Organizational change resistance is a difficult concept to explain to those who haven’t been through an ERP software or digital transformation initiative. Unlike software, project plans, budgets, process documentation and other more tangible concepts, organizational change is hard to see, touch and feel.
The threat, however, is very real and extremely common. Organizational change management can mitigate and neutralize the risk of employee resistance, but you almost have to feel the pain firsthand before the need and the impact become obvious.
This is true even in companies that think their employees won’t resist change because “everyone is ready for a new system.” Don’t fall for this common myth because I assure you that your employees are ready for change only until they realize what that change really entails.
Here are a few ways that organizational change resistance will hurt your operational efficiency if you are not adequately addressing it during your ERP implementation or digital transformation initiative:
Your business processes become misaligned. Employee resistance means that your team is likely resisting new processes, systems and ways of doing things. If they are resisting the corporate standard, then they are instead creating their own operational reality, which is going to create misalignment of your business processes. This defeats the entire purpose of an ERP software initiative, and is one of the key reasons why you need an effective organizational change strategy.
You are fostering “black market” ERP systems. Although it may be the opposite of your intent, not addressing organizational change results in people creating their own systems and workarounds. This is probably a big part of why your organization currently has all those “black market” spreadsheets, standalone databases and inefficient processes – the exact ones you want to get rid of with new software. The less you invest in overcoming organizational resistance, the more you’ll pay in these underground systems and processes.
End-user training is typically a mess. When employee resistance is high, you can forget about effective end-user training. Instead of learning to use the new system, your employees will spend their time reacting to all the changes they don’t agree with, and they won’t be absorbing how they should be implementing new processes in systems and in their day-to-day responsibilities. Rather than assuming that training will address organizational resistance, it is important to think of training as a capstone that finalizes all the acceptance of change that has led up to that point in the project. Just because ERP vendors and consultants don’t know much about change management doesn’t mean that you should gloss over it.
Your project team will get blamed for the resistance. Organizational resistance is very destructive and causes an implementation to fail, regardless of what the project team does or doesn’t do. Since most executives and others without extensive ERP and digital transformation experience don’t understand this, they will blame the project team. We’ve seen far too many project teams with their hands tied, all because organizational resistance and change management wasn’t effectively managed. This is why we caution project teams to focus less on the technology and more on the organizational and business side of an ERP implementation.
Business benefits aren’t realized. It’s not uncommon for companies to fail to realize a majority of expected benefits (according to our most recent ERP Report), but these problems are magnified when organizational change management is overlooked. Each year, companies lose millions of dollars in lost revenue and inflated expenses due to organizational resistance and other failures to realize business benefits. The worst part is, you usually can’t see these losses directly, but they are hidden in your financial results.
It may be hard to see early in a project, but resistance to change is very easy to see later in the project – after it’s too late to do anything about it. Hopefully, these points make change resistance more tangible and understandable so you can do something about it before it becomes a problem.