What is change management? Put simply, it’s the process that guides how an organization prepares, equips and empowers its workforce to successfully navigate organizational change.
Are your employees as agile and adaptive as your enterprise strategy? If not, you definitely want to read today’s post. We’re taking a closer look at the theory of change management and how a clear understanding of its principles can lead to business transformation or ERP implementation success.
Increased Competition Driving Business Transformation
Many organizations spend a good percentage of their technology budget on the tools they need to innovate and improve their business processes. This includes technology like enterprise resource planning (ERP) systems, automation technology and intelligence tools.
Unless a solid change management plan is in place prior to these investments, employees will be left feeling over their heads and behind the learning curve. Before long, frustrations and tensions can mount as morale subsequently dips.
Thankfully, there are strategies and structures you can put in place to ensure the success of your current initiatives and future projects. Building an organizational change capability can secure digital transformation success.
With so much at stake, why are companies flocking to new technology in the first place? Why not maintain the status quo and stick to proven legacy systems? The short answer is that doing so would mean falling gravely behind.
Business leaders have no choice but to modernize their IT infrastructure and technologies to make their operations more agile, flexible and customer focused.
While these are admirable goals, they’ll fail to take flight without an active, engaged and motivated workforce behind them. This reveals the importance of change management: It’s imperative to lay out solid groundwork before anyone takes a step forward. In particular, if a company moves so quickly that they fail to account for the people side of change, even the best-laid plans and the sleekest software could leave the company behind the mark. In other words, the consequences of poor change management lead to higher costs, greater downtime and slower benefits realization.
Change Management Case Study
The client recognized their need for more comprehensive change management, so they asked us to fill in the gaps. We developed a robust communication plan to supplement the vendor’s communication approach.
Reasons to Employ Change Management
- To increase employee understanding, adoption and dedication
- To provide business leaders with the knowledge and insights to effectively lead the change
- To address the fragmentation and cultural challenges that can threaten to derail the project
- To give end-users a sense of autonomy and the opportunity to take ownership of the changes
- To communicate the project’s expected business benefits and return on investment
To be clear, deciding to implement any sort of change management plan is a step in the right direction. Yet, there is a marked difference in the way you ready one individual for change and how you ready an entire department or an identified group of workers.
Which one makes the most sense for your organization? While there’s no right or wrong answer, the most effective approach will depend on the number of people the change will ultimately impact.
At the end of the day, change management initiatives should encompass some aspects of both one-on-one communication as well as group-based communication.
Change Management vs. Project Management
As your organization learns more about the tenets of change management, it might start to sound a little like project management. While both efforts involve some degree of oversight and guidance, they are each unique.
Project management refers to guiding and managing the series of steps that must be in place to meet a project deliverable. In other words, what specific actions need to take place to move the project along?
In all, there are five main stages of project management. These include:
There are many individual tasks that must be completed at every part of this journey. Project managers are responsible for knowing what every team member is doing and how that effort propels the team and gets them closer to that final stage.
Overall, project management is concerned with actionable, project-related processes and activities. It’s an eye-on-the-prize, methodical sequence of events that must take place to stay competitive and ensure client satisfaction.
Conversely, change management is more centered on making sure the workforce is ready to embrace the changes that those projects bring.
To make the distinction clearer, let’s consider a real-life scenario: Say your C-suite decided to invest in a new ERP solution that can help your company streamline operations and quicken your time to market.
A project manager would be in charge of handling the logistics of this task. They would:
- Plan and define the scope
- Secure executive buy-in
- Plan and sequence the activities required
- Assign and delegate resources and responsibilities
- Develop schedules and timelines
- Estimate costs
- Communicate with key stakeholders
Meanwhile, a change manager would be considering how this new technology might affect the workforce. This person is focused on the human side of change, rather than the technical.
A few of the questions a change manager might ask include:
- How does this change our core business processes?
- Will there be any role changes?
- How will this affect organizational structures?
- How do employees feel about the change?
- How can we mitigate employee resistance?
- How can we build a continuous improvement culture?
What is Change Management When Broken Down into Three Phases?
1. Preparing for Change
First, you must prepare your plan of approach. This requires an understanding of who the change will impact and how it will impact them. From there, you can determine how much change management is necessary and what activities are crucial.
2. Managing Change
At this juncture, the focus is on carrying out the change management plan to prepare the workforce for new technology and/or processes. This should involve:
- Communicating key messages using various mediums
- Training employees
- Coaching managers to be change leaders
- Engaging stakeholders, some of which may good change champions
- Managing and monitoring change resistance
3. Reinforcing Change
It’s all too easy to only focus on the first two phases of change management. However, it’s equally critical to ensure that your organization has change management process steps in place to reinforce the change moving forward.
What happens when the initial buy-in begins to wane? How can you maintain employee engagement and motivation months or even years later?
In the reinforcement phase, you should use KPIs to gauge buy-in throughout implementation and after go-live. Common questions include:
- Are employees actually embracing the new way or still holding tight to the old way?
- Where are there gaps in knowledge and usability?
- What successes can we celebrate on an individual and team basis?
What is ADKAR?
The change management world is replete with acronyms, and ADKAR is one that you might have heard.
This is a five-stage change management model that helps guide organizations and individuals toward successful change. The letters stand for:
- A: Awareness of the need for change
- D: Desire to support the change
- K: Knowledge of how to change
- A: Ability to adopt new skills and behaviors
- R: Reinforcement to retain the change over time
This model is a helpful tool for any organization preparing to undergo an ERP implementation or business transformation. It outlines key steps required to equip employees to embark on the journey and encourage them to stay the course.
Ineffective Philosophies of Change Management
While it pays to understand the change management models and theories that contribute to successful change management, it’s equally important to know the causes of change management failure.
There are several faulty organizational change management philosophies out there:
1. No Organizational Change Management
Many organizations ignore change management altogether. They have plenty of seemingly good excuses such as, “Our people hate the current system, so we won’t have any trouble getting them to change.”
This statement may be true until the specifics and the magnitude of the changes become more apparent during implementation. At this point, it’s typically too late to whip together an effective plan.
2. Training Only
This may be the most common version of organizational change management. While most organizations understand that training is important, they don’t understand that it is just one of many components of an effective change management plan.
The dangerous part of this philosophy is that those guilty of this approach think they are doing what’s right, so they don’t know what they don’t know. By the time they realize that training isn’t enough to get the organizational alignment they need, they are just a few short weeks from go-live, which is far too late to transition employees.
3. “They’ll Change Because I Said So.”
While point #2 is the most common change management philosophy of ERP projects teams, this one is the most common in executive boardrooms. However, it’s important to view change management not just on the organizational level, but on an individual change management level, as well.
In our experience, it can be difficult to persuade most executives that this approach isn’t as easy as it sounds. We always point out that employees may put up a front that they are embracing change, but it’s the more subtle and covert forms of resistance that are more damaging – and undetectable to most executives.
4. Change Through Trial and Error
While this more incremental approach to change can be effective in long-term projects with several phases of deployment, the reality is that most organizations try to implement ERP software in as little time as possible, which makes this approach unrealistic. We recommend having some structure and deliberate planning behind your organizational change management.
9 Change Management Tips
1. Take a Systematic Approach
While you might be eager to jump right into it, rushing into change management is a recipe for disaster. It’s best to take a systematic approach.
This means conducting organizational assessments to gauge if your company has the tools and resources it needs to support a business transformation. Some common organizational assessments include:
- Change impact assessment
- Business readiness assessment
- Stakeholder analysis
One of the most important stakeholders is the end-user. You can assess their needs using the assessments mentioned above, but we also recommend using surveys and focus groups.
Focus groups are helpful for several reasons:
- During focus groups you can document employees’ pain points with the current system. Exposing these pain points can help you convince executives to invest in new technology.
- Focus groups are effective in gaining employee buy-in. When communicating the reasons for change, you can use the insights from focus groups to craft your message.
- Focus groups help you select an ERP software solution that addresses employees’ pain points. This is important because when employees’ needs are fulfilled by a technology solution, they are likely to respond more positively to change management efforts.
2. Assemble a Change Management Team
Your team should also be comprised of:
- Executive and senior leaders
- Department managers and supervisors
- Subject matter experts
- Change practitioners
There are a few key roles in organizational change management that you must assign early in the project, whether this project is related to ERP software or process changes. Change management team members should clearly understand their role and how it fits into the overall function of the project team. This ensures accountability and ownership.
There are many people whose influence, control and opinion could determine the overall success of your business transformation. Balancing their perspectives with your evolving business needs is critical to ensuring a smooth path forward. These key individuals can be the linchpin in the eventual outcome of your project. This is why it’s important to understand the role of a stakeholder analysis in change management.
3. Utilize Change Champions
Change champions, or sometimes called project sponsors, are not necessarily project team members but are people in your organization who are excellent spokespeople for your change. They are knowledgeable about its benefits, excited about its implementation and ready to share their expertise with others. Usually, these are well-respected leaders in your company whose influence and approval hold weight and credence.
4. Start at the Top
The most effective change management strategies start at the top. This is because people model the behavior they see. If executives appear fearful of change, employees will fear it as well. If you are trying to get change management included in your ERP project but are hitting a brick wall, it may be helpful to review change management myths that lead to an underinvestment in OCM.
While everyone wants change, no one wants to change. This is a well-known adage in the field of change management. Put another way, it’s often easier to convince people of the need for something new than to get everyone moving in the same direction toward that objective. There are many barriers to organizational change found within leadership and project teams.
Consistency is important, too. When executives say one thing and do another, this erodes employees’ trust in leadership and increases change resistance. Wondering why managers resist change? The answer lies mostly in the fact that they have misconceptions, but it’s also true that they have a certain amount of fear.
So, how do you gain executive buy-in to begin with? Start with answering questions like:
- How will the project cut costs or achieve other business benefits?
- How will the project impact different stakeholders?
- How will the project address the pain points of key stakeholders?
- How do the goals of the project align with business objectives?
- How much will the project cost?
- What’s the expected ROI?
Executives like specifics, so be sure to provide details. What specific business benefits will the ERP implementation bring? How much will the project cost? (Read our blogs, “How to Set a Change Management Budget” and “Change Management Business Case to the Rescue: How to Get OCM Funding” to learn more about costs.) Will it improve communication and integration between departments? Will it improve the company’s ability to serve customers? Quantify these benefits of ERP as accurately as you can.
For example, one of our process manufacturing clients wanted to improve the efficiency of their sales processes, so they demonstrated to executives how the new system would provide better insights into their customer service function, allowing them to automate many of these processes. They also showed how this would free up time for employees to focus more on outbound calls.
In many companies we work with, we see at least one executive that is not on the same page with the goals of the project or is working against the project, so outlining specific ERP business benefits is critical.
5. Address Change at All Levels
Once you have C-suite support, you can address change at all levels of the organization. This is where you can use the results of your change impact assessment.
With an understanding of the impact the project will have on different stakeholders, you can develop a change management plan focusing on each of these stakeholder groups – from executives to process owners to business unit leaders to end-users (and everyone in between).
6. Focus on Culture
Your organizational culture may be resistant to change due to a history of poorly executed projects. On the other hand, your organizational culture may be open to change but misaligned with the project goals. In either case, cultural change is essential for digital transformation and should be incorporated into your change management plan.
If your organizational culture is already welcoming of organizational change, you can use this to your advantage. For example, when communicating with employees you can highlight how the proposed changes align with the organizational culture. This can help drive brand loyalty and encourage even the most resistant employees to embrace change.
The long-term success of your organization hinges on its ability to adapt and grow. Only by keeping pace with the competition, customer demands, and marketplace changes can you solidify your industry presence. Make sure your organization understands the impact of process change of employees.
7. Develop and Execute a Communication Plan
Often, it’s fear of the unknown or confusion over details that can impede user adoption or breed resistance. Strategic communication not only increases buy-in, but it also increases the effectiveness of employee training. When employees know the details of the change before training, then training sessions can be used to reinforce the details of how employees will conduct new business processes that have already been communicated to each of them seven times or more.
A formal communication plan can help you define your elevator pitch, your communication mediums and your responses to common questions and complaints.
In addition to communicating specific organizational changes to employees, you should also communicate the what, why and how of the project. Employees need to hear specifically how their roles and responsibilities are going to change.
8. Customize Your ERP Training
Even tech-savvy employees don’t innately know how a new system operates, and when you consider your less tech-savvy employees, teaching them a new system seems hopeless. But it shouldn’t be. There are many tips for reskilling employees when technology changes their job description.
The good news is that you have many resources available to educate your staff. In addition to the ERP vendor’s training materials, you can design customized training based on the process changes you (hopefully) documented.
While ERP vendors provide boilerplate training materials to use as a starting point, these are not going to be relevant to your employees unless you customize them based on the specific roles and responsibilities of each employee. This customized training should encompass all the processes and decisions that need to happen outside and within the system.
ERP Training Success Story
We helped this manufacturer implement a training strategy to increase user adoption of its new ERP system.
9. Continue to Ensure User Adoption After Go-live
Most ERP project teams are relieved when they cross the finish line of a go-live. Many months or years have been spent getting the project off the ground, so the last thing anyone wants to do is talk about how to extend the project. However, most user adoption issues are identified after go-live, and most of the benefits realization doesn’t kick in until well after go-live.
An effective organizational change management plan not only ensures employees are prepared for go-live, but it also ensures that they continue to improve their individual and team performance in the weeks and months after go-live. This incremental investment in time and money after go-live has returns that exceed the investment multiple times over.
If you’ve already gone live, we recommend conducting an ERP system usage audit using pre-defined KPIs to track system usage and identify risk areas, such as strong change resistance among employees. Increasingly, organizations are measuring the people side of change because they need to demonstrate the value-add of applying change management to their ERP projects or business transformations. There are change management metrics you can use to measure OCM success.
We worked with a manufacturing client that was having user adoption problems with its Epicor rollout. Some of the client’s departments had completely abandoned the software and reverted back to their legacy processes, so the implementation was at risk of failing.
We helped them assess how to optimize acceptance and use of the system. Without our help, this client was staring down the possibility of having spent significant amounts of time and money in software licenses and technical implementation services that resulted in expensive shelf-ware that fails to deliver business value.
Building a Quality Survey and Overcoming Survey-aversion
- Eliminate the negative word “survey” from your vocabulary – Instead, propose to solicit “targeted feedback” for the purpose of improving the ERP implementation.
- Position the survey to come from high profile leadership – Take advantage of the opportunity to convey influential messages from leadership.
- Understand the organization’s survey history – How have they been used in the past, and what were the resulting perceptions? Was the survey painfully long and cumbersome to complete? Did the results put someone in the hot seat?
- Be realistic about your organization’s ability and willingness to open the doors for suggestion (i.e. criticism) –The reluctance to give voice to possible dissenters is one of the main reasons for survey resistance.
- Consider segmenting responses from your major populations– It can be very revealing to analyze the difference in perceptions between types of system users, functional areas, length of service and level of position within the organization.
Tips for Success
- Define your audience and objectives –Are you trying to assess satisfaction with current or past projects? Are you trying to identify populations of negativity, so that you can address them specifically? Are you trying to determine whether your employees understand project objectives and are ready to tackle the upcoming challenges?
- Use open-ended questions sparingly –While they can provide depth to your summary, they take time to analyze.
- Include a powerful introduction –Prepare an intro that gives context for the questions, sets expectations for completion time, provides a clear level anonymity, explains how the information will be used and expresses appreciation for candid responses.
- Be prepared to act upon information that indicates opportunity –This may range from completely changing the ERP training plan, to crafting a message explaining why you won’t be addressing a common concern that the survey revealed.
- Include a follow-up –After the window for participation closes, follow up with a thank you message and provide any summarized results that support a positive message. For example, “The feedback consistently reflected a desire for more communication on when and how training will be provided, and this is being incorporated into the communication plan.”
What to Avoid
- Unnecessarily long surveys –Determine the appropriate amount of detail that will provide useful information for planning purposes. Eliminate questions that don’t produce meaningful data.
- Rating an individual or department team for a past project outcome –It is far more useful and less inflammatory to gauge employees’ levels of confidence in whether this particular project will be managed well.
- The perception that the information gathered was not used –This happens when respondents are not given any follow up acknowledgement. Even if the feedback is predominantly negative, a communication expressing thanks and intent to evaluate results for future improvement should follow the survey as quickly as possible.
Projects Don’t Have to be so Grim: The Fun Side of ERP Implementations
Let’s face it. The thought of going through the selection and implementation of a new ERP system for your organization is about as appealing as having your wisdom teeth pulled. It can be excruciatingly painful if leadership and team members don’t buy in to the project.
In most cases, making the commitment to upgrade software is extremely disruptive and time-consuming to everyone involved – from the C-suite to the warehouse, production and shipping departments.
However, it doesn’t have to be complete misery. You can and should allow your teams to have a little fun along the way. Having some fun in the midst of your project is a great way to create a sense of ownership among employees while using the opportunity to reinforce the vision and goals of the project. It is also a way to maintain interest and enthusiasm during the doldrums that are surely going to occur along the way.
As projects take on a natural ebb and flow, it’s up to the change management team to be proactive and strategic in planning relevant and engaging activities from inception through post go-live. Following are four ways organizations can make their ERP implementations less grim:
1. Project Branding
At the onset of the ERP implementation, leadership and the project team should sponsor a project naming contest. The goal is to create a project name that captures the essence of the project and is consistent with the corporate culture.
This is a great opportunity to communicate the purpose, goals and objectives of the project while generating employee engagement and awareness. It is important to include everyone, provide effective communication and celebrate the winners and others who entered. It doesn’t hurt to have a meaningful prize, either.
2. Celebrate Small Victories
Given that most ERP implementations take several years, it is important to celebrate small victories throughout the process. This can include team recognition for achieving key milestones of the project as you move forward.
Recognition doesn’t need to be expensive or time-consuming. Something as simple as public acknowledgement of individuals or teams through newsletters, status meetings and town halls can be very effective. Add an element of fun by giving those recognized a project-branded memento.
3. Recognize Individual Contributions
Take time to recognize individuals who are actively engaging in the project by contributing to process improvement, being a project evangelist, encouraging others and offering innovative ideas. Also, recognize those who are generally keeping a positive attitude when it may be easier to complain or, worse, be an obstructionist.
4. Hold Town Hall Meetings
This is an opportunity for leadership to be visible while providing updates on the status of the project, including timelines and training. Leadership should also reiterate project goals, linking them to overall corporate vision.
This is where change management gamification can come into play. Put simply, it means applying traditional game elements to a project to encourage employee engagement and adoption. It’s a strategy that calls upon natural inclinations toward fun and earning rewards. One fun idea for this setting is to play ERP Jeopardy with project-related categories. It is best played in front of an employee audience and should include fun prizes for all the participants.
5 Reasons to Employ Top-down Change Management
1. Standardization and Scalability Requires Top-down Change
If left to their own devices, disparate employees and workgroups in most organizations would prefer to do things their own way. Even in cases where employees embrace potential changes and improvement, employees will always have different ways of performing functions.
As anyone who has ever started or grown a business knows, it is extremely difficult to scale and standardize a company when employees are acting incongruently. This is a key reason why change and direction set from the top is critical to a successful ERP implementation.
2. Customization is a Symptom of Bottom-up Change Management
While most people don’t associate change management with ERP customization, the two are inversely correlated. In other words, the less top-down change management you invest in, the more customization of the software you are likely to experience since customization requests are often a form of change resistance.
The opposite is true, as well – the less you customize ERP software during implementation, the more change management will be required. This is not necessarily a bad thing since customization can be more expensive (especially in the long-term) than change management.
3. Strategic Decision-making Starts at the Top
No matter how talented, loyal or open-to-change your employee base is, it is unreasonable to expect that they are going to have the best strategic answers for the company as a whole.
For example, entering new markets, acquiring other firms or moving to a shared service model are typically decisions made among the executive ranks. Similarly, key strategic decisions that will ultimately affect your ERP implementation need to be driven by the executive team.
Common examples we see among our global client base include the decision to standardize business processes across locations, redefining organizational roles and responsibilities as a result of new ERP software and facilitating business process reengineering across the organization. These decisions should be made by the executive team and implemented as part of an organizational change management strategy.
4. ERP Implementation Resource Constraints Can Only be Fixed by Executives
It’s no secret that most ERP implementations take more time, money and resources than expected. This is largely because expectations are unrealistic from the start.
The executive team should set the tone for the entire project by ensuring appropriate timelines, milestones, budgets and resource plans are set from day one. In addition, it is the executive team’s responsibility to ensure the company is investing in the right ERP implementation success factors, such as business process reengineering.
5. The Big Picture Typically Suffers When Using a Bottom-up Approach to Change Management
Most consultants and implementing organizations focus myopically on the technical aspects of implementation rather than the business aspects. This happens when the project vision is set by the IT department instead of executives.
However, when executives set the project vision, the company is more likely to focus on business process reengineering and pre-implementation planning, which will have a bigger impact on ERP success than the technical activities will.
Why Change is so Difficult (According to Science)
Any type of work-related change, regardless of how large or small, is typically met with resistance. These sentiments are universal and affect everyone from part-time employees to C-level executives. Why? Because it’s built into our biology.
Here’s what you need to know about the science of change resistance:
1. Humans are Creatures of Habit
Researchers have determined that humans are most comfortable when involved in predictable activities within the same context day after day. Any deviation from this routine can be difficult to manage. This is true even when changes may be beneficial.
To be a viable competitor, a company must embrace and manage change. If managed effectively, change is worth the effort when productivity, morale and profits begin to grow. Let’s face it, change is neither easy nor fun. In fact, organizational change has many deep and far-reaching impacts. Addressing resistance to organizational change is important from the start.
2. Change Makes Humans Feel Stressed and Overwhelmed
Change, particularly in the workplace, can trigger anxiety. In fact, organizational change is one of the top reasons for employee burnout and stress. New job responsibilities may make employees feel incompetent. As they worry about their job performance, they become increasingly fearful of change. This is especially true for long-time employees who’ve been following particular business processes for a very long time. When things inventively do change, there is a tipping point at which employees can no longer absorb any more changes, and this is what’s called change saturation.
3. Humans Hunger for Certainty
The human brain yearns for certainty and makes every effort to avoid uncertainty. Organizational change can cause employees to feel uncertain about their job security – could process automation make their position obsolete?
4. Humans Know That Change Can Result in Unforeseen Problems
In everyday life, humans instinctively anticipate negative outcomes, regardless of how unlikely they may be. It goes without saying that the fear of negative outcomes leads to change resistance.
What if an employee was greeted on Monday morning with the news that their supervisor was replaced by someone new? This may be good news if the old supervisor was a poor manager, but the employee may still focus on the negatives.
Experts in Organizational Change Management
Change doesn’t have to be scary. With a strong change management plan in place, change can be a springboard into a new realm of opportunities. Be sure to check out our organizational change management checklist to help you get started and make sure you’re covering all your bases.
What is change management? It is the process a company takes to ensure that everyone in the organization is working together to take advantage of these opportunities. From your CEO to your front-line employees, it means making sure that your entire workforce is ready to embrace the transformation. Yet, talking about change management is only so convincing. Sharing real-life change management success stories can drive the point home and help you visualize your own company following suit.
Looking for an organizational change management consultant as you step into the unknown? Request a free consultation below.