The Basics of Change Management

Change is constant. Failure to adapt to change can lead to project failures and cost overruns. According to the Project Management Institute (PMI), for every $1 billion invested in projects in the U.S., $122 million is wasted due to poor project performance. A staggering 70% of organizations have experienced at least one project failure in the last year.

With the consequences so dire, effective change management is a critical discipline for any organization. Having the right tools and processes in place will help businesses mitigate risk, pivot and adjust quickly, enabling them to support consistent, enterprise-wide success. 

What is Change Management?

Change management is the process of managing changes to a project or organization. Project change management, especially for maintaining industrial assets or implementing large capital projects, focuses on clear work processes, responsibilities and communication that track how scope changes impact cost and schedule with clear review and approval paths that must be followed. 

Organizational change management is also interested in ensuring successful outcomes of planned initiatives.  Some examples of change that organizations need to proactively manage would include integrating of people and corporate cultures following a merger or acquisition, process improvement initiatives or digital transformation which involves implementing new technologies that often dramatically disrupt the status quo.

Types of Change

The primary types of organizational change are transformational, incremental and developmental.

• Transformational change affects the entire organization and often occurs due to major shifts, such as shifts in customer demand or implementation of a new company-wide CRM.
• Incremental change is characterized by small, gradual alterations to existing processes or products. They are often continuous and incorporate feedback loops.
• Developmental change focuses on proactive improvements to current processes or performance levels. It is often driven by internal rather than external pressure.

Unfortunately, organizations often face many challenges in adapting to change and implementing new initiatives, including unclear goals, poor communication and inadequate risk management.

To implement successful change management, you must first understand it.

It is a systematic process to help individuals, teams and entire organizations manage change or transition. It involves planning, implementing and monitoring changes so that they occur smoothly and to the organization’s advantage.

Businesses need effective change management to:

• Reduce resistance to change,
• Enhance employee engagement and
• Increase the likelihood of successful outcomes. 

Without a robust change management framework in place, businesses may have to deal with multiple adverse factors, such as:

• Confusion and stress among teams,
• A reduction in productivity and
• Possible project failure.

Key principles that underpin effective change management are:

• Clear Vision and Objectives: People find it easier to handle change if they know why it’s happening. It’s, therefore, useful to have clear goals in sight and reasons behind any change or transition.
• Effective Communication: Transparent and frequent communication regarding the logic and benefits of change is crucial. It helps build trust and reduce resistance.
• Engagement and Involvement: Getting employees and stakeholders involved with change is good. This helps them feel like more significant contributors to the process and strengthens their commitment to the change.
• Change Readiness: Before any transition, assessing the organization’s status and evaluating its readiness to cope with change is wise. This makes it easier to get the timing right and pre-empt challenges.
• Continuous Evaluation and Adaptation: Change management is ongoing. You must continue monitoring its impact and adjusting to ensure it remains effective and beneficial.

Benefits of Change Management

According to McKinsey & Co., corporate initiatives with excellent change management are 143% more likely to achieve successful outcomes. In other words, with strong change management, change will be managed more efficiently and bring the most value to the organization.

Some of the main benefits include:

• Improved Employee Engagement: Employees feel valued and included when they are involved in the change process. This makes them more committed and motivated to help the organization succeed in its transition.
• Enhanced Organizational Performance: Managing change can minimize potential disruption. This helps with productivity, efficiency and resource management so your organization can keep working smoothly with minimal delay or downtime.
• Reduced Resistance: People are often innately resistant to change and may even fight against it. Through change management practices, organizations can address people’s concerns, communicate the benefits and turn resistance into acceptance.

With the help of change management, businesses can evolve in all the right ways with superior employee engagement and sustainable performance.

Change Management Process

The change management process is multifaceted, involving numerous steps and stages for effective management and execution.

For the best results, businesses should adopt a systematic approach encompassing change management planning, preparation, implementation and evaluation.

Step 1: Identifying the Need for Change

The change management process begins with identifying the need for change. This means spotting market gaps, new challenges, or opportunities that could be addressed with change.

For example, your organization may be restructuring, or customer demand may rise. In either case, you must change aspects of your work to meet those changing conditions.

Knowing the need for change makes it much easier to list its benefits and explain its necessity to teams and workers.

Step 2: Planning and Implementation

The next step is to plan and implement the necessary change, which involves developing a change management strategy, listing specific actions to take, allocating resources and delegating where appropriate.

Communication is critical here. Everyone involved in or affected by the change must know what and how it’s happening. This transparent and frequent communication ensures everyone feels informed and involved in the change process.

Good communication will help reduce resistance and gain buy-in, and the sooner you inform employees about an upcoming change, the better prepared they’ll be for it.

Step 3. Evaluating and Adapting the Change

Once the change has been established, it must be monitored. It’s not enough to merely make a change and then sit back and watch what happens. You must be proactive and attentive.

Establish metrics to define success during the planning process. Use tools and analytics to monitor the change's progress and effects, collect feedback from employees and stakeholders, and use that data to make necessary adjustments.

Change management is a continuous process that demands ongoing monitoring, evaluation and refinement. Embracing this allows organizations to stay agile, competitive and resilient.

Building Change Capability

Ideally, organizations should be able to cope with significant and small changes efficiently and effectively. That’s what the idea of “change capability” is all about, i.e., how capable is your business of navigating change when it comes?

Building change capability involves:

• Developing a change-ready work culture,
• Fostering change-oriented skills in leaders and
• Building change management competencies. 

Let’s take a closer look at these three aspects.

Developing a Change-Ready Culture

This is about creating an environment where change is embraced, not feared. It should be an open environment where communication and ideas flow freely, workers feel empowered to innovate and agility and adaptability are highly prized assets.

Organizations that value change find it much easier to drive change initiatives.

Fostering Change-Oriented Skills in Leaders

Leaders and managers at all levels of an organization need to have the necessary skills to manage change initiatives. They should also be strong communicators, motivators and others.

Organizations should provide them with the training and resources they require to understand changing dynamics and guide their teams to success.

Building Change Management Competencies

This is about establishing a structured framework and making use of software tools for managing change when it comes. That includes creating standardized processes and methodologies to plan, implement and manage change.

Whenever a new change arrives, teams can use the same tools and techniques they have grown familiar with to manage it without disruption.

Overcoming Resistance to Change

Some degree of resistance to change is nearly unavoidable. You have to recognize common resistance factors and use effective techniques—such as effective communication and stakeholder engagement as noted above—to combat them.

To overcome resistance to change, you must understand its underlying causes, which can include:

• Fear of the unknown
• Loss of control
• Uncertainty about the future

It all boils down to general fears and worries. Workers often resist change because they are unsure how it will affect them. Many fear that its effects may turn out to be hostile or harmful. For example, an oil and gas company want to standardize design and engineering processes across its offshore platforms to improve efficiency and consistency but faces resistance from engineers accustomed to their own ways of working.

To overcome this resistance, the company leveraged a digital platform to centralize knowledge and create a single source of truth. It used the platform’s visualization tools to communicate the new standardized designs and processes clearly and effectively.

Another strategy for managing resistance is to get workers engaged with the change. Make them feel like they are a part of it by soliciting and listening to feedback. Training and support during change periods can also alleviate common concerns and fears. If the change involves new tools or systems, for example, it helps train workers to use or implement those systems, making them less scary and intimidating.

Another effective tactic is offering incentives and rewards for embracing change. This helps motivate employees to face change head-on and prove to themselves and their leaders that they can adapt.

When milestones are reached in the process, ensure the organization celebrates these successes with all stakeholders, including those who resisted the change. This can help change the perception of change from something they fear to something to celebrate.

Finally, creating a culture that values and thrives on improvement and innovation will also help minimize resistance. In other words, if change is a cornerstone of your operations, it will feel like second nature to workers and stakeholders rather than something to fear or fret over.

Best Practices for Successful Change Management

Managing change is a challenge, but these best practices can greatly improve the likelihood of success:

• Creating a Change Management Plan: Planning change before implementing it is essential. If you’ve got a structured plan with objectives, timelines and scope in all detail, change is much easier to manage, and employees will have a clearer picture of how it works and what it brings.
• Engaging and Involving Employees: Employees are the backbone of any organization. You need them to buy in for successful change implementation. Communicate with them. Explain the reasons behind the change, its benefits and how it aligns with the company's vision. Get them involved in decision-making and seek their input to reduce resistance Some organizations formalize this by identifying change agents to socialize change at a peer level throughout the company, solicit feedback and serve as a conduit between employees and the leaders/champions of the changes being implemented.
• Measuring and Monitoring Change Progress: Change management is an ongoing process that requires continuous monitoring and evaluation. Establish key performance indicators (KPIs) you can track to measure progress and identify possible areas for adjustment or improvement. Review your KPIs regularly and make changes as needed.

Common change management KPIs include:

• Change the adoption rate
• Employee satisfaction or engagement
• Effectiveness of employee training
• Time to adoption
• Project ROI

Data analysis can be used to track progress and identify areas for improvement. Establish baselines for KPIs before the change process begins. Regularly analyze KPIs to see if the changes are progressing as expected. Data trends and patterns can indicate whether current efforts need adjustment.

Tools and Technologies for Change Management

Having the right tools in place can help your organization prepare to manage change, whenever it may occur. It is important to also select the correct tools for the type of change you are managing.  In some cases, a project management system is appropriate to ensure all aspects of organizational change management are implemented according to schedule.

With project change management, where work processes need to be strictly adhered to the most important components of change management tools include:

• A centralized hub for asset management: This provides a single source of truth, ensures asset compliance and governance and houses resources where they are accessible to all relevant stakeholders.
• Integrated change impact analysis: This is an integrated analysis tool that determines the effects of change to help with risk management and mitigation, task prioritization and forecasting the outcome of various actions.
• Streamlined collaboration and transparency: This facilitates communication across teams, defines roles and timelines, builds trust through transparency and provides continuous feedback mechanisms.

Visit these additional resources for more information on change management:

Products: EcoSys for Project Change Management, HxGN SDx2 for Engineering Change Management

Content: How Change Management Leads to Project Success, Managing Change & Keeping Digital Twins Evergreen