Sunday, 20 March 2011

Change Management: is it a real need or just a fad?

Every organisation is subject to a constant process of change, insofar as it could be agreed with Watson and Gallagher (2005) that “organisations are in a perpetual state of change.” Looking back on how things were managed within an organization 10, 5 or just a very few years ago, everyone would surely realise that things works fairly differently now and that many things have actually changed. It is indeed very likely that things will be different again in the not-too-distant future, too.

As for the frequency at which change occurs within organisations, the CIPD revealed in 2002 that significant reorganisations were occurring at least once every three years at the time. More recently, in order to underscore the acceleration at which change takes place within businesses, the CIPD (2010) has claimed that organisations are undergoing change at an “ever-increasing pace.” In contrast, what has not actually changed at all during the last decade or so is the rate of failure: over 40% of re-organisations in fact fail to meet their intended objectives.

There are indeed a whole range of reasons prompting employers to introduce changes within their firms. More in particular, change can be implemented for:

-  The planned or emerging need to innovate, which requires the introduction within the organisation of new technologies;

- The changing demand and circumstances which could in turn imply the need to develop new products and services;

- The need to change working procedures and systems, which could be in part also linked to the introduction of new technologies;

- The expansion/contraction of an organisation activity, which could mainly be linked to the good or bad health of the global or local market where the organisation operates (adapted from Watson and Gallagher, 2005).

There are indeed a few other relevant reasons which can account for organisations implementing change processes: changes in the overall business strategy, increased competitive pressure and new regulations, for instance, clearly also have a remarkable impact on an organisation need for change.

Although under some circumstances the rationale behind the need for change is provided by the endogenous environment, the reasons why organisations are subject to change are more often than not provided by the external environment. In the light of the pace technology develops and the external environment changes it can be argued that, as suggested by Mullins (2005), change is really “an inescapable part of social and organisational life.”

The pressure and influence exerted by the external environment on organisations is remarkable so that in order to avoid the dire consequences of dropping behind, businesses are constantly involved in a sort of adaptation and evolutionary process. What matters in terms of change is the business ability and capability to promptly respond and adapt to change and not to simply resist and avert it. The definition provided by Charles Darwin is self-explanatory: “It is not the strongest of the species that survives, nor the most intelligent, but rather the one most responsive to change.”

Public sector employers, by reason of their typical bureaucracy, procedural constraints and because of the several stakeholders with different if not competing priorities usually involved, habitually “face unique obstacles in leading” and managing organisational change (Fenlon, 2002). Notwithstanding, during the course of the last few years, public sectors organisations have been subject to and have actually undergone remarkable changes, too. In many cases, works are still well underway.

Before planning and implementing a change, business leaders and HR Professionals have to first and foremost become aware that a change is actually needed in their organisation. In order to initiate a change process, hence, a need for it has to clearly arise and be identified.

According to a research carried out by Roffey Park (2010) amongst more than 900 managers (called Management Agenda), the drivers pushing the more successful organisations to implement changes are represented by: their client needs, efficiency and quality; as opposed to the change procedures planned by employers with the aim of just curbing and containing costs. Findings of the Management Agenda Survey also revealed that when change is driven by these factors businesses are better able to deliver change quickly and effectively.

Employers should hence definitely avert to introduce change exclusively driven by internal politics or costs and rather focus on change aiming at better satisfying their customer needs.

The Roffey Park study also revealed the existence of a clear relationship between change management and performance, which further suggests that employers should avoid developing and implementing strategies aiming at achieving short-term cost containment objectives or just battening down the hatches. That, also in the event organizations are actually experiencing financial hardships. Business can in fact achieve far better results by innovating and looking for new market opportunities, rather than limiting their development and activity.

When designing and implementing change, employers should use an approach enabling them to proceed in an orderly and structured way, which will in turn ensure them to effectually and consistently achieve their intended final results.

Boddy (2008) suggests a model of change in which different stages are clearly identified, Figure 1.

For the purpose of this feature, we focus on the first stage of the model, that is, the one considering the reasons triggering a change process within an organisation.

As anticipated above, also in the light of the findings of the Management Agenda Survey, the need for change is mainly linked to the influences and changes which actually happen in the external environment, which clearly have a strong impact on any organisation irrespective of the industry to which it belongs.

The internal environment obviously is important too, but it does not represent the very starting point of the process. Employers initiate change when they ascertain the existence of a gap between what the external environment requires to be competitive and what the organisation, the internal environment, can actually offer. When a gap between the customers’ expectation and the actual organisation’s offer is identified, this clearly means that it is time for the organisation to introduce some changes.

As also confirmed by the Roffey Park investigation, the cause for the emerged gap between the desired and actual performance could be related to the organisation incapability to meet its customer demand. The existence of this circumstance jeopardises in turn the business capability to extend its customer network, both in terms of quality and quantity, and to achieve competitive advantage. What even worse, the emergence of this gap can ultimately cause a sensible sales revenues reduction, which can in turn hamper the organisation’s capability to acquire the resources it needs to carry out its transformation activity and produce its typical output.
Change aims at bridging this dangerous gap and enables an organisation to, if anything, keep pace with the constantly changing environment, avoiding this to be drowned by its competitors.

The model proposed by Boddy is particularly interesting in that it emphasises the circumstance that a change process is likely to generate somewhat of a knock-on effect. The change process, causing “practical issues of design and implementation”, will in turn produce the conditions for further, future changes.

The task of addressing the effect of a “perceived performance gap” is not really straightforward and the need to combine flexibility and stability, apparently in contrast, just contributes to make things even harder.

The current economic landscape, which is not expected to change in the future because of the constantly increasing competition trend, is dominated by two aspects which are also known as “performance imperatives” (Prastacos et al., 2002).

The first imperative is represented by the need for flexibility and the need for innovation. In such uncertain economic circumstances, organisations find it particularly difficult planning for the long term so that maintaining a high degree of strategic and organisational flexibility is definitely key (Boddy, 2008). At the same time, as suggested by Volberda (1997), employers also need to do whatever they can to maintain their processes stable and efficient.

As mentioned earlier, the objective of simultaneously achieving both flexibility and stability could appear contradictory, but it is actually intended to stress the importance that assumes for businesses their capability to react promptly and effectively to the external pressures whilst maintaining efficiency, which is also a very important component of organisational development.

The internal context needs, therefore, to promptly adapt to the external changing environment, but this does not mean that organisations merely need to adapt to the external changes to be successful. The internal context has indeed a remarkable influence to the successful implementation of this adaptation process, too.

To consider the importance of innovation, the second performance imperative suggested by Prastacos et al (2002), developing products having recourse to the cutting-edge technology offered by the latest advancements is not enough. Companies need to produce products which have to be perceived by customers as desirable and at prices which these are willing to pay for. All of that clearly depends on the internal management context.
The need for change, nonetheless, is not invariably perceived in the same way and with the same degree of urgency by the different individuals concerned. The petrol company BP, for instance, was subject to a particular competitive pressure in the 1980s, but it was only in the early 1990s that its business leaders considered the issue worth of careful attention and initiated a rapid process of change.

To produce effects and generate actions the need to activate a process of change has to be truly perceived by the most influential individuals within the organisation. Only when the organisations’ high ranks notice the gap between internal and external environment and consider it serious enough to threat the business stability a process of change will be actually initiated (Boddy, 2008).

Employers and trade unions can propose processes of change within organisations, but whether their views are not shared and supported by the most influential people within the business it is unlikely that change will yield the desired result.

The need for change is essentially subjective (Boddy, 2008): what is perceived as urgent by some individuals can be considered as something which can be postponed to the future or deemed even useless by others. Business leaders should pay extra care to this aspect and should be particularly cautious about the information they intend to disseminate to make the case for change. Those who want to avoid change will manipulate information in order to minimise the effects of a particular event or phenomenon, whilst those who are pressing for change could, by contrast, be tempted to manipulate information in order to emphasise the relevance of the possible consequences of doing nothing. Management should invariably double check information before taking action.

Organisational change is not a matter of showing who is the more influential person within an organisation, nor is it concerned with showing to the others how powerful one is. These processes require many resources and the full involvement of many people, if not that of the entire workforce. Change management is in general very expensive, is likely to produce remarkable effects and to meet the opposition of those contrary to its implementation: change hardly is a matter of plain sailing. It is important and even crucial develop and implement change processes when required, but not just as a mere exercise. Change has to be planned and implemented only to concretely help an organisation to stay competitive in the market and employees have all to be made aware of its real purpose.

It is very unlikely that a change involving an intended area of the organisation will not produce effects on others, one more reason to avoid underestimating the dire consequences of pointless change procedures.

From the procedural point of view, it could be useful considering also the approach to change management developed by Hayes and Hyde (1998), figure 2, to which the one proposed by Boddy is to some extent similar.

This model, starting from the identification of the need for change imposed by the external environment, considers an interesting intermediate stage where the management has to carry out a useful diagnose in order to assess the current situation and identify the likely future state that, with reference to the object of change, will be reached by the organisation.

The final stage of the process, called review, suggests that also in this case the process is very likely to start anew once finished. It is in fact possible that during the review the need for further improvement or change may emerge.

It can be concluded that the answer to the initial question is rather obvious: change management not only has not to be intended as a fad, but when justified it also represents a necessary practice for savvy employers which want to stay competitive in their market. A few conditions are, nonetheless, important:

a) The need for change has to be real and well determined,
b) The information provided to support this need have to be clear and objective,
c) Change, enabling the organisation to better meet its customer needs, is aimed at achieving competitive advantage and not at merely reducing overheads.
Longo, R., (2011), Change Management: is it a real need or just a fad?, HR Professionals, [online].