Change Management:Perspective and Challenge

by | Md Zaini Md Zakaria FCCA

Many organizations face with a situation where it requires the management to deal with recurring issues on non-achievement of KPIs, non-performing and demotivated workforce, and serious problems with company’s profitability and liquidity.

“The process, tools and techniques to manage the people-side of business change to achieve the required business outcome, and to realize that business change effectively within the social infrastructure of the workplace” (Source: Change Management Learning Center)
“The systematic approach and application of knowledge, tools and resources to deal with change. Change management means defining and adopting corporate strategies, structures, procedures and technologies to deal with changes in external conditions and the business environment” (Source: SHRM Glossary of Human Resources Terms)
But before we look at the challenge, let us look at the process of the change management. Normally, a change to the organization will ultimately going to impact one or some of the following parts:

• Processes
• Systems
• Organization structure
• Job roles

While looking at the change management from modern perspective, it is also interesting to share how Islam approaches this subject differently. In Islam teaching, Allah (subhanahu wa ta`ala – exalted is He) makes specific reference on the requirement to change ourselves first before we make attempts to change the world. Muslims are encouraged to make conscious decision in their heads to either feel helpless or empower ourselves. There is one particular surah which Allah makes special reference to this topic, that is
“…Indeed, Allah will not change the condition of a people until they change what is in themselves…” (Qur’an, Surah 13 Ar R’ad (The Thunder) ayah 11)
Many people believe they can change the world, but forget that changing the world is not simply changing the external. It is also changing yourself. You may have strengths and weaknesses you need to work on, but you cannot advocate for world peace, justice, kindness, helping others or a better working place when you have not established those ideals in your own life, your own home or your own office.
Internal change is the sunnah (way) of the Prophet Muhammad ﷺ. When he received the message of Islam, he began with those closest to him—his family and close friends. Only after he invited them to Islam did he begin telling the people of his tribe, people in other cities, and eventually the world. The wisdom in this approach is to ensure the purity of your activism and actions for the sake of Allah swt. Ask yourself: are you serving the community to show off or boost your ego, or are you truly doing it for the sake of Allah swt?
Regardless of the approaches used, each has its own merits and has been used extensively by the gurus of the management in driving the big turnaround in one organization. Some with success and some met with failures. Studies show that in most organization, two out of three transformation initiatives fail. The more things change, the more they stay the same. This was mainly due to differences on what factors most influence transformation initiatives as individuals looks at an initiative from his/her point of view and personal experience; and there are so many ideas offered by the management gurus which taken together, it will force the company to embark on many priorities simultaneously which in turn spreads resources and skills thin.
Based on a number of researches and articles with regard to change management, the challenge can be commonly grouped into 3 key factors namely resistance, communication and process of change. All this attributes to human factor.

When it happens, some has resorted to look at their strategies to see where it goes wrong and try to maneuver and modify the strategies along the way. If they still fail to address the issues or the solutions fail, they will introduce alternative management tools to the organization like Benchmarking, Balanced Scorecard, Core Competencies, Supply Chain Management and the like. Some might think that it is caused by the inability of the existing workforce and then replace them with new recruits as quick-fix solution to successfully implement their strategies effectively. In some serious case, the management might think that the whole organisation has in-depth issues and would like to totally revamp the whole process. All these efforts, either in part or holistic approach, are part of the Change management process that is created with simple purpose to turnaround the organisation from a bad state to a desired state.

Change Management Defined

Before we look at the challenges in implementing the changes, we should look at and try to understand the definition of Change Management. There are many definitions provided by the management gurus. Among them include the following;

The understanding of the definition is important to ensure people will not confuse with the changes that they made with other things. Based on study made by Tim Creasey of Prosci Research, he explored the definition into two contexts, that is the “change” itself and the “project management” where the former deals with the people impacted by the change while the latter focuses on the tasks to achieve the project requirements. Both are of equal importance to bring the organization from a current state (how things are done today), through a transition state to a desired future state (the new processes, systems, organization structures or job roles defined by ‘the change‘).

Harold L. Sirkin, Perry Keenan and Alan Jackson alternatively look at the definition from different perspective by classifying the change management into two (2) elements, namely the hard side and the soft side. The hard side of the change management includes time, no of people and financial results. While the soft side, the most fashionable side of the change, includes culture, leadership and motivation. They also concluded that both factors are of equal importance to ensure any attempt to make changes to the workplace should be applied hand in hand to improve the success rate. They also concluded that a company must pay attention to the hard issues first before the soft elements come into play to avoid a breakdown in the transformation program.

Change Management in perspective

While there are numerous approaches and tools that can be used to improve the organization, all of them ultimately prescribe adjustments to one or some parts of the organization listed above. Change typically results as a reaction to specific problems or opportunities the organization is facing based on internal or external stimuli. While the notion of ‘becoming more competitive’ or ‘becoming closer to the customer’ or ‘becoming more efficient’ can be the motivation to change, at some point these goals must be transformed into the specific impacts on processes, systems, organization structures or job roles. This is the process of defining ‘the change‘.

There are five key principles that need to be considered as well when planning for a change;

Principle 1: Different people react differently to change – people is either at “stability” or “change” spectrum. People at stability spectrum will not welcome any change to the way things are done. While people at the change spectrum would always look for something new and difference.

Principle 2: Everyone has the fundamental needs that have to be met – control, inclusion and openness. If a change program fails to meet the control, inclusion and openness needs of the individuals affected by it then that program is likely to encounter a range of negative reactions, ranging from ambivalence through resistance to outright opposition.

Principle 3: Change involves a loss, and people go through a “loss” curve – The relevance of the “loss curve” to a change management program depends on the nature and extent of the loss. If someone is promoted to a more senior position, the ‘loss’ of the former position is rarely an issue because it has been replaced by something better. But if someone is made redundant with little prospect of getting a new job, there are many losses (income, security, working relationships) that can have a devastating effect.

Principle 4: Expectations need to be managed realistically – The relationship between expectations and reality is very important. If the employees’ expectations are not met, they are unhappy. If their expectations are exceeded, they are happy.

Principle 5: Fears have to be dealt with – In times of significant change, rational thought goes out of the window. This means that people often fear the worst.  In fact, they fear far more than the worst, because their subconscious minds suddenly become illogical and see irrational consequences.

These principles have to be understood and addressed properly by the Management when considering to affect the change at any parts described above.

It would be hypocritical, for example, of a leader who secretly abuses his power in the office taking to the employees of the organisation to advocate for adherence to the rules and governance. What good do his deeds do for him if he is not living up to them?  Change would start with himself, then with his family, then with employees in the organization, and then with the community at large.

That said, you must first change yourself before changing anything else to ensure any change management programs that are going to be introduced will be easily adapted to overcome any challenges in the implementation. This shall be the next topic that I will touch on, that is the challenge in the Change management.

Change management and challenges

RESISTANCE

• Organizational culture
• Every organisation has its own culture that is defined by processes, methods, habits, procedures and perceptions that are engrained in the organization and its people.
• These characteristics are difficult to alter as they are developed over the course of time and become the precedence and standards for the accepted way of doing things within an organisation.
• Consequently, these expectations and belief systems become established in the working environment and any attempt to adjust or make change to the “normal” way of doing things become strange to people and perceived as of no benefits.
• Negative influence from within the organisation
• Resistance basically comes from the existing employees in the organization and can be in any forms.
• It includes resisting on the appointment of new leader because there are some employees who feel they are more deserving of the role; minorities who simply do not like change and would try to influence others to do the same; negative persons who will be the first to prove that the change does not bring benefits to the organization; or even old employees who simply feel ill-equipped by the new competencies attached to the new role that makes them look incompetent.
• Introduction of new element – technology

COMMUNICATION

Communication is a crucial element of change management. It entails activities like dealing with people, managing their expectation, and explaining why certain changes are being made. Whatever changes are made, the workforce needs time to adjust to new processes, procedures and responsibilities. Studies show that few people adapt easily to new situations within the workplace. The uncertainty that comes with changing circumstances often stirs fear in workers who have grown accustomed to doing things in a certain way. In a study made by Jean Scheid, he listed communication as one of the top change management issues as seen in the failure to communicate when a change occurs or is about to occur. If the change is never communicated to employees, we can expect to face anger and resistance from them regardless of how large or small a change may be. Many leaders also forget to inform employees that are in lower placement positions by relying on their immediate supervisors to handle company-wide range change. In certain case, the changes are too swift and done without explaining the reason for the change. W Chan Kim and Renee Mauborgne authors of the book Blue Ocean Strategy further reiterated the importance of motivating employees and getting them on board when introducing a change. And this can only be done through clear and well defined communication plan to address the needs of the employees. A recent study carried out by HR consultant Towers Watson found that the top-performing companies do use various forms of communication to keep the employees abreast of changes to working practices. Based on findings above, it is clear to us that establishing clear lines of communication and engaging employees in discussions about the business are absolutely critical to implementing change management successfully. After all, it is the employees who will be doing most of the legwork to make a new strategy works. They must understand the aims and objectives and be clear on why the plan has been introduced, how it will be implemented and what is expected of them. Leaders who get this right will find it much easier to gain confidence and support when making strategic changes.

PROCESS OF CHANGE

To understand this better, we could refer to the psychology of change publication “Field Theory in Social Science” which identifies the process change into three stages;

Stage 1: Unfreezing (Pre-implementation) – a stage where people overcome inertia and dismantle the existing mindset.

During pre-implementation stage, it basically addresses the question of the needs for the change. For example, the need for the change may be to improve service delivery or the need to comply with governmental directives. At this stage, the non-human challenges include incompatibility and service disruption.

• Incompatibility – The proposed process might not be compatible with business and procedural realities. If the Management embarks on the process change that is totally incompatible with realities, it would be disastrous and proven costly to the organization.
• Therefore, it is necessary to determine the extent of the compatibility with the reality and the extent to which the new system can be adapted to achieve the predetermined process change objectives in line with the overall organizational objectives.
• To overcome this, it will be advisable to obtain external experts to assess on the suitability and compatibility of the proposed process from the evaluation stages.
• Service disruption – Often when organization embarks on new initiatives especially in the service industry, the service will be disrupted during the period of change.
• In some existing cases, it will affect the overall existing quality of service delivery. The last thing management would like to avoid is disruption in the system especially where customers would be directly affected.
• It can damage organisation’s reputation during the change period and customers switching to competitors permanently when the disruption is very material. The challenge will be on how to balance the requirement to change the process and maintaining the same level of service quality. Possible solutions include carry along members and customers before the implementation stage to prevent or reduce possible resistance from customers; and/or increase the number of service points during the transition.

Stage 2: Implementation – when the change occurs, it is typically a period of confusion due to the fact that people are now encountering new processes differ from what they use to.

Implementation of the decisions made at pre-implementation stage often has problems due to the facts that no one could envisage all the likely problems that will be faced or may, for whatever reasons, not disclose until the management has committed to the exercise. Many process change projects have been abandoned half way through after huge funds and management time have been committed. This was because the change programs are already faulty at pre-implementation stage which often culminate serious problems that truncate the process change at the implementation stage. It is necessary for management to set up a committee who will proactively identify problems and resistance during the implementation and finding solutions immediately. When it cannot prevent it from happening, it should at least find effective solutions.

The committee should also be composed of all departments affected by the process change and should meet on a regular basis or as and when the need arises. All external and internal stakeholders in the system should be involved as the implementation progresses to ensure better understanding and cooperation. If the change is not realistic and unattainable, stakeholders would not buy into the change and the process of effecting the change. Criticism should also be encouraged from the proponents and opponents of the change and should be objectively analysed.

Stage 3: Refreezing (Post implementation) – a stage where the new mindset is crystallizing and a comfort level is returning at previous levels.

This stage is basically concerned with ensuring the process change achieves the predetermined objectives. Problems relating to post implementation stage are also identified and sorted out quickly although it would be milder than when it was at pre-implementation and implementation stages.
Challenges at this stage would include the following;

• Lack of or inadequate training
• New change programs normally introduce new processes. Majority are reluctant to learn new ways when time and deep concentration are required. They are more likely to find reasons to condemn the new application.  Therefore, it is necessary for the management to train them at all stages of the process change implementation including activities that make them feel as if they contribute to the success of the change programs.
• Culture clash

Culture differences happen in a situation where the organisations have been operating independently with distinct processes, vision and beliefs are fused together as an entity under a common process, vision and beliefs. A good example is when one company takes over or acquires new company. Staff at acquired company may resist to leave their old ways of doing things and work under new culture introduced by acquiring company. These differences should be identified and streamlined first before getting the commitment from the staff involved.

One last critical component that management always forgot to consider is disaster recovery and contingency plans at all stages of the process change. These plans help to ensure that the organization can continue its operations with minimal disruptions should the change process implementation fail.

The understanding of these challenges are of equal importance in coming up with comprehensive change programs apart from the change itself. The success of the change programs depend highly on the ability of the management to address these concerns at interval and include it as part of the strategies in managing change so that they can act positively with hindsight should the problem occurs.

Change Management in Practice – Learning from the Best
I have the opportunity to interview one company which won the Excellence in Change Management Award at the Global Excellence in Management Awards 2013 (GEMA) recently. The company is SAJ Holdings Sdn Bhd, a water operator for the state of Johor. In his brief summary on how the Company transformed from a body under the State Government to dynamic company that it was now, Encik Ikmal Hisham Rahim, Head of Human Resource for the company highlighted a number of interesting facts. He highlighted centralization and culture as the key factors that first requires change before anything else. Right after the privatization of the previously corporatized and highly regulated water body, the structure was decentralized with district “warlords” operating with full power over their own territories. These warlords decide autonomously on how to run their operations with different set of rules and procedures. The standards were different from one district to another. What they did next was to bring all these district warlords to headquarter and appointed each of them as Head of Sections and/or Departments. This was done with the sole purpose of centralising the command of control with all districts now reporting direct to headquarter. A new set of standard operating procedures and policies followed after that with all districts adhering to one standard way of operating.

Encik Ikmal also noticed that change program and initiatives could never happen successfully without changing the work culture. Therefore, once the structure was centralized, they immediately embarked on setting up new work culture by influencing the values, beliefs and practices of their existing employees who are mostly local Johoreans. This was done by tapping on Johor’s unique culture of practicing Islam as a way of life, respect of the elderly, family unit orientated and looking up at strong leadership as way to influence the values, beliefs and practices. The unique culture of Johoreans mix well with the new culture introduced that focuses on integrity, customer focus, teamwork, discipline, passion and learning. It took them a number of years to instil and nurture this new culture to the workforce by organizing Islamic-related programs such as tadarus, Eid ul fitr and haj celebrations, tazkirah, “majlis ilmu”, ESQ and parenting program.

Once the intended culture is well-received and practiced by its people, then only they introduced initiatives to make the full transformation. Among the change management programs that they have to become a World Class company includes Balanced Score Card, Performance Appraisal, Knowledge Management, Six Sigma, ISO, Customer Charter, Succession Planning, Competency Dictionary (mapping of required competency of staff position), Staff Training and Development, TAP (“Tanyalah Pengurus”, a dedicated program to meet the staff), Mentor-mentee system, comprehensive compensation scheme, manpower requisition guidelines and many more. Based on their latest record of Employee Satisfaction Index, the scores are on average well above 80% indicating a very happy and satisfied employees with the way the organization is run.

The Company experienced setback when they first embarked with the initiatives at company level due to higher number of staff in the workforce (about 2,200 employees). The change initiatives from the top took longer time to materialize due to geographical reason as the staff were scattered all over Johor. To escalate the change programs, they identified and employed Change Agents. Each change agent is responsible to implement the change at his/her area of control. This created a clusters of change which when accumulated will bring about a fast dissemination of ideas and practice to the staff. As a result, the change programs were easily felt and understood by majority as they, in some ways, have a part in the change progress, creating accountability and responsibility on the success implementation of the change programs.

In his recap, En Ikmal did also share on the new trend from Generation Y who are less collaborative and prefer to work in silo. They are also motivated by quick reward and would not care with any change programs if it does not address their needs for recognition. Current change dissemination strategies are now less effective and would require new ways to handle the demand from this generation. This would be their next challenge which we will be interested to learn from later on.
(Note: At the time this article is published, the “Success Story of SAJ” is currently in the process of being documented by a researcher from INTAN which will be published as reference nationwide).

Conclusion
It is imperative that significant consideration be put on the holistic approach in the change management. It requires time and motivation to keep with the planned change and to make it successful. It can be really rewarding if it is carefully thought through and implemented. With proper plan, concerted efforts from all employees, clear direction and communication from top, the change will be imminent and should result in improving the atmosphere in and the health of the organization. Learning from the experience of award winning company in Change management proves that the combination of modern management gurus and Islamic teachings provides further impetus in a way that people can experience change differently but successfully.

References

• Article on “Definition of Change Management” by Tim Creasey, Director of Research and Development of Prosci Research (Change Management Learning Centre)
• Article on “Top 10 Change management issues and How to handle them” by Jean Scheid (2011).
• A whitepaper on “Change management issues and Risk Mitigation Strategies for enterprise” by Kevin Kutzavitch MSLIT/Mastech Inc.
• Article on “The Hard side of Change Management” by Harold L. Sirkin, Perry Keenan and Alan Jackson (The Magazine Oct 2005)
• Case study on “Why communication is key to successful change management” by Gerhard Schmitz and Oliver Becker.
• “Blue Ocean Strategy” by W Chan Kim and Renee Mauborgne.
• “Field Theory in Social Science” by Kurt Lewin (1951)
• Translation of Al Quran Surah 13 Ar R’ad (The Thunder) from the website.
• Article on “Change Management in Process Change” by Ezekiel Oseni

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