effecting change in business enterprises: the worker...

IHRIM Journal • September/October 2005 25

The Worker of the FutureBy Row Henson

THE ONLY BUSINESS CONSTANTIS CHANGE

Businesses have always had todeal with change – it may be the onlything about the business world thatdoesn’t change. And globalization,competition, and accelerated techno-logical innovation are creating condi-tions under which change itself ischanging: change is becoming morecomplex and omnipresent, requiringenterprises to develop focused capa-bilities for change management.

Instead of being an episodic obliga-tion associated with the occasional re-structuring or market crisis, changemanagement is increasingly perceivedas a permanent business function thatis essential to keeping the organizationagile and adaptable in a continuouslychanging, competitive environment.Chief executive officers around theglobe seem to agree: in a survey con-ducted for The Conference Board’s2004 CEO Challenge, 540 CEOs ratedspeed, flexibility, and adaptability to change asone of their top two business chal-lenges.1

CHANGE MANAGEMENT AS ABUSINESS FUNCTION

Change management is increas-ingly perceived not as a focused re-sponse to an occasional need for reor-ganization, but rather as an ongoingbusiness function. Expectations haveshifted – change is no longer seen asan extraordinary event: it is nowviewed as a permanent condition ofbusiness life. Survey results and casestudies indicate that change manage-ment is becoming institutionalized invarious ways, including:

• Designation of a change man-agement function in the organi-

zation (most commonly in HRdepartments),

• Development of tools and tech-niques for planning and imple-mentation,

• Establishment of communica-tion methods for facilitatingchange, and

• Reorientation of corporate cul-ture toward flexibility and agility.

Among survey respondents, 19percent have formalized change man-agement “to a great extent,” while 54percent of companies have achievedmodest formalization.2

EXPANDING PRESENCEA central finding is an expanded

presence of change management.Among survey respondents, 82 per-cent identified change managementas a priority for their company.“Change management has become acore competency; as such, it is lever-aged into every aspect of how wemanage our business. It keeps the en-terprise nimble and more flexible tochange, and better able to respond tochange occurring around us,” saysone executive.

Survey participants are virtuallyunanimous in their expectation thatthe need for change management willcontinue to expand: 99 percent expectan increased need over the next threeyears, and of this group, 62 percentexpect the need to increase to a greatextent. In response to such needs, al-most half the companies surveyed (48percent) have already established achange management function some-where in their organization, and over aquarter of the rest expect to launchone within three years.

Most frequently, the responsibility

for change management is located inthe HR department (46 percent), re-flecting a view that change implemen-tation is essentially a question ofchanging the practices and attitudes ofpeople. Another common approach isto situate operations in corporateheadquarters (27 percent), which em-phasizes the importance attached tohaving senior management support.

Less often, change management isassigned to other departments (suchas IT, when the change involves imple-menting new software) or to individualbusiness units. Regardless of the orga-nizational location, surveyed compa-nies generally recognize the impact ofconstant change and the need to de-velop a capacity to deal with it.

However, a gap is evident betweenperception and performance. While re-spondents are virtually unanimous inanticipating increased need for changemanagement, over a third have neitherimplemented a change managementfunction nor plan to do so within thenext three years.

This gap raises the question of howsuch organizations deal with changewhen it occurs. It is likely that someare continuing with the familiarepisodic or crisis approach, while oth-ers may expect to deal with change bybuying expertise as the need arises –either through outside consultants ornew hires with the necessary skills.

WHAT DRIVES CHANGEMANAGEMENT

The expanded scope of changemanagement is driven by a variety ofdemands, reflecting the four key as-pects of any enterprise:

• organization, • people,

Effecting Change in BusinessEnterprises:Current Trends in ChangeManagementBy Gregory R. Guy, New York University and Karen V. Beaman,Workday™

September/October 2005 • IHRIM Journal26

FEATURE

• process, and • technology.Some change drivers are common

across the enterprise; while othersvary for different groups of executives– top managers, line managers andHR managers (see Figure 1). Whenasked to identify the principal driversthat prompt these executives to de-velop or sponsor change managementin their companies, managementgroups select improving organiza-tional performance and cost reduction– two organization-wide goals. Theother drivers reflect the differences infocus and responsibility in each man-agement group.

Top management is driven to changemanagement primarily by organiza-tional concerns, such as restructuringdue to mergers or divestitures, but thegroup is also influenced by one obvi-ous people factor: change in leader-ship.

Line management is driven largely

by business process concerns. Any-thing related to people and personnelis notably absent, suggesting that linemanagers take a fairly narrow view ofchange and may lack an understand-ing of the importance of talent man-agement and its role in the changeprocess.

Human resources management islargely brought to change manage-ment by the people aspects of thebusiness, which is not surprising givenits behavior-oriented function.

WHAT DOES NOT DRIVE CHANGEMANAGEMENT

What is not mentioned as a changemanagement driver is as important asthe drivers actually identified. Some ofthe unmentioned drivers include:

Innovations in products and tech-nology. It is not surprising that newproduct development is not perceivedas a driver since, in a broad range ofbusiness sectors, it is a part of regular

business practice. Industries routinelystructure their operations around newproduct introductions, such as the an-nual launch of new models in the au-tomotive industry or the frequent re-lease of new versions of applicationsand operating systems in the softwareindustry. Many businesses have beenbuilt around such practices for over acentury, so product developmentwould not require new managementtechniques for dealing with change.

New technology, however, is a dif-ferent story. Technological develop-ment is manifestly transformational:what Microsoft does so lucrativelynow barely existed as a business 20years ago, and what Google does to-day didn’t exist at all even a decadeago. Cell phones have completely un-dermined the business model of fixed-line telecom giants in less than adecade, and the easy transmission offiles over the Internet threatens thevery existence of intermediary busi-nesses, such as record companies,video rental stores, and book publish-ers and retailers.

Sixty-one percent of survey respon-dents indicate technological changeinitiatives are currently underway intheir organizations. So, why is intro-ducing new technology not a biggerdriver for change management? Theanswer for some might be that theysee – correctly or not – an existingability to accommodate new technol-ogy within their current business prac-tice. It is also possible that respon-dents simply fail to appreciate thepotential impact of new technologiesor believe there is no way to anticipatetheir effects.3

Marketplace Expansion. SurveyedHR executives do not see marketplaceexpansion as a potential driver ofchange management. In fact, domes-tic expansion is mentioned less thanthree percent of the time, and globalexpansion less than eight percent. Theglobal figure is particularly surprising;given that 41 percent of companiessurveyed indicate they have globalchange initiatives currently underway.

These results could have a numberof explanations. Little expansion mayhave occurred during the recent reces-sion, or these executives may believe

Figure 1. Drivers of Change Management.

Figure 1. Drivers of Change Management.

Top Managers %Improve organizational performance 72%Achieve world-class standards 34%Cost reduction 31%Change in leadership 25%Merger/Acquisition/Divestiture 25%

Line ManagersImprove organizational performance 49%Cost reduction 41%Service Improvement 32%Streamline processes 31%Customer-centric approach 28%New system or technology 25%

HR ManagersImprove organizational performance 52%Improve individual performace 34%Upgrade talent 32%Cost reduction 23%Change in leadership 18%

Key: OrganizationPeopleProcessTechnology

their organizations already possess acapability for expansion. Perhaps HRexecutives are more disconnectedfrom strategic business growth thanother top management would be, orthey may simply display shortsighted-ness in considering the impact of ex-pansion on their organizations.

CHANGE INITIATIVES UNDERWAYWhat executives see as drivers of

change management contrasts greatlywith the actual change initiatives un-derway (see Figure 2). The most com-mon type of ongoing initiative ischange in business process (89 per-cent), which is ranked fourth as a dri-ver for line managers, but not at all forother executives. The 38 percent of ex-ecutives who indicate that outsourc-ing is an ongoing change in the com-pany is noteworthy. Given theconsiderable emphasis placed on out-sourcing in recent years as a competi-tive business practice, this figure islikely to increase.

An interesting comparison is be-tween changes involving global ini-tiatives, which are underway at 41percent of companies responding,and changes involving domestic ini-tiatives, which trail at 32 percent.These percentages suggest that glob-alization is a big factor in businessoperations at a broad spectrum ofcompanies.

THE ROLE OF MANAGEMENTThe broad-based engagement of

many management categories in thechange management process is strik-ing. Effecting change is no longercompartmentalized or externalized.Executives at all levels across the en-terprise are now seen as having im-portant roles in change management(see Figure 3).

Initiating. There is considerable di-versity in the roles that various levelsof management take in change man-agement. The most common patternis to assign initiating change to theCEO and/or other top officers. How-ever, top executives appear to haveless active roles in other stages ofchange management. Leadership over

the change process is, for most partic-ipants, fairly evenly divided betweenHR directors, local business unit lead-ers, and corporate officers at the vicepresident level.

Leading. A substantial number ofrespondents still see an importantrole for the CEO or COO in leading thechange management process. Moresweeping changes and extensive orga-nizational restructurings, e.g., mergersand divestitures, generally requiremore hands-on leadership from thetop brass, if only to demonstrate willand commitment.

Managing and Sustaining. Day-to-day managing and sustaining changeis more clearly assigned to the localunit leaders at the line level and to HRdirectors at the corporate level. Aswith any initiative, effectiveness is typ-ically greatest when it is driven fromthe level closest to the people who areactually affected by it.

Evaluating. It is interesting that thetask of evaluating change is more dif-fuse across the organization:

• Human resources director: Evalu-ates people factors;

• Chief operations officer: AssessesROI and effects on the bottomline;

• Business unit leader: Determineseffects on the business unit’s effi-ciency; and,

• Various specialized roles, e.g.,change management manager, or-ganizational effectiveness leader,and VP of strategy, developmentand planning.

Other officers and agents are also


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Figure 2. Change Initiatives Underway.

Figure 2. Change Initiatives Underway.

Process 89%Structure 76%Behavioral 68%Technological 61%Redesign 54%New systems 48%Global initiatives 41%Outsourcing 38%Domestic initiatives 32%New alliances 31%

Key: OrganizationPeopleProcessTechnology

Initiation Leading Managing Sustaining EvaluatingRole/PositionCEO 80% 45% 4% 31% 24%CFO 45% 41% 17% 30% 20%COO 39% 28% 21% 23% 32%VP strategy, development, planning 37% 45% 27% 31% 27%External consultant 4% 4% 27% 11% 16%HR director 30% 51% 52% 49% 39%

Change management manager 11% 24% 25% 27% 30%Organizational effectiveness leader 11% 21% 31% 25% 28%Organizational planning and development manager 8% 20% 20% 18% 23%Senior VP of operations 31% 49% 34% 35% 21%Business unit leader/manager 27% 51% 49% 58% 27%

Figure 3. The Roles of Management.

Figure 3.The Roles of Management.


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mentioned as having roles in thechange management process. One ap-proach to formalizing the changemanagement process cited by a quar-ter of respondents is to have a changemanagement manager involved in allphases of the process.

Similarly, an organizational effec-tiveness leader is cited by about aquarter of respondents as having re-sponsibility for leading, managing,sustaining and evaluating change.One-fifth of respondents assign simi-lar roles to a leader of organizationalplanning and development. Finally,external consultants play a small butsteady role, especially in managingchange (an outsourcing model ofchange management) and evaluatingresults.

ADOPTING CRITERIA AND DETER-MINING STRATEGY

An effective change managementmodel must adopt criteria for choos-ing one form of change over anotheror for deciding among competingstrategies. Survey respondents reportseveral factors that contribute to sucha decision, but market demand (68percent) is most important.

As noted earlier, some market fac-tors (like expanding market share andintroducing new products) are not im-portant drivers of change, but themarket does more directly affectchange management. Market demandis an impetus only in general ways,such as creating the need for im-proved organizational performanceoverall, but once change managementis underway, it is a decisive factor incharting direction.

Other criteria for selecting the pathfor change include availability of bud-get (52 percent) and other resources(47 percent) and the impact of changesin leadership (41 percent). People-re-lated factors rate fairly low on this par-ticular question: employee satisfactionand turnover are accorded importanceby only 37 percent of respondents.

MAKING ADJUSTMENTSChange management, like any form

of management, must allow for revis-ing plans or altering processes in lightof experience. Just as the famous mili-tary aphorism declares, “No battleplan survives contact with the enemy,”no change management plan survivescontact with the real world of imple-mentation.

What factors influence such revi-sions? By far the most common factorleading to plan revision is change incorporate management priorities (seeFigure 4). Lead-time for change man-agement planning is often consider-able and market conditions, competi-tive pressures, or organizationalrestructurings can easily intervene be-fore the change is completed, requir-ing alterations in scope or direction.

Other similar factors cited arechanges in alignment and commit-ment. Changes must be coordinatedacross various divisions and unitswith differing concerns. Maintaining

alignment among stakeholders andretaining their commitment to theprocess throughout implementationof changes is a regular challenge forchange managers.

Availability of resources, time pres-sures, and budgetary concerns alsolead to plan adjustments. Their impor-tance speaks to the planning chal-lenges in change management. Sinceit is sometimes difficult to forecast thefull scope and time demands of achange project and its impact on bud-get and resources, it may be necessaryto revise the plans in light of experi-ence. This is reflected in the remainingfactors affecting plan adjustments: re-sults and magnitude.

Change implementation shouldclearly be a dynamic process, under-going frequent revision to accommo-date practical lessons learned. It mayturn out that the scope of the projectis overly ambitious or doesn’t extendfar enough.

PREPARING FOR AND EFFECTINGCHANGE

Three crucial factors in preparingan organization for change are evidentin the study:

• planning,• communicating, and• achieving participation. Nearly three-quarters of the execu-

tives in the survey identified full em-

Figure 4.Top Factors TriggeringAdjustments.

Figure 4. Top Factors Triggering Adjustments.

Factor %83%

Resources 66%Time 58%Alignment 56%Commitment 51%Budget 45%Results 41%Magnitude 39%

Changing priorities

Figure 5. Critical Factors in Effecting Change.

Figure 5. Critical Factors in Effecting Change.

Planning Techniques %Project management 85%Use planning/design tools 61%Develop assessment tools 55%Formal change management methodology 37%

CommunicationsCommunicate scope and rationale 89%Training 75%Employee input 63%Feedback 61%

Obtaining buy-in across the organizationSeek sponsorship, commitment 70%Identify resistance and challenges 61%Develop reward/recognition processes 51%Trust-building efforts 38%

ployee engagement as critical to suc-cess (see Figure 5). Planning and com-municating are preparations for stim-ulating such engagement.

Planning is the first task in gettingpeople involved in the change. Com-panies regularly prepare for change atthe project or program managementlevel and often use planning and de-sign tools or develop assessment toolsto do so. Using formal methodologiesand processes is less common.

Effective communication is criti-cal. As one executive notes, it is “fun-damental to our efforts.” Survey re-spondents systematically seek tocommunicate the scope and rationalefor change – almost all cited this as abasic preparation for launching achange. Three-quarters also conducttraining for employees as a part ofpreparing for change. And recognizingthat communication is a two-wayprocess, a majority of respondentssought employee input or feedback re-garding preparations for change.

Achieving participation throughsponsorship and commitment duringthe preparation phase is pursued by70 percent of respondents, and abouthalf establish reward and recognitionprocesses related to the change. Ad-vance identification of potential resis-tance is a preparatory step taken by al-most two-thirds of companies, andmore than a third pursue trust-build-ing efforts.

THE IMPORTANCE OFCOMMUNICATION

The vital importance of communi-

cations in change management hasbeen repeatedly stressed since thefield was first developed. But what ap-proaches to communication are mosteffective in achieving success? Surveyresults echo several themes that recurthroughout this report: clarity, conti-nuity, and constancy are basic fea-tures of successful communication(see Figure 6). The communicationmust also be reciprocal: management


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has to listen as well as talk. Advocacyand sponsorship are also vital in com-munications.

FACILITATING CHANGEWhen change management is initi-

ated, what do businesses do to imple-ment change? Again, survey resultsand working group discussions revealthat effective communications areseen as the principal means of puttingchange into practice: the ability toclarify and communicate is the top-ranked competency for facilitatingchange (see Figure 7). The second-and third-ranked competencies, build-ing trust and achieving collaboration,also involve communication.

There appears to be less emphasison achieving two-way communica-tions: eliciting feedback is rated as anextremely important competency byonly 17 percent of respondents, andasking relevant questions by 24 per-cent. This is unfortunate, given thecritical importance of employee en-gagement to successful change.Merely preaching the change message

Figure 6.Top Techniques for Successful Communications.

Figure 6. Top Techniques for Successful Communications. %

Clarify the rationale and the nature of the change 90%Continuous communication 78%Sponsoring and championing the change 69%Two-way communication 62%Identify potential barriers 61%Explain criteria for success 59%Explain how change is achieved 54%Repetition 54%

Key: ClarityContinuityAdvocacyReciprocity

Figure 7. Key Competencies for Implementing Change.

Figure 7. Key Competencies for Implementing Change.Percentage rating "extremely important"

Planning %Strategic Planning 41%Strategic decision-making 35%Analytical thinking 27%Diagnose needs 24%Market intent and results 13%

CommunicationsClarify and communicate 59%Building trust 45%Achieve collaboration 44%Identifying and managing resistance 38%Asking relevant questions 24%Managing emotions 20%Facilitate feedback 17%

OperationsManage cultural change 39%Solve problems 25%Mobilize resources 23%Manage diversity 9%Facilitate interventions 14%

Key: Action orientedAttitude oriented


will not necessarily convert the audi-ence. However, it may be that respon-dents understood their top-rankedchoice (clarify and communicate) toinclude two-way communication.

In either case, it is encouraging tonote that in describing their currentpractices in change implementation,companies state they are seeking em-ployee input: 61 percent obtain feed-back and 75 percent say they areachieving active employee participa-tion.

Planning and operational compe-tencies are also necessary for facilitat-ing change, but executives in the surveysee them as less important than com-munications. Respondents also give in-termediate rankings to strategic plan-ning, decision-making at intermediatelevels, and operational ability to man-age cultural change, but other compe-tencies in these areas receive compara-tively low ratings, e.g., facilitatingintervention, managing diversity.

Action versus Attitude. A usefuldistinction can be made between theaction-focused side of change man-agement (what people are to do) andthe attitudinal or relationship side(how they feel about it). Any actionplan developed for effecting change ismore likely to succeed if it is acceptedand positively endorsed by the peoplecarrying it out. The importance thatexecutives attach to establishinggood relations and attitudes withinthe workforce and achieving buy-inshows up clearly in the survey results:four of the top-six competencies nec-essary for facilitating change are di-rected at relationships and attitudes.

Overall, the median frequency of“extremely important” ratings for atti-tude-oriented competencies was 38percent versus just 24 percent for ac-tion-oriented competencies. Develop-ing a good action plan and communi-cating it clearly is vital, but strongemployee relations and positive atti-tudes are required for successfulchange.

ENGAGING EMPLOYEESSuccessful implementation is

greatly facilitated when the people car-rying out the change are engaged inthe process and buy into strategy and

tactics. Ideally, this should involve: • acceptance,• understanding, • willing participation, and • enthusiasm.Achieving this buy-in requires two-

way communication – not just top-down dissemination of instructionsand information, but also solicitingand listening to workforce questions,concerns and suggestions.

Attention should also be paid tobuilding motivation and incentives,like recognition and reward programsand links to compensation into thechange process.

Finally, it is critical to the successof any change initiative to follow-upduring and after implementation andto evaluate the new processes andmodify them if they are not having theintended impact on departments orindividuals.

Employee Engagement Tools. Beopen and invite employee participa-tion and communication. Communi-cate in multiple directions:

• Convey strategic goals, rationale,and overall change direction;

• Communicate constantly aboutwhat is different and how it af-fects people;

• Communicate about links to cor-porate culture and other sys-tems;

• Solicit feedback; and,• Use multiple communication

methods: Web sites, newsletters,focus groups, town hall meet-ings, information centers, andthe like.

Think globally:

• Conduct surveys and interviewsto determine employee viewsand needs; and,

• Obtain early input about impacton employees, and their rolesand functions.

Act locally:• Facilitate effectiveness of local

leaders and build trust withinunits;

• Create employee-driven teams;and,

• Reorganize work assignments ef-fectively and equitably.

Provide motivation and incentives:• Link implementation to objec-

tives, compensation, HR prac-tices;

• Establish recognition and rewardsystems; and,

• Empower employees in thechange process.

Follow-up:• Conduct surveys to assess suc-

cesses, hurdles and employeeengagement; and,

• Respond to employee sugges-tions and concerns.

IMPLEMENTATION TECHNIQUESCompanies are using a variety of

techniques in carrying out theirchange initiatives. Communication,as noted, comes in at the top, fol-lowed by employee participation. Butseveral specific techniques to pro-mote motivation and employee em-powerment are widely used (see Fig-ure 8).

Linking implementation to individ-

FEATURE

Figure 8. Implementation Techniques.

Figure 8. Implementation Techniques.%

Communication 90%Employee participation 75%Link to performance objectives/competencies 66%Feedback 61%Integrate with HR processes 58%Technology 48%Recognition 47%Leverage industry knowledge 41%Shared decision making 38%


ual performance objectives and com-pensation is ranked third: two-thirdsof companies have adopted this pol-icy. Integrating with HR processes,e.g., in hiring, promotion, and train-ing, is commonly used, but shared de-cision-making, which also promotesempowerment and engagement, isless popular.

One approach that appears to beunderutilized is leveraging knowledgefrom the industry (such as pursuit ofbest practices and benchmarking).Fewer than half the respondents citethis response, suggesting there issubstantial room for growth, at leastin those industries where such infor-mation is readily available.

OVERCOMING RESISTANCE ANDSUSTAINING CHANGE

Follow-through is often the te-dious and unglamorous part ofchange – the hard slog of identifyingbottlenecks, flaws and resistance;finding solutions; revising the plan;and rising to the challenges. Externalconsultants may have come and goneand senior management may haveturned its attention to other things,but the change process is not com-plete and will not be so without sus-tained effort. What are the typicalchallenges that change managementefforts face during the follow-throughstage, and how are they overcome?What techniques can help managerssustain the change over the longhaul?

Of the top challenges reported inthe survey, the biggest factors arepeople issues: covering staffing andtalent problems, personnel turnover,employee attitudes and engagement,and the like (see Figure 9). Resistanceand lack of trust by individual employ-ees have fairly straightforward resolu-tions (the same ones discussed inconnection with planning and imple-mentation): communicate effectively,solicit feedback, establish rewardsand recognition, demonstrate leader-ship commitment, build trust throughteamwork, consistency, clarity, and soon. Similar solutions are indicated forcommunication weaknesses. The ap-propriate response is to identifyshortcomings in the communication

strategy and implement successfultechniques.

The rest of the top 10 challenges,beginning with organizational resis-tance, all involve problems associatedwith the organization itself. This isperhaps the face of change that is themost complex and the least amenableto general solutions. Some challengesinherent in the structure of the enter-prise cannot be avoided simplythrough better planning or communi-cation. Many changes have asymmet-rical effects with respect to costs andbenefits, affecting adversely some ar-eas of the organization while bringingbenefits to others (and presumably tothe organization as a whole).

However much management seeksto make the change a win-win situa-tion, some change inevitably resultsin someone’s institutional “ox” beinggored. Some departments may losestaff, responsibility, or budget; or theymay suffer a loss of institutional cloutand status. Some may assume new,perhaps less attractive, tasks and re-sponsibilities. Still other units mayhave to work harder or lose valuedperquisites or privileges. Institutionaljealousies and rivalries may alsocome into play.

Under such circumstances, it ishard to motivate “losing” departmentsor individuals; even the imminent col-lapse of a burning platform may notmotivate a unit to embrace a changein which it sees itself as being “thrown

to the wolves.” Overcoming such chal-lenges cannot always be done withoutpain, and it has to be handled on acase-by-case basis. Nevertheless,some general points can still begleaned.

Overcoming organizational resis-tance requires commitment and en-gagement from top leadership. If, forexample, IT and HR are engaged in aturf war over new software implemen-tation, an effective and lasting resolu-tion can most likely come only fromthe top leadership, who are above thefray and presumably have in mind theinterests of the entire enterprise.

Achieving strategic alignment isgenerally a problem of planning,sponsorship and commitment. Solu-tions lie in strengthening these areas.Similarly, lack of a defined missioncan clearly be resolved by defining themission.

The basic structural conflicts of in-terest that arise during downsizingand outsourcing may be among themost difficult to accommodate.

If a function formerly performed in-house is now outsourced, one cannotexpect the departments and individu-als who performed that function tomarch cheerfully toward what they seeas their own execution. Ameliorationstrategies directed at the individual,e.g., early retirement or outplacementpackages or transfers to other depart-ments/units, or at the department(repositioning to assume other func-

FEATURE

Figure 9.Top Challenges to Change Management.

Figure 9. Top Challenges to Change Management.%

People issues 59%Organizational resistance 58%Communication weaknesses 47%Employee resistance 39%Lack of trust 34%Strategic alignment 32%Downsizing 25%Structure 23%Lack of defined mission 18%Outsourcing 13%

Key: OrganizationPeopleProcess


tions as part of a general reorganiza-tion of tasks) can cushion the blow.

In the best of all possible worlds,these shifts in function and individual(or wholesale departmental) depar-tures from the organization result in aclassic reallocation of resources tomore productive and lucrative activi-ties – what economic theorists term“creative destruction” in a marketeconomy. But in the real world, and inthe short term, managers must recog-nize that not everyone sees it this way,and some dissatisfaction and disen-gagement is inevitable under theseconditions.

MEASURING PROGRESSSome of the techniques that help

sustain change involve tracking andmeasuring its progress and effects(see Figure 10). Appropriate assess-ment of outputs and results is vital tosustain the business case for changeand change management.

Surveys and scorecards, which canbe custom-tailored to focus on thefeatures that are most relevant to agiven change process or to investigateissues of greatest concern, are themost commonly used metrics,adopted by more than two-thirds ofparticipating companies.

Financial indicators are “lagging”measures: revenue, costs, and marketshare are key financial measures andthe criteria by which the market evalu-ates a company’s performance. Butthey focus on overall performanceover a period of time and thus can beinfluenced by a number of factors thatare independent of the change man-

agement process, such as market con-ditions and competition. If an airlineundergoing internal reorganizationexperiences rising costs due to in-creases in the price of jet fuel or de-clining revenue, this sheds no light onthe relative progress, successes orfailures of change managers. There-fore, as tools for tracking the course ofa change, financial measures are rela-tively crude.

Most of the remaining metrics aremore specifically focused on theprocess of change. On-time comple-tion is an obvious way to track theprogress of a change implementation,especially when a project is phasedand interim target dates can be set.Quality indicators can be focused ondesired outcomes or on such compo-nents of the change process as train-ing, communications and the like.Process tools can be tracked to studyimplementation. And expectation in-dicators are also customizable to fitlocal circumstances.

Models have limited use for surveyrespondents, however. Modeling is atechnique of formal change manage-ment; it allows managers to simulate,quantify, and make predictions aboutthe course of the change. The rela-tively low usage of this technique isconsistent with previous findings inthis study indicating that the spreadof formal change management meth-ods still has considerable scope forexpansion.

AVOIDING COMMON PITFALLSRespondents cite the following in-

dicators as demonstrating inadequate

change management or potential pit-falls to be avoided. Some indicatorssuggest the need for further study,such as how to measure capacity forchange, how to evaluate appropriate-ness of risk-taking, and how to modelcompatibility or difference in corpo-rate culture:

• Poor communications, e.g., ofgoals, methods, motives, com-mitment;

• Unclear rationale for change;• Lack of understanding of the ur-

gency of change;• Inadequate employee mobiliza-

tion and engagement;• Lack of courage and risk-taking:

may cause change to fail by de-fault;

• Complacency: resistance tochange because of prior success;

• Too many initiatives at one time,overloading change managementcapacity;

• Mixed messages from top andmiddle management;

• Short-term thinking and lack offollow-through, especially inlong-term initiatives;

• Changed or diminished priori-ties; lack of focus;

• Cultural mismatch in mergersand acquisitions that seek toblend two contrasting cultures;

• Lack of leadership support, com-mitment or modeling behavior;

• Poor market analysis; poor plan-ning; and,

• Underestimation of barriers; lackof due diligence.

DEVELOPING A SUSTAINABLE PLANIn the final analysis, sustainability

in change management depends on acomplex dance of strategy and tactics,overall vision and meticulous atten-tion to detail. It requires foresight andstrategic planning, but plans must berevised in light of experience. An ef-fective and sustainable plan not onlyrequires attention to the overall busi-ness context (the market, competi-tion) and business goals but also aclose focus on the specifics of theprocess:

• identifying resistance, redundan-cies, and inefficiencies, and over-

FEATURE

Figure 10. Change Management Metrics.

Figure 10. Change Management Metrics.%

Surveys 70%Scorecards 70%Revenue 59%Costs 58%On-time completion 42%Quality indicators 42%Process tools 28%Market share 27%Expectation indicators 21%Models 13%


coming or eliminating them;• ensuring every necessary step in

the change process is taken; and, • building and maintaining inter-

nal relationships to ensure en-gagement.

Sustainability demands continuingcommitment and support from thetop, but it can only be put into effectby the actions of individuals at all lev-els of the organization. Ultimately,sustaining change and bringing itthrough to success means that it mustbecome institutionalized – a part ofregular practice across the organiza-tion. Tracking progress toward thatgoal consists of tracking a shift in cor-porate culture.

ACHIEVING SUCCESSWhat are the secrets of successful

change management? They fall intothree main areas (see Figure 11):

• alignment,• competency of leadership and or-

ganization, and • competitive pressures.Obtaining Alignment. The number

one factor, commitment, is one ofeight “top-10” factors related toachieving alignment and engagementacross the organization. This compre-hensive significance that surveyed ex-ecutives attach to alignment rein-

forces earlier findings: obtaining buy-in across the enterprise is a key com-ponent of preparing for change; theability to work on relationships withassociates and secure positive atti-tudes are essential competencies forimplementing change; and achievingemployee engagement is a recurringtheme in all studies of change man-agement. The success factors relatingto alignment broaden and deepenthis picture.

When key corporate and local lead-ers are seen as sponsoring and endors-ing the goals and mechanisms ofchange, it encourages alignment atthe organizational and departmentallevels. Sponsors should communicatecompelling reasons why changeneeds to occur. Regardless of whetherthis is done one-on-one, businessunit-by-business unit, or throughmass communications (a Web portalor newsletter), it should involve alllevels. Consistency must be demon-strated, just as with other initiatives.

Linking the change to the corporatemission and values makes the motiva-tion clearer. It also makes it possibleto bring the entire workforce on boardas contributors and enablers ofchange. If everyone on the team un-derstands the enterprise’s objectivesand strategy, they are far more likely

to contribute than if they are merelyexecuting orders by rote.

Corporate culture and values supportthe same goal of engagement: A cul-ture that embraces innovation andvalues participation is more likely toachieve success than one that de-mands obedience without question.

Trust is critical for achieving em-ployee engagement and sustainingthe change results. It is helpful tobaseline the trust factor at the begin-ning of a change initiative throughsurveys and/or focus groups, and thento monitor periodically its growth.

Employees must perceive they arebeing treated with dignity and equal-ity to give their trust. If trust is thereinitially, employees will buy in soonerand motivate others to follow along.“Communicate, educate, engage,”cited one respondent as the strategyfor increasing trust in her organiza-tion. Deliberate communication frommanagement ensures that peopleknow what is changing, why it’s chang-ing, and how it will affect them – thusempowering employees and reinforc-ing trust.

Training is a classic technique forachieving alignment. Systematic andclear training in the goals, means, andpractices of the change greatly facili-tates transition to the new businesssystem.

Leadership and OrganizationalCompetency. With every business ini-tiative, good leadership is a rising tidethat lifts all boats. In initiating change,leadership is perceived as the most im-portant enabler of success, especiallywhen the top leaders are seen as mod-els of desirable behaviors.

But working group findings revealthat all levels of management must beinvolved to achieve truly excellentleadership. When management seeschange processes as a means toachieving strategic results, it impliesthat successful change managementis an institutional priority and an en-abler of improved organizational per-formance. Several respondents indi-cate that consistent leadershipmessages and a clear operatingmodel contribute to success andalignment with strategic goals.

Just as leadership knowledge and

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Figure 11. Factors Leading to Success.

Figure 11. Factors Leading to Success.%

Commitment 83%Knowledge and competency of leadership 80%Employee involvement 73%Sponsorship 66%Link to mission/values 66%Corporate culture 58%Trust 51%Values 49%Burning platform 47%Training 44%Market pressures 44%Capability/competence 42%Resources 42%

Key: Organizational competencyAlignment and engagementCompetitive pressure


competency were widely cited as anessential component of success, therest of the organization must alsohave the capability and competency to dowhat is asked of it. Of course, compe-tency is not enough: resources mustalso be deployed in pursuit of thegoal. Forty-two percent of respon-dents note that success depends ondevotion of adequate resources to thechange management process.

Competitive Pressures. Competi-tive pressures create a sense of ur-gency and clarity about the need forchange. But change for the sake ofchange is pointless, even counter-productive. So, initiating any changerequires justification. If justificationis objective and clear to all, it be-comes far easier to make the case forchange and bring associates onboard. And a burning platform, headedfor imminent disaster, concentratesminds wonderfully.

Clear market pressures do the same. Ifthe sales force is getting beaten bythe competition every day, they will beclamoring for change. Of course, com-petitive pressure alone is hardly a pre-dictor of success: more enterprisessuccumb to it and fall by the waysidethan those that achieve successfulchange because of it. But if the otherfactors that facilitate change are pre-sent, the organization can make con-structive use of the focus and impetusprovided by a burning platform andmarket pressures to successfully im-plement a new approach.

THE ROLE OF HR IN CHANGEMANAGEMENT

Since changing an organization ul-timately comes down to changing thepractices, attitudes, and behaviors ofthe people who comprise it, HR de-partments are an essential compo-nent of change management. HumanResources is the most popular loca-tion for a formal change managementfunction, among surveyed companiesthat have established that function.Survey respondents also identify thedepartment as having the broadestspectrum of leading roles across allphases of change.

As noted earlier, HR is rated as thetop choice for leading, managing and

evaluating change, and is second onlyto line managers in its importance forsustaining it. Initiation is the onlyphase in which survey respondents donot see a top leadership role for HR; inthis phase, it is ranked only sixth in im-portance, below all c-level manage-ment and other corporate officers, whoare seen as the principal initiators.

Human Resources often shares itsresponsibilities in change manage-ment with other departments andother executive levels, but it is alwaysseen as the major player. So, what re-sponsibilities must HR assume inchange management, and what com-petencies can it leverage to facilitatethe process?

Provide Leadership. Human Re-sources departments have estab-lished competencies in dealing withpeople, affecting their behavior, moni-toring performance, and developingand implementing systems. They are,therefore, well placed to provide lead-ership in change managementprocesses that call for such talents.Specifically, HR can take the lead in:

• Communications. Human Resourcescan conduct informative commu-nications, spreading the wordabout the goals and methods ofthe change and also aid in devel-oping two-way communicationsand soliciting and receiving inputand feedback.

• Planning. Human Resources’ peo-ple experience is critical in plan-ning the change, including as-sessing skill requirements;anticipating training, hiring, oroutplacement needs; and identi-fying resistance.

• Rollout. Human Resources can actas a leader, resource center,coach, and adviser to managersand employees in support of theprocess; create roadmaps to en-able implementation; and re-design systems that are affectedby change initiatives.

Act as a Center of Expertise. Hu-man Resources departments can beorganization-wide resource centersfor the change management process.Survey respondents report various ini-tiatives of this sort, such as:

• creating Web portals to provide

online access to information andtools for effecting change,

• providing consultancy and advi-sory services to line managers,and

• organizing HR partner academiesto educate associates in facilitat-ing and sustaining change man-agement.

Human Resources can assist inidentifying and resolving resistance tochange and in promoting culturalchange and establishing cultural ac-ceptance of changed business meth-ods.

Align HR Systems with ChangeObjectives. According to survey re-spondents, an essential componentof implementing change is linking thechange to personnel policies to en-hance motivation, employee engage-ment and workforce competencies.Two-thirds of the companies surveyedlink the implementation of a changewith individual performance objec-tives and compensation policies. Themajority also integrates the changewith other HR processes, and nearlyhalf develop reward and recognitionprograms to promote the change.

Clearly, HR needs to respond tothe workforce demands created by achange: hiring, outplacement, anddownsizing are consequences of manychanges, and virtually all changes de-mand different skill sets and trainingrequirements.

Assess and Evaluate. Human Re-sources typically possesses informa-tion systems and metrics that are vi-tal to assessing progress andsuccess in change management ini-tiatives. Headcount, payroll andcompensation information, and em-ployee turnover figures provide over-all measures relevant to manychange initiatives.

Communication efforts can be as-sessed by looking at informationsources and dissemination, trainingand publicity efforts, and interactionwith employees via Web sites and callcenters. Human Resources often con-ducts pilot projects to assess the fea-sibility of change management effortsand uses surveys or focus groups toexamine progress and results. In addi-tion, HR managers can take the lead

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in a formal review process at variousstages of change.

THE FUTURE OF CHANGEMANAGEMENT

Prophecy is difficult but several di-rections for the future of change man-agement are suggested by the workinggroup’s findings.

1. The business environment willcontinue to drive an acceleratingrhythm of changes in modernenterprises. Thus, the need foreffective change managementcan only increase.

2. Change management will be fur-ther institutionalized in estab-lished departments or programsand formalized processes.

3. Change management is increas-ingly seen as a business func-tion, given that it is driven moreand more by business factorsand becomes a way to optimizeorganizational effectiveness,balance competing demandsand improve the bottom line.

4. Businesses with extensive expe-rience are likely to developchange management as a corecompetency, giving them a com-petitive edge in a rapidly chang-ing market.

5. If the trend toward outsourcingcontinues, a rise in change man-agement service providers maybe seen. If companies can obtaincost savings and improved ser-vice by outsourcing payroll,product development and cus-tomer relations, it may be feasi-ble that they could do the samewith change management.

In addition to the above trends,however, a number of aspects aboutthe future of change management re-main unclear. Working group partici-pants and survey respondents wereunanimous in their belief that there isa great need for further study and re-search in the following areas:

• recognizing characteristics of or-ganizational culture that make itflexible and resilient;

• finding links to further integratechange management into day-to-day organizational practices;

• managing change as resources

shrink and the frequency ofchange accelerates;

• institutionalizing an organiza-tional capacity for change;

• integrating change managementwith other organizational man-dates, e.g., promoting diversity,social responsibility;

• aligning talent management withchange management;

• identifying the tradeoffs inchange alternatives to optimizereturn;

• balancing short- and long-termneeds for change management;

• developing tools for resilienceduring change; and,

• articulating the roles of each“face” of change (organization,department/group, individual).

Achieving practical solutions tothese challenges will greatly assist en-terprises in performing change man-agement effectively.

SOME RECOMMENDATIONSChange management is a collec-

tive enterprise with distributed re-sponsibilities and competencies. Tomake it work, all components of theorganization – individual, depart-ment/group, and organization – haveto work together, collaborating on acommon goal and aligning efforts. Butthey also have to work separately, car-rying out their separate responsibili-ties and developing their individualcompetencies. All aspects of thechange management process, includ-ing planning, implementation and as-sessment, require some degree ofsegmentation, distributing differentpieces to different units and individu-als and making different demandsfrom each of these perspectives. Thefollowing recommendations may behelpful:

Organization • Set the overall strategy.• Assign roles, responsibilities and

resources.• Manage the process, ensuring

compliance and successful out-comes.

Departments or Groups • Communicate effectively about

the plan and educate depart-

ment/group members. • Assign jobs among members.• Redesign practices to conform to

the new system.

Individuals • Assume responsibility for getting

educated about the changeprocess.

• Do the tasks the process re-quires.

• Coordinate activities with others.

Organizational Competencies• Leverage change across the orga-

nization.• Diagnose needs strategically.• Align resources.• Identify and manage resistance.• Clarify roles and functions.• Share decision-making among

responsible parties. • Integrate with HR processes.• Manage the cultural shift.• Manage emotions.• Facilitate collaboration across

the organization.• Hold people accountable.

Departmental/Group Competencies• Clarify the rationale and nature

of the change.• Champion or sponsor the

change.• Facilitate two-way communica-

tion and feedback.• Identify potential barriers.• Explain criteria for success.• Incorporate changes into work

processes, job descriptions, ex-pectations and evaluations.

• Monitor ongoing implementa-tion efforts and communication.

• Pursue a holistic approach thatsimultaneously considers strat-egy, culture and process.

• Reinforce strategic intent byaligning individual goals and re-wards.

• Develop centers of expertise,where associates can go for infor-mation.

• Embed the change in systemsthat drive behavior.

• Align change to customers.• Develop ongoing assessments

with feedback loops and continu-

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ous improvement.

Individual Competencies• Establish a sense of personal re-

sponsibility for effecting thechange.

• Display commitment and modelappropriate behavior.

• Solicit support from leadershipand associates.

• Develop organizational develop-ment skills, e.g., teamwork,knowledge of strategy.

• Communicate, communicate,communicate!

• Manage people issues; don’t ig-nore them.

• Pursue continuous individuallearning about the change.

• Ask the right questions.

ENDNOTES1 See CEO Challenge: Top 10 Chal-

lenges, The Conference Board, Execu-tive Summary R-1353-04-ES, 2004.

2 This article is an extract from alarger study based on the collectivewisdom and experience of The Confer-ence Board’s Three Faces of ChangeWorking Group members, a survey, in-depth interviews and case studies.Seventy-one companies participatedin the change management survey,ranging in size from small to verylarge as measured by worldwide rev-enues and number of employees.They represent a range of industries,operating in the United States andacross a broad spectrum of othercountries and regions. Drawing onthese resources, the group sought toexamine the state-of-the-art in initiat-

ing and effecting change in businessenterprises. The authors would like tothank Lynne Morton from PI Solutionsfor leading the working group onchange management and providing uswith support in this effort. In addition,we’d like to acknowledge from TheConference Board, Linda Barrington,research director, for sharing her in-sight and inspiration with us on nu-merous occasions, and Henry Silvert,research statistician, who reviewedthe findings and statistics provided inthis report. Finally, many thanks go toLisa Faucher of The Jeitosa Group,now Workday™, for her tireless efforts.

3 It should be taken into consider-ation that the survey targeted HR ex-ecutives, who are not necessarily thepeople closest to the technologicalside of a business.

Gregory R. Guy is a professor of linguis-tics at New York University. He is an experton empirical research methodology andquantitative analysis and developed one ofthe first personal computer applications forthe statistical analysis of linguistic data. Hehas past experience as a journal editor andcurrently serves on the editorial boards ofthree journals. Dr. Guy has published re-search on international business models,global mindsets and international work ex-periences. Notable publications include To-wards a Social Science of Language(ed.), Language Variation and Linguis-tic Theory, and Análise Quantitativaem Sociolingüística (Brazil). Dr. Guyholds a doctorate and master’s degree in lin-guistics from University of Pennsylvaniaand a B.A. from Boston University. He has

been a lifelong activist for social diversity andhuman rights, having served on institu-tional, municipal, provincial, and nationalpanels addressing issues of disability, acces-sibility, and diversity in higher educationand in the workplace. He can be reached [email protected].

Karen V. Beaman is vice president andchief HCM strategist for Workday™, a newgeneration in enterprise applications. For-merly, she was the managing partner of TheJeitosa Group, a global business consultancyfocused on achieving organizational effective-ness through transnational leadership. Pre-viously, she held global responsibility for thesales and delivery of ADP’s professional ser-vices across the Americas, Europe andAsia/Pacific. Ms. Beaman is an internation-ally recognized speaker and author, havingpublished work in the fields of linguistics, hu-manities, management, human resourcesand information technology. She is the co-founder and editor-in-chief of the IHRIMJournal and is editor of the books Bound-aryless HR: Human Capital Manage-ment in the Global Economy (2002)and Out of Site: An Inside Look at HROutsourcing (2004). Her latest book,Common Cause: Global Shared Ser-vices for Human Resources, is sched-uled for release in 2006. Ms. Beaman has abachelor’s degree from Old Dominion Uni-versity and a master’s degree from George-town University and was promoted to Ph.D.candidate in sociolinguistics and historicaland computational linguistics. In 2002, she received the IHRIM Summit Award for her lifetime achievements in HR informa-tion management. She can be reached [email protected].

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