Any Company Can Manage Change Effectively

More than 2,500 years ago, the ancient Greek philosopher Heraclitus gave us the phrase “Nothing endures but change.” The concept of a world in constant flux no doubt resonates with business today. Buffeted by intense regulatory pressure, bombarded with emerging technologies, challenged to compete on a global level, and still pressured by Wall Street to make their numbers, companies now face the reality of constant turbulence. Those that can retool their organization internally to thrive in the face of such change will emerge as winners. Those that approach change passively, letting events overwhelm them, will likely experience a great deal of operational and financial pain.

Research has shown that successful change management depends little on the size, industry, or business goals of a company. Any company can manage change effectively, whether introducing a new employee benefits plan or 401(K) program, or completely overhauling its core processes.

Forging New Behaviors Is the Key to Success

The central challenge of change management is altering behavior. Creating shifts in what people actually do can be more important than introducing new technologies or rolling out new strategies. An organization’s culture is defined by persistent patterns of behavior; cultural change begins at the behavioral level.

Fostering new behaviors is difficult — particularly in large-scale organizations — but not impossible. In fact, using techniques based in academic research on human behavior, businesses have been affecting employee behavior in health and safety initiatives for years. The challenge is to take these behavior management techniques that have worked in more narrowly focused training initiatives and apply them enterprise-wide, with the ambitious goal of improving overall quality and productivity.

Abandoning Old Habits

Any change initiative is intended to improve long-term business results. In fact, change management, often viewed by management as a “soft” business tool, is closely related to superior financial performance. A 2002 Watson Wyatt survey of more than 12,000 U.S. workers shows a clear correlation between successful change management and business performance. Over a three-year period, the total return to shareholders of companies whose employees believe their employer is effectively managing change averaged 29 percent, versus 5 percent in shareholder losses for those companies whose employees think change is being handled poorly.ⁱ

It is employees who will make or break the organization’s attempt at change. For many, it can be uncomfortable to change long-standing work habits and replace them with new behaviors. Eliminating the old way of doing things depends on getting people to find value in using the new system. This isn’t achieved through management rhetoric, mountains of data, or the belief that their immediate supervisor needs their support. Instead, management must create a change initiative environment that will encourage and support change by providing positive consequences for important behaviors that are aligned with corporate objectives.

Correctly used, behavior management techniques that incorporate positive reinforcers can give rise to and maintain new behaviors. Many employees will struggle to abandon their long-time work habits. To facilitate the change process, it is important to demonstrate immediate, positive consequences for performing change-related behaviors. Intangible reinforcers delivered contigently for altering behavior — and creating benchmark behaviors for others to follow — will encourage and maintain new behaviors until they become new performance standards.

Creating New Habits

To be successful, a change initiative needs to become embedded in an organization’s culture, often replacing old systems or processes. This long-term goal should be accomplished in three stages. First, the focus must be on maintaining the early adopters’ enthusiasm for change, so others will see value in using the new system. The greatest weapon for achieving change is leveraging the enthusiasm of the (most likely) small number of highly motivated, highly energetic employees who embraced change from the beginning.

Next, the focus should be on reinforcing the change-related behaviors. When people start exhibiting the new behaviors, it is critical to reinforce efforts made toward using the new system. Finally, once the new behaviors are well established, the emphasis moves toward the development of a more permanent strategy to use the change initiative as the way of improving the organization’s results.

Change Initiatives Should Be As Painless As Possible

The more precisely reinforcement principles are applied, the easier that change becomes. A few general rules can be applied to organizational change initiatives:

• Select improvement objectives that are very specific. Frequently, people select improvement objectives that involve several behavior changes in different segments of the employee population. Such complex performance improvement objectives can be confusing to employees, not to mention shareholders, customers, and Wall Street analysts. Split this objective into specific change targets and focus on those issues that people can control directly. Later, join efforts with other groups or departments and align smaller, more targeted objectives to support a broader business goal.
• Start with easily recognizable behaviors. There will be ample opportunity to identify and refine new behaviors as the program rolls out.
• Develop a simple and reliable measurement process. The measurement process should be as transparent as possible. The objective is to increase opportunities for positive reinforcement by detecting incremental improvements in performance. The results of the measurement process should be reflected on graphs that show changes in performance. Such feedback builds morale and provides an opportunity to recognize group performance.
• Don’t wait until there is progress in results to reinforce new behaviors. There often is lag time between behavior change and the impact on business variables. It is during this period that behavior weakens and the change initiative begins to falter. If the behavior is properly linked to business outcomes, change the behavior with reinforcement and the results will follow. Not only will employees see early on that their efforts at change were recognized and reinforced, but other employees will watch as their coworkers adapt easily to new conditions. A systematic application of reinforcement principles can produce lasting change in behavior.
• When celebrating progress, focus on behavior change. Link successes with the specific new behaviors. This strengthens the relationship between behavior change and the organization’s positive results.