probe the reasons - is the urgency real? Will the effects of agreeing a more sensible time-frame really be more disastrous than presiding over a disastrous change? Quick change prevents proper consultation and involvement, which leads to difficulties that take time to resolve.

Involving and informing people also creates opportunities for others to participate in planning and implementing the changes, which lightens your burden, spreads the organizational load, and creates a sense of ownership and familiarity among the people affected.

Bad news needs even more careful management than routine change. Hiding behind memos and middle managers will make matters worse. Consulting with people, and helping them to understand does not weaken your position - it strengthens it. Leaders who fail to consult and involve their people in managing bad news are perceived as weak and lacking in integrity. Treat people with humanity and respect and they will reciprocate.

RESPONSIBILITY FOR MANAGING CHANGE

The employee does not have a responsibility to manage change - the employee's responsibility is no other than to do their best, which is different for every person and depends on a wide variety of factors (health, maturity, stability, experience, personality, motivation, etc). Responsibility for managing change is with management and executives of the organization - they must manage the change in a way that employees can cope with it.

The manager has a responsibility to facilitate and enable change, and all that is implied within that statement, especially to understand the situation from an objective standpoint (to 'step back', and be non-judgmental), and then to help people understand reasons, aims, and ways of responding positively according to employees' own situations and capabilities. Increasingly the manager's role is to interpret, communicate and enable - not to instruct and impose, which nobody really responds to well.

“Change must involve the people - change must not be imposed upon the people”

Be wary of expressions like 'mindset change', and 'changing people's mindsets' or 'changing attitudes', because this language often indicates a tendency towards imposed or enforced change (theory x), and it implies strongly that the organization believes that its people currently have the 'wrong' mindset, which is never, ever, the case.

If people are not approaching their tasks or the organization effectively, then the organization has the wrong mindset, not the people. Change such as new structures, policies, targets, acquisitions, disposals, re-locations, etc., all create new systems and environments, which need to be explained to people as early as possible, so that people's involvement in validating and refining the changes themselves can be obtained.

Whenever an organization imposes new things on people there will be difficulties. Participation, involvement and open, early, full communication are the important factors.

Workshops are very useful processes to develop collective understanding, approaches, policies, methods, systems, ideas, etc. Staff surveys are a helpful way to repair damage and mistrust among staff - provided you allow people to complete them anonymously, and provided you publish and act on the findings.

Management training, empathy and facilitative capability are priority areas - managers are crucial to the change process - they must enable and facilitate, not merely convey and implement policy from above, which does not work.

You cannot impose change - people and teams need to be empowered to find their own solutions and responses, with facilitation and support from managers, and tolerance and compassion from the leaders and executives. Management and leadership style and behavior is more important than clever process and policy. Employees need to be able to trust the organization.

The leader must agree and work with these ideas, or change is likely to be very painful, and the best people will be lost in the process.

1. At all times involve and agree support from people within system (system = environment, processes, culture, relationships, behaviors, etc., whether personal or organizational).

2. Understand where you/the organization is at the moment. 3. Understand where you want to be, when, why, and what the measures

will be for having got there. 4. Plan development towards above No.3 in appropriate achievable

measurable stages.

5. Communicate, involve, enable and facilitate involvement from people, as early and openly and as fully as is possible.

SUCCESSFUL CHANGE

“JOHN P KOTTER’S” EIGHT STEPS TO SUCCESSFUL CHANGE:

John Kotter's highly regarded books 'Leading Change' (1995) and the follow-up 'The Heart of Change' (2002) describes a helpful model for understanding and managing change. Each stage acknowledges a key principle identified by Kotter relating to people's response and approach to change, in which people see, feel and then change: Kotter's eight step change model can be summarized as:

1. Increase urgency - Inspire people to move, make objectives real and relevant.

2. Build the guiding team - Get the right people in place with the right emotional commitment, and the right mix of skills and levels.

3. Get the vision right - Get the team to establish a simple vision and strategy focus on emotional and creative aspects necessary to drive service and efficiency.

4. Communicate for buy-in -Involve as many people as possible, communicate the essentials, simply, and to appeal and respond to people's needs. De-clutter communications - make technology work for you rather than against.

5. Empower actions - Remove obstacles, enable constructive feedback and lots of support from leaders - reward and recognize progress and achievements.

6. Create short-term wins - Set aims that are easy to achieve - in bite-size chunks. Manageable numbers of initiatives. Finish current stages before starting new ones.

7. Don't let up - Foster and encourage determination and persistence - ongoing change - encourage ongoing progress reporting - highlight achieved and future milestones.

8. Make change stick - Reinforce the value of successful change via recruitment, promotion, and new change leaders. Weave change into culture.

IDEAS ON ILLUSTARTING CHANGE MANAGEMENT ISSUES

When people are confronted with the need or opportunity to change, especially when it’s 'enforced', as they see it, by the organization, they can become emotional. So the managers who try to manage the change, Diffusing the emotional feelings, taking a step back, encouraging objectivity, is important to enabling sensible and constructive dialogue. To this end, managers and trainers can find it helpful to use analogies to assist themselves and other staff to look at change in a more detached way.

On this site there are several illustrations which can be used for this purpose, depending on the type of change faced, and the aspect that is to be addressed. Here are a few examples, useful for team meetings, presentations, one-to-one counseling or self-reminder, particularly to help empathize with others facing change:

Just as the state of 'unconscious incompetence', needs to be developed into 'conscious competence' to provide a basis for training, so a person's subjective emotion needs to be developed into objectivity before beginning to help them handle change. None of us is immune from subjectivity, ignorance or denial. The lessons and reminders found in stories and analogies can help to show a new clear perspective.

OTHER POINTS ABOUT PEOPLE AND CHANGE:

Strong resistance to change is often rooted in deeply conditioned or historically reinforced feelings. Patience and tolerance is required to help people in these situations to see things differently. Bit by bit. There are examples of this sort of gradual staged change everywhere in the living world.

Also, certain types of people - the reliable/dependable/steady/habitual/process-oriented types - often find change very unsettling.

People who welcome change are not generally the best at being able to work reliably, dependably and follow processes. The reliability/dependability capabilities are directly opposite character traits to mobility/adaptability capabilities.

Certain industries and disciplines have a high concentration of staff who need a strong reliability/dependability personality profile, for example, health services and nursing, administration, public sector and government departments, utilities and services; these sectors will tend to have many staff with character profiles who find change difficult.

Be mindful of people's strengths and weaknesses. Not everyone welcomes change. Take the time to understand the people you are dealing with, and how and why they feel like they do, before you take action.

BUSINESS DEVELOPMENT DRIVEN CHANGE

Business development potentially includes everything involved with the quality of the business or the organization. Business development planning first requires establishing the business development aims, and then formulating a business development strategy, which would comprise some or all of the following methods of development.

Sales development. New product development. New market development. Business organization, shape, structure and processes development (e.g.,

outsourcing, e-business, etc). Tools, equipment, plant, logistics and supply-chain development. People, management and communications (capabilities and training)

development. Strategic partnerships and distribution routes development. International development. Acquisitions and disposals.

Generally business development is partly scientific, and partly subjective, based on the feelings and wishes of the business owners or CEO. There are so many ways to develop a business which achieve growth and improvement, and rarely is just one of these a single best solution. Business development is what some people call a 'black art', i.e., difficult to analyze, and difficult to apply a replicable process.

FAST CHANGING ENVIRONMENT

Planning, implementing and managing change in a fast-changing environment is increasingly the situation in which most organizations now work.

Dynamic environments such as these require dynamic processes, people, systems and culture, especially for managing change successfully, notably effectively optimizing organizational response to market opportunities and threats.

Key elements for success:

Plan long-term broadly - a sound strategic vision, not a specific detailed plan (the latter is impossible to predict reliably). Detailed five years plans are out of date two weeks after they are written. Focus on detail for establishing and measuring delivery of immediate actions, not medium-to-long-term plans.

Establish forums and communicating methods to enable immediate review and decision-making. Participation of interested people is essential. This enables their input to be gained, their approval and commitment to be secured, and automatically takes care of communicating the actions and expectations.

Empower people to make decisions at a local operating level - delegate responsibility and power as much as possible (or at least encourage people to make recommendations which can be quickly approved).

Remove (as far as is possible) from strategic change and approval processes and teams (or circumvent) any ultra-cautious, ultra-autocratic or compulsively-interfering executives. Autocracy and interference are the biggest obstacles to establishing a successful and sustainable dynamic culture and capability.

Encourage, enable and develop capable people to be active in other areas of the organization via 'virtual teams' and 'matrix management'.

Scrutinize and optimize ICT (information and communications technology) systems to enable effective information management and key activity team-working.

Use workshops as a vehicle to review priorities, agree broad medium-to-long-term vision and aims, and to agree short term action plans and implementation method and accountabilities.

Adjust recruitment, training and development to accelerate the development of people who contribute positively to a culture of empowered dynamism.

“TROUBLESHOOTING” TIPS FOR INVESTIGATING APPARENT POOR

PERFORMANCE

If you are ever give the job of 'troubleshooting' or investigating (apparent) poor performance, perhaps in another location or business belonging to your own organization, or perhaps as a consultancy project, here are some simple tips:

Actually 'troubleshooting' isn't a great word - it scares people. Use 'facilitator' or 'helper' instead. It sets a more helpful and cooperative tone.

On which point, you could well find that the main issue will be people's resistance and defensiveness to someone coming in to their organization do what you are doing. When you overcome that challenge, then you can start comparing what's happening with what the organization sets out to do (mission, values, goals, priorities, targets, key performance indicators, processes, measures); how the people feel about things (staff turnover, retention, morale, attitudes); and how customers and suppliers feel about things too (actually go out and visit customers, and ex-customers particularly).

You must observe protocols very diligently - introduce yourself properly to people and explain who you are and what you are doing. Don't assume that your task gives you the right to be secretive, or to have access to anyone or anything without permission. Ask for help. Ask for introductions. Ask for permission. Be polite and courteous. Respect people more than you would do normally, because they will be sensitive, understandably so.

And then be led by the people there as to what can be improved. You should adopt the role of a researcher and enabler rather than a problem solver. Plan lots of questions that will help people to tell you how they feel about things - customers and staff and suppliers - and what they think can be done to improve things.

Avoid asking 'why' unless they're really trusting you and working with you. Used early, 'why' puts people on the defense and you'll not find out anything. Look at the customer relationship materials as well - customers will tell you what's best to focus on, and will give you an early opportunity to facilitate some improvement responses. Also look at the employee motivation survey material.

It's likely that you'll have to write a report and recommendations afterwards, in which case try wherever possible to involve the people in what you say about them. Let there be no surprises. Be constructive. Accentuate the positive. Be straight and open with people.

PRINCIPLES OF CHANGE MANAGEMENT

No single methodology fits every company, but there is a set of practices, tools, and techniques that can be adapted to a variety of situations. What follows is a “Top 10” list of guiding principles for change management. Using these as a systematic, comprehensive framework, executives can understand what to expect, how to manage their own personal change, and how to engage the entire organization in the process.

1. Address the “human side” systematically. Any significant transformation creates “people issues.” New leaders will be asked to step up, jobs will be changed, new skills and capabilities must be developed, and employees will be uncertain and resistant. Dealing with these issues on a reactive, case-by-case basis puts speed, morale, and results at risk.

A formal approach for managing change — beginning with the leadership team and then engaging key stakeholders and leaders — should be developed early, and adapted often as change moves through the organization. This demands as much data collection and analysis, planning, and implementation discipline as does a redesign of strategy, systems, or processes.

The change-management approach should be fully integrated into program design and decision making, both informing and enabling strategic direction. It should be based on a realistic assessment of the organization’s history, readiness, and capacity to change.

2. Start at the top. Because change is inherently unsettling for people at all levels of an organization, when it is on the horizon, all eyes will turn to the CEO and the leadership team for strength, support, and direction.

The leaders themselves must embrace the new approaches first, both to challenge and to motivate the rest of the institution. They must speak with one voice and model the desired behaviors. The executive team also needs to understand that, although its public face may be one of unity, it, too, is composed of individuals who are going through stressful times and need to be supported.

Executive teams that work well together are best positioned for success. They are aligned and committed to the direction of change, understand the culture and behaviors the changes intend to introduce, and can model those changes themselves. At one large transportation company, the senior team rolled out an initiative to improve the efficiency and performance of its

corporate and field staff before addressing change issues at the officer level. The initiative realized initial cost savings but stalled as employees began to question the leadership team’s vision and commitment. Only after the leadership team went through the process of aligning and committing to the change initiative was the work force able to deliver downstream results.

3. Involve every layer. As transformation programs progress from defining strategy and setting targets to design and implementation, they affect different levels of the organization. Change efforts must include plans for identifying leaders throughout the company and pushing responsibility for design and implementation down, so that change “cascades” through the organization.

At each layer of the organization, the leaders who are identified and trained must be aligned to the company’s vision, equipped to execute their specific mission, and motivated to make change happen.

A major multiline insurer with consistently flat earnings decided to change performance and behavior in preparation for going public. The company followed this “cascading leadership” methodology, training and supporting teams at each stage. First, 10 officers set the strategy, vision, and targets. Next, more than 60 senior executives and managers designed the core of the change initiative. Then 500 leaders from the field drove implementation.

The structure remained in place throughout the change program, which doubled the company’s earnings far ahead of schedule. This approach is also a superb way for a company to identify its next generation of leadership.g

4. Make the formal case. Individuals are inherently rational and will question to what extent change is needed, whether the company is headed in the right direction, and whether they want to commit personally to making change happen. They will look to the leadership for answers. The articulation of a formal case for change and the creation of a written vision statement are invaluable opportunities to create or compel leadership-team alignment.

Three steps should be followed in developing the case: First, confront reality and articulate a convincing need for change. Second, demonstrate faith that the company has a viable future and the leadership to get there. Finally, provide a road map to guide behavior and decision making. Leaders must then customize this message for various internal audiences, describing the pending change in terms that matter to the individuals.

A consumer packaged-goods company experiencing years of steadily declining earnings determined that it needed to significantly restructure its operations — instituting, among other things, a 30 percent work force reduction

— to remain competitive. In a series of offsite meetings, the executive team built a brutally honest business case that downsizing was the only way to keep the business viable, and drew on the company’s proud heritage to craft a compelling vision to lead the company forward.

By confronting reality and helping employees understand the necessity for change, leaders were able to motivate the organization to follow the new direction in the midst of the largest downsizing in the company’s history. Instead of being shell-shocked and demoralized, those who stayed felt a renewed resolve to help the enterprise advance.

5. Create ownership. Leaders of large change programs must over perform during the transformation and be the zealots who create a critical mass among the work force in favor of change. This requires more than mere buy-in or passive agreement that the direction of change is acceptable. It demands ownership by leaders willing to accept responsibility for making change happen in all of the areas they influence or control.

Ownership is often best created by involving people in identifying problems and crafting solutions. It is reinforced by incentives and rewards. These can be tangible (for example, financial compensation) or psychological (for example, camaraderie and a sense of shared destiny).

6. Communicate the message. Too often, change leaders make the mistake of believing that others understand the issues, feel the need to change, and see the new direction as clearly as they do. The best change programs reinforce core messages through regular, timely advice that is both inspirational and practicable. Communications flow in from the bottom and out from the top, and are targeted to provide employees the right information at the right time and to solicit their input and feedback. Often this will require over communication through multiple, redundant channels.

7. Assess the cultural landscape. Successful change programs pick up speed and intensity as they cascade down, making it critically important that leaders understand and account for culture and behaviors at each level of the organization. Companies often make the mistake of assessing culture either too late or not at all. Thorough cultural diagnostics can assess organizational readiness to change, bring major problems to the surface, identify conflicts, and define factors that can recognize and influence sources of leadership and resistance.

These diagnostics identify the core values, beliefs, behaviors, and perceptions that must be taken into account for successful change to occur. They serve as the common baseline for designing essential change elements,

such as the new corporate vision, and building the infrastructure and programs needed to drive change.

8. Address culture explicitly. Once the culture is understood, it should be addressed as thoroughly as any other area in a change program. Leaders should be explicit about the culture and underlying behaviors that will best support the new way of doing business, and find opportunities to model and reward those behaviors. This requires developing a baseline, defining an explicit end-state or desired culture, and devising detailed plans to make the transition.

Company culture is an amalgam of shared history, explicit values and beliefs, and common attitudes and behaviors. Change programs can involve creating a culture (in new companies or those built through multiple acquisitions), combining cultures (in mergers or acquisitions of large companies), or reinforcing cultures (in, say, long-established consumer goods or manufacturing companies). Understanding that all companies have a cultural center — the locus of thought, activity, influence, or personal identification — is often an effective way to jump-start culture change.

9. Prepare for the unexpected. No change program goes completely according to plan. People react in unexpected ways; areas of anticipated resistance fall away; and the external environment shifts. Effectively managing change requires continual reassessment of its impact and the organization’s willingness and ability to adopt the next wave of transformation. Fed by real data from the field and supported by information and solid decision-making processes, change leaders can then make the adjustments necessary to maintain momentum and drive results.

A leading U.S. health-care company was facing competitive and financial pressures from its inability to react to changes in the marketplace. A diagnosis revealed shortcomings in its organizational structure and governance, and the company decided to implement a new operating model. In the midst of detailed design, a new CEO and leadership team took over. The new team was initially skeptical, but was ultimately convinced that a solid case for change, grounded in facts and supported by the organization at large, existed. Some adjustments were made to the speed and sequence of implementation, but the fundamentals of the new operating model remained unchanged.

10. Speak to the individual. Change is both an institutional journey and a very personal one. People spend many hours each week at work; many think of their colleagues as a second family. Individuals (or teams of individuals) need to know how their work will change, what is expected of them during and after the change program, how they will be measured, and what success or failure will

mean for them and those around them. Team leaders should be as honest and explicit as possible.

People will react to what they see and hear around them, and need to be involved in the change process. Highly visible rewards, such as promotion, recognition, and bonuses, should be provided as dramatic reinforcement for embracing change. Sanction or removal of people standing in the way of change will reinforce the institution’s commitment.

Most leaders contemplating change know that people matter. It is all too tempting, however, to dwell on the plans and processes, which don’t talk back and don’t respond emotionally, rather than face up to the more difficult and more critical human issues. But mastering the “soft” side of change management needn’t be a mystery.

DEFINITION

Resistance to change is the action taken by individuals and groups when they perceive that a change that is occurring as a threat to them.Key words here are 'perceive' and 'threat'. The threat need not be real or large for resistance to occur. In its usual description it refers to change within organizations, although it also is found elsewhere in other forms. Resistance is the equivalent of objections in sales and disagreement in general discussions.Resistance may take many forms, including active or passive, overt or covert, individual or organized, aggressive or timid.

Top reasons for change resistance - 288 companies reporting

Ability to change

Participants were asked to rate their organization’s ability to change. Figure A shows the distribution of scores on a 1 to 5 scale, with one being the most rigidly opposed to change. Only one fifth of participants rated their organization a 4 or 5, indicating a high level of adaptability to change. More than 40% of participants rated their organization resistant to change with a score of either 2 or 1.

Figure A – Ability to change

Employee resistance

Participants gave a variety of reasons for resistance by employees and managers. The top-five reasons for employee resistance were:

1. Lack of understanding around the vision and need for change. Participants indicated that the primary reason for employee resistance was that employees did not understand the vision of this particular change project. Employees did not clearly understand why the change was happening, nor did they have adequate knowledge regarding the change itself. Employees did not have the answer to the question, “what’s in it for me?” – or WIIFM. This could include, "Will I have a job?," "How will it impact my daily work?," "How will I benefit from the change?".

2. Comfort with the status quo and fear of the unknown. Participants indicated that employees tended to be complacent, or that the current way of doing business had been in place for a long time. The current processes and systems seemed fine to the employees, and they were opposed to the change since it forced them out of their comfort zone. Uncertainty and fear of the new system compounded the desire of employees to continue with the “old way” to which they had grown accustom. 

3. Corporate history and culture. The organization’s past performance with change projects impacted the employees’ support of the current change project. Employees were desensitized to change initiatives, as many had been introduced and failed. The project was seen merely as the “flavor of the month,” and employees expected it go away like those in the past. 

4. Opposition to the new technologies, requirements and processes introduced by the change.Many participants felt that some employees resisted the change because of opposition to the actual change itself. Employees were opposed to changes that increased the performance and process measurement of their work. The change was seen as adding unwanted work, responsibility and accountability. Lastly, some employees opposed the new processes,

systems or technologies because they felt the change would not solve the problems. 

5. Fear of job loss. Employees perceived the business change as a threat to their own job security. Some employees felt that the change would eliminate the need for their job, while others were unsure of their own abilities and skills in the new environment.

Manager resistance

The top-six reasons for manager resistance to change were:

1. Loss of power and control. The leading reason for manager resistance to change was a fear of losing power. Changes often eliminated something the manager had control of or introduced something that the manager would not have control over. Managers perceived the changes as infringements on their autonomy, and some participants indicated that the change was even perceived as a personal attack on the managers. Managers reacted to the change initiative as a "battle for turf."

2. Overload of current tasks, pressures of daily activities and limited resources.Managers felt that the change was an additional burden. Limited resources compounded the problem. The change initiative seemed like extra work and resource strain at a time when the pressures of daily activities were already high. In many projects, managers were expected to continue all of their current duties in addition to the duties of implementing the change. 

3. Lack of skills and experience needed to manage the change effectively. Managers were fearful of the new demands that would be placed on them by the business change. Several skill areas were identified as areas of concern. First, managers were uncomfortable with their role in managing the change. Some feared recrimination while others did not have the experience or tools to effectively manage their employees’ resistance.

Managers also were concerned about the demands and responsibilities placed on them by the new business processes, systems or technologies. 

4. Fear of job loss.Managers felt that the business change would ultimately impact their own job security. Middle management is often the victim of large-scale business change. One participant reaffirmed this fear:   “They were eliminated in the change, so no resistance was recorded.” 

5. Disagreement with the new way. Some managers disagreed specifically with the change. They did not feel that the solution was the best approach to fixing the problem. Managers who did not play a role or provide input in the design and planning phases tended to resist the solution. Some participants felt that the resistance was due to the solution not being the idea of the manager ("not invented here"). 

6. Skepticism about the need for change. Managers were not convinced of the need for change. They did not see the business issues driving the change, or they did not identify the same problems as the design team.

CASE STUDY

ICICI BANK

"What role is I supposed to play in this ever-changing entity? Has anyone worked out the basis on which roles are being allocated today?"

- A middle level ICICI manager, in 1998.

"We do put people under stress by raising the bar constantly. That is the only way to ensure that performers lead the change process."

- K. V. Kamath, MD & CEO, ICICI, in 1998.

THE CHANGE LEADER

In May 1996, K.V. Kamath replaced Narayan Vaghul, CEO of India's leading financial services company Industrial Credit and Investment Corporation of India (ICICI). Immediately after taking charge, Kamath introduced massive changes in the organizational structure and the emphasis of the organization changed - from a development bank mode to that of a market-driven financial conglomerate.

Kamath's moves were prompted by his decision to create new divisions to tap new markets and to introduce flexibility in the organization to increase its ability to respond to market changes. Necessitated because of the organization's new-found aim of becoming a financial powerhouse, the large-scale changes caused enormous tension within the organization. The systems within the company soon were in a state of stress. Employees were finding the changes unacceptable as learning new skills and adapting to the process orientation was proving difficult.The changes also brought in a lot of confusion among the employees, with media reports frequently carrying quotes from disgruntled ICICI employees. According to analysts, a large section of employees began feeling alienated.

The discontentment among employees further increased, when Kamath formed specialist groups within ICICI like the 'structured projects' and 'infrastructure' group.

Doubts were soon raised regarding whether Kamath had gone 'too fast too soon,' and more importantly, whether he would be able to steer the employees and the organization through the changes he had initiated.

BACKGROUND NOTE

ICICI was established by the Government of India in 1955 as a public limited company to promote industrial development in India. The major institutional shareholders were the Unit Trust of India (UTI), the Life Insurance Corporation of India (LIC) and the General Insurance Corporation of India (GIC) and its subsidiaries. The equity of the corporation was supplemented by borrowings from the Government of India, the World Bank, the Development Loan Fund (now merged with the Agency for International Development), Kreditanstalt fur Wiederaufba (an agency of the Government of Germany), the UK government and the Industrial Development Bank of India (IDBI).

The basic objectives of the ICICI were to

Assist in creation, expansion and modernization of enterprises.

Encourage and promote the participation of private capital, both internal and external.

Take up the ownership of industrial investment. Expand the investment markets.

Since the mid 1980s, ICICI diversified rapidly into areas like merchant banking and retailing. In 1987, ICICI co-promoted India's first credit rating

agency, Credit Rating and Information Services of India Limited (CRISIL), to rate debt obligations of Indian companies. In 1988, ICICI promoted India's first venture capital company - Technology Development and Information Company of India Limited (TDICI) - to provide venture capital for indigenous technology-oriented ventures.

In the 1990s, ICICI diversified into different forms of asset financing such as leasing, asset credit and deferred credit, as well as financing for non-project activities. In 1991, ICICI and the Unit Trust of India set up India's first screen-based securities market, the over-the-counter Exchange of India (OCTEI). In 1992 ICICI tied up with J P Morgan of the US to form an investment banking company, ICICI Securities Limited.

In line with its vision of becoming a universal bank, ICICI restructured its business based on the recommendations of consultants McKinsey & Co in 1998. In the late 1990s, ICICI concentrated on building up its retail business through acquisitions and mergers. It took over ITC Classic, Anagram Finance and merged the Shipping Credit Investment Corporation of India (SCICI) with itself. ICICI also entered the insurance business with prudential plc of UK.

ICICI was reported to be one of the few Indian companies known for its quick responsiveness to the changing circumstances. While its development bank counterpart IDBI was reportedly not doing very well in late 2001, ICICI had major plans of expanding on the anvil. This was expected to bring with it further challenges as well as potential change management issues. However, the organization did not seem to much perturb by this, considering that it had successfully managed to handle the employee unrest following Kamath's appointment.

CHANGE CHALLENGES - PART I

ICICI was a part of the club of developmental finance institutions (DFIs - ICICI, IDBI and IFCI) who were the sole providers of long-term funds to the Indian industry. If the requirement was large, all three pooled in the money. However, the deregulation beginning in the early 1990s, allowed Indian corporate to rise long-term funds abroad, putting an end to the DFI monopoly. The government also stopped giving DFIs subsidized funds. Eventually in 1997, the practice of consortium lending by DFIs was phased out.

It was amidst this new found independent status that Kamath, who had been away from ICICI for eight years working abroad, returned to the helm. At this point of time, ICICI had limited expertise, with its key activity being the disbursement of eight-year loans to big clients like Reliance Industries and Telco through its nine zonal offices.

In effect, the company had one basic product, and a customer orientation, which was largely regional in nature. Kamath, having seen the changes occurring in the financial sector abroad, wanted ICICI to become a one-stop shop for financial services. He realized that in the deregulated environment ICICI was neither a low-cost player nor was it a differentiator in terms of customer service.

The Indian commercial banks' cost of funds was much lower, and the foreign banks were much savvier when it came to understanding customer needs and developing solutions. Kamath identified the main problem as the company's ignorance regarding the nuances of lending practices in newly opened sectors like infrastructure.

The change program was initiated within the organization, the first move being the creation of the 'infrastructure group (IIG),' 'oil & gas group (O&G),' 'planning and treasury department (PTD)' and the 'structured products group (SPG)', as the lending practices were quite different for all of these. Kamath picked up people from various departments, who he was told were good, for these groups.

The approach towards creating these new skill sets, however, led to one unintended consequence. As these new groups took on the key tasks, a majority of the work, along with a lot of good talent, shifted to the corporate center. While the zonal offices continued to do the same work - disbursing loans to corporate in the same region - their importance within the organization seemed to have diminished. An ex-employee remarked, "The way to get noticed inside ICICI after 1996 has been to attach you to people who were heading these (IIG, PTD, SPG, O&G) departments. These groups were seen as the thrust areas and if you worked in the zones it was difficult to be noticed.

“Refuting this, Kamath remarked, "This may be said by people who did not make it. And there will always be such people." Some of the people who did not fit in this set-up were quick to leave the organization.

However, this was just the beginning of change-resistance at ICICI. The basic objectives of the ICICI were to another change management problem surfaced as a result of ICICI's decision to focus its operations much more sharply around its customers. In the system prevailing, if a client had three different requirements from ICICI, he had to approach the relevant departments separately. The process was time consuming, and there was a danger that the client would take a portion of that business elsewhere. To tackle this problem, ICICI set up three new departments: major client group (MCG), growth client group (GCG) and personal finance group. Now, the customer talked only to his

representative in MCG or GCG. And these representatives in turn found out which ICICI department could do the job.

CHANGE CHALLENGES - PART II

ICICI had to face change resistance once again in December 2000, when ICICI Bank was merged with Bank of Madura (BoM). Though ICICI Bank was nearly three times the size of BoM, its staff strength was only 1,400 as against BoM's 2,500. Half of BoM's personnel were clerks and around 350 were subordinate staff.

There were large differences in profiles, grades, designations and salaries of personnel in the two entities. It was also reported that there was uneasiness among the staff of BoM as they felt that ICICI would push up the productivity per employee, to match the levels of ICICI. BoM employees feared that their positions would come in for a closer scrutiny. They were not sure whether the rural branches would continue or not as ICICI's business was largely urban-oriented.

The apprehensions of the BoM employees seemed to be justified as the working culture at ICICI and BoM were quite different and the emphasis of the respective management was also different. While BoM management concentrated on the overall profitability of the Bank, ICICI management turned all its departments into individual profit centers and bonus for employees was given on the performance of individual profit center rather than profits of whole organization.

ICICI not only put in place a host of measures to technologically upgrade the BoM branches to ICICI's standards, but also paid special attention to facilitate a smooth cultural integration. The company appointed consultants Hewitt Associates to help in working out a uniform compensation and work culture and to take care of any change management problems.

ICICI conducted an employee behavioral pattern study to assess the various fears and apprehensions that employees typically went through during a merger. (Refer Table I).

TABLE I

'POST-MERGER' EMPLOYEE BEHAVIORAL PATTERN

PERIOD EMPLOYEE BEHAVIOR

Day 1 Denial, fear, no improvementAfter a month Sadness, slight improvementAfter a Year Acceptance, significant improvementAfter 2 Years Relief, liking, enjoyment, business development activities

Based on the above findings, ICICI established systems to take care of the employee resistance with action rather than words. The 'fear of the unknown' was tackled with adept communication and the 'fear of inability to function' was addressed by adequate training. The company also formulated a 'HR blue print' to ensure smooth integration of the human resources. (Refer Table II).

TABLE II

MANAGING HR DURING THE ICICI-BOOM MERGER

THE HR BLUEPRINT AREAS OF HR INTEGRATION FOCUSSED ON

A data base of the entire HR structure Road map of career Determining the blue print of HR

moves Communication of milestones IT Integration - People Integration

-       Business Integration.

Employee communication Cultural integration Organization structuring Recruitment, Compensation Performance management Training Employee relations

To ensure employee participation and to decrease the resistance to the change, management established clear communication channels throughout to avoid any kind of wrong messages being sent across. Training programmes were conducted which emphasized on knowledge, skill, attitude and technology to upgrade skills of the employees. Management also worked on contingency plans and initiated direct dialogue with the employee unions of the BoM to maintain good employee relations.

By June 2001, the process of integration between ICICI and BoM was started. ICICI transferred around 450 BoM employees to ICICI Bank, while 300 ICICI employees were shifted to BoM branches. Promotion schemes for BoM

employees were initiated and around 800 BoM officers were found to be eligible for the promotions. By the end of the year, ICICI seemed to have successfully handled the HR aspects of the BoM merger. According to a news report,” The win-win situation created by….HR initiatives has resulted in high level of morale among all sections of the employees from the erstwhile BoM."

Even as the changes following the ICICI-BoM merger were stabilizing, ICICI announced its merger with ICICI Bank in October 2001. The merger, to be effective from March 2002, was expected to unleash yet another series of changes at the organization. With Kamath still heading ICICI, analysts were hopeful that the bank would come out successfully in the task of integrating the operations of both the entities this time as well.

SUMMARY

The goal of this document is to provide change management information

that can be beneficial both personally and professionally. Change refers to any

alteration that occurs in total work environment. Generally people are

accustomed to a well established way of life.

Model of change is given by “KURT LEWIN”, according to this theory any

behavior is a result of equilibrium between driving (in favor of change) and

restraining force (in against of change). The driving force pushes one way,

restraining push other way, LEWIN anticipated change only one when:

Driving force > Restraining force

Management of change becomes very important in today’s business

scenario as the environment is not only complex but also dynamic. Hence for

effective implementation of change, management requires to have a proper

understanding of the various factors affecting change and thus getting affected.

Proper implementation of change improves organizational effectiveness.

“HENCE CHANGE IS GOOD”

BIBLIOGRAPHY

Robbins P. Stephen, “Organizational Behavior”, published by Pearson

Education, Inc. New Jersey, USA, 11th edition, 2005.

Ashwathappa K., “Organizational Behavior”, published by Himalaya

Publication, Mumbai, India, 7th edition, 2007.

WEBLIOGRAPHY

http://www.wikipedia.org/wiki/Change_management

http://www.CartoonStock.com

http://www.etu.org.za/toolbox/docs/building/change

http://www.drbalternatives.com