Challenge of Change 2006
Winning Hearts and Minds
“An organisation that is not changing,
but is standing still, is dead”

Contents
Introduction 1
● Methodology
The Changing Business Landscape 2
● The biggest drivers of change
● The biggest drivers of change (2002)
● Is change driven by fear or ambition?
UKplc’s Business Change Agenda 4
● Change initiatives planned for the next 12 months
● Is this too much change?
● Change initiatives planned for the next 12 months (2002)
● Proportion of initiatives managed well
The Recipe for Success and Failure 6
● How well do companies manage change?
● How well do companies manage change? (the independent change managers’ view)
● Proportion of change programmes that deliver intended business benefits
● Common mistakes in change programmes
● Common mistakes in change programmes (the independent change managers’ view)
● Common problems companies face
Technique and Skill – Delivering Change 9
● Resources used to deliver change
● Which resources are most effective?
Who is in Charge of Change? 11
● Who manages change?
● Who manages change? (2002)
● Is it a distraction?
Where Does the Buck Stop? – The Role of Senior Management 12
● Percentage of time spent on change
● What senior management is not good at
● What senior management is not good at (2002)
● What senior management could do better (2002)
Executive Sponsorship 13
● Executive sponsorship in relation to achievement of change goals
● Location of sponsor in organisational structure
● Sponsors’ grasp of role and impact
Making the Change 15
In Conclusion 16
Index
● Executive Summary

Introduction Methodology
Companies are constantly changing, although most of us probably The Challenge of Change report is more exhaustive and detailed
think of it as evolution – the constant process of growth and than ever before. It was compiled using research conducted
development of a business, rather than the major transformation amongst almost 200 businesses from across the UK, questioning
programmes we tend to consider as “change”. senior managers and those responsible for change or business
transformation programmes.
With Executive Online’s latest Challenge of Change report we
wanted to find out how UK companies view change and how they In addition we also surveyed 170 interim managers, the vast
manage it. In a difficult economic climate with greater global majority of whom have been involved in change projects, and
competition than ever before, businesses are under constant asked them a number of questions relating to the delivery of
pressure to deliver results. So is change used as a strategic tool to business transformation.
create better companies that are more able to remain successful?
We questioned companies in detail about their plans for change
And who is actually managing the change process? What techniques and why change is necessary; how these programmes would be
and resources are being used? How important are senior managers implemented; and how they measured their success. We also
in this process? And above all, how successful are change wanted to know who was at the sharp end of change – who within
programmes in 2006? their organisation manages the day-to-day process and how much
of a role senior management plays.
Our findings paint a picture of change in British business as primarily
a reactive response to issues that suddenly appear on the board’s Finally, to add context, comment and insight from people working
radar – such as the need to cut costs or play catch-up with the rest at the forefront of change, we held a special focus group of some
of the market – rather than strategic plans to make the organisation of Executive Online’s most experienced independent change
better. management professionals.
As a result change programmes are often not well thought out, Nearly three quarters of all our respondents have been responsible
poorly executed and many are ultimately unsuccessful in meeting for a programme of change or business transformation. The majority
their stated aims. Unfortunately, according to our latest report, the of respondents hailed from the area of Human Resources, although
blame lies predominantly at the door of the board and senior there was a significant number of replies from people who were
management. Executives Online’s Challenge of Change report department heads, directors or directors of project teams.
provides an insight into how British businesses manage change,
where they go wrong and where they could do better. A diverse cross-section of industries was represented, with notable
Introduction and Methodology
sectors including the public sector (20%), professional services
I am sure you will find it enlightening. (15%) and manufacturing (9%).
“An organisation that is not
changing, but is standing still,
is dead. Everything that
Norrie Johnston, Managing Director, Executives Online
people and managers do is
about change of some sort.”
Jill Griggs, Independent Business Transition Manager
1

The Changing Business Landscape THE BIGGEST DRIVERS OF CHANGE
Pressure on business is greater than ever before. Competition is Increasing efficiency
intense and often it comes not from a local competitor, but an 20%
ambitious fast-growing business from a powerhouse emerging Cost reduction
economy such as China, India or South East Asia. To compete, 17%
Corporate restructure
Western companies need to be better, slicker or cheaper –
14%
preferably all three. Looking for competitive advantage
9%
Companies in the West also face a much greater administrative Increased competition
burden than their competitors in developing countries, particularly 9%
in terms of stricter legislation, whether to do with operating Quality improvement
procedures, employment rights or corporate governance. 7%
Emergence of new technology
6%
And they still have to deal with all the other major issues that big Falling sales
businesses face: remaining profitable in a tough economic climate; 5%
aiming for growth and expansion, particularly via mergers and Making the business more innovative
acquisitions; improving efficiency via major infrastructure and 4%
Business relocation
systems projects; and the critical need to reach more customers
3%
and break into new global markets, many of which are actually
Expansion into new markets
home to their biggest competitors.
3%
Globalisation
Yet the approach to these issues seems to have changed since 3%
Executives Online first published its Challenge of Change report in Source: Online research among 200 clients and prospects July 2006
2002. Those big issues are now primarily dealt with as part of the
continual development and management of a business – at least for
The top three drivers – increased efficiency, cost reduction and
most of the organisations we questioned – rather than major hurdles
corporate restructure – could all be described as initiatives
that require a standalone change programme to address them.
designed for maintaining the status quo, making the business more
For example, four years ago the top driver for change was “increased profitable by stripping out costs and tightening up systems rather
competition” as cited by 94% of respondents. In 2006, however, than driving for growth.
The Changing Business Landscape
the top driver is “increasing efficiency”, yet it was only named by
20% of the respondents. This is a change for the better as it shows Therefore these are change programmes that will have a direct and
that companies are now more able to cope with their current possibly negative impact on employees, probably resulting in job
business landscape. losses, so they will be viewed with suspicion and concern across the
organisation. It also means that if such change programmes are not
The downside is that too many organisations are not looking ahead well handled, the chance of failure is greater and they could actually
at what challenges may be waiting around the corner for them, or cause more damage to the morale and culture of the company,
anticipating new opportunities for growth and diversification. Often hurting its future competitiveness.
the board and senior directors are too focused on the immediate
situation, looking no further ahead than the next 12 to 18 months It seems that change is primarily about dealing with issues, either
– an approach Executives Online calls “Now Management”. (For a current or anticipated, that the board believes could harm the
deeper discussion of this approach, request and download business, as opposed to ambitious initiatives that could drive the
Executives Online’s Now Management Report.) This is invariably company forward and make it more successful. For example,
driven by targets such as sales or income, and by pressure from “looking for competitive advantage” was only rated as the fourth
shareholders. biggest driver, and then by only 9% of the respondents.
2

In Executives Online’s last Challenge of Change report in 2002 This could be due to pressures from shareholders as suggested by
there was a very different set of drivers. Increased competition was our interim managers:
the main driver, with the then twin big issues of technology
That comes back to the idea that there are too many strong signals
(including the Internet) and globalisation also ranking highly.
coming over from the quarterly report and the pressure to get figures
in – Ian Henderson, Independent Change Management Expert
THE BIGGEST DRIVERS OF CHANGE (2002)
And indeed the very structure of accountability in UK firms:
Increased competition In defence of British industry, we are driven by monthly and quarterly
94% targets, which means that you do not have the luxury of going back
New technology to fundamentals and saying you will address something as a root and
91% branch review. We tend to take the most glaring of the problems and
Changes in legislation
try to fix that because that will give the quickest result – Phil Church,
87%
Emergence of the Internet Independent Change Management Expert
82%
Globalisation Or simply a lack of management perceptiveness:
81%
Falling sales It is very difficult to teach management teams the behavioural
competences needed to pick up and interpret weak signals. The
78%
average management team does not have the ability to identify those
signals, interpret them and respond to them. To some extent this
exacerbated by a belief strategy which is all about a mission
Despite findings to the contrary, more companies claim that their statement, objectives and goals. Many management teams do not
change programmes are driven by ambition than by fear. However, really understand the “resource based view of the firm” where the
more than a third of respondents believe that change is driven principal change drivers are the dislocations/break points in the
neither by ambition or fear, reinforcing the perception that change market. How they identify these break points via weak signals and
has become just a normal part of the lifecycle of a business. formulate a response in terms of resource needs and capabilities
(distinctive competences) is generally not considered – Geoff Elliott,
Independent Change Management Expert
IS CHANGE DRIVEN BY FEAR OR AMBITION?
The Changing Business Landscape
Ambition
34%
45% Fear
“It is very difficult to
Neither
teach management
21%
teams the behavioural
Source: Online research among 200 clients and prospects July 2006 competence to pick up
and interpret weak
In general though, the boards and senior management of British
companies do not seem adept at looking well into the future to signals.”
either anticipate challenges and problems on the horizon, or
indeed opportunities for growth or expansion into new markets. Geoff Elliott, Independent Change Management Expert
3

In keeping with the stated drivers for change, the top three planned
UKplc’s Business Change Agenda
change programmes in 2006 deal with restructuring, improvement
in efficiency and cost reductions. The top two planned programmes
We wanted to know what change programmes were planned by
in 2002 were also cost reduction and restructuring, although a far
British companies for the coming year and whether this revealed
greater number of companies were embarking on such initiatives
the emergence of any new issues, given that competition from
four years ago.
firms in low-cost economies is such a growing phenomenon.
As far as programmes aimed at growth are concerned, plans for
In the end, planned changes were pretty much in line with the key
these are significantly lower down the list of priorities, with 13%
drivers for change as previously stated, so there is no disconnection
planning mergers and acquisitions and only 6% looking at a change
between issues and solutions. Plans were also broadly similar to the
programme to help them break into a new market. Hopefully this
planned changes reported by Challenge of Change respondents
again indicates that companies see expansion into new markets as
back in 2002. So despite the shifting business landscape, the
a core part of their business strategy so they do not need separate
solutions remain the same.
change programmes to help them do it.
What was surprising was the huge drop in the number of
The drop in the number of change programmes in 2006 compared
companies planning change programmes in 2006 compared with
with 2002 is reflected by the majority of respondents who gave an
2002. Perhaps this indicates that many organisations have been
emphatic “no” to the question of whether too much change is
through major business transformation and feel they are now in
planned. However, the 30% who feel there is too much change is a
good shape – relocation overseas, for example, has fallen to a single
significant voice.
figure, whereas the number of firms planning cost reduction
programmes is less than a fifth of what it was in 2002.
IS THIS TOO MUCH CHANGE?
It could also mean they don’t know what’s waiting around the
corner for them.
CHANGE INITIATIVES PLANNED FOR THE NEXT 30%
12 MONTHS
70% No
Business restructure
Yes
19%
UKplc’s Business Change Agenda
Introduce a major business improvement initiative
18%
Major cost reduction Source: Online research among 200 clients and prospects July 2006
14%
Introduce new technology
13%
Merger or acquisition
13%
Downsize workforce
12%
Move into a major new market
6%
Relocate any operations overseas
4%
Divestment
1%
Source: Online research among 200 clients and prospects July 2006
4

Much more change was planned when Executives Online
PROPORTION OF INITIATIVES WELL MANAGED
questioned companies four years ago. The pressure on businesses to
tighten their belts was obviously a lot greater then as almost four
out of five companies were embarking on cost reduction 100% will be well managed
programmes, with nearly a third planning to shed staff. 8%
90% will be well managed
6%
80% will be well managed
CHANGE INITIATIVES PLANNED FOR THE NEXT
12%
12 MONTHS (2002) 70% will be well managed
19%
60% will be well managed
Cost reduction
9%
79% 50% will be well managed
Business restructure
15%
46% 40% will be well managed
Downsize workforce
10%
29%
30% will be well managed
Relocate any operations overseas
9%
10% 20% will be well managed
7%
0% will be well managed
If fewer companies are planning major change programmes in 2006 3%
Source: Online research among 200 clients and prospects July 2006
there still has to be a question mark over the rationale behind such
initiatives. If cost reduction is major priority, does this take into
account different market challenges a company might face in years More than two-thirds feel that 50% or more of planned initiatives
to come? Could businesses be sacrificing important resources for will be well managed, with a significant 45% believing that 70% or
the sake of a short-term gain in profits? more will be well managed. However, this does leave nearly a third
(31%) who expect a lower than 50% success rate, with a worrying
The suggestion that change could often be a knee-jerk reaction to 3% who feel that none of the initiatives will be well managed.
keep shareholders happy is supported by Independent Change
Management Expert Andy Millward’s experience of working on a Later in the report we will examine the possible reasons why
transformation programme with a major UK blue-chip organisation: change programmes are not always well managed and specifically
(The company would) look purely at what would give them a financial the problems senior management faces and the mistakes they UKplc’s Business Change Agenda
return on investment within, say, 18 months. It was a very blinkered make. A major problem could be the foundation on which change is
approach and they certainly did not look at it in terms of overall business built – if an organisation is not running smoothly in the first place,
priorities and where the business strategy was going. They certainly unless the change programme directly addresses those existing
did not look at it with consideration of the issues on the horizon. They problems, it could actually end up doing more harm than good.
looked only at what could be the biggest banker within 12 – 18 months.
Geoff Elliott explains:
Encouragingly the majority of companies believe that their change Most of British industry does not have the basic know-how’s and the
project will be well managed – although this does not quite tally basic management education to effect real change – they are generally
with the general perception of how well change is managed in UK too focussed on short-term issues and problems, looking for solutions
businesses, as shown later in this report. on cost reduction and inefficiencies. Change management is really
about being able to manage an unbounded messy problem with many
stakeholders and different views of the issues facing the company.
5

Although just over half of those surveyed believe UK companies are
The Recipe for Success and Failure
“average” in their management of business change, almost two in
five (39%) believe management is “poor” to a greater or lesser
The acid test for any change programme is whether it is successful.
degree. Only one in ten thought change was well managed.
The results from the latest Challenge of Change report reveal a
worryingly high level of doubt as to the effectiveness of these
These findings conflict somewhat with previous figures where 69%
initiatives and their success in achieving the goals identified at the
of companies said they felt 50% or more of their planned
outset. This could be another reason why the number of planned
initiatives would be well managed. This could be because they are
change programmes has fallen so drastically.
more positive in advance of change programmes and only see the
problems and mistakes once the projects are complete.
By their own admission more than a third of British businesses are
performing poorly when it comes to managing change. The problems
Yet it seems that even with such a poor perception of change
lie with the vision of senior management and ultimately why
management, the internal view is much rosier than that of
change is being implemented at all. There often seems to be no real
outsiders who have worked on transformation programmes in the
end goal, other than cutting costs or improving efficiency to boost
UK. We asked our independent change management experts how
profits. It is difficult, therefore, for the rest of the company to buy
they rated the management of change in British companies. They
into an initiative that will probably put more pressure on them
were much more critical than the managers and directors inside the
rather than giving them challenges to aspire to.
businesses themselves, with two thirds saying that change was
poorly handled.
Charles Millar, an Independent Change Management Expert with
experience of managing business transformation programmes,
believes that part of the problem is that senior management often HOW WELL DO COMPANIES MANAGE CHANGE? –
see change as a solution to all their woes, rather than just THE INDEPENDENT CHANGE MANAGERS’ VIEW
addressing specific parts of their business.
He explains:
Average
My concern is that there is something that I see as an emerging concept
24% 27%
of change management as some sort of magic toolkit, “that will help Quite well
overcome this resistance and will allow us to carry on managing in the
way that we have managed before”, which generates this resistance. 7% Quite Poorly
42%
The Recipe for Success and Failure
Very poorly
HOW WELL DO COMPANIES MANAGE CHANGE?
Online research among 170 interim managers and independent change
management experts, May 2006
Average
39%
51% Quite well
Poorly*
10%
* breaks down as 35% quite poorly, 3% very poorly and 1% poorly
Source: Online research among 200 clients and prospects July 2006
6

Given that so many businesses believe that change management
could be handled better in the UK, it is not unreasonable to expect
COMMON MISTAKES IN CHANGE PROGRAMMES
that the percentage of change initiatives that companies feel
actually deliver would be a lot lower than our research shows. Fail to carry employees with them
17%
Don’t allow enough time
EXPECTATION THAT AT LEAST 50% OF CHANGE 16%
PROGRAMMES DELIVER THE INTENDED BUSINESS Fail to empower staff so that they can deliver
BENEFITS 13%
Fail to gauge how much change should be undertaken
12%
According to managers and directors in the companies Don’t allow enough budget
57% 9%
According to independent change management experts Failure to appoint a committed change sponsor/champion
39% 8%
Failure to take decisions in timely way
7%
No clear measurable targets set
The majority of companies believe that 50% or more of their 7%
change programmes actually deliver the expected benefits, but only Poor project/programme set up
one in five put the success rate as high as 70% and above. 5%
Lack of governance
2%
Again we asked interim managers the same question and only just Lack of budgetary control
over a third felt that 50% or more of initiatives actually deliver 1%
their intended business benefits. This fell to just 14% of people who Source: Online research among 200 clients and prospects July 2006
thought the success rate was 70% and up.
including helping blue chip organisations prepare for Y2K. She
Why is the success rate for business change programmes in the UK explains:
so low? We already know that the management of transformation
I find that many organisations rely on their hierarchy to achieve what
projects is not highly rated, but why is this? Again much of it is to
they perceive as change. The top issues instructions and the rest are
do with a fuzzy view of what the change project is trying to deliver,
meant to agree to them; there is no consideration of winning hearts
which supports the theory that too many programmes are the
and minds. The top will say “this is what is going to happen” and the
result of knee-jerk reactions.
rest say “that is a stupid thing; I do not believe in that” and they spend
The Recipe for Success and Failure
most of their time resisting the change, just giving enough signals to
Two of the top five biggest mistakes were concerned with staff
appear as though they are participating even though their hearts are
issues, accounting for 30% overall, which is in keeping with the
not in it.
weaknesses identified amongst senior managers (see future chapter
on senior management). This shows that in their desire to keep
shareholders happy, senior managers overlook the needs and
feelings of their employees when implementing change.
The remaining three were all practical measures relating to time,
budget and an underestimation of the actual amount of change
required, totalling 37% in all.
Poor management of staff during change is a common fault in UK
businesses, according to Gwynneth Flower, an interim manager
who has been responsible for a number major change projects,
7

This view was echoed by our survey of interim managers and their
experiences of change programmes. They also feel that an inability
COMMON PROBLEMS COMPANIES FACE
to get staff buy-in is a major flaw of change programmes.
Lack of management resource to see change through
17%
COMMON MISTAKES IN CHANGE PROGRAMMES – Internal resistance/vested interests
THE INDEPENDENT CHANGE MANAGERS’ VIEW 15%
Reluctance to take painful decisions
14%
Fail to take employees with them Insufficient key skills/experience in senior team
23% 14%
Don’t allow enough time Lack of leadership
20% 11%
Shortage of skills within senior team Lack of vision from the top
16% 11%
Lack of leadership Lack of top management ambition for the company
14% 6%
Don’t allow enough budget Lack of will/determination
10% 6%
Internal barriers Shareholder/investor short-termism
8% 5%
Not enough management resource Other
5% 1%
Lack of will and vision from senior management Source: Online research among 200 clients and prospects July 2006
4%
Online research among 170 interim managers and independent change
management experts, May 2006 Although a lack of management resource is the most often cited
problem, issues relating to management style and skills are also
prevalent, such as a reluctance to take decisions or a lack of vision.
It is noticeable, however, that the independents mention problems
Such a high rating for internal resistance and vested interests would
with management skills and leadership more often than internal
indicate that change managers often have to deal with politics as
respondents. When interim managers are drafted in to help with
well.
change programmes they usually have a better overview of the
project and normally have a direct report to senior management.
The overall findings here suggest that all too often change is
They usually have previous experiences of change programmes to
The Recipe for Success and Failure
embarked upon by companies on a needs-must basis to protect
compare with, so this means they are uniquely placed to see where
themselves, rather than with ambition and vigour to improve
management deficiencies lie.
themselves. As a result many projects suffer from a lack of vision,
bad management skills and are generally under resourced, which
Problems with management also dominate the list of most
leads to a poor reception from workers and ultimately a large
common problems faced by companies trying to implement
number of failed programmes.
change. The top four findings were cited by a similar number of
companies and create an image of change programmes being half-
hearted or ill thought out.
8

Technique and Skill – Delivering Change WHICH RESOURCES ARE MOST EFFECTIVE?
The change industry is a multi-billion pound business with
Internal team: members 100% applied to the change program
consultancies basing their entire enterprises on telling companies 35%
what they should change and why they should change it. Some Internal team: change programme added to usual responsibilities
even offer the means to deliver change. 27%
Independent change managers engaged to lead and support
company through change
The tide seems to have finally turned against the major blue-chip
22%
management consultancies, at least in terms of perception of value
External boutique or niche change management consultancy
for money. The majority of businesses planning a major change pro-
5%
gramme prefer to use their own internal resource, drafting in experts External global consultancy e.g. McKinsey, Accenture etc
to either fill knowledge gaps or manage the entire process if required. 3%
Interim/contract workers brought in to deliver aspects of
change programme
RESOURCES USED TO DELIVER CHANGE 2%
Source: Online research among 200 clients and prospects July 2006
Internal team: change programme added to usual responsibilities
36% Although they only comprise 9% of the mentions, independent
Internal team: members 100% applied to the change programme
change managers engaged to lead and support a company through
18%
Interim/contract workers brought in to deliver aspects of change change are rated the most effective resource by fully 22% of
programme respondents. We can conclude from this that although the concept
15% of independent change managers is not well-understood by the
External boutique or niche change management consultancy market – there apparently being low awareness and usage of them
12% as an option – they deliver excellent value and results for the few
Independent change managers engaged to lead and support
organisations who employ them.
company through change
9%
External global consultancy e.g. McKinsey, Accenture etc This view is supported by our interim consultants:
8%
Technique and Skill – Delivering Change
Many businesses know what they want to achieve as the end result,
Source: Online research among 200 clients and prospects July 2006
but they do not know how to go about it. They are looking for people
with expertise or experience who can show them the way to do that –
The majority of change programmes (54%) were handled exclusively Gwynneth Flower, Independent Change Management Expert
by internal teams, with a further 24% using external interims or
managers to deliver all or part of a change programme. Only 20% There still seems to be a feeling that the major consultancy brands
used an external agency, of which less than half turned to the have their place, particularly in the bigger global corporations and
global blue chip brands such as Accenture. high profile public sector jobs, with the sentiment being that “nobody
ever got fired for using a top five consultancy – even if the
Obviously most companies feel that internal teams understand the programme failed”.
culture of their business best, a stance that is borne out by the num-
ber of firms that rate their internal resources as the most effective. There is a lot to be said for turning to a known entity when planning
change, whether it is well-respected consultancy or a particular
Belief in internal teams obviously pays off as almost two-thirds said methodology such as Six Sigma. It is often seen as a security
this was the most effective approach, with a significant one in five blanket or a guarantee of success for companies embarking on such
citing the use of independent change managers as being the most major transformation programmes.
effective. In contrast only 8% said external consultancies had been
the most effective.
9

However this belief could be misplaced if there are major flaws meet new challenges, but they first need to understand what those
within an organisation. Independent Change Management Expert problems and challenges are.
Charles Millar points out that even the best techniques will not be
successful if the basics within an organisation are not addressed first. Geoff Elliott asks:
What does a customer mean by these things? Whether you call it
He explains:
transition or transformational change or change management is not
I find British management tend to be very methodology oriented; actually as relevant as what the customer expects. Are the customers
they are looking for quick fixes, usually because they have not expecting a structured methodology such that you come in and
invested in the organisation in the first place. They want a magical simply follow the steps and do it to the company? Or, are they
toolkit that will somehow get them through the bit of change they do expecting the “change agent” to facilitate change via organisational
not like to manage, which is the people, so that they can get to the learning with the management team?
thing that they want, which is the money.
But methodology, whether it is Six Sigma, “Lean”, or Total Quality
The danger is then that companies who say they want change Management, is nothing without vision, goals and good
don’t actually know what they want to change. They may want to management. Gwynneth Flower says:
make certain problems go away or have a desire for quick fixes to
Many people look for a model. All too many people think that you
make them more profitable and efficient, but they don’t really under-
buy a piece of software, you put it on the IT system, you fill in a
stand which parts of their businesses need to be changed or why.
survey, and then the changes are made. But it is not like that; it really
is not. In the end what you are doing is actually changing the culture
As a result they may choose a change technique or philosophy
of an organisation to make it work more efficiently. You can call it all
because of its reputation without really knowing whether it is the
sorts of wonderful names.
right thing for the job.
As Phil Church explains:
When anybody comes in to sell something, saying “Leave it with me, I
will look at it and I will come up with an idea for you”, your initial
instinct is “My people internally should have done that, should they
not? Can they not?” I believe it lends you to buy from someone who
Technique and Skill – Delivering Change
says “Leave it to us”.
Charles Millar speaks from his own experience when he says:
Many organisations need to legitimise what they are doing. One of
“Whether you call it
the ways to do this is to take best practice, whether it is Six Sigma, or
the one that is coming into the public sector now, which is “Lean”.
transition or trans-
Lean is something the owners ask for because they want to get more formational change is
money out of the business. Customers generally ask for agility. So
here we have a paradox with Six Sigma, which is supposed to be not actually as relevant
customer focused, being used for something that the owners want,
not what the customers want. as what the customer
In fact many of the interim managers we spoke to question expects.
whether the word “change” is even the right term for what most
businesses need. They may need solutions to problems or help to Geoff Elliott, Independent Change Management Expert
10

Who is in Charge of Change? Four years ago 79% of change projects were managed on a daily
basis by senior level executives, three times more than in 2006. This
could be in-keeping with the overall drop in the number of change
Although change has the potential to deliver massive benefits – as
projects taking place, and it could also reflect the suggestion that
well as causing major problems – it seems that the day-to-day
companies are better at managing day-to-day business challenges,
responsibility for such programmes has been devolved down the
so any change programmes required can be handled by people
organisation somewhat, particularly when compared with our last
lower down in the organisation. However it also shows that the
report in 2002.
importance given to these programmes has lessened.
This adds to the whole picture of change being poorly managed as
Worse still, the respondents feel that this is having a negative
senior directors give over the handling of vital projects to middle
impact on the “day jobs” of people that have been given the
managers and heads of function that, although perfectly capable at
responsibility of overseeing change. The nightmare scenario is that
their own jobs, may not have the influence or the skills to push
not only are change programmes suffering because of deficiencies
such important initiatives through an organisation.
in their management, other parts of the business are also being
neglected because managers are overstretched.
WHO MANAGES CHANGE?
IS IT A DISTRACTION?
Managers
29%
Head of function
15%
Project manager
16% Yes
Board of directors/Divisional directors 45%
17% 55% No
MD/CEO
10%
External consultant/Specialist brought in
10%
Source: Online research among 200 clients and prospects July 2006
Source: Online research among 200 clients and prospects July 2006
The majority of change programmes (60%) are handled by middle
managers and function heads. Only 27% are dealt with by director Change has been shunted down the list of corporate priorities:
level executives. This is a major shift from our findings in 2002, fewer projects are being implemented; the vision and goals for
these projects are unclear; and responsibility for management is
Who is in Charge of Change?
when the vast majority of programmes were handled by senior
level executives. being passed down the ladder to the middle ranks who do not have
adequate skills, resources and support.
WHO MANAGES CHANGE? (2002)
Board of Directors
34%
Senior management
23%
MD/CEO
22%
Head of function
13%
11

Where Does the Buck Stop? – WHAT SENIOR MANAGEMENT IS NOT GOOD AT
The Role of Senior Management
Inspiring the workforce
We wanted to know what role senior managers were playing; 21%
Managing change
whether they were taking ownership of programmes and where
18%
their weaknesses lay. All our findings so far point to inadequacies in Effective leadership
the management of change, either in terms of identifying why such 16%
programmes are needed in the first place, or how they are actually Decision-making
implemented. 8%
Risk taking
Anecdotally our interim managers feel that most senior executives
8%
Initiating change
are poor in their knowledge of what change means and what it can
6%
achieve. Gwynneth Flower says: Thinking strategically
I think it is fair to say that, in general, British management does not
5%
Exploiting new technologies
understand the term “change management”; they do not know what
5%
it means. It is something akin to business integration, making the Forging strategic alliances
management teamwork more efficiently together and so on. 5%
Identifying business opportunities
The vast majority of respondents said that senior managers spent 3%
Moving fast enough
less than half of their time on change projects, with 60% saying
3%
that senior managers actually spent less than a third of their time Sound financial control
devoted to managing change. 2%
Source: Online research among 200 clients and prospects July 2006
PERCENTAGE OF TIME SPENT ON CHANGE
In 2002 the leadership skills displayed by senior managers were
50% or less also found wanting, particularly when it came to looking ahead
78% and laying out a path for the development of businesses. Issues
Source: Online research among 200 clients and prospects July 2006 such as a lack of effective leadership and risk taking were also
cited in the 2006 Challenge of Change report, but in far fewer
numbers than 2002.
The Role of Senior Management
However 57% said that this was time well spent by senior
managers, but that leaves a significant 43% who believe it is not
time well spent.
WHAT SENIOR MANAGEMENT IS NOT GOOD AT (2002)
When we asked our respondents what they felt senior executives
Exploiting the potential of the Internet
were particularly poor at, yet again the issue of staff management
72%
came tops. This is a marked difference from 2002 when the top
Risk taking
issue was a lack of exploitation of the Internet, which was then a
70%
rapidly emerging technology and business channel. Implementing and managing change
60%
Forward planning
50%
Effective leadership
50%
12

WHAT SENIOR MANAGEMENT COULD DO BETTER (2002) Executive Sponsorship
The poor opinion of the role of senior management in the change
Gauging how much change should be undertaken at any
one time process is all the more worrying considering how important many
86% people feel executive sponsorship is for nurturing and shepherding
Effective change leadership change programmes through an organisation.
82%
Understanding the relationship between change and We asked our clients and change management experts about the
business success
role of executive sponsorship in the change programmes they had
82%
Communicating the news of change to the workforce been involved with.
78%
Identifying the most appropriate individuals to manage change Once again the bottom line seems to be that senior executives lack
78% basic understanding of the aims of business transformation projects
and specifically their roles as sponsors. We also asked a small sample
of companies to give their views on what they expected from
Sadly it seems that senior management is lacking in many of the executive sponsorship and what they felt they actually received.
core skills expected of leaders and that are vital for the
implementation of change. Specifically inspiring the workforce,
HAS THE QUALITY OF EXECUTIVE SPONSORSHIP
managing change and effective leadership are seen as major
BEEN SUFFICIENT TO ACHIEVE ALL CHANGE
deficiencies, accounting for more than half of all the responses.
MANAGEMENT GOALS?
Again this could be due to a lack of focus; why do they want to
initiate change and what benefits will it bring to the business? By Yes
establishing these factors and communicating them more 27%
No
effectively to the rest of the organisation, not only will senior
67%
managers achieve more understanding from the workforce, they Not Applicable
might actually find people within the organisation that have the 6%
skills and abilities to help deliver the changes required. Source: Online research among 190 clients and interim managers July 2006
Gwynneth Flower offers an insight to this particular issue:
The majority of respondents were negative in their assessment of the
When you go further down into organisations you often find, in the role senior management had played in change projects in helping to
little sections and so on, that people have been saying for a long time achieve the end goals. If top executives have no clear vision of what
that working in certain ways is crazy, but nobody would listen to them. those goals should be, then the failure rate is quite understandable.
Executive Sponsorship
13

The vast majority of executive sponsorship takes place at a very
HOW OFTEN HAS POOR QUALITY OF EXECUTIVE senior level within an organisation. Compare these figures with
SPONSORSHIP RESULTED IN THE EARLY previous findings relating to the people that actually carry out
TERMINATION OF A CHANGE PROGRAMME? change on a day-to-day basis (60% are middle managers), and the
amount of time senior management actually spends on change
Never programmes (78% say senior executives spend less than half their
28% time managing change), there is an obvious gap between the
Infrequently concept of supporting change within an organisation and the
18% number of senior executives actually rolling up their sleeves and
Sometimes
getting involved in the practical side of managing that change.
35%
50% of the time
5%
More often than not
WHERE WAS THE SPONSOR FOR THE CHANGE
6% PROGRAMME LOCATED?
Frequently
8% Top (C-level) executive level
Source: Online research among 190 clients and interim managers July 2006
42%
Board level
Nineteen percent of respondents said projects had been terminated 32%
more than half of the time due to poor quality of executive Divisional director
sponsorship. 12%
Functional director (e.g. of HR, IT, etc.)
10%
It is noticeable that the interim managers reported significantly Project manager
lower numbers of cancelled change programmes, perhaps showing a 4%
higher level of commitment to projects using external resource. Source: Online research among 190 clients and interim managers July 2006
On balance the 81% who said that projects are scrapped only
sometimes or infrequently is a more positive result. But considering The problem, it would seem, lies with a lack of understanding or
the time, effort and money that goes into such projects, to have appreciation of what senior executives can and should actually
even just a handful of failures is a shocking indictment of the bring to the business change process.
quality of change management in UK businesses.
This becomes much clearer when you consider that the vast majority
DO YOU BELIEVE THAT SPONSORS FULLY
of respondents believe that good executive sponsorship can be key UNDERSTAND THEIR ROLE AND ITS IMPACT ON THE
in helping a change programme to deliver competitive advantage RESULTS OF A CHANGE INITIATIVE?
to a business.
Yes
24%
Executive Sponsorship
DO YOU BELIEVE THAT THE QUALITY OF
No
SPONSORSHIP CAN BE A KEY FACTOR IN 72%
DETERMINING COMPETITIVE ADVANTAGE? Not Applicable
4%
Source: Online research among 190 clients and interim managers July 2006
Yes
91%
No Almost three quarters of companies said that executive sponsors did
4% not understand their role in change programmes or the impact they
Not Applicable could have on the end results. This is a recurring theme throughout the
5% Challenge of Change report – senior managers, from the board down,
Source: Online research among 190 clients and interim managers July 2006
seem to have taken their eye off the ball when it comes to change.
14

Making the Change
If our latest Challenge of Change report shows that transformation Before embarking on change, organisations first need to get back to
programmes are generally not well managed in UK businesses, then basics. Change can be ambitious and hugely successful – but only if
the research points to a fundamental lack of understanding of what the foundations are prepared in advance.
change is supposed to do: Why do we need to change? What are
our goals? How do we achieve them effectively? Jill Griggs, Independent Business Transition Manager, suggests a
straightforward methodology as a starting point:
Geoff Elliott explains: ● Plan change as part of your business strategy, identifying the
Many people talk about change management in terms of projects quantifiable contribution that the outcomes will make to the
and project change control in extremely mechanistic and linear terms, strategic direction of your organisation.
not really understanding that change is an iterative process. Project ● Ensure all change plans have a predefined contribution to the
change control is only one aspect of change management. strategy and detailed interfaces to each other. This needs to be at
the micro level, not macro.
There are six basic dimensions of change underpinned by process.
● The business change or transition manager should be part of
They are: work design; the quality management system and
validating the contribution of the planned transition to the
governance; people and skills; performance measurement and
organisation’s strategy.
management; technology infrastructure required by the organisation
(not just ICT); and culture and climate change. These change
● Any business transition needs to have benchmarks included that
dimensions have two basic drivers: the internal drivers, namely cost can measure the changes being effected and how they feed into
and efficiencies; and external drivers in terms of market break points. the strategy.
● These should not be confused with milestones required to
One of the practical problems is where to start and where to make measure transition progress to time and budget. Benchmarks are
the intervention, for example with technology, process, work design snapshots of how a business measure is changing as a result of
or people and skills? Likewise what change outcomes are being the transition.
sought at people, departmental, company, SBU and Global Levels? ● Every business transition planned needs a corporate, executive
Most organisations do not have the building blocks in place and the level manager to be responsible for how it fits into the overall
basic know-how to effect change. strategy of the company.
● No business transition should be started until the effect on the
For example, if the “budget process” or “order entry” process is
organisation in five years time has been quantified, benchmarked
broken or needs improving, or several business units need to be
and approved at board level.
consolidated and the organisation does not have the basic know-how
and skills to make those changes, then culture change is not going to ● Tactical tweaking of a business is “business as usual” and should
fix those things, the things which are broken or sub optimal. It is a be measured as part of the performance assessment of the
gloss that sits across the top. manager responsible for that area. This is not a business transition
activity that should result in a change in strategic outcomes.
Making the Change
Most of British industry does not have the basic know-how’s and the ● This means that the organisational design and accountabilities
basic management education to effect real change – they are associated with each job description, and quantifiable
generally too focussed on short-term issues and problems, looking performance measures for each role, need to be clearly defined.
for solutions on cost reduction and inefficiencies. Change
management is really about being able to manage an unbounded As Jill points out, and the findings of Executive Online’s research
messy problem with many stakeholders and different views of the reinforce, even at this start point – at the very basic level of change
issues facing the company. – senior input is needed and strong executive management is vital.
15

In Conclusion
Executive Summary
Compared with four years ago there is less change taking place in The bleak picture is that the fault lies with senior directors, either
British companies: because they abdicate responsibility to junior managers:
Change programmes planned for the next 12 months Who is responsible day-to-day for change?
2006 ● Business restructure - 19% ● Managers - 29%
● Cost reduction - 14% ● Head of function - 15%
2002 ● Business restructure - 46% ● Project manager - 16%
● Cost reduction - 79% ● Board of directors/
Divisional directors - 17%
What change there is tends to be aimed at stabilising the business ● MD/CEO - 10%
– maintaining the status quo rather than striking out for growth:
Key drivers for change Or because they just don’t have the skills or vision:
● Increasing efficiency - 20% What is senior management not good at?
● Cost reduction - 17% ● Inspiring the workforce - 21%
● Corporate restructure - 14% ● Managing change - 18%
● Effective leadership - 16%
Invariably this means that the majority of change programmes are
designed to tighten up the business and thus improve profits. Yet Because the reasons for change are not always understood by
these goals seem to be badly communicated by the board and senior managers, change is often viewed with suspicion by the rest
senior managers, possibly because the benefits are not clearly of the organisation. But change should not be seen as dangerous, it
defined, resulting in poor management of the actual programmes: should be seen as ambitious, making the business better.
How well is change managed?
● Average - 51% It rests on the shoulders of senior managers to show more vision
● Quite well - 10% and leadership, to spell out what benefits change can bring and why
● Poorly - 39% it is good for the business and the workers themselves. Often the
organisation already has the resources and skills to transform a
This results in a lack of buy-in by employees as they are likely to business to bring about the improvements and competitive
see change as a threat to them and their jobs. In turn this leads to advantage required. Senior management needs to ensure that the
the workforce giving lip service to change programmes and an organisation is running effectively in the first place to be able to
astonishingly high rate of failed or poorly managed programmes: identify where those resources and skills lie.
What percentage of change programmes actually deliver
desired benefits? Only when managers win the hearts and minds of everyone in the
● Companies that feel business will the Challenge of Change be met successfully.
50% or more deliver
intended benefits - 57%
● Interim managers that
feel 50% or more deliver
In Conclusion
intended benefits - 39%
16

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