Leading Change

(by George Telfer)

"You are today where your thoughts have brought you. You will be tomorrow where your thoughts take you."
(James Allen)

The opening decade of the twenty-first century has heralded a period of unprecedented organisational change. This has not only affected the overall fabric of organisations but also the individuals that make them work. Key writers on the subject of change have collectively referred to a ‘post-industrial society’, turning from production to services and from manufacture to information technology with the economy shifting more towards services and knowledge working. Top management cannot run things in the old way, even if it wanted to.

Why do we find it so difficult to cope with change and what is the part that management and leadership plays? A survey by the recruitment firm, Korn Ferry International into the causes of the removal of CEO's back in 1998 revealed that ineffective leadership accounted for 73% of the cases, exceeded only by financial or ethical malpractice and mental or physical incapacity. A more recent study by the Institute of Strategic Change established that the stock prices of companies perceived to be “well led”; creating cultures of adaptation, grew 900% over a ten year period versus 74% for companies perceived to lack good leadership.

This is elaborated further by such writers as Peter Drucker in his “Age of Discontinuity” where he states that leadership and organisational structure needs to adapt to the changing information explosion coupled with the technological and political changes in the fabric of modern society. Five overriding factors are having the greatest impact on organisations. Uppermost is the need and drive for an organisation to do 'more with less'. Secondly, the ever-accelerting knowledge explosion, thirdly, the growing trend towards product obsolescence, fourthly, the almost inevitable changes in the composition of the workforce and lastly, the issue of ambiguity that has become the norm in organisational life; for many global businesses, competitors in certain markets can be collaborators in others, major distributors in one market can be potential business rivals in another and customers can simultaneously be suppliers; the boundaries are increasingly blurred and permeable according to the geographical location. Internally too, leadership means guiding and enabling a constantly shifting workforce with a cocophony of different employment contracts and relationships that integrate one strategic function with another, core workers with peripheral workers, each with their own differing view of how things should be. Matrix structures bring further ambiguities, no longer having a single hierarchy making all the decisions. Further changes are demographic, social, cultural, economic, political and technological, reflective of the increasing turbulence on the landscape of today’s business environment.

Of the 100 largest US companies at the beginning of the 1900’s, less than10 are still in existence. In ‘The Times’ first published list of Britain’s 300 industrial companies in 1965, less than 20 out of the 100 firms topping that list are still there today. As traditionally bounded industries have overlapped, mutated and invaded others and organisations have sought to embark on change cultures, the responses to this climate of change reflect more upon managerial thinking than any other specific issue.

Synonymous and almost inevitably within this organisational change has been conflict and resistance. These are core issues that must be considered in any discussion on the management of change because paradoxically without a degree of tension to stimulate action, the way forward for many organisations remains uncertain. Leadership forms the second underlying principle alongside conflict in all change processes for it is leadership that underpins all change strategies in any organisation.

There is certainly no single text that authoritatively sets out a singular approach or definitive success strategy for change management, yet the route towards a clearer understanding of the management of change began more than fifty years ago with the work of Kurt Lewin. He set out one of the two 'systems approaches' to understand and handle the management of change. His focus was strongly towards human and social factors; the so-called softer side of managing change. His 'force-field theory' referred to three stages of change, underpinned by a workplace 'learning environment'. His “unfreezing, change, and refreezing” principles aimed at reshaping employees beliefs and setting up a new set of group and social dynamics that would embrace change. This was in sharp contrast to the development of an alternative 'hard systems' approach to the management of change which called for a more structured series of processes and working practices mapped out and driven through by strong and robust management practices.

Although every organisations' change strategy is unique, this dual approach to change management continues to form the basis for modern thinking on the subject. Michael Beer and Nitin Nohria defined these two alternative 'soft and hard' approaches to change as Theory E and Theory O. “Theory E change strategies usually involve the heavy use of economic incentives, drastic layoffs 'downsizing' and restructuring with shareholder value the only legitimate measure of corporate success. Theory O change strategies are geared towards building up the corporate culture, employee behaviours, attitudes, capabilities and commitment with the organisation’s ability to learn from its experiences being a legitimate yardstick of corporate success. They concluded that effective combinations of 'hard and soft' approaches to change reap benefits in profitability and productivity, thus resolving the tension between the two and satisfying shareholders whilst still building viable institutions. “Marrying the two” creates a sustainable competitive advantage and reduces the anxiety that can grip any institution in the face of corporate change or restructuring. They described it as “E dancing with O in an unending minuet.” and highlighted the need to work through six dimensions of change:

1. Confront the inevitable tensions between Theories E and O.
2. Set the direction from the “top” and engage the people below, (Leadership).
3. Focus simultaneously on the “hard and soft” sides of the organisation.
4. Plan for spontaneity.
5. Let incentives reinforce change - not drive it.
6. Use consultants as expert resources who will guide and empower employees.

The role of consultants is to identify barriers to the effective management of change and to enhance communication within the organisation. They also need to help people understand the skills needed to manage change. Analysis of the balance and processes involved in change which include information, motivation, standards, success (or self worth) and performance monitoring is important, as is relating these to staff and understanding the current thinking on staff retention. Whenever someone is under-performing - especially within the context of change management - the reason for this is usually related to one of these factors.

In exploring how change management is being approached within organisations, what are the other alternatives open to management thinking? New concepts have done much to change the way we think and what we expect. Developed from the Kurt Lewin theories of “softer strategies”, it has had much to do with the way we actually feel, think and behave in relation to managing change today. Men and women are no longer motivated simply by the range of basic human needs but are more likely to seek higher levels of need such as “self actualisation” as in Abraham Maslow’s “Hierarchy of Needs”.

A further factor is the all too slow but increasing role of women and their impact on organisational values - they have, at last, become accepted as critical players in the “softer strategies”. The shift of power from an authoritarian basis to less tangible measures such as consultation, mutual trust, respect and support in a more team-orientated approach to organisational work practices is more evident in many organisations. Changes in organisational values - “humanistic democratic ideals”, as opposed to “mechanistic bureaucratic systems” have also played a part, being not only nice but efficient, saying what needs to be said, and giving the right information at the right time. It seems logical to expect that there would be more “buy in” if the decision making process was a shared one.

In returning to the central issue of whether there is a single right way to manage change - it seems unlikely. There is much evidence to challenge the assumptions that people in organisations are a receptive lobby of open-minded individuals who will thrive in an atmosphere of consultation and harmony. This has been challenged by some writers who throw criticism on the notion that all organisations have a common purpose and a need to be cohesive. Power tactics may be the right method to enforce change but Henry Mintzberg argues that for managers, their key role is to act as “disturbance handlers” while John Brunner writes of the need “to ride the shock wave of change”. Managers need to employ a more eclectic approach to change as it affects the organisation at every level and in different ways, hence it must be approached in different ways. Lewis Gunn at the University of Strathclyde highlighted three alternatives: The structural approach; to change the look and fabric of bureaucratic structures and create a more “organic” landscape in organisations. Change needs to affect communication, creating what Stephen Covey describes as a move from dependence to independence and on to interdependence, with communication being the key to survival; upwards outwards and downwards within the organisation.

Gunn also refered to the procedural approach to the management of change, arguing that structural changes in themselves will not bring about a change in thinking or behaviour. Procedures would be required that would enable, then monitor change by looking at present and future environments. Review procedures would focus on the changes sought or the consequences felt. Planning for change is also seen as a necessary procedural development.

Perhaps underpinning change most effectively is what he describes as the behavioural approach brought about through engaging people in a contributory or participative manner. In effect; an open, supportive and consultative environment that encourages a high level of “two-way” communication in an atmosphere of mutual trust, respect and support, influencing through persuasion rather than coercion. He also reminds us that change should not be for change’s sake, becoming rushed and ill considered. It needs to take measured account of the strengths and weaknesses within the organisation.

Change can fail because people don't see sufficient compelling evidence to change, or by creating “attitude barriers” - “I don't want to ...” Or “working environment barriers” - “I'm not expected to ...” Or “process barriers” - “I don't know how to ...” Approaching change on a number of fronts would at least give some accordance to the complexity and difficulty experienced. It requires a contingency approach which accounts for the different needs and situations that prevail in any organisation.

All change theories appear to be strongly linked to the correct leadership approach, with consultation seen as the most effective route to change. Coupled with discussion, this would establish a sense of urgency, identify and discuss crisis potential, and recognise opportunities. Keis Van Der Heijden writes that a formal planning process cannot produce change. Most of it takes place through the informal contacts in which the “strategic conversation” takes place and influences action through these channels.

Training can be an essential component in organisational change. An organisation’s ability to realise and sustain its desired vision depends upon the training its employees receive. Chris Argyris at MIT, picks up on Bruce Garrett's original theme of “learning organisations” and claims that: “To survive and prosper in today's turbulent and rapidly changing business environment, organisations may need to innovate and transform their traditionally managed structured organisations into learning organisations”. He refers to 'transformational change' as the fundamental change that generates learning, although managers are witness to a wealth of alternative terminologies, i.e. large scale change, frame breaking change, reorientation, culture change, strategic change, quantum change, double loop learning or gamma change. Argyris views the key feature in managing transformational change as teamwork, allowing us to imagine organisations as 'living things' that can among other things, learn through working as a team.

However, introducing change can be fraught with difficulty and more often is. When employees decide to resist change, they will do so based upon their assessment of the impact of their resistance, the effort required to resist, and their assessment of the risks involved in doing so. Few companies manage the change process well and according to research based findings, 70% of all change initiatives fail. Part of the problem in coping with change lies in its increasing pace, complexity and unpredictability and the ambiguities that result. It can also be painful and therefore needs people to embrace it rather than resist it. If we cannot keep apace, it becomes increasingly challenging. This idea stems from the notion of a “temporary society” and a decline in the duration of relationships and personal working expectations, extending even to changes in our attitudes towards consumer goods and their constant turnover - transient, readily available and easily disposed of.

The fact that change is problematic makes conflict almost inevitable. Members of social systems tend to become strongly attached to the existing order of things and a clash of interests that gives rise to a resistance to change. These are often brought about by different values, expectations and objectives between workers and management. For both, it can be threatening and seen as a potential power shift or a change in status within the organisation. The difficulty in overcoming any resistance to change is often caused by fear and uncertainty over these factors. They can include the fear of:

ï‚Ÿ the economic effects on people based upon income and security
ï‚Ÿ past experiences of redundancy
ï‚Ÿ the uncertain effects of a learning culture
ï‚Ÿ change in status
ï‚Ÿ changes in the scale of things to be done
ï‚Ÿ market forces
ï‚Ÿ misinformation and misunderstanding
ï‚Ÿ no consultation or say in the changes
ï‚Ÿ the problems caused by the redistribution of power.

How then can managers overcome difficulties in introducing change:

Perhaps the answer lies partly in companies stopping the need to change all the time. Instead, they should intersperse major change initiatives among carefully paced periods of smaller organic change. Writing in the Harvard Business Review, Eric Abrahamson calls it a “dynamic stability” or a continuous process of relatively small changes that involve the reconfiguration of existing practices rather than the creation of new ones.

Either by changing the people, their positions in an organisation, or by trying to win their “hearts and minds”, managers must acknowledge conflict as an inevitable feature of change within and outwith the organisation and on a wider sphere than purely the working environment. The conditions required to bring about change include an awareness within the organisation that change must happen and leadership that puts change on the agenda and keeps it there. It also requires the recognition that people are the catalyst for change and that communication and teamwork are the forces that bring it about.

John Kotter gives a clear eight point perspective on what organisations fail to do:

1. They fail to put together a group with enough power to lead change and work as a team by hiring, promoting and empowering people who can bring about change.
2. They fail to create a vision that directs and communicate this vision.
3. They fail to change the systems that undermine the vision - “getting rid of the blockers”.
4. They fail to encourage risk taking and non-traditional ideas activities and actions.
5. They fail to plan some visible performance improvements; creating wins and recognising and rewarding the people who make it possible.
6. They declare victory too soon and fail to connect with new ways and successes.
7. They fail to make changes through new projects and change agents.
8. They fail to ensure effective leadership and succession.

Corporate cultures will also make things either more difficult or easier. The more a culture is internally focused, bureaucratic and disempowering of initiative issues, the more trouble there will be in producing change. Conversely, the more the culture is externally orientated and non-bureaucratic, will it encourage leadership at all levels and succeed in change. Organisational culture itself is such an impediment to change.

How then can we see change? As being large or small? Having a high or low impact? Needing to be imposed or becoming self-generating? Is it threatening or exciting? Going back to the “good old days”, however, is not really an option. We have passed a crisis point where the only way forward in managing change is to leave the past behind. From fear to anticipation and from retreat towards acceptance.

Organisational leaders need not only to affect and embrace change but also to lead it effectively: The key questions they must live with and respond to are; what is the change? Why, how and when is it being introduced? How will it affect people and the organisation? What will be gained and lost from the present situation? Does our present knowledge and skills meet the new situation? If not, how will that be resolved through training and if so, what training is needed? What will be personally gained (positively and negatively) by the changes? Is change wanted and what happens if it is not accepted? Is the organisation, and are the people ready, willing and able to handle change? Do we have any other alternatives?

We need to face up to the realities of change: Most of the changes that affect us are not initiated by us nor are we in control of them. Change is natural, normal and around us at all times. It can be and frequently is painful, at least to start with. A climate and turmoil of frustration, anger and fear may have to be faced but staying the same is not an option nor is the indecision that the need for change can create. As Marcel Proust's 'In Search of Lost Time' reminds us; "Our indecision may be our final decision."


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