I strongly believe in progress through changes. The way how we went through the Covid-19 pandemic made me believe even stronger in the necessity of those evolutionary changes. The push towards digitalization, as in dissipation and adaptation within organizations, in its magnitude is easily comparable to the early 2000s with the rise of the Internet.
Disruptions are inevitable
Contemporary companies are open systems which must relate their strategies, plans and activities to their external and internal environments in order to survive at the market and protect the interest of its stakeholders. The information uncertainty and resource dependency are the two most important factors that determine the responsiveness of companies to the external influences and shape their willingness to change. In a globalised world, disruptions are inevitable (information uncertainty) which is why the topic of managing organisational change has become one of the most important movements influencing the work of contemporary companies in the past decades. The need has never been as evident as it currently is observed during the Covid-19 pandemic.
As counterintuitive as it may seem, crises – regardless of whereas wars, famines or ecological disasters - have been huge drivers for innovation throughout human history. Organizational growth in times of change can be facilitated when three simple steps are followed:
Change – Terms and Concepts
Under the term of organisational change, the contemporary management literature refers to modifications in the goals, structure, culture, technology and work tasks of organisations. It can be introduced by organisational management reflecting the new organisational plans, or it can be imposed by external changes and pressures, as it happened due to the worldwide pandemic. Although there is a consensus in literature regarding the causes and its forms, there is little agreement and vague empirical evidence on its meaning (nature) and how it influences organisations. The most basic question, the one that Sennett (2007) refers to in the quotation at the beginning of this article is whether a change is a norm or an exception. One therefore can argue whether stability is fixed, and change is the deviance, or that change is the norm “where stability is a vain attempt to control it”. The essence of this duality comes from the differences in the modern and postmodern post-industrial theory. Modern theory places a priority on the stability and on materialising things i.e., refers to direction of changes i.e. from this point to that point, while the post-modern theory emphasises instability and change as part of present state of organisations.
Regardless of which approach to change management you favour it is of crucial importance to diagnose i.e. identify the level, type and intensity of the required change. Further steps include managing and leading effective organisational change. A simple case of Lewin’s ‘unfreezing’, ‘moving’ and ‘refreezing’, can be the simple playbook to a successful implementation and is often the ‘magic’ a successful leader plays. Although this model is a simplified procedure of a complex undertaking, it does provide a means and tools for identifying and overcoming change resistance, identified first by Adams in 1987 as inertia and hostility.
One can argue the rational planned approach is neither successful nor attainable for managing changes in contemporary organizations because organizations cannot be controlled as a block of ice, it ignores the human factor and it serves only as a top down implementation of management decisions. Therefore, the findings from the metareaserach of Graetz and Smith (2010), argue that a complex approach to change management which does not take into account only the top down approach is required for the contemporary organizations due to the high instability of the environments in which they operate.
In most of the cases the tools, first introduced by Kotter and Schelesinger (1979, p.111) provide a voice to the employee’s concerns. These tools are a standard approach in managing change on contemporary organisations although their names vary and include: information and education, participation and involvement, negotiation and agreement, cooperation and explicit and implicit coercion. However, the writer of the article (me) tends to agree with Graetz and Smith (2010:197), in their comment that the various tools proposed for the managers toolbox, although comprehensive and with a different purpose are often misused as a tool “not to listen to, but to silence dissident voices”.
Changes in organisations during times of crisis
A crisis represents a low probability, high impact situation that is perceived by critical stakeholders to threaten the viability of the organization. The factors which could cause an organisational crisis are identified within the external and internal environment of the company. The global Covid-19 Pandemic is an external factor that triggered a crisis in many organisations across the globe.
The term of an economic crisis, in our case ignited by a global pandemic and the respective fallout, is inexorably linked to the concept of business cycles and the inherent instability of the market-driven economy. After the events that led to the Great depression in 1929 and the consequences after, the attention of the economics profession has turned on the fundamental issues of the stability of the market-driven economy – the Keynesian’ model. The basic purpose of the same was to offer theories that try to explain the macro-outcomes of the business cycle, while the economic theory accompanying it tries to design solutions to control them (Schiller 2006). In simple words, people, organisations, and governments do not like to be subjected to the unsecure outcomes of the ups and downs periods as are unemployment, inflation, slow growth or high interest rates.
According to research of Gossage et. al. from 2010, the crisis showed that contemporary organisations need to be “change capable,” all the time. Changes faced in the current economic climate are intensive and frequent. We can go as far as to declare that changes, as the ups and downs of the business cycle, must be seen as a constant state where managers and chief strategists learn how to adjust their organisation’s resources, capabilities, and strategies to the changing marketplaces. For implementing these adjustments in fast and successful ways, organisations should recognise the importance of change management competency, and establish successful models for introducing changes. However, considerable research, notably Gossage, indicate almost a half of the surveyed organisations reported a lack of human capacity “to adapt to and manage change through periods of economic uncertainty”.
Management role as a leader in times of crisis
While business cycle skills are required among top managers for identifying the scope and intensity of the required changes, transformational leadership qualities are as essential for implementing the identified change. The majority of the literature of the new Millennium, particularly after the crisis in 2008, gives a significant role of the leadership in managing the change.
Only those organisations capable enough to capitalize on the opportunities and on the potential of the entire organisation can survive in the rapidly changing business environment. Multiple studies consistently indicate that nearly half of the surveyed executives after the crisis “are not confident that their organizations can quickly mobilize to serve new markets and customers, do not believe their culture is adaptive enough to respond positively to and aren’t sure their workforces are prepared to adapt to and manage change through periods of economic uncertainty”. Therefore, their organisational capacity to embrace change as a continuing state is problematic.
Significantly, research indicates that the organisations which had an enterprise-wide change network, developed broader change competences, create effective change leaders, and have good analytical skill to assess the change fitness were more successful in overcoming the crisis. Under these circumstances, findings indicate that managers need to transform themselves as well and develop better understanding of the organisational change accompanied with the business cycle management skills.
In many organizations, while the CEO and top management formulate and implement its strategies, inputs from lower levels of management and employee networks contribute in a collaborative effort particularly in the implementation of the strategies.
During the crisis period a cautious and restrained communication strategy may be enabled, and mostly aims to protect the organization and its stakeholders from litigation threats and minimize the risk of legal liability. Although the strategy of restricting or limiting the amount of information disseminated might ostensibly have its merits, post-crisis communication has different requirements and intentions. After the catastrophe has been subdued newly established policies and crisis induced activities need to be reviewed. Though the organization might opt not to disclose the initial reason for the changes (as might be the case with security issues), the crisis inspired change efforts need to be extensively and continuously communicated to ensure employee buy in. Lack of understanding and acceptance remains the main reason for the low success rates of organizational change efforts. This problem is especially present in the frail state after a crisis with the business vulnerable and resources strained. Though the importance of communication – particularly during and after a critical incident - is a staple in business communication, organizations seldom pursue a conscious communication strategy.
In general, a strong focus on communication, on all organizational levels as well as external with partners, customers and competition is advisable. A significant amount of time is well spent on what I usually like to label “permanent communication”. The time spent on communication by VP level management to support change management in post crisis setting amounts on average to 75% of working time. The time spend on communication is significantly higher with successful projects – going up to 85 percent of average working time.
So, what now?
In summary, a simple guiding playbook can be designed basing on the overall premise of never-ending constant change, regardless of it being initiated internally or externally, firmly anchored in the corporate culture penetrating every level of organization. Hence, a well-designed, culturally accepted concept will automatically keep the organization agile and adaptive to the inevitable changes. Additionally, the importance of strong leadership, with a knack for communication cannot be overestimated and needs to be incorporated as the cornerstone of the strategic change management.
Prof. Dr. Helena Liebelt is Ciso and Head of IT at the Deggendorf Institute of Technology (DIT). Currently she is developing a new Master program „Quanten Computing and HPC“ which will go live by the end of 2021. Dr. Liebelts research is focusing around Quantum Computing Architecture and Quantum Simulation.