Once you have established the need for change, consult with stakeholders to start to plan for the implementation. This involves looking at the organisation’s readiness for change and identifying barriers or risks that need to be mitigated. Without planning, your change initiative might fail due to process and people barriers.
By the end of this chapter, you will understand:
- The types of stakeholders that you need to consider during the change process
- How to conduct a Cost Benefit Analysis
- Why understanding risk is important in change management
- What a change readiness assessment is
- What the barriers are in organisational change management.
Complete the following steps to plan, implement and review your change management strategy.
As mentioned in the previous topics, why is the change required? A SWOT or PESTEL analysis may assist in identifying the changes needed to ensure the organisation stays competitive and financially viable.
A clear objective for the change must be established.
Organisational change might include:
- Technological changes – new software, improved business processes, automating job functions.
- Structural changes – change in roles, responsibilities, teams and reporting relationships.
- Cultural change – enhance team member values to align with the organisational values.
- Operational change – introducing new policies, procedures or systems to improve work efficiency and processes.
- Adaptive change – introducing change to prepare the organisation to meet changes in the external environment. For example, a change in technology, market or economy might mean the organisation needs to implement change.
- Reactive change – A change that the business must quickly react to that was not planned. This could be due to a natural disaster, supply change issues or a shift in consumer attitude.
- Anticipatory change – the organisation anticipates that a change is required and has time to plan and implement change systematically.
A cost-benefit analysis is a valuable tool for making decisions that benefit the organisation. Talk with managers, stakeholders, change agents and staff to seek feedback and assess the risks about the proposed changes. Stakeholders bring a wealth of experience and may provide feedback about other operational change requirements or impacts you may not have considered.
Other risks and costs that need to be considered include the following:
- Costs of interruption to business when transitioning to new systems
- Financial costs of implementing change
- Long-term costs and consequences to the business if the change is not implemented.
- What are the risks to the business if it does not change?
- What are the impact on staff, suppliers, customers and stakeholders?
Consider the operational change requirements, organisational objectives, risks and opportunities for the business. Decide if the organisation should proceed with the organisational change. If necessary, seek input from managers and other staff members.
Consult with stakeholders, specialists and experts to confirm the change management opportunity and process.
Assign task responsibilities, resources and timeframes.
Develop an:
- Action plan to identify all of the tasks and activities required to implement the change
- Communication plan to identify what information needs to be communicated, how the information will be shared and when the information needs to be communicated.
- Education plan to identify training and development requirements of team members to support the change initiative.
Assess the success of the communication or education plan against the change objectives. To help identify if changes are required, seek feedback through informal discussions and formal surveys.
Modify communication or education plans based on the achievement of program objectives. Respond to barriers to the change according to risk management plans.
A stakeholder is anyone that has an interest or may be impacted by the change.
It is a good idea to conduct a stakeholder analysis because this will help inform the following:
- who is impacted by the change
- the level of power of stakeholders in the change process
- how you will communicate with those impacted
- timing of communication
You will need to identify all of the stakeholders and their level of participation, the impact, the information that they will require and the level of engagement. This is also where you might identify who is on your change team and the level of change experience they have.
These could include:
- People responsible for the change
- Users of the change
- People who may benefit from the change
- People who influence the change
Mendelow (1991) introduced the concept of mapping stakeholders based on two things. First, is their power, which is their ability to influence a project or outcome. Second, is their interest, which is how interested they are in the project. These two issues can be used to monitor the energy and effort needed to invest in their management and the level of information they may need. This can be a handy tool in change and when preparing the communication plan.
Read the article What is Mendelow’s Matrix and how is it useful? by Oxford College of Marketing to learn how this matrix can be applied when dealing with stakeholders to ensure change becomes successful.
Stakeholders can be categorised according to how much they agree with the change and whether they trust that the organisation will succeed. The information you gather can be placed in a stakeholder Analysis and Engagement Plan.
Read the article Stakeholder analysis by Peter Block, Leadership Centre, to learn more about stakeholder analysis.
One of the ways that people and organisations make decisions is through the use of a cost-benefit analysis. A cost-benefit analysis is a tool that estimates all costs and possible profits and benefits that can be obtained from a business opportunity and weighs them up against the costs of that action or opportunity. The outcome of a cost-benefit analysis is that it can be used in the decision-making process for information on the feasibility of a decision or situation.
Examples where a cost-benefit analysis could be helpful include:
- Assessing change initiatives
- Weighing up investment options
- Deciding on project proposals
A cost-benefit analysis takes into account direct and indirect costs. An example of an indirect cost would be customer satisfaction, while a direct cost would be materials.
Cost-benefit analysis steps
- Compile a list of all the costs and benefits of the project or decision.
- Assign a monetary value to each cost and benefit.
- Take the sum of the benefits and the sum of the costs and divide – sum of benefits/sum of the costs.
For more information about developing a cost-benefit analysis, watch the video in this link and review the article ‘What is a cost-benefit analysis’ by Adam Hayes, Investopedia. Duration: 1:39
Example
A company is considering employing a Social Media Manager to manage social media. You are tasked with deciding if the position will add value to the company.
The time period that you are analysing is one year, and you predict that sales will increase by 25% if you engage in marketing via social media.
| Costs | |
|---|---|
| Salary | $75,000 per year |
| Recruitment costs | $2,000 |
| Training | $5,000 |
| Total cost | $82,000 |
| Benefits | |
| Additional Revenue for 12 month period | $100,000 |
| Increase in brand awareness is 10% | $10,000 |
| Total benefits | $110,000 |
| CBA | |
| 110,000/82,000 | 1.34 |
This is a positive value; therefore, hiring a Social Media Manager would benefit the company.
You must be able to deal with uncertainty and change, as our world is constantly changing. Risk is a part of business and organisations need to plan for risk by creating a change management plan. A risk management framework allows an organisation to see the positive and the negative consequences of risk to make informed business decisions.
Every organisation must have a clearly defined risk appetite statement that outlines the amount of risk they are willing to take. Some risks can be critical to the success of a business, while others can be harmful.
Risk is everywhere, and in organisations, it can be helpful to categorise risk in areas such as:
- Strategic
- Compliance
- Financial
- Operational
- Environmental
- Reputational
In terms of change management, it is a tool that is used to evaluate the risk associated with the change objective or initiative.
A risk management plan should consist of the following steps:
- Identify the risk
- Assess the risk
- Manage the risk
- Monitor and review the risk
Identify the risk
It is important that you undertake a review of your change initiative and identify any potential risks.
Common risks in change projects include organisational and individual resistance to change, poor leadership, costs, people risk, deficiency in skills, insufficient resources, lack of planning and reporting, and uncertainty.
An organisational change readiness assessment, stakeholder analysis, SWOT, PEST, and input from a change expert and stakeholders can help identify risks. Review all policies and procedures that may need to be altered and the likely impact of the changes.
Assess the risk
Each risk needs to be assessed in terms of the likelihood of it occurring and the consequence or the impact if it did happen. This is usually done by using your organisation’s risk analysis matrix.
Here is a free risk matrix Template from Smart Sheet that can help you plan your own risk assessment:
Manage the risk
Once you have identified and assessed the risk, you need to develop a strategy to manage the risk. This usually involves options such as: avoiding the risk, reducing the risk, transferring the risk or accepting the risk.
Monitor the risk
All risks must be assessed, and plans must be regularly monitored and reviewed to ensure any changes are identified and addressed.
Risk assessment template example:
| Risk Description | Risk Category | Likelihood or Consequence | Risk Approach | Mitigation Strategies |
|---|---|---|---|---|
| Resistance from employees to change | People | High | Reduce |
Communicaiton plan Training plan Regular meetings and feedback sessions |
There are many free templates that you can access via the internet that will help you set out your risk assessment.
Here are two examples of free templates available:
Download free, customisable risk matrix templates by Smartsheet contributor Andy Marker.
Best change management risk assessment & project management risk management risk mitigation by OCM Solution
For change to be successful, it needs to be supported by the people affected by it.
A change readiness assessment is a process that organisations can undertake to measure and assess how ready and prepared a group is for change. The first assessment examines the change itself, looking at the scope of the change, who will be impacted, the type of change and the depth of the change. A lot of this information will have been gathered from your research conducted on the change initiative. The second part of a readiness assessment focuses on the organisation. It includes assessing the organisation's culture, capacity for change, leadership style, past changes and outcomes, and employee readiness for change.
There are many different assessment tools that you can use, and the nature of the tool will be dependent on the change project and the organisation.
Who might be resistant, and what strategies can you implement to manage resistance?
Change is part of life, but with any change comes resistance. This can be on an individual or organisational level, and it can be overt and covert.
The main reasons for resistance to change are:
- Fear of the unknown
- Loss of control
- Threat of losing a position or status
- Threat of increased workload
- Becoming obsolete
In most cases, it is not the technical aspect of the change that people resist; it is the behavioural side that focuses on the losses that people perceive.
Kotter and Schlesinger (2008) have outlined four reasons people resist change and provided six solutions. Reasons for resisting can include:
- Parochial Self-Interest: when people feel they may lose something personally. They are more interested in what they will lose rather than the impact (loss or gain) on the organisation.
- Misunderstanding and lack of trust can be with a manager or the organisation.
- Different assumptions: when there is a different perspective or viewpoint on the reason or need for the change.
- Low tolerance for change: everyone has a different level of change tolerance.
Some solutions to the above reasons can include:
- Education
- Participation and involvement
- Facilitation and support
- Negotiation and agreement
- Manipulation and co-optation
- Explicit and implicit coercion
Watch the YouTube Kotter & Schlesinger Resistance to Change Reasons to learn how to overcome resistance to change.
Watch the YouTube Kotter & Schlesinger - Resistance to Change Solutions to learn about change solutions.
To help reduce resistance to change, people must understand:
- The proposed change: What is going to change? Who will this impact, and how will the transition affect them? What is the reason for the change (the why)? What outcomes will the change deliver?
- When people feel part of the change and understand why it is necessary and how it will affect them, they are more likely to come on the change journey than resist it.
Analyse if the change is likely positive or negative for the team and stakeholders. If the change is positive, the change will likely be embraced with an improvement in team morale, productivity and efficiency.
If the change has a negative impact on stakeholders, there will be more resistance to change and feelings of stress and anxiety. Consequently, this will impact team morale, efficiency and productivity.
Once you consider if the change is positive or negative, you can take proactive steps to mitigate the risk of successfully implementing the change. Although you cannot eliminate these feelings, you can support staff by developing communication and education plans to meet the change objectives.
Read How to deal with resistance to change by Paul R.Lawrence, Harvard Business Review, to learn more about resistance to change.
Read Choosing Strategies for Change by John P. Kotter and Leonard A.Schlesinger, Harvard Business Review, to learn about managing change.
