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Managing Change &


Pick any industry and chances are that it looked very

different in the 1970s than it did in the 1980s.

Quality improvement, Adoption of new methods,

Adaptation to new technologies, Response to regulatory

change, Facing up to new competitors.
Most will be forced through a new set of changes in the

years ahead
Although its impossible to anticipate the when, what, and

where of change, it is something businesses can count on

and should plan for.

Indicators of Change
A merger, acquisition, or divestiture
The launch of a new product or service
A new leader
A new technology

Types of Change
Structural change
Done by top management

for greater overall performance

Mergers, acquisitions, consolidations, and divestiture of operating

Cost cutting
elimination of nonessential activities

Process change
altering how things get done (e.g. reengineering a loan approval

Cultural change
companys general approach to doing business or the relationship

between its management and employees.

A shift from command-and-control management to participative
management is an example of cultural change

Motivation to Change
An organization is change-ready when three
conditions are present:
1. Leaders are respected and effective.
2. People feel personally motivated to change.
3. The organization is nonhierarchical and
people are accustomed to collaborative work.

all fundamental changes in organizations involve

some changes in the rewards system

different reward systems are more appropriate at

different phases of a change initiative. For example:

Performance-based pay plans, such as stock options and profit

sharing, are most appropriate during the motivation stage of

During the implementation phase, bonuses for achieving
performance targets and successful implementation are useful.
Finally, once change has been effected, the organization may
want to change to a pay-for-performance regime that focuses on
the strategic performance and the attraction/retention of
talented people.

7 steps to change
Step 1. Mobilize Energy and Commitment through Joint Identification of Business
Problems and Their Solutions
Step 2. Develop a Shared Vision of How to Organize and Manage for
Step 3. Identify the Leadership
Step 4. Focus on Results, Not on Activities
Step 5. Start Change at the Periphery, Then Let It Spread to Other Units without
Pushing It from the Top
Step 6. Institutionalize Success through Formal Policies, Systems, and Structures
Step 7. Monitor and Adjust Strategies in Response to Problems in the Change

Mobilize Energy and Commitment through Joint

Identification of Business Problems and Their
Problem identification (Why must we do this?) is

necessary for motivation and creating urgency

how the problem is identified is also important.

People at the top often assume (wrongly) that

they have identified the entire problem (top down
developing a solution to the problem. Here again

employees should be involved.

Develop a Shared Vision of How to

Organize and Manage for
The people in charge of change must develop a clear

vision of an altered and improved future.

They must also be able to communicate that vision to

others in ways that make the benefits of change clear.

an effective vision must:
describe a desirable future
be compelling
be realistic
be focused
be flexible
be easy to communicate to different levels

Identify the Leadership

a visible leader and sponsor of change,

someone who owns and leads the change

The leadership must act as

champion,assemble the resources needed for

the project, and take responsibility for success
or failure.

Focus on Results, Not on Activities

Many companies make the mistake of focusing

measurement and managerial attention on training,

team-creation, and other activities thatlogicallyshould
produce desirable results down the road.
a shift to measurable short-term performance

improvement goals, even though the change campaign is

a long-term, sustained one.For example, Within ninety
days we will reduce fuel costs by 15 percent.
Results-driven improvement efforts bypass lengthy

periods of preparation, training course development, and

other rituals of change.

to Other Units without Pushing It from the
Changing an entire organization at once is

much more difficult and less likely to succeed

Once change on a smaller scale is

accomplished and witnessed by employees in

adjacent units, diffusion of the change
initiative throughout the organization is much
more likely.

Institutionalize Success through

Formal Policies, Systems, and Structures
Gains can be consolidated and cemented

through policies that describe how work is to

be done, through information systems, and
through new reporting relationships.
For example, once it had achieved a key goal

over 99 percent on-time deliveries of furniture

orders the company institutionalized its
gains through a performance measurement
system that kept everyones focus on that

Monitor and Adjust Strategies in

Response to Problems in the Change
All types of unanticipated problems crop up as

people move forward. Developments in the

external environment can also affect whats
going on inside the company.
change leaders must be flexible and adaptive,

and their plans must be sufficiently robust to

accommodate alterations in schedules,
sequencing, and personnel

Roles for Leaders, Managers &

leaders create an appealing vision of the future and then develop

a logical strategy for making it a reality. They also motivate

people to pursue the vision, even in the face of obstacles.
Managers, on the other hand, have the job of making complex

tasks run smoothly. They have to work out the implementation

details, round up the required resources, and keep employee
energy channeled in the right direction
HR people, however, can play a critical supportive role by:
helping management with the hiring and assignment of consultants;

reassigning and/or outplacing personnel displaced by change;

arranging for employee training; facilitating meetings and off-site
conferences; and helping institutionalize successful change through
employee development, rewards, and organizational design.

Change Implementation
Although implementation can be a tricky and
unpredictable challenge, you can improve the
odds of success if you
enlist the support and involvement of key

craft a solid plan,
support the plan with consistent behaviors,
develop enabling structures,
celebrate milestone successes,
and communicate relentlessly.

Enlist the Support and

Involvement of Key People
This means assembling a team with the right

blend of skills, authority, resources, and

implementation will go more smoothly if it has

the backing and involvement of key people

(not just the CEO) - employees whom others
respect, individuals with key technical skills,
people with access to vital resources, and the
informal leaders to whom people naturally turn
for direction and advice.

Craft an Implementation
characteristics of a good implementation plan
divided into achievable chunks,
and with clearly defined roles and


Support the Plan with Consistent

Behaviors and Messages
Make sure that management walks the talk.
Inconsistency in either will send a damaging

messagethat management is either not

serious about implementing change or
unwilling to do its part

Develop Enabling
This means training, pilot programs, and

alignment of the rewards system with your

change goals.

Celebrate Milestones
Identify important milestones in the project

and celebrate them when they are reached.

Celebrating a series of short-term wins can:
neutralize skepticism about the change effort;
provide evidence that peoples sacrifices and

hard work are paying off;

help retain the support of senior management;
keep up the momentum; and
boost morale.

Communicate Relentlessly
tell them why, tell them how, and tell them


Social & Human Factors

Successful management of change requires

that you recognize the primacy of people

factors and the social systems in which they
The rank and file, the resisters, and the

change agents are the three sets of players

typically encountered in a change initiative.

The Resisters
Change resisters will either drag their feet or actively

attempt to undermine your efforts. You can identify potential

resisters by determining where and how change will create
pain or loss in the organization.
Once youve identified them, there are several things you

can do to neutralize their resistance or make them active

participants. These include:
explaining the urgent need to change,
Describing how change will produce benefits for them,
and finding new ways in which they can contribute.

People who do not respond to these efforts should be

moved out of your unit.

The Change Agents

Change agents see the need for change and
articulate it effectively to others.
They are critical catalysts for a change initiative
and should be placed in key positions.
Tips for identifying change agents:
Find out who people listen to.
Be alert to people who think otherwise.
Take a close look at new employees who have come

from outside
Look for people with unusual training or experience