risk of change

Why organisational change is hard – and how to do it right

In Change by Antony MalmoLeave a Comment

embrace changesource: http://dilbert.com

Life on earth has one basic maxim: adapt or die. Business is not exempt from this pressure – this you already know. So, why do 70% of organisational change initiatives fail?

There are many reasons why individuals might resist change. To successfully apply changes, it is important to identify and address the root causes. According to Robert Tanner, there are eight reasons why people resist change:

  • Loss of job security or status: Some employees may fear the impending change will demote their importance in the organisation, or that they are being pushed out the door.

 

  • Non-reinforcing reward systems: Employees are likely to be unmotivated by change if there is little or no reward for them. While a carrot and stick approach works in the early stages, for sustained change, you need to factor in ‘intrinsic motivators‘.

 

  • Fear of the unknown: One of the most important tools in handling resistance is communication. Employees will be curious and even afraid of what may come, it is important to inform them and also to hear them out.

 

  • Peer pressure: Famed psychologist, Abraham Maslow pointed out that the desire to belong to a group is a primal human instinct. If the planned changes threaten social bonds in the workplace, it is likely that some employees will resist them.

 

  • Climate of mistrust: Change is scary and it requires a significant level of trust in leader and peers to overcome that fear.  Be warned – building trust takes time, and it can be lost in an instant.

 

  • Organisational politics: Organisation politics are an important part of any company and it is necessary to assess them in a positive way, even if they are seen as an obstacle. Acknowledge what you are feeling and then taking positive steps to counter the organisational resistance you are facing.

 

  • Fear of failure: Employees might not be willing to adopt change because they are worried that they will not be able to adapt to the new requirements. It is important to develop a culture where failure is seen as part of the learning process.

 

  • Lack of tact or poor timing: People may agree with the change that you want to implement but they may not agree with how you are going about making the change. Thoughtful implementation strategies have to be used in order for significant change to be successful and effective.

Cost-Benefit Analysis of Change Management

risky journey

Change, by its very nature, is risky. Therefore, it’s reckless to drive change without a strategy. There are many different costs that have to be covered if any changes that are implemented fail. There can be costs to the organisation, the project, and if the change is not implemented.

 

The costs to the organisation:

  • Plunges in productivity (deep and sustained)
  • Impact on customers and suppliers
  • Loss of valued employees
  • Morale and quality of work decline
  • Resistance (both active and passive)
  • Now the company has a history of failed change
  • Stress, confusion, fatigue
  • Change saturation

Costs to the project:

  • Project delays
  • Missed milestones
  • Project put on hold
  • Resources not made available the team in change
  • Budget overruns
  • Unexpected obstacles
  • Rework required on project design
  • Project will probably fail to deliver on objectives or will be completely abandoned, leading to loss of work by project team

Costs if the change is ultimately not implemented:

  • Expenses not reduced and efficiencies not gained
  • Revenue not increased
  • Market share not gained
  • Waste not eliminated
  • Certain regulations not met resulting in extra expenses such as fines, penalties, etc.

 

Additionally, the organisation loses the investment made in the project when the project does not deliver results. Some of the losses can be quantified and but some cannot, such as the decline in morale. If a project is being planned and has a high ‘people-side risk’ component, then the right risk mitigation technique would be to apply a structured approach to change management. Projects with effective change management are five to six times more successful than projects that did not address the people side of change effectively. According to the prestigious change management company Prosci, data from over 2,700 change practitioners showed that projects with ‘excellent’ change management in place were six times more likely to meet objectives than those with ‘poor’ change management. Even those using ‘good’ change management were five times more likely to meet objectives.

Now that you know what’s at stake and the value of having a plan it’s time to take a look at the next post on how to lead change.

Sources:

  1. McKinsey & Company, The Inconvenient Truth About Change Management
  2. https://managementisajourney.com/organizational-change-8-reasons-why-people-resist-change/
  3. https://www.prosci.com/change-management/thought-leadership-library/cost-benefit-analysis-of-change-management

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