In most industries change is now a permanent feature but few companies get it right. Our blogs aim is to show how. A central theme in them is that change management is too often done to leaders, whereas it should be done by leaders. Only when done by leaders – at all levels – will the necessary behaviour and culture change become self-sustaining.
We will first look at some evidence on why leadership is the most critical influence on Change and strategy implementation. We will then make the link between leadership and what organisational change management is, or rather, what it should aim to achieve.
According to an article in the McKinsey Quarterly, the failure rate of large-scale change programs has been around 70% for many years. They put this down to most leaders in most organisations simply not being practised in what it takes to lead change.
“[..]for many organizations, this relatively placid experience leads to a “steady state” of stable structures, regular budgeting, incremental targets, quarterly reviews, and modest reward systems. All that makes leaders poorly prepared for the much faster-paced, more bruising work of a transformation [..] many executives struggle to change gears and can be reluctant to lead rather than delegate when they face external disruption, successive quarters of flagging performance, or just an opportunity to up a company’s game [..]”.
This phenomenon is not new, as research going back decades illustrates. In the late 90’s, for instance, a wide-ranging research study by the Industrial Society (Exhibit 1) across 578 Corporations revealed Leadership or Management Style as the most important reason for the failure of change programmes.
More recent research by Sull and Homkes published in Harvard Business Review (HBR March 2015: Why Strategy Execution Fails and What to do about it) shared insights from data from 250 companies and over 8000 managers gathered over 5 years. One of its key findings was that the top two reasons for a ‘failure to execute’ include a lack of alignment i.e. cascading goals down the organisation and aligning measurements and incentives. Another key reason is a lack of coordination and collaboration between units and departments, with only 5% of managers reporting that they could rely on colleagues to deliver. We will argue that both alignment and collaboration are functions of Leadership.
There are numerous studies examining the crucial role of leadership in change. A final one worth mentioning is a large research study conducted in the US involving over 20,000 employees across multiple organisations. It looked at which factors had the most impact on or detracted from, desired outcomes, such as employee commitment to, and compliance with, new behaviours, policies and processes, in particular, with regard to safety and ethics. The biggest factors were: Executive Leadership, (Immediate) Supervisory Leadership, Fair Treatment and Decision Making consistent with Values. The biggest detractors were a culture with a focus on self-interest, blind obedience of authority, and the protection of Top Management.
The Link between Leadership and Organisational Change Management
What is organisational change management? A more formal definition is: Planning for change, managing change and reinforcing change. A closer examination of typical papers and articles throws up a series of ‘best practices’ in organisational change management. These approaches, all working ‘in concert’, include:
- Communication/management of change (including resistance to new ways of working) – creating an understanding of the ‘what’ and ‘why’ of the change
- Leadership, sponsorship and management, especially leaders visibly role modelling changes, recognising successful change and removing ‘obstacles’
- Training (on how to use a new tool or technique, soft and hard)
- Coaching – individuals and teams
- Measurement and reinforcement through a formal mechanism (rewards)
- Stakeholder Management
A more detailed pictorial representation of the component parts of a change programme is in Exhibit 2.
Whilst it is difficult to disagree that all the above is important, it is also likely that the vast majority of the 70% of change programmes that fail, employed most or all of these, fairly self-evident, tactics and approaches. It seems they are necessary but not sufficient for success. (As a side note: we have also witnessed many organisations who define organisational change management even more narrowly to effectively become ‘communication’. This is clearly deficient. Communication can only ever create awareness but will do little or nothing to effect real change).
So, there is something missing. One way to identify what that is, is by looking at defining the success of change management in a different way. Our simple definition of success is “that everybody does something different in the execution of their daily duties”. This means everyone, or at least all those affected by the Change, must THINK, ACT and COMMUNICATE differently. So, our definition of the goal of organisational change management is to help everyone impacted by the change to make a successful transition.
How much management of the transformation is needed depends on the amount of disruption created in individual employees’ day-to-day work and the organisation’s attributes, such as culture, value systems and processes along with its history of managing change. The amount of disruption will be lower in case of ‘continuous improvement’ type of change and much higher in case of ‘transformational change’ which targets significant breakthroughs in performance and which typically involves changing structures, processes, systems as well as the prevailing culture.
For people to think, act and communicate differently they must have the ‘Will & Skill’ or, the ability, motivation and desire, to do so. So what influences those? Well, apart from having the basic skills and experience and the ability to focus (i.e. not too many priorities and distractions), these are critically driven by:
- Clarity on what precisely needs to be different and what needs to change and in whom? Not everybody is equally affected by a change
- Understanding of WHY ie an underlying purpose, which makes what individual employees and departments do, matter. It
- Clear exchanges of expectations between line managers and teams/direct reports, including what support is needed
- An explicit set of beliefs, values, as well as high standards and a sense of ‘identity’, role modelled by leaders and reinforced with high levels of honesty, challenge, trust and fairness
- A sense of belonging to and inclusivity in and around teams, which foster collaboration, ‘positive’ peer pressure and ‘social control’
- Highly visible Role Modelling especially by (senior) Leaders
- Autonomy and Control
- Recognition and Reward (in various ways)
- The ability to ‘try something new’ and to experiment without the risk or fear of blame
- Confidence, in part through effective coaching and skill development
- Intrinsic Motivation
- Respect including respect for ‘wellbeing’ (being treated as a human being rather than a human resource)
If further evidence were needed, recent research between Egon Zehnder and McKinsey identified ‘Change Leadership’ as a discrete competency, which differentiates top-quartile from bottom-quartile performers (Exhibit 4, below).
This substantiates our view that, as a fundamental principle, organisational change management should not be done to Leaders but by Leaders, and Change Leadership (sic) should be nurtured and developed across leadership populations.
This raises the question as to what Leaders should be able to do (to a high standard), and not do, in very practical terms. Find out soon in our upcoming blog posts.