Change management: Realizing a Competitive Advantage through Psychology

“Panta rhei”, everything flows! Already 2500 years ago greek philosophers argued that change is the only constant in the universe. In our rapidly changing modern economy, this notion is more true than ever. But can you effectively manage changes? In this article, you will learn about critical success factors of organizational change and how they can be cultivated based on a comprehensive literature review. You can apply this knowledge to increase the success rate of change projects in your organization which will improve the competitiveness of your company and help to establish yourself as a competent, strategic partner.

Why is organizational change suddenly so important?

Due to developments like globalization and the technological progress, today’s companies are operating in an increasingly competitive and fast changing environment.

Therefore, to survive and to prosper, they need to be more flexible and able to adapt quicker than their competitors. As a result, businesses allocate a significant amount of resources to fostering and facilitating changes. Nevertheless, studies regularly report that a large portion of change projects are considered failures (e. g. Higgs & Rowland, 2005; Meaney & Pung, 2008), entailing enormous losses for the companies involved. So what can be done in order to carry out the necessary changes without unnecessary financial losses? Or: How can you move change projects from being an unpleasant requirement to becoming a competitive advantage for your business?

Two researchers had a great impact in the field of organizational change: Achilles A. Armenakis and Stanley G. Harris (2009). They have addressed this question and carried out a review of the last 30 years of literature on the topic. Their comprehensive model of organizational change is the basis of this article.

But before launching a change project, …

… you should conduct a thorough analysis of the root problem or target area that you want to change, of the stakeholder groups affected as well as of your organization, taking into account its current situation and its capacity for change. This first step is imperative for being able to select an appropriate intervention. If you are choosing the wrong intervention for a given situation, your project is naturally doomed to fail. For example, a transformational change can be feasible for a young and dynamic company that is used to change, while it might be too much to chew for an established, traditional and highly formalized organization (Peiró, & Martínez-Tur, 2008). To prevent this, avoid off-the-shelf interventions, make sure to apply the principles of evidence-based management and seek advice from a qualified organizational psychologist. All done? Fine, let’s get going!

Success factors in changing human systems  

Changes often aim at modifying structures or processes. However, behind these structures and processes are human beings, whose support and commitment ultimately makes or breaks any change project. Having this in mind, the authors describe 5 key change beliefs of  change reciptients which are facilitating the phases of change readiness, adoption and institutionalization and are, hence, vital for a successful project. These beliefs are discrepancy, appropriateness, efficacy, principal support and valence (Armenakis et al., 1993, 2000):

• Discrepancy describes the perceived necessity for a change (e. g. dissatisfaction with the status-quo).

• Appropriateness is the conviction that a chosen change is suitable to address and dissolve a given discrepancy.
• Efficacy is the belief that both the individual change recipient and the organization are able to successfully implement a change.
• Principal support is the conviction that managers are committed to the change and will act as change agents.
• Valence refers to the belief that the change will be beneficial for the individual change recipient.

If you want to assess these 5 key change beliefs in your change recipients, you can choose from several valid measurement instruments on the market (e. g. Armenakis et al., 2007; Holt et al., 2007).

Figure 1: Success Factors of Change. Adopted from: Armenakis, & Harris (2009)

Takeaways for your practice: Cultivation of the 5 key change believes

Anticipating and shaping these beliefs is at the heart of an effective change management. For that purpose, the authors propose several change strategies: The active participation of your stakeholders is central for achieving a sustainable change (e. g. participative decision making). Thus, stakeholders are active co-creators of the change rather than passive change recipients. Using this approach, you will not only inspire their genuine buy-in and commitment, but you can also draw on their expertise and opinions, rich sources for improving any intervention. Pervasive communication is an approach used by change agents to align stakeholders with their views, e. g. through giving speeches or distributing memos. Even though this strategy is less powerful in getting stakeholders on board than active participation, it is at the same time less expensive, less complex and, hence, more controllable. Also human resource management practices play an important role in change. Research found that human resource management practices should be aligned with desired changes. Moreover, there are certain practices which generally encourage change and favour a supportive climate for change, like for example high potential management development programs (Harris & Feild, 1992), expatriate programs (Borstorff et al., 1997) or work-life benefit programs (Muse et al., 2008). Also the management of internal and external information is a quite important tool for facilitating change. Before starting a change, you should develop clear information and communication policies to establish and maintain a positive image of your project in the eyes of your stakeholders.

Applying each of these strategies might not be necessary in every case. However, as an organizational change is a generally rather complex undertaking and thus prone to failure, the combined use of all of the strategies increases the likelihood of success. The overall effectiveness of these strategies is strongly depended on the change agents attributes (e. g. credibility), highlighting the outstanding importance of leadership in any change.

The insights provided by Armenakis and Harris are quite practical and applicable. Taking them into consideration will greatly improve the success rate of change projects in your organization and, thus, prepare it for competing in global and rapidly changing markets. Finally, applying this knowledge will help you to establish and consolidate your position as a competent, strategic partner in your organization.

Are the research findings presented above in line with your experience of change projects? Which additional factors might be important for an effective change management? Please share your opinion on the comment section below!

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References

Armenakis, A. A., & Harris, S. G. (2009). Reflections: Our journey in organizational change research and practice. Journal of Change Management, 9(2), 127-142.

Find the original article here!

Armenakis, A. A., Harris, S. G., & Feild, H. S. (2000). Making change permanent A model for institutionalizing change interventions. Research in organizational change and development, 12, 97-128.

Find the original article here!

Armenakis, A.A., Harris, S.G., & Mossholder, K.W. (1993). Creating readiness for organizational change. Human Relations, 46(6), 1–23.

Find the original article here!

Meaney, M., & Pung, C. (2008). McKinsey global results: Creating organizational transformations. The McKinsey Quarterly, 7(3), 1-7.

Find the original article here!

Peiró, J. M., & Martínez-Tur, V. (2008). Organizational development and change. In: N. Chmiel (Ed.), An Introduction to Work and Organizational Psychology: A European Perspective (2nd edition). pp. 351-376. Oxford: Wiley-Blackwell.

Find the original book here!