Why Is Organizational Change Management So Important?

Written By: Eric Kimberling
Date: May 20, 2021

Change management is one of the most critical success factors for digital transformation and it can be very difficult to sell your executive team or key stakeholders on the concept of change, or on the change process as a whole.

Much of the work we do is in the realm of organizational change management and one of the biggest challenges we face with our clients is an understanding or a lack of understanding of why change management is important. What it means and how to incorporate change management into an overall transformation.

This is particularly true with executives and people that just don't have a lot of experience with organizational change management, or with complex digital transformations. In this blog would like to provide you with some steps and talking points that you can take to your team to help them understand the importance of change management.

Defining Change Management

The first step toward helping your team understand what change management is, and what the value is, is to help them understand what exactly change management is. To understand what change management is, it oftentimes helps to start with what it's not. Change management is not just a soft type of thing where we're all singing “Kumbaya” and making each other feel good. It's about tangible business results. This is probably the most important place to start as it relates to your executive team and some of your internal stakeholders.

In simple terms, OCM is anything that causes the business and the operations of your company to move forward to that future state, whatever it may entail. There certainly is a component of communications and training that goes along with that however, there is a lot more to change management beyond just training people on how to use the new system.

There are several workstreams within change management that are critical things like organizational design, and just redefining what people's roles and responsibilities are going to be. The change impact and understanding how individuals and workgroups within your organization are going to be impacted by the transformation so that we can target our communications, training, and change efforts to fit exactly their needs via where they are today and where they're headed.

For a deeper dive into some of the different workstreams, and some of the different components of change management, I've included a link to our organizational change management report, which gives some best practices and a deeper dive into understanding what change management is.

Effective Organizational Change Management Prevents Failure

In some extreme cases acting as an expert witness in lawsuits involving ERP implementations, we find that the number one common theme with those implementations is a lack of organizational change management. Oftentimes, it helps to share that story with your stakeholders and with your team to help them understand the change management is absolutely a driver of success versus failure.

When we actually define success versus failure, it comes down to two layers:

1. Implementing On-Time and On-Budget

Companies that don't invest appropriately in organizational change management will typically find that they're going to spend more time and money ironically, on their implementation than they would if they had invested appropriately in managing change. Investing efforts associated with organizational change is absolutely critical to ensure that you're successful in your initial implementation.

2. Operational Disruption

The second dimension of failure, which is even more costly and more disruptive than the first round of implementation time and cost is the whole concept of operational disruption. If you think about what happens if you go-live and you haven't managed change appropriately – in the major of cases your business will experience massive operational disruption.

OCM strategies mitigate risks to ensure that your people, the operations, and your organization are all ready to move forward into this future state so that by the time you get to go-live, it's more of a non-event rather than a big, massive, chaotic event.

The bottom line is, organizational change is a key factor in preventing that ERP failure and should not be ignored.

Change Management Optimizes Business Value

Now, if we shift gears away from preventing failure and focus more on how we get optimize this investment - a lot of value that organizations leave on the table is caused by not investing in organizational change management. There's a reason that most organizations don't manifest the full business benefits they expected out of their technology.

One of the biggest reasons for this miss is that they didn't invest in organizational change. In other words, the technology can do what's needed to be done to create business value and reduce cost, and increase efficiency.

It is important to make sure that you have a change management plan that directly ties to business value, increased ROI can be one of the most powerful ways to sell change management to your stakeholders, especially at the executive level.

HOW TO MEASURE OCM PODCAST LINK: Top 5 Change Management Metrics to Measure (podbean.com)

Change Management Reduces Chaos and Inability to Scale

One of the intangible benefits of change management that many don't think about is the fact that it will ultimately reduce chaos within your organization after go-live. It enables you to scale, which for most organizations, is one of the key reasons why they're implementing new technology or going through the transformation in the first place. In order to ensure that you're avoiding employee chaos, it is important to look at the moral issues that come along with that.

At the end of the day, you're essentially creating an environment that can scale, take on more business, and grow faster than you would otherwise. It's crucial you have the OCM strategy in order to tie together all the different components of your digital transformation to craft a solid foundation for growth.

I hope this has given you a high-level summary of how to sell organizational change management to the skeptics, either internally within your organization or perhaps outside of your organization as well. Oftentimes, for example, system integrators or technical types don't recognize the value of change management or that of implementing change. This is meant to give you some talking points that you can use to convince your team of the importance of organizational change initiatives.

If you'd like to discuss more on successful change management and how it might help your organization, please reach out to me directly. I'm happy to be a sounding board and walk you through the opportunity and obstacles posed by the many changes in the marketplace today.

FAQ about Change Management in a Organization

Why do we need change management?

Change management is essential to ensure the successful implementation of any type of change within an organization. Change can be anything from a new technology or process, to a restructuring of the organizational hierarchy. Without effective change management, organizations run the risk of unsuccessful execution and implementation of their desired changes, resulting in decreased employee morale, costly delays, or even complete failure of the project.

Change management includes activities such as creating a vision and strategy for change, setting goals and objectives, engaging stakeholders, understanding the impact of change on employees and other stakeholders, assessing risks associated with the change, developing plans to address those risks, communicating throughout the process, and monitoring progress. For questions on OCM strategies for your specific project, please contact us at info@thirdstage-consulting.com.

What is the importance of change management?

Change management is critical to achieving a successful implementation and adoption of change initiatives. It helps organizations anticipate, prepare for, manage, and measure the impact of new changes on their employees and stakeholders. Change management allows organizations to successfully implement desired changes promptly while reducing resistance or confusion among those affected by the change. Additionally, having a well-defined change management process can help organizations identify and address any potential risks associated with the proposed change. By understanding the importance of change management, organizations are better equipped to ensure the successful implementation and adoption of new initiatives.

Kimberling Eric Blue Backgroundv2
Eric Kimberling

Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.

Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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