Organizational Change: A Guide for HR
Organizational change is a reality for all organizations. How you prepare and manage it is key. Learn how to manage change here.
Change is something every company will have to go through at some point. Whether that’s to adopt new technologies, stay competitive, or improve specific areas of operation, no business stays the same for years on end. Still, organizational change is a topic that scares many company owners. There’s a degree of uncertainty and a risk of failure. Here’s everything you need to know to manage organizational change successfully.
What is organizational change?
Organizational change refers to any action a company takes to alter one or more major components of its business.
Significant changes in personnel
Removing old technology and/or adding new ones
Changes in the company’s structure
Changes in service offerings
A shift in the company’s culture
There are many reasons a company will have to make organizational changes, such as:
A significant shift in business goals or a new business model
Economic factors, such as a pandemic or recession, force companies to restructure their workforce, offerings, or pricing
Mergers or acquisitions, which often come with a change in leadership or workforce restructuring
What is organizational change management?
Organizational change management is the process through which you guide the organizational change in your company. It is a structured approach to change and helps ensure you can implement the new components with minimal disruptions.
Organizational change management can help you overcome employee resistance, lack of engagement, errors, and legal or regulatory non-compliance. The key is to ensure things continue to run smoothly and people are trained and understand these changes from the start.
The impact of organizational change
Organizational change is a necessity for any business. It doesn’t matter how productive you are, at some point, you’ll need to make some changes. Perhaps you’ll simply need to introduce new technologies or add new products, but change is unavoidable if you want to stay competitive and successful.
When you implement change correctly, manage expectations, and support your employees, the business can grow quickly. Adopting new technologies can help you create better products that support your customers. Restructuring, while often unpleasant, can lead to more productivity and better performance when the transition is well-managed.
But the opposite can also be true. Without good organizational change management, a lot of these initiatives fail. A Harvard Business Magazine study revealed that only 22% of companies successfully implemented organizational changes.
It’s a staggering result—over 50% of companies failed. The ones that did succeed placed a lot of emphasis on their employees and DE&I initiatives. Competitive pay and access to healthcare are other things those in the lucky 22% have in common.
Change management is critical if you want good results. Set clear goals, be transparent, communicate with your team, and pay attention to those who will be impacted the most—your employees.
Types of organizational change
Organizational change comes in many forms. Some experts like to look at them as adaptive vs. transformational changes.
Adaptive changes are small, incremental changes. They don’t cause major disruptions in the business flow and are easier to implement. Switching to a different operating system is a good example here.
Transformational changes are more complex and come with major shifts within the company. They’ll take longer to implement and have a higher failure risk. Examples include changes in team or department structure, or a new business strategy.
There are also more focused ways to look at organizational change. Here are some of the most common types.
1. Strategic change
When a business wants to create new policies, change the structure of the company, or other processes, they’ll go through a strategic change. The responsibility will often be with the CEO and other members of the upper management team.
One example is restructuring the company. This can come as a result of external issues, like inflation, a recession, or a merger. A company may also choose to restructure as they get ready to remove certain products from their offering or add new ones.
2. Remedial change
As you may have guessed by looking at the name, remedial changes come in response to one or more problems. Their goal is to address those problems as quickly as possible to find a remedy for the situation. It is not an ideal type of change, will often feel unplanned, and can disrupt the business.
On the plus side, it’s easy to measure the success of a remedial change. Has the problem been solved or not? The answer will dictate your next steps. If the change was successful, you can continue working with the new strategies in place. Otherwise, you ’ll need to find other solutions.
3. Structural change
Changes to a company’s structure include major shifts in the management team, removing or creating new departments, or shifting responsibilities from one department to another.
Causes can be both internal and external. A merger or acquisition will often require structural changes. Other causes include changes in the market or even new policies within the company.
This highlights one key factor—multiple types of change can happen at the same time. Plus, one change, such as a new policy, usually categorized as a strategic change, can lead to another change of a different type.
4. People-centric change
Any organizational change will influence people, be it employees or customers. But people-centric changes involve measures that directly impact them, such as new policies around parental leave, and internal, or external hiring.
If most other types of change will be, for the most part, the responsibility of the management team, people-centric change is all about HR. They’re the ones who best know your workforce and can ensure a smooth transition. Employees may often be resistant to change and question motives and outcomes, so prioritize transparency and clear communication.
3 tips for managing organizational change
How you manage organizational change will depend on the changes you want to make. Switching operating systems, for instance, could be fairly easy and might only require a few hours of training.
But a structural change will require a well-defined process, everyone’s buy-in, and clear communication. Regardless of what changes you’re planning to make, there are a few steps to help you get started.
1. Set clear goals
Goals are a stepping stone on your journey to organizational change. To improve your chances of success, you can set multiple, smaller goals. This will give you actionable steps along the way, helping you minimize the risk of mistakes. Make your goals measurable to give you a sense of how well the implementation of the entire process is going.
Plus, having a clear vision of the journey will help everyone in the company understand the why behind these changes. They’ll be able to see every step of the process, and how things are changing.
2. Define the organizational change process
The organizational change process usually has three phases: prepare, manage, and sustain.
The first phase, preparation, is where you define the goals and assign the team that will take care of the implementation. You can also select a few metrics that will help you track how successful the process is.
The second phase, change management, is where you begin implementing the changes. During this process, you should also monitor your metrics to see how you’re doing. Are you achieving the results you want? Are there any improvements you can make?
Finally, phase three is all about sustaining the change. If the outcome isn’t the desired one, you can go back to phase one or two. Otherwise, all that’s left to do is decide what you need to do to ensure the changes will stick.
3. Train and support employees
People can be resistant to change. Plus, if you’re bringing in new technologies, or introducing new tasks, you’ll need to offer employees training and support. Make use of your learning and development strategies and don’t forget about mentorship programs.
All this will help employees adjust to the recent changes, learn new skills, and become more productive.
The role of HR in organizational change
Any type of organizational change will impact your employees. Some will require them to learn new skills, others will have them adjusting to a new leadership, new colleagues, or a new department. If you’re not careful, you risk seeing a drop in performance and engagement, and even increased attrition.
Not every change initiative is successful. And a lot of employees are experiencing “change fatigue”. A study by Gartner revealed employee support for change initiatives dropped to 43% in 2022 from 76% in 2016.
HR plays a critical role in helping employees navigate the changes with more ease. They can help create an organizational change process that will surpass this resistance with ease. One of the best allies you can have here is people analytics.
This tool is frequently used in HR to get a complete view of your workforce, what motivates employees, and what helps them perform well. With it, you can make data-informed decisions, improve transparency and communication, and drive change that can last.
In the end, you can turn a necessary organizational change into something positive that boosts engagement, retention, and overall performance.
On the Outsmart blog, we write about workforce-related topics like what makes a good manager, how to reduce employee turnover, and reskilling employees. We also report on trending topics like ESG and EU CSRD requirements and preparing for a recession, and advise on HR best practices like how to create a strategic compensation strategy, metrics every CHRO should track, and connecting people data to business data. But if you really want to know the bread and butter of Visier, read our post about the benefits of people analytics.