Managing Change During Times Of Economic Pressure
You only have to read the newspaper or watch the TV news to hear about the economic turmoil that we are currently facing due to the sub-prime mortgage debacle and the resulting stumbling stock market. This is giving many organizations cause for concern regarding their business plans for 2008 and beyond. These external economic forces may propel companies into implementing change strategies to adjust to the new economic realities.
But for those of us who lived through the troubled economic times of the 1980s and 1990s, we remember that at some point the economy will pick up again and companies had better not make changes that will prevent their businesses from rebounding when the economy bounces back. Business owners and managers need to carefully learn the lessons from the past and avoid the pitfalls of poorly planned change initiatives.
The bottom line is that they need to implement change strategies that are built on proven approaches. Research from Harvard University and other institutions have identified eight critical steps in planning and executing change to minimize the pain and maximize the gain. These are:
1. Build a sense of urgency for change.
Usually in life nothing happens until we identify some level of urgency or need. Need is the catalyst for change. For example, we don't start exercising or dieting until we gain a sense of urgency surrounding our clothes not fitting properly. It is the same way in organizations; owners and managers must communicate a sense of urgency to employees by explaining to them the external forces impacting the organization.
2. Build a guiding coalition.
Business owners and managers can not make change all on their own. They need to engage key players in their organization who will support and add credibility to the change. If these key players are not engaged to move the change initiative forward, they may be the people who could block the change from happening at all.
3. Create a vision for the future.
It may seem strange to have this as the third step; however, it is necessary to create a shared vision for the future among the senior team in the organization. Organizations need to set specific goals for change based on the pain they are feeling right now.
4. Communicate the vision.
As Conrad Hilton said about the hotel industry, there are only three key rules for success: location, location, location. In the case of change management it is a little different. The three key rules are: communication, communication, communication. Three critical points that require communication and are needed for employees to buy into the change are:
A. The change will happen and it is necessary
B. How the change will impact the organization
C. And, how the change will impact employee jobs specifically
Without this knowledge, employees will make up their own stories to fill the vacuum and usually these will be more negative than reality dictates. These negative stories will have a negative effect on morale, motivation, and productivity.
5. Enable action.
Senior managers need to outline the vision and goals for change, but they also need to empower people to implement change, which is aligned with the big picture, locally. They need to provide the tools and empowerment for employees to take the imitative and implement the changes necessary.
6. Create short term wins.
Change is hard work and therefore managers need to recognize the effort that employees make in order to make change happen. This involves showing appreciation and elevating peoples' spirits by celebrating short term wins. This creates positive momentum that will encourage people to persevere in the change process.
7. Don't let up
This is critical! Many change initiatives fizzle out due to lack of senior management visibility in supporting the change. Managers must be held accountable for the results they achieve in making the change happen. Research tells us that most change initiatives fail due to senior managers who do not visibly and consistently support the change and keep the pressure on.
8. Make it stick
A change that is achieved must be embedded into the organization's DNA. This is done by senior managers enforcing the change and embedding it into the organizational processes and culture. To revisit the weight loss example, just as when we lose twenty pounds, we need to maintain our change in life style to prevent it coming back. Organizations need to maintain the new and healthier life style with a consistent focus by managers to ensure that back sliding does not occur.
It all sounds relatively straight forward, however in reality, it's much harder than it seems. It requires will power, determination, and focus on the part of managers and leaders to overcome the resistance that it inevitably incurs. The change must be driven through. Owners and managers must expect significant resistance from 10-20% of employees. It may be best to not focus on the heavy resistor group but rather focus on the 10-20% on the other end of the scale who may readily accept the changes being proposed. The must use the people who are accepting of the change to influence others in the organization that the change is necessary and in the long run will be beneficial.
Many organizations use outside change consultants to help guide them through the process. Just as many people attend weight watchers or hire personal trainers to help them achieve their change goals with fitness and weight reduction, so organizations too can benefit greatly from the advice and the encouragement of change consultants.
Dr. Nash is an Industrial/Organizational psychologist and management consultant specializing in organizational development, employee development, and human capital management. He is the President and founder of Aspen Organization Development Consulting as well as an adjunct Professor of Management, teaching courses on conflict resolution and international business. Kevin has held senior management positions with global corporations in Marketing and Human Resources, and has worked as a management consultant for clients in Europe, Africa, and the USA. You may contact Kevin at knash@aspenod.com
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