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Home > Business > Special

Change management is a high-risk business

Shyamal Majumdar | June 20, 2003

Resistance to change is a favourite topic of discussion in HR circles these days. Attend any HR do, and chances are that you will be swamped with data showing how change efforts in organisations all over the world are faltering.

For example, only 9 per cent of the 200 global organisations surveyed by the US-based Saratoga Institute have said that their change efforts have been very successful.

Another 4 per cent termed them moderately successful while over a quarter (27 per cent) described their experience as not very successful, 33 per cent were unsure and 27 per cent said it was too soon to comment.

But why do transformation or change efforts fail so consistently? R Sankar, country head of Mercer Human Resource Consulting in India, quotes an Information Week study which showed that a whopping 62 per cent of the respondents cited "resistance to change" as the primary factor for the failure of change efforts.

The opinion in corporate India seems to be that the rank-and-file in an organisation would rather leave things as they are and the main reason for this status quo bias is people's strong desire to hang on to what they own; the very fact of owning something makes it more valuable to the owner.

McKinsey tested the effect with coffee mugs imprinted with the Cornell University logo. Students given one of them would not part with it for less than $5.25 on average, but students without a mug wouldn't pay more than $2.75 to acquire it. The gap implies an incremental value of $2.50 from owning the mug.

Behavioral scientists, however, say that Indian corporations find it fashionable to blame it all on the rank-and-file, but that is just a myth. The 3-N model classifies employees in terms of their learning orientation into three categories: natural learners (20 per cent), neutral learners (60 per cent)and negative learners and 20 per cent).

According to the 3-N model, the proportion of these three categories remains stable across organisations. Through sustained efforts in creating intrinsic interest in their work profile, it is possible to convert neutral learners into natural learners.

Even negative learners - at least a majority of them - are negative only with the kind of work that have been assigned to them but would welcome change readily if the benefits are communicated to them properly.

Models like the 3-N one only reinforce the growing belief that a major part of the responsibility for failure of change management in corporations must be shared by those occupying corner offices.

In a brilliant piece in its quarterly magazine, Charles Roxburgh, director at McKinsey's London office, says that CEOs themselves are often unwilling to make a determined break with status quo, which is required for successful turnarounds.

For example, some CEOs keep postponing decisions on divestments as they are prone to ask: "What if we sell for too little - how stupid will we look when this turns out to be a great buy for the acquirer?"

Such CEOs, who suffer from change phobia themselves, are responsible for the common errors (see chart) that organisations make while initiating a change process. Most of them are still trapped in an incrementalist mindset that change can come only in degrees and lack the energy of their own convictions to change.

So what's the way out since a company can't remain on the cutting edge by standing still? Consultants refer to two main prerequisites for the successful implementation of a change process: CEOs must curb their tendency to play god and organisations must create internal "change champions".

First, the CEO's role. Traditional change management concepts like a top-down approach - CEOs trying to force their version of change on a reluctant workforce - only breeds increased resistance and cynicism in an organisation.

If one is to avoid polarisation, with a handful of members of a change management team dictating strategy on one side and the remainder of the company viewing each of the team's move with suspicion on the other, what is required is an "engagement approach", which helps create the critical mass required to make change efforts successful.

And it is here that HR professionals have a critical role to play as change efforts can only succeed if there is a certain sensitivity to people issues.

People, process and the associated change initiatives are well understood on paper, but become abstract when it comes to implementation. The role of HR professionals is to unfold these abstract concepts and develop them into tangible alternatives.

Second, the best way to reduce resistance to change is to have internal change champions who must be chosen carefully. According to Mercer's Sankar, these must have in-depth organisational knowledge, a stake in project success, a high degree of integrity and credibility, past track record of initiating and executing change, a proven track record of high performance and they must be respected by their peer group and trusted by superiors.

Says Sankar: "External change agents like consultants can only be facilitators and play a catalytic role. These cannot be any substitute for internal change champions. For this to happen successfully, their selection must be a continuous process. No company can remain opaque all along and then expect things to change overnight."

Finally, a small piece of advice to HR professionals: always draft your change vision carefully. Any change vision that requires more than a one-page manifesto to articulate its goal is doomed to failure.

*Why change efforts can fail

  • Not establishing a sufficient sense of urgency.
  • Not creating a powerful enough guiding coalition.
  • Lacking and/or under-communicating a vision.
  • Not removing obstacles for the new vision.
  • Not planning for short-term wins.
  • Declaring victory too soon.
  • Not anchoring changes in the corporate culture.

*Source: Mercer

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