7 Models of Change Management Every CFO Must Know

April 16, 2024
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One could say that nothing is certain in life besides death, taxes, and change. In a business setting, you know that change is constant. From a management and leadership perspective,  change management is a necessary tool to promote, support and manage change within an organisation. There are several models of change that a business can adopt to ensure success. 

We will define what change management means, how CFOs can drive change forward, and introduce seven models of change management, including their advantages and disadvantages. 

What is Change Management?

Change management refers to how we prepare and support people to adopt change in a manner that supports organisational success. When it comes down to it, people, processes, groups and projects experience change. But, the truth of the matter is that at the heart of every change is people. So, change management provides you with an approach that allows individuals to move from one state to another in an organised fashion that is aligned with business goals. 

Change management exists so that when a business is changing, these models can help keep everyone on the right page and adhering to timetables and budgets. This, in turn, promotes an increased ROI. 

In today’s day and age, when an organisation changes with processes or people, it more often than not involves the adoption and integration of new technologies. Data Automation software can play a significant role in helping to make transitions smoother and also standardise changes in all departments of a business.

Factors of Resistance

Not all employees are equally open to adopting changes. That’s why it’s essential to ensure you do the following when introducing something new:

  • Reinforce desired behaviours
  • Communicate how and why the change is being made
  • Increase transparency 
  • Show how the change will increase their job satisfaction 

7 Models of Change Management 

If you’re here, it’s because you want to know what the best model of change management is right for your business. Here are seven of the most-used models within organisations. 

Every business has its own needs, so it’s essential to consider the pros and cons of each before adopting an approach. 

1. Lewin’s 3 Step Model

Back in the 1950s, Kurt Lewin designed this model that is one of the most widely used and effective methods to this day. To remember how this works, consider that Lewin created this model after how ice freezes and unfreezes, hence the steps:

  • Unfreeze: This is preparation mode. The organisation must share the reasons why the existing process or status quo must be changed to achieve better results. A lot of people are resistant to change, which is what makes this step so important. This involves business to look at its current operations and find where faults lie. One way to do this is with process modelling and the usage of data automation tools that can provide you with in-depth reports and analytics to diagnose inefficiencies. 
  • Change: This is the transition phase. Here, change takes place. Although most organisational change doesn’t happen overnight and is instead a process, leadership must be available to steer the ship in the right direction. Both time and communication are of the essence. 
  • Refreeze: Once the change has occurred and everyone is on the same page, refreeze happens. The new process or idea has taken hold, and it has become the status quo. Importantly, you should still be measuring its success continually. 

A significant benefit of Lewin’s model is that it is effortless to understand, and thus widely used. However, the model lacks insight into the human component to change management, which is ultimately one of the most critical factors to make change happen and stick. 

2. McKinsey 7s Model

The McKinsey 7s Model was developed in the 1980s by McKinsey consultants. The stages are:

  • Strategy: This is the plan to achieve the outlined goals. It involves the step-by-step method of what is to happen. 
  • Structure: This defines how the organisation is structured, and therefore, who is responsible for what.
  • Systems: Here is how day-to-day activities are performed. In most cases, to optimise operations, automation tools can be used to reduce repetitive tasks and streamline business processes. 
  • Shared Values: These values define the central importance that an organisation adheres to function. 
  • Style: Style refers to how leadership and changes are handled. 
  • Staff: The people and employees within the business. 
  • Skills: Skills are the capabilities that employees have. 

This model provides an in-depth look at how an organisation functions. It is both emotional and practical when addressing the needs and workings of employees. It is well-rounded in that it takes into account everything as equally important. The disadvantage is that if one part of the model is failing, all others do too because they are interconnected. Compared to other models, it can be considered more sophisticated. 

3. Kotter’s 8 Step Plan

John P. Kotter, a Harvard Business School Professor and author, created this plan that is divided into eight steps, namely: 

  • Increase Urgency: Motivate everyone with a sense of urgency to move forward. 
  • Build the Team: Assemble the right people based on skills, knowledge and commitment. 
  • Get the Vision Right: Be sure to creatively and emotionally connect the vision with the objectives.
  • Communicate: Get everyone on the same page by communicating with people why the change is needed.
  • Get Things Moving: Support your team, remove hurdles and implement constructive feedback. 
  • Focus on Short-Term Goals: Change takes time, so divide the ultimate goal into smaller pieces that can be built upon each time they are met with success.
  • Don’t Quit: Persistence is necessary to make change happen as things take time and challenges arise.
  • Incorporate Change: Manage change and reinforce it as part of the company culture. 

This step-by-step model is easy to follow. It relies on accepting change and being prepared for it. On the downside, it’s a time-consuming process, and you must move through each step in order before you can get to the next level. 

4. Nudge Theory

Credited to Cass R. Sunstein and Richard H. Thaler, Nudge Theory is a concept that is based on behavioural science and economics. The key to the theory is encouragement and inspiration. Therefore, it is based on human behaviour and focusing on the key elements that promote people to want to change. Thus, the change should be designed such that it is aligned with how people think and make decisions. 

In comparison to the other models, it requires a sophisticated approach. The main benefit is that it accounts for different feelings and opinions. It’s also profoundly realistic in that it is all about human nature. The biggest challenge is that it requires a lot of honest and open communication and understanding. 

5. ADKAR Model

The ADKAR model is an acronym and goal-oriented model that aligns steps directly with the change that is desired. To sustain and implement change, an individual must see the results at each stage. It can be used for helping employees feel supported during an organisational change, diagnose why employees may be resistant to a new process, or to create a plan that focuses on both personal and professional improvement during the transition. 

  • Awareness: The need for change 
  • Desire: The feeling of wanting to take part in the change 
  • Knowledge: Understanding how to make the change happen 
  • Ability: How you can incorporate change consistently 
  • Reinforcement: To create a status quo of the new switch through positive reinforcement 

The ADKAR model is beneficial because it can clearly show what is wrong if the change isn’t working. The model breaks down changes into steps that are measurable. Also, it helps both people and businesses adopt change in a logical approach. 

6. Bridges’ Transition Model

Developed by William Bridges, a change consultant, this model concentrates on transitions rather than change itself. Transition is internal, and change is something that happens, with or without realisation. Transition usually takes time, but change can happen more quickly. The  stages are:

  • Ending, Losing and Letting Go: This is the stage where people feel discomfort at the idea of change, which can include feelings of resentment, anger or denial. When a person accepts an end is near, they can come to terms with it to move forward. 
  • The Neutral Zone: Uncertainty and impatience set in. It’s the bridge between the past and future and may include feelings of low morale. Anxiety and cynicism may occur, too. 
  • The New Beginning: Once people clear the hurdles, they enter the phase of support, acceptance and renewed energy. It can be accompanied by a desire to learn and high commitment. 

This model requires patience, time and emotional understanding. It doesn’t work for all processes or businesses, but it can work well for smaller companies. 

7. PDCA Model

This four-stage model is used for continuous improvement. It’s implemented to improve a processes’ quality across various aspects of the business including product lifecycle, HR, supply chain management and project management. The steps are:

  • Plan: Define the problem, collect data (automation tools help here!), and understand the root cause
  • Do: Develop a solution that can be effectively measured.  
  • Check: Confirm that the intended results are in fact, the reality. You can do this by using data analytics to check the before and after results by comparing KPIs. 
  • Adjust: Use reports to share the outcome with relevant stakeholders. If changes need to be made, make recommendations and repeat.

A great benefit of this model is that it requires data and analytics, which can easily be ascertained and analysed with the help of technology. This structured and strategic approach relies on data and is, therefore, more black-and-white than other methods that include emotional aspects. 

The Bottom Line

Regardless of how you choose to implement and manage change within your organisation, the goal is always to become better. Optimising your organisation relies on the use of technical assistance through automation tools that can reduce bottlenecks, alleviate risk, and help to define processes clearly. As such, process improvement and change management can be adequately supported. 

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