Why do Organizational Change Initiatives Often Fail - Research Paper Example

?Why do Organizational Change Initiatives Often Fail Executive Summary Change is imperative and change in an organization can occur during mergers/acquisitions, during expansion and growth, during downsizing and during restructuring or implementation of new technology (Stanleigh, 2008). How to change may differ across organizations but change is essential for progress or as Abrahamson (2004) calls it “creative destruction”. Without pain no change is possible and the justification for change is “change or perish”. Change could involve a process, technology or public process. Research indicates that almost 56-70 percent of mergers and acquisitions fail to achieve the intended objectives while 90 percent of culture change initiatives fail (Atkinson, 2005). If the change objectives are not achieved, the organization should strive to evaluate the causes of failure. Once the causes can be identified it may be possible to apply change management procedure to achieve the change objectives. Consequences of change failure can be disastrous. Change failures not only result in waste of resources but when changes fail people go cynical and lose motivation to work. Failure in managing change can lead to preconceptions and perceptions that can have a demoralizing effect on employees. The causes of failures that have emerged include shortcomings in change leadership, insufficient attention given to the complexities in the change process, or repetitive change syndrome resulting in initiative overload, change chaos and cynicism. Failures could also occur due to lack of clear compelling statement or vision, or when there is no definite plan or directives, no goals and programs, no methods or deadlines. Speeding up the change process could lead to errors that could be devastating. Management may also fail to recognize that adjustment to change could take time. Various tools have been suggested to manage change effectively the most important suggestion being that change requires effective leadership; it requires more than just managing change. This should be a visionary leadership where the vision is effectively communicated to the people concerned. Empowerment is another effective tool to obtain the intended outcome in the change process as empowerment helps eliminate the obstacles while it also reduces the alienated feeling that employees develop. However, a practicing manager needs to ensure that the stakeholders are involved in the change process from the very beginning. No sense of urgency should be transmitted as this could end up in change chaos. Communication should be honest and be able to generate trust and confidence. Short-term wins should be created as it is an effective tool in receiving cooperation for furthering the process of change. This research was conducted to synthesize the varied perspectives on change leadership and change models that could help an organization to achieve the change objectives. The research will review the top reasons for change initiative failure and how they can be remedied. Various change models of renowned scholars such as Kotter, Lewin, Bridges and Abrahamson have been reviewed and evaluated. 2. Literature Review 2.1 Causes of failure in the change process 2.1.1 Resistance to change Manifestation of resistance Employee resistance to change can be exhibited or communicated in a number of ways, the employees could express cynicism or they may not be “open” to change or “not ready” for change (Peccei, Giangreco & Sebastiano, 2011). The resistance to change manifests itself mainly through low-engagement in pro-change behaviors. There can even be more active anti-change behaviors as when people speak out in public against the change or when they undermine its implementation. Resistance is often displayed passively and covertly, asserts Atkinson. If they were displayed in a forthright manner it would have been possible to deal with them logically. Some times staff may attend a change project and display approval but underneath this external facade they nurture anxieties and fears. Causes of resistance Resistance is likely when the employees do not understand the purpose of change, its impact on the organization and on their job security. Resistance to change is likely in case of ineffective communications, when the purpose of change has not been communicated properly (Hoang, 2007). People resist disturbing the equilibrium as they are used to a certain pattern of working. Employees could further resist change as they simply do not want to be involved in the change process. Pain is part of any change which indicates the likely resistance to change. The change process is carried out by people and especially by the senior executives. Kegan and Lahey (1997) focus on the real reasons why change process fails. The authors claim that the valued employees are not purposefully resistant. The reason for failure could be that these employees are caught in a competing commitment. For instance, the employees may feel that if they deliver the current assignment successfully, they would be assigned tougher assignments. This makes them resist from giving their best and thereby causing failure in the change process. This attitude can undermine the employees’ as well as the company’s success. The manager can unknowingly pass on this attitude to his subordinates. The third reason for resistance could be that employees do not have the ability and the competencies to do what is required in the change process. If they feel they would not be able to acquire the new desired competencies, they would be negatively disposed towards any change. The fourth reason could be that employees do not share the value driving the organizational change. Possible solutions Resistance to any change is natural and this resistance hinders progress. Resistance can be dealt with by the right leader who would be able to identify such complexities in behavior and guide them through a productive process (Kegan & Lahey, 1997). Atkinson (2005) suggests that the change management model should first attempt to treat resistance as a powerful ally. It should be considered as natural and as a positive indication because when people resist better solutions can emerge. Thus the change model should have the right leader who would be able to predict the resistance. Once this is known, the leader would also know how to overcome resistance. Sande (2009) suggests the ADKAR change model which involves five stages - Awareness, Desire, Knowledge, Ability, and Reinforcement. The change management team has to comprise of members other than the senior executives of the company as this could lead to biases or favoritism. The reasons for resistance have to be ascertained and evaluated whether it carries weight. It could be possible that the management or the leader has overlooked certain critical impacts of change. Resistance can then be handled by creating awareness, by communicating the reasons for change and the expected outcome. Scholars like Kotter and Gill agree that effective communication is vital for transformation. Without the right communication rumors can lead to distortion of facts. Then the desire for change has to be created. The reasons for resistance such as lack of competencies and ability are also dealt with through this model of change. Reinforcement of the organizational values also plays a vital role in effective change management. Even the need for training has to be informed because people need to know why they need to understand something. People should be encouraged to give their best and not hold back as has been pointed out by Kegan and Lahey (1997). The model of resistance to change is based on two key factors, contend Peccei, Giangreco and Sebastiano (2011). The first is the extent to which the employees perceive the change to be beneficial or detrimental to their own interests. This is based on individual’s perception on the outcome of change. The greater the perceived benefits of change the lower the resistance is likely to be. The second factor is the extent to which the employees are involved in the change process. These are termed as perceived favorableness and fairness of change. Organizational commitment has been found to be related to more positive employee attitude and reactions to change. When the employees are involved in the change process they are likely to be more supportive of change and exhibit lower levels of resistance. Higher the degree of involvement, lower the resistance to change is likely to be. The change model of resistance to change has been shown in the figure below: Source: Peccei, Giangreco and Sebastiano (2011) This figure suggests that the attitude to change is the key mediator to change. However, Organizational commitment has been identified as a direct antecedent to resistance to change. Commitment can be affective, normative or continuance. However, affective commitment or the emotional involvement with the company is likely to increase the organizational commitment and thereby impact the resistance to change. Through enhancing organizational commitment managers can create new opportunities in the organization during the change process. Employee involvement may also help to reinforce and enhance employees’ sense of attachment to the organization. Honesty, trust and openness can enhance motivation among staff thereby enhancing their involvement and commitment (Donnelly, 1994). 2.1.2 Lack of effective leadership Management of people is more important than the combined effort, strategy, service quality, product or expenditure on research and development (Gollan, 2006). The success of change management lies in a smooth transition process. If an organization lacks the ability to manage change, it leads to failure of organizational initiatives to change. Typically change initiatives fail because of the shortcomings in change leadership, contend Kee and Newcomer (2008). The change leadership may fail to understand the responsibilities and challenges in the change initiative. Insufficient attention may be given to the complexities in the change process or the critical stakeholders may not be adequately involved in the change process. Gill (2003) contends that lack of effective leadership in introducing and sustaining the change management process can lead to failure in organizations. Failures occur due to lack of clear compelling statement or vision; there is no definite plan or directives, no goals and programs, no methods or deadlines. Employees feel alienated and under these circumstances leadership creates meaningful change. How the change initiative is introduced in the organization makes a difference. During the process of change, employees pass through the phases of denial, resistance, exploration and commitment (Stanleigh, 2008). Failure can occur when management fails to recognize that adjustment to change takes time. Each individual differs and hence each would undergo the different phases of change at their own pace. The management may end up dealing with employees who are burned out, who cannot work in cohesion with others, who are angry and frustrated. Thus failures in change process can occur when all the employees are not engaged, when the change is managed only at the senior level without communicating the purpose of change to other employees, or when the staff is not given time to vent and then undergo the process of change. Gill (2003) suggests a model that entails creating a guiding coalition which should comprise of a group of people that have the power to lead change. They also need to work together as an effective team. Effective communication of the vision and strategy is the essence to effective change. The leadership should be able to connect the message with the needs, interests and feelings of those whose commitment is needed. Empowerment can stimulate people’s intellect and imagination which can add creativity in the change process, in risk taking and in trust. Empowerment also has the power to get rid of obstacles to change. This becomes easy as empowerment implies involving people in the change process. Empowerment manifests as intrapreneurship and this model of change met with success at General Electric. Performance expectations and rewards were realigned and the team was required to meet ownership, stewardship and entrepreneurship goals. The results were measurable as GE strengthened its position in several global markets and increased its market value. Kee and Newcomer (2008) suggest that leaders cannot implement change unless they are fully involved. They do not agree with the top-down or the bottom-up approach and suggest a middle path or the transformational stewardship. In this approach the organizational leaders serve as facilitators of change. Sometimes the top leaders may have to confine the change process and involvement to selected people without involving all the employees. At other times, participants from all ranks in the organization need to be cultivated. Leadership has to encourage people from all levels to contribute effectively and invite suggestions. The leadership attributes should reflect the leaders’ inner beliefs and values, their mindset, their interpersonal abilities and interactions. Transformational stewardship has the ability to overcome resistance that arises due to top-down approach. When the top leaders interact with the employees a sense of ownership is created for those involved with the change process. The change process requires strategic goals from the top leadership and involvement of the informed and knowledgeable members of the organization at all levels. 2.1.3 Lack of proper planning Visionary leadership and effective communication may be vital for transformation projects but these do not always lead to success in the change process (Sirkin, Keenan & Jackson, 2005). Kotter (1995) finds that people try to skip steps in order to expedite the change process and this is when errors are likely to occur, leading to failures in change initiatives. Skipping steps only creates an illusion of speed without producing any satisfying results. The change process goes through a series of phases and any critical error can have devastating impact on the entire process. Failures also occur when people end up responding to the condition as they arise, most often in an ad hoc manner, without any planning (Orlikowski & Hofman, 1997). In the case of technological change there is a discrepancy between how people think about change and how they implement it. This discrepancy makes the change process more difficult and challenging. Abrahmson (2004) refers to ‘repetitive change syndrome’ as the reason why change initiatives fail. Initiative overload, change chaos and cynicism are the three symptoms when change is repetitive without any planning. The ‘repetitive change syndrome’ harms the company’s capacity to handle change while also impacting routine operations. This occurs when employees are unaware of the effects of constant change in their organization. This demonstrates lack of top management involvement. The author describes a US pharmaceutical firm that jumps at several initiatives only to drop it when they find something more interesting. When so many initiatives have been experimented upon by the organization chaos prevails as none knows how to go about implementing change. This results in anxiety and political fighting. Employee burnout also results which lead to failure in implementing change and this is expressed as cynicism. In a fast-moving consumer goods company the executives did not agree with each other on when the change initiatives had been started, stopped, re-started or completed. Sirkin et al found that DICE factors are essential for effective change and without which failure in organizational change is likely. The DICE factors are the four hard factors – duration (the time between project reviews), performance integrity (capability of the project teams), commitment of the staff and the executives (as these two are the most affected by change), and additional effort that employees need to make to cope with change. Companies assume that if change initiatives take long to implement, it is more likely to fail and hence Sirkin et al suggest if a long project is reviewed frequently it is more likely to succeed than a short project that is not reviewed frequently. The time between reviews should not exceed eight weeks and ideally should be done twice a month. The DICE framework enables the executives to tap into the insight and experience of their employees. Middle managers are generally known to block change but Sirkin, Keenan and Jackson (2005) find that middle managers are prepared to support change efforts even if it calls for additional work, or leads to uncertainty and puts their jobs at risk. Resistance from these managers arises when they lack sufficient input to initiate change. The same managers would support change if they have the right tools, the language and the right forums to express their concerns. The DICE framework helps people do the right thing by change. Kotter’s model is an eight-step process where the author emphasizes that not recognizing the urgency for change is the biggest error that an organization can make. Not having a guiding coalition is another serious error in the change management process. Moreover, the guiding coalition should not comprise of members of the senior management team because Kotter explains that had they been effective the organization would not have needed change at all. Often failures occur when the senior management fails to recognize the importance of a powerful guiding coalition. When there are plenty of plans and programs with no vision, the change process invariably fails. Without a sensible vision the organization can follow the wrong track and lose valuable time and efforts. This phase also requires effective communication and Kotter says it should be possible to communicate the vision in less than 5 minutes and generate interest. If not, then the team is not yet over with this phase. Kotter highlights that when the need for change is not communicated properly, when the employees do not believe that change is useful and that useful change is possible, they would not be willing to make sacrifices, thereby rendering the change process a failure. In addition, obstacles such as the organizational structure pose problems leading to failures. There are bosses that refuse to change and make inconsistent demands. Even after progressing to the fourth stage the process can come to a halt if the senior executives undermine the new initiatives. At times, they may feel threatened by change and claim that change is not warranted. Kotter believes that real change takes time and if there are no short-term goals set to achieve, the entire process risks losing the momentum. Without short term goals people might choose to resist change. If the workers are able to perceive short-term gains and achieve goals, if they find that the transformation effort is successful, the quality of transformation goes up. Both productivity and customer-satisfaction rating improves. Pressure to produce short-term gains can be a useful effort in the change process, asserts Kotter. Only long-term goals can reduce the urgency levels. This planning too needs to be done in advance. However, while leaders should focus on obtaining short term wins which would serve to motivate the people such short-term wins should not lead to complacency. 2.1.4 Cultural change Cultural differences during mergers and acquisitions leads to resistance as people apprehend a cultural misfit because the fundamental differences are evident in thoughts, actions and behavior of employees (Olie, 1994). This leads to conflicts and may hinder progress in the acculturation process. The decision-makers give disproportionate attention to strategic fit as compared to integration issues. The cultural differences are evident in dress codes and behavior which divides them into ingroups and outgroups. This hinders the psychological integration as resistance to change is high. However, resistance does not occur just because the cultures differ. Culture can also work against change when organizations have two sets of rules – one that is found in print and the other that is followed (Maurer, n.d.). The official rule can be found on the company website or in the employee handbook, where the organization claims to be pursuing diversity and teamwork. However, the other set of rules actually governs how the organization works. This is not found in writing and is simply followed by the managers to suit their convenience. Cultures that are resistant to change may pose significant challenges in leading change efforts. Thus, Kee and Newcomer suggest that in the short run the leaders must address potential obstacles to change but in the long-run they must devise strategies to make the culture more change centric. Change in corporate culture has to be brought about for any change to be effective. However, institutionalizing change in corporate culture requires a conscious effort to be made to show to people how the change in approach, behavior and attitude has helped improve performance. On their own, people could create inaccurate links and feel demoralized. To see the right connection requires effective communication. The fact that performance has increased has to be shown to people. The second factor in institutionalizing change in corporate culture is taking enough time to make sure that the top management of the next generation personifies the approach. A wrong succession decision at the top can undermine all the efforts put in by the current generation. The board of directors should necessarily be an integral part of the renewal effort. The board must understand the transformation details without which they would not realize that their decisions are wrong. Such efforts would also ensure that the change in corporate culture trickles down to every function within the organization, including the succession decision. 2.1.5 Lack of effective communication with the stakeholders Stakeholders perceive that they have a role in and are affected by the organizational change. This includes both the internal and the external stakeholders. It becomes essential to address the perception that these stakeholders have regarding the potential loss or gain through the change initiative (Kee & Newcomer). Most often organizations lack a collaborative network to facilitate communication between the leaders and the stakeholders. If leaders can consistently and intentionally communicate the shared vision of collaboration to the stakeholders they promote a shared vision that could generate trust and public interest. However, the internal stakeholders or the employees are the most important stakeholders and the management cannot afford to overlook their views and motivations. Even at the time of strategizing change the leaders have to secure the stakeholder buy-in and collaboration. Kotter contends that many times the managers develop good transformation vision and attempt to communicate this in a single meeting or through a single instance of communication. This invariably has no effect because few people seem to understand the new approach. Some organizations spend considerable time in delivering speeches in a bid to communicate their vision but this too fails. Some even print newsletters but all these efforts cease to communicate or eliminate the cynicism that some workers develop. Communication can take place in the form of words or deeds and deeds is the most powerful form. Good communicators would incorporate messages into their hour-by-hour activities, says Kotter. They would explain how the solutions fit or do not fit into the business situations. When such information is shared the workers feel involved. When the employees receive all the information, when they believe that change will bring benefits, they would be willing to make small sacrifices. It is also important to understand how the key stakeholders view the impact of change. Kee and Newcomer refer to the Journey of Change which was disseminated throughout the organization to address the perception of the internal stakeholders on their views of the potential loss or gain. Through this effort in communication, the key stakeholders were involved in developing the change strategy and in formulating the domains of value. This helped in reducing the stakeholder fears and provided opportunity for collaboration. Communication becomes critical in downsizing and this is the time that the management requires support and understanding from the key stakeholders. Timely and effective communication could help allay fears and also communicate the commitment to treat fairly all those who would be laid off (Kotter, 1995). 2.2 Other models of change While Kotter’s model emphasizes that considerable time should be sent at each stage as any error at any stage can be devastating, Jick’s ten-step approach helps evaluate the change process already in progress. Implementing change should be an ongoing process with thoughtful questions asked at each of the stages. How a manager implements change is as important as what the change is (Mento, Jones & Dirndorfer, 2002). The implementers are also required to be sensitive to the voices in the organization during the change process. Lewin suggested a three-stage model of change that involves “unfreezing”, “change” and “refreezing” (Orlikowski & Hofman, 1997). Unfreezing is the preparatory stage after which change is effected and then the organization strives for stability. This model, however, does not work in the turbulent, flexible, and uncertain organizational and environmental conditions. It is even more difficult in technological change management because technology change is an ongoing process and not just one event. Besides, technological and organizational changes cannot be anticipated ahead of time. However, the focus in this model is on creating urgency for change, communicating the vision, leading change and measuring the progress of change across several dimensions (Mento, Jones & Dirndorfer, 2002). The organizational structure may have to be redesigned to fit change. Successful and sustainable change can be achieved by focusing on people’s behaviors, values and beliefs (Court, 2011). Court suggests the involvement of the HR department in helping the organization to build the capability to change. This model or the learning approach entails linking the activities involved in delivering an organizational transition to those required in an individual’s transition. This is based on the wheel of learning and involves facilitating the corporate memory on change, diagnosing the transition, shaping interventions and tracking improvement. This has been depicted below: Source: Court (2011). The best way to be successful in future ventures is to learn from past experiences and the HR personnel play a valuable role in capturing the lessons from previous organizational change. Often the technical specifications are well understood but how the new team would interact and behave in the future when the new process or system is installed, is not diagnosed. This invariably becomes a cause for failure. With the new technology or system skills gaps are identified but training is not the only solution. Other interventions may be required like “action learning” assignment for each member. The HR professional have to work alongside and help the staff with personal challenges. In tracking improvements too, Court believes that the HR professionals play a vital role in helping individuals see how they have changed and see the positive results that have been gained from the change. 3. Conclusion The literature review on the change process reveals that change is inevitable and change is here to stay. Since change projects encounter more failures than successes, it becomes important to evaluate failures. Learning from the past is the best way for any organization. The organization learns what mistakes to avoid. It also learns why the failures have occurred. Change is an ongoing process and hence knowing the causes of failures would help the change management team to devise the right strategy for change. Different scholars have suggested different reasons for failures in achieving the change objectives. What needs to be clearly established in the minds of the people is that change is inevitable and that change will causes some amount of pain. Managing change is to reduce this pain to the maximum possible so that the transition is smooth. The causes of failures that have been identified by different scholars range from lack of vision to lack of strategic change. The research suggests that failure in the change process can occur due to several reasons but the five most important ones that have emerged are resistance from employees, lack of effective leadership, lack of proper planning, lack of effective communication to the stakeholders, and the lack of ability to handle the culture change. Resistance itself could occur due to lack of leadership or lack of communication. It could also stem form lack of proper planning or when the organization is unable to handle the culture change. Therefore resistance appears to be the most critical element in the change process that needs to be addressed. This is not always easy because resistance manifests itself in many ways. At times the stakeholders may be exhibiting their consent towards the change process but secretly harboring fears and anxieties. It has also been suggested that failure in achieving the change objectives could occur because of shortcomings in change leadership. The change leadership may not have the ability to understand the complexities in change. Abrahamson suggests that initiative overload could be responsible for failure while it could occur due to lack of compelling statement or vision, says Gill. Creating a sense of urgency can only create chaos and disturbances. Before exhibiting the urgency it would be advisable for the management to lightly discuss the issue of change – the causes, the necessity and the expected outcome. This could reduce the impact of knowing that change is envisaged. This implies that the compelling vision has first to be shared with the people concerned. This would also reduce the impact of the initiative overload. Employee involvement has also been suggested by many scholars as an effective tool for achieving the change objectives. Employees should not feel alienated, says Gill and this situation can be avoided when they are involved. Communicating the vision is the first step of involvement and involvement should be undertaken at each of the phases in the change management process. Perspectives vary even as far as the models of change are concerned. However, most scholars agree that change leadership should be effective and that change requires more than just managing change. A guiding coalition is what has been suggested which means that the member of the change team should work in cohesion with each other. The suggestion of the involvement of the HR personnel is not appropriate because biases could creep in during the process which could impact the outcome. A practicing manager, at the outset, needs to understand the reasons for resistance as this would help him devise the change strategy. Through effective communication he should have the ability to share the compelling vision. This coalition should effectively be able to communicate to the rest of the employees of the need for change and the expected outcome. Members of the core group should be empowered as empowerment is an effective tool for change. The communication should be honest and should be able to generate trust. Even though work may be delegated regular evaluation of the progress should be conducted to ensure the process is on the right track. The perception of the internal stakeholders is essential to get them involved and make them feel a part of the change process. This could enhance their organizational commitment and develop a culture of change within the organization. References Abrahamson, E. (2004). Avoiding Repetitive Change Syndrome. MIT Sloan Management Review. Winter 2004 Atkinson, P. (2005). Managing resistance to change. Management Services, 49 (1), 14-19 Court, T. (2011). How the HR function can build the capability to change. DEVELOPMENT AND LEARNING IN ORGANIZATIONS. 25 (1), 16-18 Donnelly, M. (1994). Managing People and Quality in a Climate of Change. Managing Service Quality, 4 (4), 41-44 Gill, R. (2003). Change management - or change leadership? Journal of Change Management, 3 (4), 307-318 Gollan, P.J. (2006). High involvement management and human resource line sustainability. Handbook of Business Strategy, 279-286 Hoang, P. (2007). Change management and force field analysis: change takes place constantly in business. Paul Hoang considers the barriers to change and looks at how managers can bring about change effectively (Business Strategy). Business Review, 13 (4) Kee, J.E., & Newcomer, K.E. (2008). Why do Change Efforts Fail? What can Leaders do about it? The Public Manager. Fall 2008 Kegan, R., & Lahey, L.L. (1997). The Real Reason People Won’t Change. Harvard Business Review. November 2001 Kotter, J.P. (1995). Leading Change: Why Transformation Efforts Fail. Harvard Business Review. March-April 1995 Maurer, R. (n.d.). Why 70% Changes Fail? Mento, A.J., Jones, R.M., & Dirndorfer, W. (2002). A change management process: Grounded in both theory and practice. 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