There can be no continuing success in modern business without rapid organizational evolution. Technology, communication, regulation and the economy all move too fast today. No company can afford to stagnate. In fact, change might be the only thing businesspeople can count on today. Because change is happening faster than ever, adherence to change management best practices is essential.
Change Management Defined
In very broad terms, change management refers to a specific set of change management policies companies use to deal with unexpected change and the explicit and purposeful change management procedures they use to implement pre-planned, strategic changes. The change management process should cover many (if not all) aspects of a business, including the company environment (organization culture), processes and procedures, technology, communications, overall infrastructure, management hierarchy, and more.
Change management means doing as much as possible to control and supervise the inevitable process of change rather than allowing change to simply happen. The process begins with a comprehensive change management risk assessment and doesn’t end until changes — foreseen and unforeseen — are brought to successful fruition with a minimum of harmful disruption.
Two Types of Organizational Change
In the realm of business, management change is considered either “Transformational” or “Adaptive.”
Transformational
Transformation change can happen by surprise — as in the unexpected death of a company founder or the abrupt resignation of a CEO — but more often, transformation change is part of a plan. Transformation change is part of the “big picture” and is how organizations move in the direction they want to go. Merging with a competitor, expanding overseas or closing down a division are common examples of transformational change. Obviously, transformational change will require a change management process designed to handle big changes.
Adaptive
Adaptive change is the normal adaptation to ever-changing business dynamics. This kind of change is no less important but is usually much less dramatic in size and scope. Adaptive change can be planned but might need to be undertaken on the fly if events dictate. A large increase in orders that might require hiring more employees is one example of adaptive change. Planned upgrades to computer systems are another. Adaptive change policies should be integrated into day-to-day management and should be second nature to management teams.
What Drives Organizational Change?
Of course, many things can be a catalyst for organizational change, and it is impossible to name them all. Here are a few drivers of change that can be anticipated and should be looked for:
- Changes in leadership, governance and top management
- Structural changes and reorganizations
- Improvements in technology
- Changes or obsolescence in business models
- Expansion in product or business areas
- Competition
The Role of Risk, Accounting and Audit Professionals
As in most areas, the role of the risk, audit and accounting divisions in change management cannot be understated. Making sure planned changes are successful and implementing the correct reaction to unexpected change often falls to this critical group of employees.
The following skills are incumbent on employees in the accountant department during transitional periods:
- Clearly communicate: Listen to all interested parties.
- Stay organized: Stay organized and keep others organized.
- Be detail-oriented: It’s why the company has accountants.
- Make suggestions: Don’t just watch things happen.
- Delegate: No department or individual can do it all.
The Change Management Process
The change management process can be defined and tackled in five steps:
1. Be Prepared
The first and maybe the most important step in change management is preparation. Company logistics and infrastructure need to be prepared in advance of the change, and, in many cases, company culture needs to be prepared as well.
During the preparation phase, the emphasis should be on making sure the entire organization understands the reasons and the importance of the changes that are coming. All changes should be communicated as a way to solve a pressing problem. This will encourage acceptance and cooperation at all levels.
2. Make a Plan and Communicate It
Step 2 is to formulate an actual plan of action. Once the plan is approved by management, it should be communicated throughout the company. A good plan will include the following aspects.
- Set goals and objectives: Determine what, exactly, is going to be accomplished by the proposed changes.
- Establish checkpoints, performance indicators and audits: Success and failure should be tracked all along the way.
- Form teams: Organize people into effective groups to form a chain of command.
- Define limits: Clearly define the scope of the change.
- Be flexible: Problems will arise, and stumbling blocks will appear; make sure the plan is flexible.
3. Implement the Changes
The goal of change management is the successful implementation of planned changes and successful dealing with surprises. The implementation phase is what it’s all about.
The operative word during this step is management. Guide and “manage” the teams that were formed in Step 2. Empower them to take the correct steps and keep the plan on track.
4. Reinforce the Change
Once implemented, it’s important to make the changes stick. In some cases, change will entail drastic variations in company culture. This must be nurtured if it is to endure.
Reward people for adapting to the change and remind people of why the change was necessary.
5. Audit and Test
Detailed analysis and testing over time is the best way to find out if the change management process was truly successful.
Be Ready for Change
We’ve touched on the importance of preparation above, but it cannot be overemphasized. Being prepared for organizational change is the essence of change management and should be first on every list of change management best practices. Proper change management involves providing an organization with a blueprint for changes, whether they are planned or come as a surprise.
KnowledgeLeader has an extensive library of tools and templates that deal specifically with the subject of change management. Our tools are designed to be customizable guides that save managers and institutional change agents valuable time and effort.
As a good starting point, we suggest the Change Management Capability Maturity Model (CMM).
Our CMM tool helps the institutional maturity of an organization's change management process. More than 60 subject-specific data points can be formulated into questions companies ask themselves to determine precisely how ready they are to deal with change. And suggestions for improvement are, of course, included.