Organizations face a constant barrage of change, whether they’re grappling with shape-shifting technology, avalanches of data, or the relentless demands of global integration. It’s no wonder that this constant fire drill makes it difficult for even the most forward-thinking companies to manage the constant pace of change, let alone think strategically about it.
Yet, being able to anticipate and make the most of these disruptions is what distinguishes market leaders from laggards. How do organizations compete–and even thrive–in a world where the business of business keeps shifting? How do you make change work, when the work keeps changing?
To find out, the IBM Institute of Business Value recently conducted its second Making Change Work study, interviewing nearly 1,400 professionals in 48 countries to determine how organizations view the specific challenges of today’s business climate and pinpoint those companies with the capabilities to stay ahead of and harness these forces.
We learned that the organizations that make the most of disruption are embracing three critical building blocks:
Why do most companies struggle to manage change successfully? Because they don’t cultivate a change-centric culture.
Change has to start at the top, and it needs to include the entire organization. The study found that leading organizations embrace three ways of accomplishing this:
- Role modeling
- Engaging employees
- Empowering new internal change leaders
Whether it is top or middle management, change must become a personal responsibility. Change-leadership activities and skill building need to be included in personal goals. We found that 64% of leading companies hold their managers accountable for managing change, compared with only 49% in the rest of organizations.
Companies that harness disruption also consistently engage employees. How? While 74% of organizations rely on a top-down change communications approach, leading companies are 50% more likely to use different communication channels and collaborate. These organizations weave social tools and collaborative technologies into their core business processes. Leading companies also invite feedback, with 71% considering and acting on employee suggestions, versus 52% of others.
Finally, they recruit emerging internal leaders. These new leaders, with their collaborative networks, can have thousands of followers internally, giving them more influence over employees than many top managers.
It’s crucial to create a clear vision of the importance of change within an organization. Yet, 87% organizations say not enough focus is put on change management in critical projects. And most invest only 5% or less of total budgets in change management activities.
Study respondents point to five barriers that create a discrepancy between the financial resources allocated and those needed, ranging from a lack of understanding of the benefits of change management to little understanding of how change management roles relate to one another.
It is critical that top managers establish the right organizational context by making change a priority. They must create this vision, reinforce the benefits, and inject change management into the corporate culture. For instance, 76% of those with successful projects include their change management activities in overall project plans–33% more than those that underachieve.
The accelerating pace of disruption is accompanied by difficulties to keep up with shortage of resources, process changes, and IT. It’s the job of change professionals to manage and direct highly skilled, enterprise-wide resources to mitigate these risks.
But the demand for change capabilities is outpacing the efforts by organizations to address it. Most companies report that the average amount of in-house change management experience is six years or less. Companies need to attract, retain, and develop change professionals and build up internal knowledge and skills. They can’t wait to address these needs by reinventing activities and roles on a project-by-project basis.
Change leaders know this. They’re formalizing change expertise and systematically building enterprise-wide change capabilities. Over the last six years, the use of formal change management methods has increased on average from 24% to 45%. For change leaders, this number jumps to 55%.
Disruption today is a constant. Despite the fact that many companies have solid know-how in making change work, they haven’t gotten better at actively managing it. By understanding the gap between themselves and change leaders, they can start to close it.
—Maria Paz-Barrientos is a vice president and partner with IBM Global Business Services and is a leader within the Strategy and Analytics’ Talent & Change global consulting business. She has 20 years of experience consulting in the areas of employee engagement, talent management, internal crowdsourcing, and knowledge management, as well as overall HR organization and Cloud strategy.