Change Management

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In Executive Online\'s Challenge of Change report we explore how companies view and manage change. This groundbreaking report updates our original Challenge of Change report, published in 2002, with new research involving nearly 400 senior executives in roles where they’re responsible for business transformation programmes. It explores such challenging questions as: Is change used as a strategic tool to create better companies that are more able to remain successful, or is it used reactively, in an inward-facing way? What techniques and resources are being used to deliver change? How important are senior managers in this process? And above all, how successful are change programmes?

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Change Management

  1. 1. CHALLENGE OF CHANGE NETHERLANDS
  2. 2. CONTENTSIntroduction 1Research Objectives and Methodology 2Survey Sample 3Defining Change Management 4Drivers of Change 6Planned Change 9Managing Change 10Recession Impact 11When Change Goes Wrong 12Delivering Change 13Conclusion 17
  3. 3. INTRODUCTIONThe constancy of change is a reality that impacts every Other failures in driving change often derive on theaspect of our lives, and how an organisation manages itself resourcing side. It is important not to “overtask” staff whoamidst this reality is critical to the success or failure of any need to worry about the day to day business, by requiringbusiness. At times change can seem gradual and them to drive change at the same time. Leaving changeevolutionary in nature; in other cases the change can come management including support in implementing change tosuddenly and dramatically. A healthy company must have professionals and dedicated staff will pay dividends in thethe ability to adapt as needed to whatever sort of change is long run.required, and thus the process of change management hasbecome a significant area of interest for executives in every Making the business more innovative was cited as a reasonindustry – especially as change seems to come more and or primary driver of change in only 3% in all the cases. Inmore rapidly, and from every direction. the current business climate, the most difficult in many years, most change programmes are created for defensiveExecutives Online has studied change management since reasons like reducing costs, improving efficiency, improving2002, with the publication of our first “Challenge of Change” quality and restructuring. Emergence of new technologyreport. We have continued to update this information with was the primary driver of only 1% of change programmes.new surveys and research over the years, and we are This indicates there must be major, under-exploitedhappy to deliver the latest installment: a survey conducted opportunities for companies to embrace innovation forin September of 2009 among 262 Netherlands-based competitive advantage. Finally, change must becomeexecutives. embedded in corporate culture, as continuous improvement – to eliminate the necessity of large-scale, disruptiveThis survey was conducted amidst a global recession, a programmes, or to make such initiatives more positive andtime during which adaptation to a changed economic effective.environment is critical to the very survival of manycompanies. Our past survey results have shown a track We hope you enjoy this latest update on the ongoingrecord of rather poorly-constructed and implemented challenge of change, and as always we welcome yourchange programmes; we were interested to see if that reaction or feedback on any aspect of our report.record had improved any and what lessons might havebeen learned by companies on managing change Edwin Glasprogrammes. We also wanted to learn about the impact of Managing Directorthe recession on change programmes currently underway. Executives Online NetherlandsMany of the executives we surveyed mentioned thenecessity of good communications during any changeprogramme. When change programmes are initiated, theremust be focus and attention on the messages andcommunication early in the process, to all of thestakeholders. When this is overlooked, employees can feelcriticised or blamed, as if they’d done something wrong,and this diminishes their openness to changing. Such errorscan produce a negative start, early in the process. 1
  4. 4. RESEARCH OBJECTIVES AND METHODOLOGYExecutives Online has been publishing the Challenge of Areas of inquiry included:Change reports since 2002 and our goal has been tounderstand how the practice of effecting change in an • Definitions and consensus on change managementorganisation has been evolving over time. This year we were • Drivers of changealso curious to see how the global economic recession may • Current planned business initiativeshave impacted the drivers of, attitudes toward, and • Impact of the recession on change programmesapproaches to change. • Assessment of how well companies manage change • How change tends to go awryOur survey was conducted online in September of 2009, via • Causes underlying change programme failurean online questionnaire to 262 Netherlands-based interim • Effectiveness and suitability of change managementmanagers and some of the senior executives in resourcesorganisations that could employ them. • Skills required by effective change managers 2
  5. 5. SURVEY SAMPLEOf the survey sample, 6% identified as the “personresponsible for delivering a change initiative in yourorganisation” and another 3% as the “owner of thebusiness case for a change programme (sponsor).” Theremainder divided nearly equally among “an interimmanager who has been engaged to deliver change” (25%),“a senior manager or executive employed in anorganisation that is or was undergoing change” (23%), “aninterim manager” (23%), and “an independent changemanagement professional” (20%). Who filled out survey? An interim manager who has been engaged 3% to deliver change – 25% 6% A senior manager or executive employed in 25% an organisation that is or was undergoing change – 23% 20% An interim manager – 23% An independent change management professional – 20% 23% The person responsible for delivering a change initiative in your organisation – 6% 23% Owner of the business case for a change programme (sponsor) – 3%“Change management is a structuredapproach to transitioning individuals,teams, and organisations from a currentstate to a desired future state.” 3
  6. 6. DEFINING CHANGE MANAGEMENTThe majority of respondents believed that there was little Do you believe there is consensus on whatconsensus on the definition of “change management.” change management is? That is, when someoneLess than a quarter felt that when someone used the uses the phrase change management, thatphrase “change management,” it would be clear to others others will instantly understand precisely what heprecisely what was meant. or she means? Yes 22% No 78%That said, when respondents were offered a possible Do you agree with the following definition ofdefinition of change management, 90% agreed with that change management: Change management is adefinition. structured approach to transitioning individuals, teams, and organisations from a current state to a desired future state. No 10% Yes 90% 4
  7. 7. Alternative Definitions of “Change Management” A further point was that the process of change was not a one-time thing, but an ongoing process:While largely agreeing with the definition offered, respondentsdid offer some modifications. Some respondents emphasised Change management is a more or less old-fashionedthat the transitions must focus on the “processes and concept in this world of continuous change. So everyprocedures” required by the change in question. Others manager is more or less a change manager. In my viewadded that any transition must be “aimed at achieving it is better to speak of different forms/levels oftangible business results” and/or must “improve quality and intervention management.competitiveness.” Another respondent argued that the word“culture” must be included as “the culture makes the Finally, one respondent offered an alternative definition, onedifference: finance, strategy, and human resources are only that suggested that change management was bothresults of the culture.” “structured” and “dynamic”:One respondent focused on the timing aspect, noting that Change management is NOT a structured approach tothe change must be a gradual, or “evolutionary” one: transitioning individuals, teams or organisations from a current state to a desired future state. I believe its a Change management is an evolutionary transitioning of structured, dynamic and economic way of adapting individuals, teams and organisations to an expected your organisation to the changing necessities of your desired future state. stakeholders while keeping close contact with those stakeholders. 5
  8. 8. DRIVERS OF CHANGEAs for the primary driver of change, “increasing efficiency”was most often cited, by 23% of respondents. “Corporaterestructure” (17%) was another important driver, along withcost reduction (14%) and “quality improvement” (13%). In the last change project you’ve witnessed or been part of, please indicate the primary driver of that change: Increasing efficiency 23% Corporate restructure 17% Cost reduction 14% Quality improvement 13% Looking for competitive advantage 10% Falling sales 7% Response to the current economic crisis 4% Making the business more innovative 3% Expansion into new markets 3% Increased competition 2% Globalisation 2% Business relocation 1% Emergence of new technology 1% 0 10 20 30 40 50 60 Number of Responses 6
  9. 9. When the question was expanded and respondents wereasked to indicate ALL drivers of change, “increasingefficiency,” “cost reduction,” “quality improvement,” and“corporate restructure” all remained at the top of the list.More growth-oriented projects, such as “looking forcompetitive advantage,” “making the business moreinnovative,” and “expansion into new markets” also elicitedresponses. In the last change project you’ve witnessed or been part of, please indicate ALL factors that were drivers of that change: Increasing efficiency 66% Cost reduction 59% Quality improvement 54% Corporate restructure 48% Looking for competitive advantage 35% Making the business more innovative 33% Falling sales 24% Expansion into new markets 22% Increased competition 21% Response to the current economic crisis 19% Emergence of new technology 13% Globalisation 13% Business relocation 12% 0 20 40 60 80 100 120 140 160 180 200 Number of Responses 7
  10. 10. Fear or Ambition?In our survey, respondents were divided as to whether mostbusiness change is driven by fear or by ambition, with 56%indicating “fear or defensive reasons” and 44% indicatingthe more positive “ambition or expansive reasons.”The reasons behind change were varied, and manyrespondents said that “a combination” of both “ambition”and “fear” were at play. One respondent commented: “itstarted with ambition but changed into a defensive mode.”Others noted that change occurred due to “anticipation ofchanging circumstances” or “reaction to competitive marketdevelopments.” Additional factors mentioned included“financial pressure” and “pursuit of profits.” In any case,however, some respondents noted again that the driversshould not matter; “change should be an ongoing focus.” Do you think most business change is driven by fear, or ambition? That is, for defensive or expansive reasons, respectively? Ambition/ Fear/ Expansive Defensive reasons reasons 44% 56% 8
  11. 11. PLANNED CHANGE What business change initiatives are planned in your (or your client’s) organisation for the next 12 months? Business restructure 47% Major cost reduction 38% Introduce a major business improvement initiative 31% Downsize workforce 26% Introduce new technology 22% Move into a major new market 17% Merger or aquisition 16% Relocate any operations overseas 8% Divestment 5% 0 20 40 60 80 100 120 140 Number of ResponsesMany initiatives were planned over the next 12 months, Do you believe this is too much planned changeespecially in the areas of “business restructure” (47%) and for your organisation over the next 12 months?“major cost reduction” (38%). Undoubtedly the globaleconomic recession has been driving these cost-orientedprojects. There is also, however, some appetite for moreexpansive projects: “introduce a major businessimprovement initiative” (31%), “introduce new technology”(22%) and “move into a major new market” (17%). Yes 26%For the majority of respondents, the planned changesseemed manageable; nearly three-quarters did not feel itwould be “too much” for their organisations. No 74% 9
  12. 12. MANAGING CHANGE In general, how well do companies manage change? 120 47% 100 34% Number of Respondents 80 60 40 10% 20 7% 2% 0 Quite well Fairly well Average Fairly poorly Quite poorlyOverall, respondents were not impressed with how wellcompanies manage change. Only 2% indicated thatcompanies manage change “quite well,” and only another10% indicated “fairly well.” Thirty-four percent ratedcompanies as “average” in change management and overhalf said either “fairly poorly” or “quite poorly.” 10
  13. 13. RECESSION IMPACTAs previous survey data has shown, the global recessionhas had an impact on companies across the board. Whenasked specifically about its effects on change programmesalready underway, almost 40% said the programmes were“continuing but with more demanding requirements.”Twenty-four percent said that “the majority” had been put onhold; ten percent said that “a minority” had been put onhold. Ten percent were continuing with diminishedrequirements, and for 3%, activity had stopped completely.Only 14% indicated that there had been no impact from therecession. What is the main impact the recession has had on change programmes already underway in your or your client’s organisation? Continuing but with more demanding requirements 39% Majority have been put on hold 24% No impact 14% Minority have been put on hold 10% Continuing but with diminished requirements 10% Activity has stopped completely 3% 0 10 20 30 40 50 60 70 80 90 100 Number of Respondents When asked specifically about its effects on change programmes already underway, almost 40% said the programmes were “continuing but with more demanding requirements.” 11
  14. 14. WHEN CHANGE GOES WRONGGiven respondents’ feelings on how poorly companies “walk the talk” by senior management was also a factor;manage change, it is clear that much goes wrong. In terms “failure to communicate” was mentioned frequently as well.of diagnosing specific issues, the most significant onesseemed to be around staffing and timing: “failure to [Senior management is] not participating, notempower staff so that they can deliver” (24%), “not allowing motivating the employees, which is unbelievably stupidenough time for the change to be implemented” (15%), and because they are a part of it.“expecting employees to do day jobs and also changeroles” (13%). Other problems included “no clear operational translation of the change wanted” and “too many projects not alignedWhen asked for additional comment, some respondents with each other, resulting in chaos.” At the end of the day,noted there was often an “inconsistent message” and “too respondents observed that “change needs time, becausemuch top-down instead of bottom-up”. An unwillingness to it’s people work and they adjust only slowly.” Where change goes wrong, what have you seen as the main cause? Failure to empower staff so that they can deliver 24% Not allowing enough time for the change to be implemented 15% Expecting employees to do day jobs and also change roles 13% No clear measurable targets 10% Failure to appoint a committed change sponsor/champion 10% Failure to identify the right changes to employ 9% Failure to make decisions in a timely fashion 7% Not implementing the change(s) quickly enough 5% Failure to hire a change expert 3% Not allowing enough budget 2% Failure to gauge how much change is needed 2% 0 10 20 30 40 50 60 Number of respondents 12
  15. 15. DELIVERING CHANGEActually delivering on the planned change programme is the Management consulting firms – either “name brand” orkey challenge. A variety of different resources may be boutique/niche firms – were not used very often. There wasinvolved in a single change programme, depending on the usage of external players, however: external/independentcompany and the magnitude of the change sought. The change management professionals (21%) and externalboard (i.e., CEO/Managing Director) generally had a role interim/contract workers (23%).(59%), and department heads were often involved as well(49%). Internal teams (those for whom changeresponsibilities were added to their usual responsibilities)played a part almost half of the time. In the last change project you have been part of, what resources have been used to lead and deliver change? (tick as many as apply) The board ie CEO/Managing Director 59% Departmental heads 49% Internal team: change responsibilities added to usual responsibilities 47% External interim/contract workers brought in to 23% deliver aspects of change programme External/independent change management professionals 21% Internal team: members seconded or otherwise 17% 100% applied to change programme External “name brand” global consultancy firm 5% External boutique or niche change management consultancy 4% 0 25 50 75 100 125 150 175 Number of respondents 13
  16. 16. Primary Resource vs. Effective ResourceSurvey respondents were then asked to indicate whichresources had been the PRIMARY resource for change, andthen which resource had been the MOST EFFECTIVEresource for the change. In most cases, the two statisticsaligned fairly closely. However, the board (i.e.,CEO/Managing Director) was viewed as less effective(relative to its usage), and internal teams dedicated tochange programmes and external/independent changemanagement professionals as more effective. In the last change project you have been part of, which resource was the PRIMARY one used to deliver change? Which was the MOST EFFECTIVE one used to deliver change? Primary Resource for Change Most Effective Resource for Change The board ie CEO/Managing Director 25% 18% Departmental heads 23% 23% Internal team: change responsibilities added to usual responsibilities 20% 19% External/independent change management professionals 13% 16% Internal team: members seconded or otherwise 9% 100% applied to change programme 13% External interim/contract workers brought in to 7% deliver aspects of change programme 8% External “name brand” global consultancy firm 2% 1% External boutique or niche change management consultancy 1% 2% 0 10 20 30 40 50 60 Number of respondents 14
  17. 17. Suitability RatingsWhen asked to rate each role as to its “suitability for leadingchange management,” respondents tended to favorexternal/independent change management professionals,as well as the board and department heads as being either“excellent” or “average” in their suitability for leadingchange management. Internal teams rated more highlywhen they were “seconded or otherwise 100% applied tothe change programme.” External “name brand” globalconsultancy firms fared the worst in suitability ratings. Suitability Ratings Excellent Average Poor External/independent change management professionals 51% 39% 10% The board ie CEO/Managing Director 47% 34% 19% Departmental heads 46% 43% 12% Internal team: members seconded or otherwise 41% 51% 100% applied to change programme 9% External interim/contract workers brought in to 36% 46% deliver aspects of change programme 17% Internal team: change responsibilities added to usual responsibilities 26% 52% 21% External boutique or niche change management consultancy 26% 50% 24% External “name brand” global consultancy firm 13% 55% 32% 0 20 40 60 80 100 120 140 Number of respondents 15
  18. 18. Change Management Skillset Other SkillsFinally, survey respondents were asked to rank a list of skills Respondents added other skills they felt were important toin terms of their importance to a person responsible for the role of an interim manager: “being able to makedelivering change. The top ranked skills were actually rather decisions,” “constantly being adaptive to change” andgeneric qualities: “successful leadership skills,” “excellent “achieving and creating trust and cooperation.” Onecommunication skills,” and “personal charisma/ respondent clarified that “vision must come first;” anotherpersuasiveness.” Following next in ranked importance were caveat was that “while too often change is based onmore experience-related aspects: “experience in the books/theory, it’s really about people and attitude only.”function in which the majority of change is concentrated”and “experience in the organisation’s industry.” Change should always involve the people who will maintain the changes. Change management is therefore leadership and communication with the rest of the business. Please rank the following skills in terms of their importance Rank to a person responsible for delivering change Successful leadership skills 1 Excellent communication skills 2 Personal charisma/persuasiveness 3 Being goal-oriented 4 Experience in the organisations industry 5 Successful track record in similar change management programme(s) 6 Experience in the function in which the majority of the change is concentrated 7 Marketing and sales capabilities 8 Technical acumen (modelling, analysis, mastery of formal analytical tools) 9 Sense of urgency 10 Patience 11 16
  19. 19. CONCLUSIONThe “challenge of change” continues to stymie the majority many respondents, and given the lack of successof companies. Consistent with previous survey results, our continually seen across the change programmes cited,September 2009 respondents were not impressed with how perhaps employing more individuals with changewell companies manage change: just 12% said “quite well” management expertise might make sense.or “fairly well” and well over half indicated either “fairlypoorly” or “very poorly.” Interestingly, the top-ranked skills for an effective change manager tended to be more generic qualities vs. moreCorporate restructure, cost reduction and increasing specific or technical skills. Successful leadership andefficiency were all viewed as significant drivers of change excellent communication skills as well as personaland were also among the most common planned initiatives, charisma/persuasiveness all ranked highly. Many surveywhich is not surprising amidst a global recession. Of the respondents commented on the critical importance of thecompanies surveyed, just 14% said the recession had not “human side” of the change process, adding furtherimpacted their change programmes; 39% were continuing credence to the need for strong leadership, communicationbut with more demanding requirements and other and persuasiveness.programmes had either been put on hold, scaled back, orstopped completely. The recession has necessitated change across most companies and industries, and the ability of a company toChange tended to “go wrong” when staff did not feel successfully navigate the tides of change will be a factor inempowered and/or when they were expected to continue determining who survives. Finding the right formula forwith their day jobs as well as helping to implement change. effective change management: what to change; who shouldThere were also issues around lack of a committed change effect that change; and how to execute on the chosensponsor/champion, and of overall senior management programme... all of these elements require careful attentioncommitment and engagement in the changes planned – for success.another aspect that had come up repeatedly in past research. Executives Online has a strong track record in findingThe board, department heads, and internal teams were all change management expertise; feel free to call uscommonly tapped to employ change. External/independent + 3 1 ( 0 ) 2 0 3 0 1 2 1 5 9 if you think we might be ablechange managers also received a vote of confidence from to help. Corporate restructure, cost reduction and increasing efficiency were all viewed as significant drivers of change and were also among the most common planned initiatives 17
  20. 20. ABOUT EXECUTIVES ONLINEWe offer a unique, full-service process which is abalanced blend of technology and personal service.Executives Online delivers fast-track executive resourcing – interimmanagement, project management, change management, andpermanent recruitment – leveraging our 80,000-strong Talent Bank ofsenior executives. We source talent globally, via the Talent Bankwhich is built and drawn upon by each of our growing network ofoffices around the world.We offer a unique, full-service process which is a balanced blend oftechnology and personal service. Our approach attracts both thebest candidates and the most challenging opportunities, and enablesus to rapidly and effectively match them together in successfulplacements.
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