January 3, 2021

What is Organisational Change Management? Why is It So Important?

Finance Leadership
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Depending on your role within an organisation, your definition for organisational change management (OCM) may slightly vary. Regardless of your definition, the practice of change management helps businesses remain agile and able to adapt to innovation and disruptions. In this article, we will outline the definition and benefits of change management, what causes change, types of organisational change, and the role of a manager in overseeing such shifts. 

What Is Organisational Change Management And What Are The Benefits? 

OCM is a framework by which an organisation manages new business processes or changes within its organisational structure. It can also be the steps that people within a business take to alter the culture, technology or infrastructure. The changes affect the way the business operates and are generally implemented to make improvements within the organisation. It’s vital for businesses to understand and practice change management to stay relevant and survive in increasingly competitive markets. With the rapid adoption of technology and automation software, change management has grown in necessity and usage. 

At its core, OCM deals with the people side of things. It involves the individuals who will be responsible for and affected by changes. As such, it requires the relevant people to be engaged in the process and bought into the updates to work effectively. Change management blends together strategy and execution in order to achieve the desired goals that such adjustments were initially implemented to accomplish. 

The benefits of OCM include:

  • Increased adoption and buy-in for new technologies 
  • Enhanced teamwork 
  • Acceptance of change 
  • Ability to operate more efficiently 

With the above benefits, a business is more likely and equipped to be able to boost its bottom line by decreasing costs and increasing revenue. 

What Causes Organisational Change? 

OCM comes into play within businesses at different times depending on the reason for change in the first place. Some common factors that may usher in organisational change include:

  • New leadership taking control 
  • The adoption of new technology 
  • A novel business model 
  • Changes in the organisational team structure 

These changes can occur at any time, so it’s best to be prepared with an OCM framework ready to go when it happens.   

Types of Organisational Change 

Like any type of change, organisational change is broad. To make it easier to understand, it’s useful to break up and categorise the various types of organisational change that occurs. Here’s how that looks:

  • Adaptive changes: Adaptive changes are geared towards minor adjustments that evolve over time. They’re incremental and serve the purpose of executing business strategies. To create these types of changes, leaders or managers refine, remove, or add processes. For example, one type of adaptive change is updating a software system to the latest version. 
  • Transformational changes: On the other hand, transformational changes are larger in scope than adaptive changes. These could be a change in team structure, organisational performance, a company’s mission statement and strategy or its business processes. These are time-consuming to accomplish. More often than not, they’re in response to an external factor, like a new competitor or disruption in supply change. To depict a transformational change, imagine the type of change that occurs when a business adopts its first process automation solution to aid completing processes and monitoring progress. 

There are some types of organisational changes that will encompass both adaptive and transformational changes. It becomes the responsibility of leadership and management teams to clearly communicate the reason for changes to the team so that everyone can be aligned and invested to accomplish the overarching business goals. 

Why Organisational Change Management Is Important And Matters 

Organisations don’t exist within a vacuum. Both the people working within a business and its external environment will play a role in how successful it can be. The interactions between the two shape the day-to-day experience of employees and customers alike. Every type of environment will undergo change, and for a business to stay relevant and grow, then change is inevitable.

Change management is like a car’s drive shaft- connecting the engine to the wheels -  allowing the organisation to move forward. It’s the reason why employees feel engaged and understand the purpose of their activities. With adequate change management, employees feel more satisfied and valuable. In turn, the business succeeds overall as its people are invested in unified goals.   

The Role of the Manager in Organisational Change Management 

Many people look to the executive team of an organisation to praise for its success or to blame for its downfall. Yet, change management depends on managers more so than executive leadership. The top-down approach and overall change culture will be shaped by leaders, but managers are on the front line, especially when it comes to operations management. This is because leaders often spend their time focused on the big picture and overall business strategy, receiving insights and information from their team to make their decisions. 

However, managers are more involved in daily activities as they oversee employees and teams. It’s important that they have high emotional intelligence and dedicate time to understanding the needs and questions of their team. They’re pivotal pieces in implementing business transitions, from adaptive to transformational changes. This is because they’re in charge of allocating resources, be it people or money or supplies. 

Managers have the power to really shape processes and oversee how they’re running. Successful OCM depends on a manager’s ability to:

  • Effectively communicate changes and goals with their team members 
  • Have strong attention to detail 
  • Provide problem-solving skills and also make decisions 
  • Delegate (but avoid micromanagement) 

Managers have a lot to oversee within any type of organisation. This is why it’s useful to pair their role with the necessary technology to empower their position. Automation software and tools can assist managers in change management by providing transparency and an easy way to track metrics when adjusting processes. 

Requirements: Preparing for Organisational Change And The Skills Needed 

To accomplish OCM, there are several requirements and skills needed. These include:

  • The right team: From executive sponsorship to skilled managers, it takes the right combination of leaders to see change through an organisation. For whoever is bringing up the need for change or enacting new technology adoptions, a CEO’s support will be necessary to get stakeholders on board. Sponsors must understand the impact the change will have on staff, understand the benefits of the change, and be able to clearly communicate this to everyone within the organisation. 
  • Cultural acceptance: Many organisations live by the motto that “this is how it’s always been done,” so change doesn’t come naturally. Yet, an organisation that promotes innovation and accepts that change is necessary to survive will have an easier time implementing updates. One way to create an organisational culture that welcomes change is to reward the small wins. 
  • Individual acceptance: At the same time, an organisation consists of individuals coming together to achieve business goals. So, each individual must be on board with changes to make them work. Yet, accepting change on an individual level can be met with challenges because people generally like to feel comfortable when completing their work duties. This is why it’s imperative to showcase how any given change will positively impact an individual’s tasks
  • Rewards: When you’re able to set individual and team goals and measure them, then you can set up a reward system. By celebrating wins, both big and small, individuals and teams can remain motivated to stick to the new processes or use the new technologies
  • Consequences: In the same vein, there must be clearly stated repercussions when changes aren’t implemented as planned. This will require designating responsibility and holding people accountable. 

Why is Organisational Change Management Difficult and What are the Challenges?

When it comes to people and change, it’s understandable where challenges lie. For starters, it’s not an easy feat to adjust behaviors and attitudes because people are creatures of habit. Within an organisation, you may have some people on board, and others will push back. Getting everyone in line in the same time frame can pose its set of hurdles. 

The OCM team will likely face these types of challenges when trying to accomplish organisational change:

  • Unpredictable by nature: People don’t act rationally. Unlike technology, when dealing with people, it’s not deterministic. Some people may be accepting of change and others may not. 
  • Need for a tailored approach: For those who need to adjust their daily tasks or way of working, they may require an individual approach. The OCM team will need to take time to listen to the needs of each individual and adjust their message accordingly
  • Requires engagement: In organisations, it’s the frontline and midlevel staff that interacts with customers and perform the duties that create organisation-wide processes. So, they need to be engaged and aware of the change process. It’s also on them to be alert to catch mistakes when they’re happening. This is another arena in which automation tools and solutions can prove to be useful as they standardise processes and can provide alerts and notifications based on set parameters
  • Cultural differences exist: Depending on where you have team members working, cultural differences in terms of communication styles and even work hours vary. It’s important to understand the environment in which a person works to be able to communicate and engage your team
  • Time-constrained: OCM has to be enacted at the right time. If it involves technological adoption, then it’s imperative to be ahead of the curve before it’s too late. But, if changes are pushed out before a system is properly set up, then it can also cause problems. So, timing is of utmost importance
  • Balancing reasoning: Since organisational change happens at the people level, it requires a balance of both rationality behind the changes, as well as emotional intelligence to communicate the changes. People need to feel like they’re a part of the bigger picture to be motivated to adopt and execute new ways of working. 

Key Steps and Principles to Implement Effective Organisational Change Management

There are change management steps that can be followed to effectively enact OCM. Consider taking these actions:

  1. Define changes: Besides just defining what changes need to occur, effective OCM takes this even further. It’s useful to conduct a review to see how any change will support overall objectives. To align the change with business goals, you can outline performance goals that will help keep everyone on track. Key questions to ask during this step are: What changes need to occur? Why does this change have to happen? 
  1. Determine impacts: A change at any level can have a domino effect throughout the organisation. Take time to see how individuals and business units will be affected by a change. Importantly, consider what needs to be done in advance (i.e. training) to mitigate risks or downfalls. Questions to consider here include: How will our team members approach the change? What impacts will come? Who will be the most affected? 
  1. Communicate strategy: A key to any relationship, including that with an employee and manager, is communication. Communicate the change to the employees who will be directly affected and make sure they understand how the change will serve them. At this stage, you’ll want to ask and answer: How will we communicate the change? How will we receive and respond to feedback? 
  1. Provide training: Once the change has been communicated, then share the strategy by which the change will be rolled out. Will there be training sessions, webinars, learning modules or on-the-job mentoring? Your team will want to know what is to be expected from them. 
  1. Implement support: Through physical and emotional changes, your team will look for support. Develop a support system to handle their needs. This could be done by implementing a mentorship program, scheduling regular check-ins, etc.
  1. Measure process: Since you’ve already postulated what and who will be impacted by the change, be sure to measure the change process and address anything that needs fixing. Ask yourself hard-hitting questions like: Did the change accomplish the goal we intended? Could we have done anything differently? Did the change management process suffice?  

Wrapping Up 

Organisational change management requires a strong management team, a clear communication strategy, and an overall desire to achieve business goals. Change may come in the form of technological adoption, new processes, or major organisational shifts. 
No matter what type of change you’re looking to oversee, you can leverage automation solutions to help in the process. Automation tools can help by standardising processes, alleviating employee burdens by managing repetitive tasks, and providing real-time analytics for how new processes are performing, to name a few benefits.

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