| There comes
a time in the life of many businesses when the owners realise
that they have to change it or close! Significant change may
be planned or forced upon you. Maybe you see bigger opportunities
that your current structure cannot cope with. You may foresee
the market changing radically, or face a long-term crisis
that cannot be solved by tweaking here and there.
But what is involved in change? How do you make it happen?
What if people in the business don’t like the way things
are going?
When faced with the need for change, the important thing
is to take a step back from the business and ask three questions:
- Where is the business now?
- Where do I want it to go?
- What is the best route from A to B?
This is the first step in managing change, as opposed to responding
to change or letting change manage you. This guide will lead
you through the main elements involved in successfully managing
change in your business.
What is change?
There are many types of change:
- forced or planned,
- external or internal,
- good or bad.
Change was traditionally seen as a problem with which one simply
had to cope. Modern business gurus, however, take a more positive
attitude to change, treating it as an opportunity to be embraced.
Who is right?
Much depends on the business you are in. For example, a company
in creative media or new technology has to be reinventing
itself continually in order to keep up to speed with the latest
developments. However, this constant state of flux does not
suit all industries. Most need a degree of stability so as
to be able to plan and develop over time.
You need to decide the balance of stability and change that
best suits your particular sector or business’s circumstances.
Then you should build the appropriate degree of flexibility
into your business plan. In that way, the changes you experience
will be planned rather than forced.
Always beware of change for the sake of it – for example,
a panic response to a competitor’s price cut, or the
tendency of a new management to throw out everything the old
management did, just to prove they are in charge.
Change must always be calm and considered, and seen to be
so, even when the situation demands quick decisions. Once
you have developed your strategy for change, you will have
to ‘sell’ it to your team if you have one. If
they do not buy into it, it is unlikely to work in the long
term and you could be worse off than before.
Levels of change
There are three levels of change.
Procedural
This is the lowest level and simply involves changing the
way a particular task is performed, for example through the
introduction of a new technology or a more efficient system.
However, even this level of change can be very disruptive
if everyone has become used to the old way of doing things.
Structural
This involves major changes to your business structure. This
usually means transfers, new appointments and/or redundancies.
This can also be disruptive.
Cultural
This is the most difficult change of all because it involves
changing attitudes throughout the business.
Change frightens people – not only employees, but also
customers, suppliers, shareholders and financiers too –
so proceed cautiously. The rule with change is ‘as much
change as is necessary, as little as you can get away with’.
That said, half-hearted or insufficiently radical change is
the worst option.
What kind of business are you?
Many types of business are limited to the capacity of the
resources available. A restaurant, for example, may be providing
a reasonable income within limits such as seating capacity.
For such a business, change is likely to be gradual and predictable.
Many other businesses, though, have the opportunity, or indeed
are formed for the purpose, of growing as far and as fast
as they can. So the restaurant owner may see the opportunity
to grow by opening other restaurants or even franchising the
brand. This will require several major transitions. Change
in these cases is essential and the main challenge for the
owner is how to manage it.
So, if your aim is not just to create a job for yourself,
but rather to make your fortune, you must begin to plan how
to become a butterfly when you are still a caterpillar.
Change and the business plan
As with so many other things, the importance of having a
proper business plan to help you deal with change cannot be
overstated. A good plan will take account of the need for
change. It will control it. It will set targets year by year.
It will prepare for those external changes that ought to be
foreseeable. So managing change should be simply a matter
of following your plan.
However, there are some forces for change that cannot be
predicted, even by the best-researched business plan. Even
here, the plan should still be helpful, giving guidelines
for coping with the unexpected.
The nine steps of change
Most of what follows deals with how to cope with such unforeseeable
changes.
1. Recognise the need for change
The need for change is often obvious. It might be external:
there may be sudden and major changes in market conditions,
suppliers, customers, competitors or technology. Sometimes
it’s internal: you may lose a key member of staff, or,
more positively, someone may have a good idea. Either way,
you need to act swiftly and decisively.
Sometimes, however, the need for change is insidious. A company
may drift for year after year, content to make a reasonable
profit, oblivious of the fact that its business environment
is changing and its own organisation is getting sloppy. One
day, it wakes up to find it is completely uncompetitive –
and radical change is a matter of survival.
So, even when things are good, and there is no immediate
pressure for change, it is a good idea to take time out to
review the situation. There is always room for improvement.
At least once a year, sit down with your key colleagues and
ask:
- What is happening in our business?
- What is happening in the outside world?
- What is likely to change in the foreseeable future?
- Can the business be more efficient?
This is not contradicting what was said about avoiding unnecessary
change: a little timely change in procedures might prevent the
need for a major structural overhaul later on.
2. Assess whether you need help
If you think that change is or might be necessary, consider
seeking outside help.
Your accountants and bankers are usually able to give a reasonably
objective second opinion, but if major changes are in the
wind, consider hiring a specialist consultant. There are several
advantages to this:
- The consultant will help you take that crucial step back
from the day-to-day running of the business so you can take
a long-term and objective view.
- The consultant will be able to give a second opinion about
whether you are right about change being necessary, or the
degree of change required.
- The consultant will be aware of more potential problems
and opportunities, and should give you some ideas you might
never have considered otherwise.
- The consultant will be able to talk to everyone in the
business (and possibly outside) with more freedom than you,
the boss.
Against this, there are several difficulties with consultants:
- Finding the right one can be tough – anyone can
call themselves a consultant. Question them closely about
their experience of change management and ask if they have
expertise in your industry.
- Consultants are also just about the only people in the
world who actually like change, so they will almost always
tell you that change is essential and often recommend more
than is necessary. So you must be careful to make sure they
work to your agenda. Set out what you want from them clearly
and hold regular review meetings to check they are doing
what you agreed.
- Finally, it is pointless to employ someone who drops a
report full of imaginative suggestions on your desk and
then walks away. Involve the consultant with the implementation
– that way the consultant will be careful to make
all the suggestions practical!
Of course, consultants cost money. The good ones cost a lot
– and so do many of the bad ones. Against that, managing
change will take you and your senior people away from their
normal jobs. Getting a consultant to do some of the legwork
may save you money.
You might be able to persuade the consultant to agree to
an element of payment by results – taking a percentage
of the increased profits, say.
In the end, you may find that your consultant simply confirms
your first instinct. This confirmation is itself no bad thing,
given the price of getting it wrong. More importantly, the
consultant will set those instincts out in a systematic and
comprehensive report that can form the basis of an action
plan.
Remember, though, that the final decision and responsibility
rest with you.
3. Analyse your business
Whether or not you employ a consultant, you still need a
clear idea of where your business is before you can decide
where you want it to go.
A SWOT analysis is as good a method as any. Simply list the
(internal) Strengths and Weaknesses of your business, and
the (external) Opportunities and Threats it faces. Do this
on a single sheet of paper. Once you have the analysis in
front of you, you will often find that both the problems and
the solutions suggest themselves.
Be ruthless and unemotional about everything, from your own
capabilities to the real viability of perceived opportunities.
Again, an external consultant or mentor can help here.
4. Consult with relevant groups
Consultation is the key to effective management of change.
It is essential to:
- confirm whether change is necessary and collect information
about the precise changes that will be required,
- combat the innate fear of change in any business,
- generate a sense of shared ownership of the vision.
Everybody needs to be consulted because everybody needs to take
the new vision on board. Employees will obviously be consulted
first because change will have the most direct impact on their
lives. However, other groups will also be concerned. These include
customers, suppliers, shareholders and financial investors.
Everyone must be kept informed.
Consultation must be a two-way process. You tell them what
you are doing, but you must also listen, and be seen to listen
to them. You may hear something that is useful. Either way,
this will help make other people feel that the vision belongs
to them as much as to you.
Consultation inevitably involves a lot of meetings. Questionnaires
and the like have their place, but there is no substitute
for talking face to face.
All this can seem time-consuming and even irritating. On
the other hand, it has to be done, and is a useful exercise
in its own right. People do not talk to each other enough
in most businesses. When they are forced to talk in this way,
it is often amazing how much useful information and how many
simple but practical suggestions come out.
5. Create the vision
The ability to produce a clear vision of where you want to
go is the defining characteristic of a leader.
So, while it is essential to listen to advice, and to consult
as widely as possible, in the end it comes down to one person
making a decision: you saying, ‘This is what we will
do – and why.’
The vision must be clear. That usually means it is short,
simple, and easily communicated to everyone involved. It is
vital that everyone shares it.
6. Set objectives
Change is an ongoing process. It is simply not enough to
issue a few memos, and then sit back. You need an action plan
that sets out precisely:
- what will be done,
- who will do it,
- whether people need training,
- when it will be done by.
7. Handle resistance
People are naturally conservative. They do not like change.
This is particularly true in most employment situations. If
you are lucky, they will say so frankly during the consultation
process. This is a good thing. It enables them to discuss
their fears and you to allay them.
Never discourage a free expression of views. It is the only
way all sides can confront and solve problems. Always remember
that some of these concerns may be justified. What’s
more, people will probably raise issues you may have overlooked.
Do not be afraid to admit as much. It enhances your credibility
to admit you are fallible: it does no good to pretend otherwise
because everyone knows you are anyway.
If you are not so lucky, you will receive no negative comments.
This does not mean that everyone is happy. Their unhappiness
may surface later in a far more dangerous form: they will
simply not implement the new procedures, or will revert to
the old ones when under pressure or if given the opportunity.
You may think you can force people to follow the new procedures,
but that means standing over them like a slave driver –
a total failure of management. The only way to overcome resistance
is to get everyone on your side, and fill them with enthusiasm
so that they can be trusted to carry the process forward on
their own. This means getting any potential problems out in
the open from the start.
8. Review progress
Objectives on their own are meaningless. As part of the process
of change, a system of regular reviews should be established.
This might mean more meetings. However, these meetings have
a particular agenda:
To check if objectives have been met.
If they have not, to assess whether the failure lies with
a) anyone in particular, b) circumstances beyond anyone’s
control, or c) the objective itself.
To suggest remedial action and set new objectives, if necessary.
This is not to say anyone should be trying to blame anyone,
but there must be constant pressure to ensure everyone knows
that change will not go away. This must come from the top
and impact on everyone associated with the business. This
applies not only to employees. For example, you may need to
meet customers to discuss their perceptions of the new system
too.
It’s a good idea regularly to take time to step outside
the business and take an objective view of how you are doing,
as you did at the start of the process. You may find it is
necessary to revise the changes. Do not be afraid to admit
as much. Change is very much trial and error.
9. Plan for the future
Change never stops. There is no point where you can sit back
and say, ‘That’s change finished with’ –
even for a little while. Even as you are reviewing one set
of changes, another set may become necessary. The paradox
is that the most stable business is the one that understands
this, that accepts change, and that builds it into its normal
processes.
So keep reviewing the changes you have made, and also possible
changes you may need to make in the future. That way, when
change comes, not only you, but everyone associated with your
business, will be ready for it.
The key is to keep your long-term objective in mind, with
each change directed at getting a step closer to it. That
said, one by-product of successful change is that it often
creates a stronger platform and a wider vision. This in turn
allows you to extend your objectives with confidence, so creating
a widening circle of success. Above all, do not be afraid
of change. If you embrace change, you will be able to teach
your people not to fear it either.
Key points
- Consultation is the key to managing change. Listening
is vital: consultation is a two-way process.
- Talk to customers, suppliers, shareholders and financial
investors, as well as your people.
- Never discourage frank expression of concerns.
- Change as much as necessary and as little as you can get
away with – avoid change for the sake of it.
- Take time out to review the business objectively.
- Change must be calm and considered, even in a crisis.
- Take advice, but remember the final decision lies with
you.
- Communicate your vision. It should be simple, clear, and
easy to communicate. Everyone must share it.
- Build change into your business plan.
- Balance change and stability. Stability comes from accepting
that change is inevitable.
- Set and review objectives. Revise the changes if necessary.
- Change does not end. Do not be afraid of it: if you manage
it, it will not control you.
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