What is change in the business world?
Generally speaking, change just means change – it can refer to an accidental change, a deliberate change, a change in business strategy, a change in market conditions, and so forth.
Organizational change, however, has a very specific meaning, as we’ll discover below.
What Is Change in a Business Context?
Since the term “change” is so broad, it has little practical value from a business standpoint.
Organizational change refers to an intentional, structured change to some area of an organization.
Organizational changes have strategic objectives, such as improving performance, organizational culture change, or digital transformation.
In a business context, changes such as these can be applied to any number of areas, including:
- Business strategy
- The organization’s structure
- Products and services
- Organizational culture
- The workplace
When managed properly, organizational changes such as these can be very advantageous for an organization – and in some cases, even necessary.
Why Change Matters
There are several reasons why organizations choose to change some aspect of their business.
- Organizations must continually adopt new digital tools and strategies in order to stay competitive and relevant
- Changing customer expectations can compel companies to rework their products, services, and value propositions
- Competitive pressure can compel organizations to adapt in order to survive
- Companies may adopt new digital solutions in order to pursue growth and profit
The benefits of a change program naturally correlate with the change program’s scope – an overhaul of the employee training program, for instance, could improve employee productivity, performance, and engagement.
As the scale and scope of a project changes, however, so too do its potential risks and rewards.
Larger change programs, for instance, are more difficult to manage and execute, but they also offer bigger potential rewards.
Common Obstacles to Change
Implementing change is often a necessary part of business, but it is important to address obstacles, since those obstacles can easily impeded progress or even cause a project to fail.
Common barriers to change include:
- Resistance to change from employees
- A lack of executive sponsorship
- Budget constraints
One of the most important obstacles to be aware of, however, is poor management.
How a program is managed, in other words, directly affects the outcomes of the change project, which is why it is so important to manage and lead change effectively.
How to Manage Change
Change management is the management discipline dedicated to organizing and executing organizational change efforts.
Like project managers, change managers design strategies and plans for implementing a change program, delegate teams, and coordinate communication.
Yet change management can be more difficult than project management. Projects are often more complex, for instance, and they frequently require a greater need for the management of people.
Most change models, such as the Lewin change management model or the Kotter 8-step model, focus on the human side of change.
Individual employees, after all, are the drivers of change and their engagement is a necessity.
Most change models, for example, focus on:
- Earning employee support and engagement through effective communication
- Building a 2-way dialogue with employees to encourage participation and reduce resistance
- Providing employees with the knowledge, tools, and skills they need to effect change
- Ensuring employees maintain new habits through reinforcement and accountability systems
Proper change management can make a big difference in the outcomes of a change program, and in some circumstances, it can even mean the difference between successful and failed change programs.
The Importance of Change Management
A structured approach to change management can have a major impact on the outcomes and the bottom-line returns of a change project.
Among other things, effective change management can:
- Improve employee engagement, productivity, and performance
- Lower employee resistance and reduce negative sentiment
- Decrease costs
- Increase efficiency
Since change management can mean the difference between success and failure, it is almost always a good idea to take a structured approach to managing change.
In-House vs. Outsourced Change Management Expertise
Managing change is certainly important, as we have seen, but there are several ways to acquire change management expertise:
- Organizations can hire change managers
- Experienced change managers can provide consulting services
- Employees can be trained in change management
In some cases, it is a good idea to implement all of these solutions, rather than just one.
An organization with no expertise or experience in change management, for instance, may choose to both hire a consultant and provide change management training to employees.
The end goal in this situation would be the development of an enterprise change management function – a department dedicated to coordinating and executing organizational change.
Having a dedicated change management department is usually the best solution for organizations that are growing or that regularly implement change initiatives.
In-house change management units, for instance, are more familiar with their organization, their industry, and their workplace culture – as a result, their change projects will typically run more smoothly.