As the saying goes, the only thing constant is change. Businesses have to change to meet new demands and an evolving marketplace. A company that gets stuck in its ways may quickly find itself falling behind. Organizations resistant to change can’t react fast enough, and before long, people speak about them in the past tense. Most companies understand the need for organizational change. According to a KPMG Global Transformation Study, 96 percent of companies say they’re in the middle of a business transformation. That’s a good thing, but the study did find a downside. Less than half of those organizations thought they wouldn’t see any sustainable value from their change effort.
Businesses need effective organizational change management to keep up with an ever-changing world. However, the obstacles to change can often prove formidable and intimidating. To survive in the business world, companies have to learn how to handle these challenges and enact constructive organizational change that prepares them for the future.
In this article, learn about the basics of organizational change, some of its leading causes, the most common obstacles companies face, and how you can handle all of the changes.
What is Organizational Change?
Organizational change is the process whereby a company transforms its structure or other significant elements to improve its operations and meet the challenges they’re facing now and expect to face in the future. A key component of this process is organizational change management, which is the strategy that applies a company’s current knowledge and resources to enact these alterations effectively. This type of change cannot happen without organizational change management.
What Leads to Organizational Change?
Change doesn’t just happen on its own. Like any chemical reaction, it takes a catalyst to get the reaction going. This instigating incident can set the course for a company, exciting a desire to overturn the status quo and enact a substantive change in the organizational structure. Catalysts can come in many forms, including the following ones listed below.
The introduction of new technology can drastically change the landscape of the business world. Think of what a monumental event the rise of the internet was and how it transformed the way businesses operate. A company slow to adopt the advantages that the internet provides would have found itself playing catch-up for years. For example, a clothing store that didn’t engage in e-commerce might find its customers shopping at other businesses offering more convenient options. Therefore, businesses need to keep up-to-date with new technologies and understand the impact they have on their organizations.
A common event that brings about organizational change is the introduction of new leadership. For example, a recently hired CEO will often have new ideas on how to run the company. Because of this, they may choose to place more focus on customer service or create ambitious new sales goals to reach. This push to fulfill new objectives usually leads to significant organizational changes and shake-ups in personnel.
For more on the different ways people can lead, check out the various leadership styles.
New Business Models
Leadership may also enact organizational change through the use of new business models. Modern companies don’t operate the same as companies did in the 1950s. Business experts often come up with new models for organizations to follow. They share these models through conferences, white papers, and even new books. Depending on leadership, they may adopt these business models, which would require changes to the organization.
New Team Structures
On a smaller scale, companies may experience changes on the team level. As some employees move to different companies and new employees move in, teams often have to adjust their structures to manage disruptions like these. Because of this, leaders must think about how they will accommodate new skill sets and talents. While this type of change doesn’t always necessitate a transformation in the organization, companies may have to shift their priorities when enough of them happen.
The Two Organizational Change Types
Once a company has decided an effective change needs to happen at the organizational level, they have another important choice. There are two ways businesses can move forward with organizational change. Choosing one of the following strategies will help put companies on the right path for carrying out their adjustments.
- The adaptive change strategy is a more subtle approach to organizational change management. While still focused on the long-term impact, companies that use this try to make minor changes to the organization. The process is slower and requires various, smaller adjustments inside the business that are refined over a more extended period. Some examples of adaptive change include upgrading a piece of software or introducing a new training program. They’re not revolutionary, but they serve the purpose of introducing necessary changes to the company.
- This strategy features much larger changes involving multiple areas of the company. Companies choosing this approach usually have bigger goals and introduce these changes more abruptly than with the adaptive strategy. In many cases, transformational change is a reaction to forces outside the company’s control, such as a dramatic shift in the economy or a competitor’s new product gaining immense popularity. Transformational leadership often favors this approach, leading to large-scale disruptions in the business’s structure.
A Closer Look at the Organizational Change Management Model
When companies know they need to make a change and have identified which strategy to follow, the next step is forming a plan. Organizational change management can follow many different models. The one a business chooses will depend on its unique needs and goals. A typical model creating the necessary changes will usually feature the following steps.
Companies need to set realistic expectations regarding the coming changes along with what they hope to accomplish.
Organizations will then design the overall plan, factoring in its impact on the company as a whole along with individual departments and employees.
This step represents the execution of the plan and requires the cooperation and coordination of top-level executives, department leaders, managers, and all team members in the organization.
After implementing the plan, managers should monitor reactions and measure results. This is an ongoing step to ensure that the changes benefit the company and will endure well into the future.
Common Challenges to Organizational Change
Even when leaders know they want to adopt changes, it’s not always smooth sailing. Business leadership will often run into significant challenges along the way. Understanding what these obstacles are can help you prepare for them.
Employees may need new skills to deal with the changes management wants to implement. If leaders don’t provide training programs, employees don’t know how to gain these skills, which leaves them fending for themselves. Training includes the programs and also the time needed to attend. If leaders don’t set time apart for training, employees likely won’t see it as a priority.
The employees themselves might show resistance to change. Indeed, people get comfortable in their workflow. When leaders disrupt it, employees might treat new initiatives with suspicion. Research from Gartner found that almost half of CIOs indicated that workplace culture was the most significant barrier they encountered to making changes. Teams need to prepare for initial resistance to any new organizational adjustment. That resistance can take many forms, such as doubt, hesitation, indifference, or outright hostility.
Sometimes an organizational change will cost more than executives initially thought. Adopting new software or merging departments can lead to consequences that are difficult to prepare for, no matter how detailed leadership plans are. As costs mount, management can become anxious, which can worry many in the business, making them wonder if the changes are even worth it.
Whenever leaders introduce new technology, they expect some hiccups along the way. Consequently, sometimes those hiccups can turn into significant problems, causing delays and added costs. Even after getting new technology up and running, it can malfunction later, creating even more problems down the line.
Leadership should strive to communicate with all members of an organization, but at times that communication can break down. Poor communication means messages aren’t getting through to the people who need to hear them the most. Even if messages get through, they might not have a clear meaning. As a result, managers may end up communicating way too much information, or they might provide too little information. Therefore, all leadership teams should be aware of how workers may interpret their communications and make adjustments as necessary.
One area primarily outside of a company’s control is the market. As leaders try to enact organizational change, sudden shifts or downturns in the economy could create obstacles. Changes of this nature can cause confusion and chaos, prompting overreactions and even abandonment of organizational plans. Additionally, managers may decide they don’t need to adapt to market evolution, leaving people unprepared for what lies ahead.
How to Handle Organizational Change
Challenges to organizational change will come up eventually. Just like change itself, they are inevitable. Leaders need to prepare for these eventual problems before changes even occur. Here are several tips which can help.
1. Work on Your Communication Skills
Just as poor communication can contribute to organizational change problems, excellent communication skills can make the process go smoothly. For example, a study from Towers Watson found that organizations practicing good communication notably outperformed other companies which did not feature effective communication or change management. As you work on your skills, you’ll often catch issues before they grow into significant long-term problems. You can also address employee resistance. Clearly explain what the changes are, why they’re happening, and how to implement them.
To improve your communication skills:
- Hold one-on-one meetings with workers to get their thoughts on the changes.
- Listen closely outside of meetings to people’s comments.
- Review what you’ve communicated to ensure the messages you want to relay are clear.
- Pay close attention to nonverbal cues.
2. Practice Problem Solving and Decision Making
In addition to communicating, all leaders should work on their problem solving and decision making skills. As organizational change happens, leaders sometimes need to react quickly and make crucial decisions that often affect people’s jobs. They also need to be ready with a solution once problems arise. Many team members will look to you for help and guidance. As such, you must have the confidence to handle the pressure.
To improve your problem solving and decision making abilities:
- Don’t be afraid to test out new ideas and solutions found through innovative leadership.
- Look for guidance and advice from mentors.
- Gain leadership skills by reading material from a variety of leaders who have different perspectives.
- Prepare ahead of time for what might go wrong and have backup plans in place.
- Feel free to get suggestions from people at all levels of the organization.
3. Gain Greater Emotional Intelligence
Change can have a powerful effect on people, especially when it concerns what they do for their jobs. As you work with people to adapt to organizational change, work to improve your emotional intelligence. This involves becoming aware of your emotions and developing empathy for others. Emotional intelligence essentially means regulating your emotions and understanding what others may be going through as a way to connect to them. During periods of dramatic change, showing emotional intelligence can make a big difference.
To show more emotional intelligence:
- Influence others by serving them, which helps show servant leadership.
- Show optimism and a positive attitude around others.
- Encourage people and avoid negative criticism when they make mistakes.
- Get to know your team members by building bonds with them.
4. Delegate Responsibilities
Enacting organizational change can turn into a massive task, even for individual teams. Taking on everything yourself comes with increased pressure and stress, which results in a higher chance of making mistakes. In response to these challenges, don’t be afraid to delegate some of the responsibilities to other team members. Delegation shows you trust others with some of the most important tasks to accomplish these changes. It also helps you manage the time it takes for completion. By delegating responsibilities, you allow others to practice leadership and provide them with a sense of ownership over all the changes happening at the company.
5. Develop Your Organizational Skills
With so many changes happening, you’ll need to develop your organizational skills to get things done. Change management requires team leaders to be exceptionally organized and ready to deal with the complexities of significant change. Otherwise, without the right organizational skills, tasks won’t be completed in a timely fashion and whole teams will act disorganized and directionless.
To improve your organizational skills:
- Plan out your day, week, and month in advance to ensure you stay on top of everything.
- Limit distractions while you work, including non-work-related messages on your phone.
- Create to-do lists where you can check off each task once finished.
- Do your most difficult tasks at the time of day when you’re most productive.
Be Ready For Organizational Change
When executives undertake organizational change, many people within the company may feel uneasy about the future. Change is necessary for businesses to survive and thrive in a volatile world, but the road can certainly be a bumpy one. Indeed, with a deeper knowledge of the challenges that lie ahead, you’ll know what skills you need to work on for you and your team to succeed. Look at each change as a way for you to grow and reach a new level of performance. As Walt Disney once said, “Times and conditions change so rapidly that we must keep our aim constantly focused on the future.” As you prepare for change, you’ll be ready for what the future holds.
Looking for more resources on developing your skills? Check out the articles below: