Whilst many people may wish that it didn't, life is all about change, and the business environment is no exception. Factors such as changes in consumer tastes, advances in technology, changes in legislation and the economic climate will all bring about the need for the business to change and adapt in some way.
Why is change management important?
For a company to achieve close to its maximum profit making potential, it needs to sell its products at a price which is as high as possible above the direct and indirect costs of producing those products, but not so high that it kills demand. For this, it needs to make sure that it is selling the products that consumers want to buy and at a price that is within their expectation levels, as well as planning ahead and implementing changes that will allow production costs to be kept at acceptably low levels.
A failure to change in accordance with what customers are demanding will lead to low sales volumes, whilst a failure to change in order to take advantage of things such as new technology can often lead to competitors stealing market share, either because they can utilise the new technology to produce superior quality products, or because it will reduce direct costs and allow the competitor to charge a lower selling price for the item.
During times of change, effective business coaching can help make the transition smoother, easier and less stressful.
Different levels of change
There are different levels of change, which are also over different time periods. Companies which see surges in demand at certain times of the year such as theme parks in summer, toy manufacturers at Christmas etc, have short change management periods in terms of staffing levels and production runs. These short term variations are easy to forecast and a failure to adjust resources accordingly in order to take advantage of the busy times would be a serious management failure.
Longer term changes are much more difficult to predict, so the change management process becomes harder. Organisations must endeavour to anticipate change before it happens in order to be well positioned to take advantage of the new conditions. These long-term changes are not as easy to predict as short-term ones that come around at the same time every year. A recent example includes the shift in consumer spending more towards internet shopping than buying in the high street where the prices are often higher due to the costs of running the stores (rent, electricity etc.) High street companies which failed to see this shift coming and create a strong online presence in time have seen their profits decline or losses increase, in some cases to levels which caused the business to fold.
Planning and adaptability in change management
As stated above, effective change management will have an element of forward looking and forward thinking, trying to identify future trading conditions so that the company can position itself in time to take advantage of the new conditions. However, there will also be 'shocks' which require the business to change rapidly.
These shocks take the form of avoidable and unavoidable. The avoidable shock is a change where management should have seen it coming, often a substantial change which takes place over a period of years. The previous example of the change to internet purchases rather than high street shopping is an example of this.
The unavoidable shock is one where conditions change, often rapidly, due to an event which couldn't be foreseen. An example of this is a serious air accident which results in the authorities rushing through new rules which greatly affect the operators of the types of aircraft concerned. In an event such as this, rapid change must be implemented. The success of this is likely to depend on the strength and effectiveness of management, as well as the organisational culture and their willingness or readiness to accept and deal with change.
Resistance to change - The true test of change management
Generally, human beings are reluctant to change, due to the fear of the unknown and taking away the familiar. Even change for the better can be scary. It is likely that workers are already at least fairly happy with the current state of things, or else they wouldn't have taken the job in the first place, or would have resigned by now! Because of this, they are unlikely to embrace change with much enthusiasm. They feel safe with current working practices and relationships, particularly if they are friends (or more!) with their co-workers. They may also feel that they will be forced to do a new task(s) which they dislike.
Whilst change management is often about positioning the company to take advantage of future conditions, a common feeling amongst current employees is that if change is being implemented, then something must be wrong. They may fear that their jobs are no longer secure. If left unchecked by effective change management, this can lead to a nasty working environment of rumour, misinformation, low morale and low productivity.
Effective change management
In order to avoid the problems mentioned in the above paragraph, effective change management must be undertaken. One of the key factors in change management is effective communication. Employees may not understand why they are being asked to change, so communicating the need for the change is a way of bringing employees on board. Even if they do not agree with the views of the management, sometimes just being told why helps to give some purpose to the upheaval. Explaining the reasons may also help to quell any unfounded fears or rumours that may have started.
Employees are also much more likely to accept change if they are involved in the planning process. Whilst this may be more time consuming than change which is imposed on them by management, it may be worth it if it saves months or years of poor productivity due to low morale by disgruntled workers.
Evaluating the change also plays a crucial role in the change management process. When management began implementing the change, they must have had not only reasons for doing so, but also a fairly good idea of the desired outcome of the changes. Evaluating the results of the change once it has been completed and in place for a certain length of time will determine whether the changes have been successful or not, as well as highlighting any problems or remaining issues that need addressing.
Evaluation can take the form of both quantitative and qualitative measures. Quantitative improvements are easier to measure, and can be things such as the decrease in the cost of producing an item from £10 to £8. Qualitative improvements are a bit trickier to measure, but include things such as questionnaires which get workers to rate on a scale of 1 to 10 how effective the changes have been in certain areas. If the objectives of the change were to improve motivation or something, having the employees take a survey both before and after the changes have been introduced will measure the success of the changes.