Why Change Management Is More Important Than Ever

Steve Odland: Welcome to C-Suite Perspectives, a signature series by The Conference Board. I'm Steve Odland from The Conference Board and the host of this podcast series, and in today's conversation we're going to discuss change management. What is it? Do we still need it? When and how.  

Joining me today is Diana Scott, the center leader of the US Human Capital Center at The Conference Board. Diana, welcome.  

Diana Scott: Thank you. Thank you for having me, Steve.  

Steve Odland: Diana, you've been doing this for a long time. You were the chief HR officer at Guardian Life, Prologis, John Hancock. You now run the Human Capital Center. And you can't pick up a newspaper or watch television without just hearing about all the change that's happening. It's happening in our world, it's happening in the country, it's happening in your companies. But change management is something different. It's a reaction to change, and it's a proactive means that companies use.  

Talk about what it is and why it's important.  

Diana Scott: Thank you, and thank you for having me. Change management is a very structured approach, actually, to change all around us, and it's a structured approach that helps to guide individuals and teams and organizations from the current state to the desired future state. 

And I think the thing that, really, people need to focus on when they're thinking about how to manage change through an organization is the people impact. And so a structured change management program or approach really focuses on, "How does change impact people?" and "How can you help to guide people through that process in a very structured way?" so that you can come out at the end with people embracing the change and excited about the future that change holds for them individually, as well as their organization.  

Steve Odland:Yeah. Now change is weird. Some of it is deliberate. And everybody likes change as long as it happens to somebody else. They don't, human beings don't like to change on their own cause they like the ritual of their daily life. But change is something that companies do, people do deliberately. And then there's also change that sort of comes at you that you don't control.  

Diana Scott:That'sa very important point, as well. The part that we don't control is actually the part that is usually the most disruptive and upsetting to people. Cause, as you said, we don't really like change. We can say we like change. We sometimes like the outcome of change. But people going through the change process rarely enjoy the process because they like the way, they like the predictability and the certainty of their current lives.  

And anytime you inject something new and different, they've got to think about, "How does this affect me? How does this affect my future? How does this affect my organization? And what am I going to need to do to be successful in this new world order, whatever that might be?”  

Steve Odland: And so when you're talking about change management, it is about both how do you react to what's coming at you and how do you deal with that? But then also, how do you affect change so that there's a proactive and reactive aspect to change management?  

Diana Scott: Absolutely. And I think, to the point that you made earlier, there are things that we do and decisions we make as leaders of companies to change the way we do business, to change the market, to change the technology platforms we work with, to change the organizational structure, whatever. There's a lot of change that happens and we as leaders control that.  

There's also a lot of change that happens external to an organization that has to do with market dynamics, geopolitical changes.We're in the middle of a lot of change right now that most of us have absolutely no control over, and yet, as leaders, we need to guide our organizations through it. And we need to get our people to understand what they can control, what they can't control, and how they can help themselves and the organization navigate through this.  

Steve Odland: Now, this term change management's been around a long time. I remember hearing it a few decades ago, and it was a strange word that came about, and then it faded away. Talk about the history of, the concept of change management.  

Diana Scott: Change management was very popular sort of at the end of the last century, the 20th century, so it is more than 20 years, and became a real discipline, because I think people realize that if you can move an organization through a change process in a more systematic way, you're going to have more successful outcomes at the end. 

But I think the fact that you don't hear about it as much doesn't mean that it's not necessary or that it's not happening. There's so many things that are driving the need for change management as companies become more global, as technology changes. Rapid-fire changes impact how we need to adapt and be resilient and manage through those so that we can be successful. So the need for change is probably more prevalent than it ever was. I think the term has been somewhat embedded into just the overall process of how people think about introducing new systems, new markets, new approaches within their organizations. So perhaps it's become more part of how we talk about our culture and how we drive organizational and market changes through the organization. But it's there, and it's necessary.  

Steve Odland:Yeah. And your point is, it's even more necessary than ever before. So this is why we're talking about it, because you don't hear people deliberately discussing how to manage or affect change in the way that they used to. And it's time that we really resurrect this whole process and make sure that future generations are trained on how to do it because change will never stop happening. 

Diana Scott: Exactly. Exactly. Everything seems to be accelerating these days. And it's coming at organizations and their people from so many different directions. Soit's not a mono approach to things. You really have to be able to adapt to elements that are changing all around you, and figure out how to systemically bring them together, and figure out what you can control and what you can't control. And do some scenario planning around "what ifs." What if it works this way? Goes left or goes right? And all the different elements are not always predictable.  

So that adaptability and that resilience that we very often talk about now, which is so necessary for leaders, right down to front-line managers. If you're effective at change management, those are the things that you're going to address now. 

Steve Odland:So give us some examples of the kinds of situations that require deliberate change management?  

Diana Scott: The most obvious one is probably technology change, when you're implementing a new technology system. We're all talking about AI right now and the impact that's having on organizations, the opportunity it presents to perhaps improve productivity, to make people's jobs more interesting. But to get people to actually adapt to that change requires the modeling of the behavior, it requires training, it requires leaders really setting the example. And it requires just a more organized approach to how you handle the entire situation. 

Steve Odland:Yeah. And it needs to be deliberate. There needs to be a plan. You need to work it out. There needs to be dates, there needs to be steps. All of these kinds of things that you don't think about. You don't hear anybody talking about that. You just hear AI, AI. Like Old MacDonald's farm: A-I-A-I-O. It just goes on. But in order to really carry this through a company in an orchestrated fashion and make it work and make it be more productive, there needs to be training, there needs to be a deliberate rollout.  

Some people love this stuff, pick it up. Some people don't. But you need to deal with people of all different kinds of styles.It's also cultural, Diana, there are certain cultures around the world, if you're in a global business, that are trained and prefer to be told what to do, and leaders need to do that. Others are more organic. They say that Americans like to color outside the lines. It is not just one way of doing things.  

And so change management, when you’re thinking about effecting a different process or implementation of new software or practices. You can't just say, "OK, there's one way to do things. We're just going to throw it out there and have people follow it." You really have to, as you said, you have to be there for people who read and learn that way, people who hear and learn that way, people who have to experience things. And then, it's the repetition. You have to do it over and over again to make sure these things are seeded in an organization.  

Diana Scott: Exactly. And I think the fact that we recognize that people are so different is a strength that organizations have now today. Diversity, we see diversity as a strength. Different approaches, different ways of thinking. You really want to have a team that is diverse, but to your point, that also means that you have to recognize that one size does not fit all.  

And so as you manage change through an organization, you have to approach how you do that potentially differently to different types of audiences, because they're going to embrace change in different ways. They're going to learn differently. And that's going to require that you have a very nuanced approach to how you manage this through an organization.  

And very often in the past, when change has not been done effectively in an organization, it probably had to do with the leadership not recognizing that you can't just jam it through one way. It really is important to bring people on board. And when you have people's buy-in, and they get excited about it, and you're able to find champions within your organization, that's when change really works effectively in pushing it through an organization. 

Steve Odland:So what do you think of as the key steps in effecting change management?  

Diana Scott: It doesn't matter what kind of change you're implementing. It could be technology, it could be restructuring your entire organization, it could be some sort of process overhaul, or maybe you're even trying to change your entire culture. 

There you really need to step back first and say, OK, why are we doing this? What is the need for this change, and why are we doing it? And what are the things that are going to what are the desired outcomes, and what are we going to need to do to actually drive this through the organization? 

Soit's stepping back and assessing, for starters. So, being thoughtful about it. And then I think you really do need to just develop a roadmap. You need to understand: What are your goals, what are the timelines that you're trying to affect? This doesn't need to take a lot of time, either. You can do this pretty quickly, but it's important to go through these steps.  

And then you need to think about your stakeholders. Who are all the different stakeholders, and what are the differences in how they might see this change? Cause in the end, you've got to be able to get a message to them of "Why are we doing this?" and "How is this going to benefit you or your part of the organization?" and "What is the change that's going to be required?"  

And make sure that they see themselves in this change, and they can understand the rationale, as well as the impact and the outcome that's desired and how it's going to impact them. "What's in it for me?" And not that we're all inherently egotistical, but the "What's in it for me?" Becomes really important. 

And then you just have to execute, and you have to execute flawlessly. You have to say, OK, I made a plan. Now let's go through and actually implement this change to the organization, and let's make sure that we're reviewing constantly so that we're seeing, is it working the way we thought? Are there any changes that we need to make as we go through this process? And then, in the end, how effective was it? How do we measure the actual success of this particular change?  

Steve Odland:We're talking about change management and organizations. Sowe're going to take a short break and be right back. 

Welcome back to C-Suite Perspectives. I'm your host, Steve Odland, from The Conference Board, and I'm joined today by Diana Scott, Center Leader of the US Human Capital Center at The Conference Board. Diana, before the break, we were talking about how to implement the change, and you talked about needing to have a plan, timetables, specific steps, dates, and all of that. 

But you can't just throw it out there. You can'tjust thengo do that, and do it once, and it's done. Because there's this whole thing about, in order for it to be taken seriously, anything in an organization to be taken seriously, they have to hear it in multiple ways and repetitively, over and over again. 

So there needs to be a lot of different ways to do this. As I've watched you implement change. You do it in group settings, you do it one-on-one, you write it into objectives, you do brown-bag lunches to talk about it, you have people discuss their own experiences. Talk about all of these different mechanisms that you've found successful. 

Diana Scott: So probably the most important thing is transparency. We talk a lot about transparency and how, if you're transparent and very authentic about why we're doing this, the need for it, and leaders are really open about it, you can pretty much get anybody on board, even if it's not going to be entirely positive for that individual. 

Transparency is probably the most important thing. And then I think it's beginning your communication and involving employees early on, which is also a degree of transparency. So they feel like this wasn't just thrown at them. So they begin to understand and are able to absorb the change that's coming, understand the impact it's going to have on them, and get excited about the positives. Cause change is inherently, you make these changes for positive outcomes.  

So if you can help them understand by getting them involved early where they feel like it's not happening to them, but they actually are involved and engaged and have a little bit of say in the process and that they're being listened to. I think if you do those well, and then you provide what we talked about earlier—support, training you want to make sure that you give them all the tools that they need to be successful in adapting to the change. Whether it means they need to learn new skills, they need to understand a new organizational structure, they need to understand a new market, they need to use new tools and technology, their job is done.  

Whatever it is, you're giving them support and training, and you're showing them that you have empathy for the fact that they are having to go through this change. But that kind of support is really important. 

And then again, back to transparency. I think as issues arise along the way, we have tobe listeningreally carefully to our employees and all the stakeholders and say, "What are your concerns?" And address them quickly so that they can feel heard again.  

Steve Odland:Yeah. Now, one of the tools that companies have found useful in implementing change is the RACI tool, RACI, as an acronym. Just if you could, describe the tool, what it is, what each of the letters stand for, and why it's useful.  

Diana Scott:So RACI is a very good framework for ensuring that the roles and your responsibilities are very clear in any kind of implementation or in any kind of structure where work is getting done across a number of different teams. 

So the R stands for "responsible." Those are the people that are going to be held responsible for getting the work done. "Accountability" is the A. Who is accountable? Typically, those are folks higher up in the organization who are providing the vision and making sure that things are properly resourced. 

C is "consulted," meaning you're going to be consulted for your expertise. But that's it. You're not going to be responsible. It will be taken into account and incorporated, but you shouldn't expect that you're going to be the decision-maker.So I think that's important, as well. And then the I stands for "informed," where you're going to be informed because you're potentially impacted, but you'rereally not held accountable or responsible for it. But you also need to understand that other experts are perhaps driving the process. So you need to be informed and figure out how this impacts you and your own organization. 

Steve Odland:So the tool is really a grid. It's an outline of each of the steps and then who is accountable, who's responsible, who should be consulted, and who should be informed. And this is a way to make sure that you effect change in the communication and the involvement in an appropriate way. But then, when you think about it, who should have the accountability or the A for change management?  

Diana Scott: It typically has to be the leadership, becausethey're the ones that are going to make sure that strategically, this is important, it's happening. They make sure that the effort is resourced properly. They're the ones that are probably directing the change because it is important to the business outcomes and the overall business strategy of the organization. The leadership is going to be responsible for whoever is leading that particular area of change.  

Steve Odland:Yeah. And then who should be responsible? 

Diana Scott:I think that really is going to lie in the people who are change managers. But it's the management, it's more of the frontline management and the team of individuals—sometimes it is within HR—that is helping guide that change to the organization, working with the managers to ensure that the communication is happening, that the training is properly set up. So depending on which aspect of the change you're talking about, it could shift slightly, but it's typically those that are charged with putting together an effective change management approach.  

Steve Odland: And so as you think about all the various areas of an organization or a company, which ones should use change management as a process? 

Diana Scott:Probably all of them. Just think about it. Certainly, if you're in HR, HR is going to typically provide a lot of support for change across the organization. But if you're dealing with organizational change, if you're dealing with reductions in force, if you're dealing with policy changes, those are all going to be required that those be managed effectively as they roll out through an organization, and HR is going to have to use this approach.  

If you think about people who are in operations, if you're changing a process or maybe adoptingnew approaches to your supply chain, whatever, that's going to require change through the organization. If you're changing a technology platform, that's a huge lift across an organization. That requires a very distant, disciplined, systematic approach to change management. SoI guess my answer is everywhere. It really needs to be thought through everywhere in an organization. 

Steve Odland:Yeah. Any place that is trying to affect any change at all—and some of that comes from HR—but when it doesn't come from HR, HR can actually play an important role to help the other groups.  

Diana Scott: Absolutely. We always say that change management is really about helping people embrace, understand, and get on board around changes that are happening around them and within their organization. And the HR organization is really charged with understanding the people aspects. Not that they are responsible solely for those cause, frankly, we all are responsible for, all managers really need to feel responsible for their people.  

But I think the fact that we have that discipline and understanding of psychologically, what drives people to embrace change or resist change, and how can you reduce some of that resistance and help people get on board? I think HR can be really effective in driving a lot of the different aspects of change management.  

Steve Odland:Yeah, and this is where, if you're a business leader, you're running a business unit or whatever, you really need to tap into your HR colleagues to help you with this. It's communication. It's process, it'sall of these things. You can't just throw something out there and expect it to take. You really have to manage it very directly and deliberately. And this is a role that I think HR professionals really are best at.  

Diana Scott: Yes. One of probably the most important things that an HR organization can do, working with a manager who's implementing some major change in their organization, is to help the manager assess how ready the organization is for this change. 

Because again, if you can predict where the pockets of resistance are going to come, what the major aspects of the change are, and how they're going to impact individuals within the organization. How is it going to change the structure? How is it going to change? What skills are necessary? And do we have those skills today? Where are those going to come from? How effective are we at communication, and how do we need to support the communication process? Are the frontline managers ready for this and do they have the skills necessary?  

That assessment of change readiness is such an important part of that upfront step. And the HR organization typically is best equipped to help managers think through that.  

Steve Odland: So that's the upfront stuff. And then you have the deliberate plan that's being implemented, but there's also a need then to track that as you're going to see how it's going. And this, too, is a very important place for HR executives to intervene. 

Diana Scott: Absolutely. And I think how you measure it is important. You have to see, is it sticking?Are the changes that we made having the predicted outcome? Are we improving productivity? Have our turnover rates gone up or down?  

So you have to get a sense of, is this change accepted and are people more productive? Are they more engaged? Are they delivering better business outcomes? Whatever the intent of the change was in the first place, whether it was a technology change or an operational change or a market shift, you need to understand what those outcomes are. And I think that's the important part, cause you need to then course-correct along the way. If things are not going as you predicted, you need to understand why.  

And I think the HR organization can certainly help with a lot of that because we look at turnover, we look at engagement. We are trying to get a better sense of overall sentiment and other factors that really drive your employment brand and your culture, your ability to attract the best for talent and retain it.  

Steve Odland:Yeah. And yeah, everything changes once you start implementing, and you've got to be able to pivot, and this is why measuring is important and tracking is important. We talked at the beginning about change that you effect in your organization, and then you talked about dealing with change that comes at you.  

We're in a situation now, we're in a world where change is coming at us very quickly. And we don't think about change management as something that we deal with about change that comes at us, but it's really important that HR professionals think about what's coming at the organization from the environment, as you said, the political environment, policy environment, geopolitical stuff, and to help people deal with this changing environment. Talk about that.  

Diana Scott: In those scenarios, probably the most important thing, again, is transparency and communication and listening so that you understand the anxiety that exists in your own organization. And then being very clear and transparent—and this is where leaders really need to step up and prove their mettle. Being able to communicate, calm the waters, talk about in a very transparent way how whatever is coming at us is impacting our organization and then what we're going to do about it. And also settle people down so that they can remain focused on, "OK, I don't have any control over this, but what are the things that we do have control over that are going to allow us to settle our organization, make sure that we're doing everything we can to secure the revenue and meet our plans as we can?" But make sure that, even if we can't do all of that, what's the path forward then?  

And when we come out at the other end—cause I think, again, reminding people that the world works in cycles, and we've been through many cycles before. We talk about the black swan and the gray swan events, and we can look at a list of all the black swan events and say, "You know what? They happened. They were horrible when you were in the middle of it."  

But as a leader, if you can help to explain to your folks, "We're going to get through this, and how do we make sure that we get through in the best way possible, that protects us as an organization, that allows us to continue to serve our customers," and come out at the other end with a plan in place for how we're then going to respond to these market changes or whatever it is that came at us. 

Steve Odland: Wow. Great words of wisdom. Diana Scott, thanks for being with us today.  

Diana Scott: My pleasure.  

Steve Odland: And thanks to all of you for listening to C-Suite Perspectives. I'm Steve Odland, and this series has been brought to you by The Conference Board.