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Organizational Change Management – The Underrated Factor in Business Transformation

By Anish Sarkar, Indian Country Head, Mercer LLC

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Anish Sarkar, Indian Country Head, Mercer LLC

Conventional consulting wisdom asserts that people, process and technology are the three major facets of any business transformation. However, there is a fourth facet which, in a sense, encompasses all the other three but is usually underrated as a critical success factor and often outright ignored. I am talking about Organizational Change Management or OCM. While some consulting clients strongly believe in the importance of OCM, a large number continue to feel that it is a waste of time, effort and money.

There is generally a tendency to equate communication planning with OCM, and this is a serious fallacy. A robust communication plan is integral to change management but there’s much more. For example, an OCM work stream needs to assess the impact of the change on various stakeholder groups in the company, understand and monitor their readiness for change and, most importantly, establish a network of change agents to drive the transformation. Change leadership has to come from within the organization – it can never be done effectively by consultants themselves.

So, is change management an art or a science? It’s a bit of both. Obviously, because it ultimately relates to people and managing their behavior, the right approach has to be determined subjectively. Individuals and groups are different in every organization, and so must every OCM strategy be. However, tools like surveys and change readiness dipsticks can be used to bring structure and rigor to the process, as well as make it measurable. And nothing beats good old knowledge management – Problems and their solutions, though never a finite universe, often tend to repeat themselves.

Organizational Change can be an Important Factor, Only if it is Pursued Strongly

OCM lies at the confluence of consulting and organizational behavior, though it also requires basic knowledge of business processes and technology tools, as well as the principles of project management. A good change manager will work closely with the project leader and be jointly accountable for achieving the programme objectives, but should not be shy of calling out change risks or recommending unbudgeted efforts (on additional training, for instance), even if they have significant impact on the project timeline. Ignoring red flags helps to meet short-term project objectives but can spell disaster down the road.

Let’s talk about a real-life example. A very successful manufacturing company was putting in place a new business reporting framework and state-of-the-art technology tool for all its managers but two-thirds of the way into the implementation, the project team heard through the company grapevine that there was great skepticism about the whole programme and most members of senior management were not interested in using the new system anyway. Their logic – The business was doing great and they were fully in control of their respective portfolios so why change anything?

Here’s another one. A large global conglomerate had launched a strategic initiative to bring in common processes and tools in different functions like Finance, Procurement and HR across all its various business units. There was strong executive sponsorship for the programme but six months into the project, progress was limited, with the appointed consultant looking at a major overrun in the first phase of the engagement itself. Scheduling meetings was getting to be very difficult, data received was incomplete and inconsistent, and there was a groundswell of opinion that things would get worse, not better, for the business with the impending change.

In both situations, which most consultants will be able to relate to, represent classic change management failures. In the first instance, the major issue was that there had been no attempt to establish change leadership within the organization – If the top management didn’t adopt the change, how could other managers be expected to do so? Clearly, the project team had anticipated the resistance but decided to proceed with the implementation regardless, without meeting the problem head-on by addressing the individual concerns upfront and securing buy-in.

In the second case, the project team had failed to understand or appreciate the sheer number and diversity of stakeholder groups, and how differently the change impacted each of them. Emotions ranged across the spectrum from blissful ignorance to abject fear, resulting in actions (or lack of them) calculated to impede the project. Given the sectorial, geographical and cultural spread of the organization, it was virtually impossible to mobilize any transformation on the ground without a systematic assessment of the change impact.

Is OCM then a panacea for successful transformation? No, it isn’t. A sound business case, experienced programme manager, competent execution team and suitable subject matter experts are certainly critical. These are the visible pillars of any consulting engagement or organizational initiative. However, a robust change management strategy can significantly increase the probability of success, even though it continues to remain more conspicuous by its absence in a world of shrinking timelines and budgets.

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