Managing organizational change

Trying to manage the pace and practice of change is one of the hardest activities any enterprise needs to undertake. Within the Information Technology sector, we have seen the pace of these changes firsthand. No enterprise can be competitive if it doesn't leverage server virtualization, cloud computing, and mobile web applications. Commercial off the shelf (COTS) software has replaced most if not all custom software applications because it is cheaper, has a faster time to market, is easier to support, and is usually more responsive to changing business needs.

But change isn't confined to the IT department. Entire business structures are finding they need to change or face losing market share, profitability, customer good-will and shareholder trust.

As necessary as change is, it isn't easy. I've been involved in business process re-engineering engagements. These have been contracts where: the client wanted me to do the work (and paid a reasonable invoice for the result); where I took them down the path step by step; where after each step I asked them to confirm that my understanding of their needs resonated with theirs (which it did); and where in the end I presented them with a list of recommendations and an implementation plan and again asked if the plan was realistic to them (again it was); and then the entire activity was shelved after they paid the final invoice.

Why is managing organizational change so difficult?

Cao and McHugh (2005) argue that there can be four factors in managing organizational change:

  1. Procedural change involves changing how functions are performed and how inputs are transformed into outputs for clients and customers to consume. This sort of change usually only affects one business unit, and seldom more than a few business units at once. Procedural changes often involve some combination of introducing process automation with some workflow modification. Impact across the organization is minimal.
  2. Structural change impacts the business organization chart, coordination or control. Usually at least some people are reassigned to different managers with some teams being disbanded, merged, or assigned new tasks, mandates and objectives.
  3. Cultural change impacts areas such as organizational culture, values, traditions, beliefs and human behaviour. These typically involve an attempt to introduce new social rules and practices and restructure how employees relate to each other as well as how they measure their success and value to the enterprise.
  4. Finally, political change attempts to undertake fundamental restructuring of the power within the organization. How do people use and wield influence? How do they manage, acquire and use their power? Where does power come from within the organization? Who gets promoted? Who gets their ideas heard and their proposals adopted?

In my experience, these four dimensions need to both "scaffold" on each other as well as interact with each other.

By scaffolding I mean that if an organization can't manage procedural change within individual business units, it is unlikely to be successful in addressing any sort of structural change. A capacity for procedural change is a requisite for any chance at structural change. Similarly, without a capacity for structural change, any attempt to manage cultural innovation with be frustrating at best and more likely abandoned altogether.

At the same time, implementing "lower" level change can be more successful if the change managers can appeal to qualities within the organization's current cultural or political fabrics. If performance is rewarded (a cultural quality), then is might be more likely to implement procedural or structural change provided workers see these changes as enhancing their probability for performance bonuses or promotion. Similarly, if power is carefully guarded in the hands of a few senior level executives, change plans--even for changes at a procedural, structural, or cultural level--should look much different than if all workers feel a sense of ownership of their work and want to make suggestions and control how their work is performed.

Change will still never be easy, but an understanding of the dynamics and dimensions of change within an organization is an important first step in analyzing how to implement a change plan that has the best probability of being successful.

Cao, Guangming and McHugh, Marie. 2005. "A Systemic View of Change Management and Its Conceptual Underpinnings." in Systemic Practice and Action Research, 18:5. 475-490.