Change Management

Change is increasingly determining the day-to-day business of a company. In order to optimally control it, special management techniques are required, which can be summarized under the term change management. The human factor is at the forefront of all considerations, because the implementation of change is dependent on the active support of the employees. As everyone has their own needs, ideas and experiences, some of which do not conform to the established corporate structure, there can be no simple recipe for how to successfully manage change. Rather, it is a complex undertaking that must start at three points: the affected individuals, the corporate structures and the corporate culture.

The need for corporate change can be caused both externally and internally. Externally, companies are faced with an increasingly dynamic environment that requires constant adaptation of their own structures if they want to be successful in the sales markets, but also in the preceding procurement markets. External change is caused by the market environment, politics, technology, ecology, the economy as a whole or institutions, as well as in the markets themselves, for example through increasing competition. To explain internal change, the metaphor of human development is used, which—like corporate development—is characterized by a sequence of growth, crisis and higher maturity. So-called life cycle models for explaining the ongoing maturity process of companies exist, which show the typical development phases as examples. However, change is often necessary because companies often overstretch the straightforward spirit of their efforts when they are successful. Here, too, the reference to the human psyche is established and this phenomenon is analogously referred to as “burn-out.”

This chapter shows that in practice often necessary changes in companies are not carried out, although the necessity is obvious. This phenomenon can be explained by findings from four different areas. Psychology teaches that people avoid or devalue information that contradicts their previous attitude (avoidance of cognitive dissonance) and that they only look for alternatives when real dissatisfaction has occurred (satisficing). Organizational theory has proven that large bureaucratic corporations hinder change just as much as excessively strong corporate cultures. More or less rational cost arguments often stand in the way of necessary changes and finally, the situation can be so complex that one shuns intervention. However, since standstill normally leads to failure, it is important to overcome these obstacles and to dare to change.

The failure of change processes is by no means uncommon, as studies have shown. For example, in a qualitative survey of German managers from 2014, those interviewed put the failure rate of change initiatives at 70%. In the international context, too, a corresponding rate of about 75% is common as a “rule of thumb”. This is primarily due to resistance from employees, especially the implementing employees, but also middle management. Resistance that is not directly apparent is problematic in this context. They are mostly based on psychological defensive reactions against unknown influences or loss of freedom, but also on misunderstandings in communication. The manifestation of resistance can range from direct opposition to inner or actual dismissal. Appearance and strength of the resistance depend on the personality traits, but also on the culture of the company. If serious effects of resistance are to be avoided, they should be taken seriously and not be tackled with strong disciplinary measures, as otherwise the counterproductive effect is more likely to occur in the form of even greater resistance.

Based on Lewin’s field theory, which can be described as a classic of change management, a model is developed with nine success factors that generally need to be considered for change processes. It is based on the assumption that the people involved in the change process always need orientation about goals and the progress of the changes. Furthermore, not only should sufficient motivation be ensured to tackle change processes in the first place, but also that motivation has to be maintained during the course of change to ensure sustainable success.

People who successfully initiate and manage change need certain leadership qualities. In this context, two leadership styles, the transformational and the transactional, are distinguished from each other. Transformational leadership, often referred to as Anglicism leadership, means leadership in the sense of change. The motivation and inspiration of employees are the top priority here. To achieve this, a transformational leader must act as a visionary, act as a coach rather than a commander to the employees, be an authentic role model for what is required of others, and strive for success not for purely selfish motives but for the sake of the cause. Frequently, people who meet these requirements possess a high degree of purposefulness, willpower, and emotional intelligence. In contrast, the transactional leadership style stands for the maintenance of order and consistency. The more a change management project is advanced, the more this characteristic is also required in order to plan and control the change appropriately. In this respect, care should always be taken to ensure the right mix of leadership styles in management bodies.

Communication is undoubtedly one of the decisive success factors of change management, which is contained in almost all other success factors, because leadership itself is primarily applied communication. Communication creates transparency and thus orientation, but it also serves to resolve conflicts and resistance. Communication comes in many forms. Personal communication, including gestures and facial expressions, plays an important role in change management because it is more motivating and less ambiguous. The goals and background of the intended change should also be communicated promptly and, if possible, to all those affected at the same time and in a language specifically oriented to the target group. Depending on whether the communication is at the beginning of a corporate change or in the course of the change, different instruments should be used. Especially for overcoming resistance during the course of change, the mastery of specific communication techniques is of great importance in the context of conducting a conversation.

Participation is the classic success factor of change management and was already discovered in early studies on this topic. By involving as many employees as possible in the process of change, their motivation usually increases and resistance decreases. Also, by using the knowledge of many, often a better result can be achieved in terms of content. Participation must not be an alibi and must involve as many affected people as possible at an appropriate point. Often the support of a professional and neutral moderator is necessary for this. Workshop-like procedures such as group moderation or open space are, in addition to employee surveys, also among the most important methods of participation.

Re-education generally covers all personnel development measures that are implemented as proactively as possible within the framework of a planned corporate change. Depending on the nature of the change, employees are given new knowledge, additional skills, but also a different attitude. The aim of re-education is therefore to achieve better preparation for the additional requirements that arise from change. In most cases, re-education in the form of further training has a motivating effect. Methodologically, trainings on and off the job are available. A suitable mix of these two categories ensures a greater sustainability, so that what has been learned can actually be applied in everyday life.

Project management is an important part of many disciplines, even outside the discipline of corporate management. In the context of change management, the naming of tasks, responsibilities, deadlines, and resources provides above all the necessary orientation. Because of the strategic importance of corporate change, the most capable people should always be appointed to projects, not those who are currently available. In addition to professional project planning, the integration of project team members is also of crucial importance. In order to receive sufficient support both internally and externally, the importance of the project and the successes achieved should be marketed aggressively. When it comes to successes, care must be taken to select those measures from the multitude of possible sub-projects that lead to so-called quick wins, that is, rapid implementation successes. The management of the diverse activities in the context of a large-scale corporate change must be entrusted to a professional project structure organization with a steering committee and, if necessary, a project management office. So-called agile project management methods are particularly suitable for the flexible and participative implementation of the visions underlying the change.

Consultation is understood to mean the use of external, and in some cases in-house, consultancy services in the context of corporate change. In this context, the consulting services may be aimed more at developing the content of change (e.g., new strategies) or primarily at the professional management of the change process itself. Consultants contribute external knowledge, are ideally neutral, have a high degree of persuasiveness and manage the projects in a routine and professional manner. However, the use of consultants is only beneficial if the consultants retain their independence from the client and at the same time tailor their solutions individually to the respective company. In addition, the selection of consulting companies should be made carefully and based on references or own experience.

Evolution refers to change in small steps. By permanently adapting to changing environmental conditions, crises should be avoided or the loss of productivity that accompanies any change should be contained. Decisive for the ability to change in small steps is the establishment of an organization’s ability to learn and change. In doing so, it is possible to learn from the mechanisms of natural evolution by analogy. Innovation, diversity, and decentralization, for example, are principles derived from this, which form a company into a learning organization. However, it is not only important to formally establish these principles, but also to create a culture of trial and error, openness to new ideas, cooperation, and fault tolerance.