Change Management

CHALLENGE OF CHANGENETHERLANDS

CONTENTS

Introduction 1

Research Objectives and Methodology 2

Survey Sample 3

Defining Change Management 4

Drivers of Change 6

Planned Change 9

Managing Change 10

Recession Impact 11

When Change Goes Wrong 12

Delivering Change 13

Conclusion 17

INTRODUCTION

1

The constancy of change is a reality that impacts everyaspect of our lives, and how an organisation manages itselfamidst this reality is critical to the success or failure of anybusiness. At times change can seem gradual andevolutionary in nature; in other cases the change can comesuddenly and dramatically. A healthy company must havethe ability to adapt as needed to whatever sort of change isrequired, and thus the process of change management hasbecome a significant area of interest for executives in everyindustry – especially as change seems to come more andmore rapidly, and from every direction.

Executives Online has studied change management since2002, with the publication of our first “Challenge of Change”report. We have continued to update this information withnew surveys and research over the years, and we arehappy to deliver the latest installment: a survey conductedin September of 2009 among 262 Netherlands-basedexecutives.

This survey was conducted amidst a global recession, atime during which adaptation to a changed economicenvironment is critical to the very survival of manycompanies. Our past survey results have shown a trackrecord of rather poorly-constructed and implementedchange programmes; we were interested to see if thatrecord had improved any and what lessons might havebeen learned by companies on managing changeprogrammes. We also wanted to learn about the impact ofthe recession on change programmes currently underway.

Many of the executives we surveyed mentioned thenecessity of good communications during any changeprogramme. When change programmes are initiated, theremust be focus and attention on the messages andcommunication early in the process, to all of thestakeholders. When this is overlooked, employees can feelcriticised or blamed, as if they’d done something wrong,and this diminishes their openness to changing. Such errorscan produce a negative start, early in the process.

Other failures in driving change often derive on theresourcing side. It is important not to “overtask” staff whoneed to worry about the day to day business, by requiringthem to drive change at the same time. Leaving changemanagement including support in implementing change toprofessionals and dedicated staff will pay dividends in thelong run.

Making the business more innovative was cited as a reasonor primary driver of change in only 3% in all the cases. Inthe current business climate, the most difficult in manyyears, most change programmes are created for defensivereasons like reducing costs, improving efficiency, improvingquality and restructuring. Emergence of new technologywas the primary driver of only 1% of change programmes.This indicates there must be major, under-exploitedopportunities for companies to embrace innovation forcompetitive advantage. Finally, change must becomeembedded in corporate culture, as continuous improvement– to eliminate the necessity of large-scale, disruptiveprogrammes, or to make such initiatives more positive andeffective.

We hope you enjoy this latest update on the ongoingchallenge of change, and as always we welcome yourreaction or feedback on any aspect of our report.

Edwin GlasManaging DirectorExecutives Online Netherlands

RESEARCH OBJECTIVES AND METHODOLOGY

2

Executives Online has been publishing the Challenge ofChange reports since 2002 and our goal has been tounderstand how the practice of effecting change in anorganisation has been evolving over time. This year we werealso curious to see how the global economic recession mayhave impacted the drivers of, attitudes toward, andapproaches to change.

Our survey was conducted online in September of 2009, viaan online questionnaire to 262 Netherlands-based interimmanagers and some of the senior executives inorganisations that could employ them.

Areas of inquiry included:

• Definitions and consensus on change management• Drivers of change• Current planned business initiatives• Impact of the recession on change programmes• Assessment of how well companies manage change• How change tends to go awry• Causes underlying change programme failure• Effectiveness and suitability of change management

resources• Skills required by effective change managers

SURVEY SAMPLE

3

Of the survey sample, 6% identified as the “personresponsible for delivering a change initiative in yourorganisation” and another 3% as the “owner of thebusiness case for a change programme (sponsor).” Theremainder divided nearly equally among “an interimmanager who has been engaged to deliver change” (25%),“a senior manager or executive employed in anorganisation that is or was undergoing change” (23%), “aninterim manager” (23%), and “an independent changemanagement professional” (20%).

An interim manager who has been engagedto deliver change – 25%

A senior manager or executive employed inan organisation that is or was undergoingchange – 23%

An interim manager – 23%

An independent change managementprofessional – 20%

The person responsible for delivering achange initiative in your organisation – 6%

Owner of the business case for a changeprogramme (sponsor) – 3%

23%

20%

Who filled out survey?

25%

3%

23%

6%

“Change management is a structuredapproach to transitioning individuals,teams, and organisations from a currentstate to a desired future state.”

DEFINING CHANGE MANAGEMENT

4

The majority of respondents believed that there was littleconsensus on the definition of “change management.”Less than a quarter felt that when someone used thephrase “change management,” it would be clear to othersprecisely what was meant.

Do you believe there is consensus on whatchange management is? That is, when someoneuses the phrase change management, thatothers will instantly understand precisely what heor she means?

Yes22%

No78%

That said, when respondents were offered a possibledefinition of change management, 90% agreed with thatdefinition.

Do you agree with the following definition ofchange management: Change management is astructured approach to transitioning individuals,teams, and organisations from a current state toa desired future state.

No10%

Yes90%

Alternative Definitions of “Change Management”

While largely agreeing with the definition offered, respondentsdid offer some modifications. Some respondents emphasisedthat the transitions must focus on the “processes andprocedures” required by the change in question. Othersadded that any transition must be “aimed at achievingtangible business results” and/or must “improve quality andcompetitiveness.” Another respondent argued that the word“culture” must be included as “the culture makes thedifference: finance, strategy, and human resources are onlyresults of the culture.”

One respondent focused on the timing aspect, noting thatthe change must be a gradual, or “evolutionary” one:

Change management is an evolutionary transitioning ofindividuals, teams and organisations to an expecteddesired future state.

A further point was that the process of change was not aone-time thing, but an ongoing process:

Change management is a more or less old-fashionedconcept in this world of continuous change. So everymanager is more or less a change manager. In my viewit is better to speak of different forms/levels ofintervention management.

Finally, one respondent offered an alternative definition, onethat suggested that change management was both“structured” and “dynamic”:

Change management is NOT a structured approach totransitioning individuals, teams or organisations from acurrent state to a desired future state. I believe it's astructured, dynamic and economic way of adaptingyour organisation to the changing necessities of yourstakeholders while keeping close contact with thosestakeholders.

5

DRIVERS OF CHANGE

6

As for the primary driver of change, “increasing efficiency”was most often cited, by 23% of respondents. “Corporaterestructure” (17%) was another important driver, along withcost reduction (14%) and “quality improvement” (13%).

Increasing efficiency

Corporate restructure

Cost reduction

Quality improvement

Looking for competitive advantage

Falling sales

Response to the current economic crisis

Making the business more innovative

Expansion into new markets

Increased competition

Globalisation

Business relocation

Emergence of new technology

In the last change project you’ve witnessed or been part of, please indicatethe primary driver of that change:

0 10 20 30 40 50 60

23%

17%

14%

13%

10%

7%

4%

3%

3%

2%

2%

1%

1%

Number of Responses

7

When the question was expanded and respondents wereasked to indicate ALL drivers of change, “increasingefficiency,” “cost reduction,” “quality improvement,” and“corporate restructure” all remained at the top of the list.More growth-oriented projects, such as “looking forcompetitive advantage,” “making the business moreinnovative,” and “expansion into new markets” also elicitedresponses.

Increasing efficiency

Cost reduction

Quality improvement

Corporate restructure

Looking for competitive advantage

Making the business more innovative

Falling sales

Expansion into new markets

Increased competition

Response to the current economic crisis

Emergence of new technology

Globalisation

Business relocation

In the last change project you’ve witnessed or been part of, please indicateALL factors that were drivers of that change:

0 20 40 60 80 100 120 140 160 180 200

66%

59%

54%

48%

35%

33%

24%

22%

21%

19%

13%

13%

12%

Number of Responses

8

Fear or Ambition?

In our survey, respondents were divided as to whether mostbusiness change is driven by fear or by ambition, with 56%indicating “fear or defensive reasons” and 44% indicatingthe more positive “ambition or expansive reasons.”

The reasons behind change were varied, and manyrespondents said that “a combination” of both “ambition”and “fear” were at play. One respondent commented: “itstarted with ambition but changed into a defensive mode.”Others noted that change occurred due to “anticipation ofchanging circumstances” or “reaction to competitive marketdevelopments.” Additional factors mentioned included“financial pressure” and “pursuit of profits.” In any case,however, some respondents noted again that the driversshould not matter; “change should be an ongoing focus.”

Do you think most business change is driven byfear, or ambition? That is, for defensive orexpansive reasons, respectively?

Fear/Defensive

reasons56%

Ambition/Expansivereasons

44%

PLANNED CHANGE

9

Many initiatives were planned over the next 12 months,especially in the areas of “business restructure” (47%) and“major cost reduction” (38%). Undoubtedly the globaleconomic recession has been driving these cost-orientedprojects. There is also, however, some appetite for moreexpansive projects: “introduce a major businessimprovement initiative” (31%), “introduce new technology”(22%) and “move into a major new market” (17%).

For the majority of respondents, the planned changesseemed manageable; nearly three-quarters did not feel itwould be “too much” for their organisations.

What business change initiatives are planned in your (oryour client’s) organisation for the next 12 months?

Business restructure

Major cost reduction

Introduce a major business improvement initiative

Downsize workforce

Introduce new technology

Move into a major new market

Merger or aquisition

Relocate any operations overseas

Divestment

Number of Responses

0 20 40 60 80 100 120 140

47%

38%

31%

26%

22%

17%

16%

8%

5%

Do you believe this is too much planned changefor your organisation over the next 12 months?

Yes 26%

No 74%

2%

10%

34%

47%120

100

80

60

40

20

0 Quite well Fairly well Average Fairly poorly

In general, how well do companies manage change?

Num

bero

fRes

pond

ents

7%

Quite poorly

MANAGING CHANGE

10

Overall, respondents were not impressed with how wellcompanies manage change. Only 2% indicated thatcompanies manage change “quite well,” and only another10% indicated “fairly well.” Thirty-four percent ratedcompanies as “average” in change management and overhalf said either “fairly poorly” or “quite poorly.”

RECESSION IMPACT

11

As previous survey data has shown, the global recessionhas had an impact on companies across the board. Whenasked specifically about its effects on change programmesalready underway, almost 40% said the programmes were“continuing but with more demanding requirements.”Twenty-four percent said that “the majority” had been put onhold; ten percent said that “a minority” had been put onhold. Ten percent were continuing with diminishedrequirements, and for 3%, activity had stopped completely.Only 14% indicated that there had been no impact from therecession.

What is the main impact the recession has had on change programmesalready underway in your or your client’s organisation?

Continuing but with more demanding requirements

Majority have been put on hold

No impact

Minority have been put on hold

Continuing but with diminished requirements

Activity has stopped completely

Number of Respondents

0 10 20 30 40 50 60 70 80 90 100

39%

24%

14%

10%

10%

3%

When asked specifically about itseffects on change programmesalready underway, almost 40% saidthe programmes were “continuing butwith more demanding requirements.”

WHEN CHANGE GOES WRONG

12

Given respondents’ feelings on how poorly companiesmanage change, it is clear that much goes wrong. In termsof diagnosing specific issues, the most significant onesseemed to be around staffing and timing: “failure toempower staff so that they can deliver” (24%), “not allowingenough time for the change to be implemented” (15%), and“expecting employees to do day jobs and also changeroles” (13%).

When asked for additional comment, some respondentsnoted there was often an “inconsistent message” and “toomuch top-down instead of bottom-up”. An unwillingness to

“walk the talk” by senior management was also a factor;“failure to communicate” was mentioned frequently as well.

[Senior management is] not participating, notmotivating the employees, which is unbelievably stupidbecause they are a part of it.

Other problems included “no clear operational translation ofthe change wanted” and “too many projects not alignedwith each other, resulting in chaos.” At the end of the day,respondents observed that “change needs time, becauseit’s people work and they adjust only slowly.”

Failure to empower staff so that they can deliver

Not allowing enough time for the change to be implemented

Expecting employees to do day jobs and also change roles

No clear measurable targets

Failure to appoint a committed change sponsor/champion

Failure to identify the right changes to employ

Failure to make decisions in a timely fashion

Not implementing the change(s) quickly enough

Failure to hire a change expert

Not allowing enough budget

Failure to gauge how much change is needed

Where change goes wrong, what have you seen as the main cause?

0 10 20 30 40 50 60

15%

3%

2%

24%

13%

10%

10%

9%

7%

5%

2%

Number of respondents

DELIVERING CHANGE

13

Actually delivering on the planned change programme is thekey challenge. A variety of different resources may beinvolved in a single change programme, depending on thecompany and the magnitude of the change sought. Theboard (i.e., CEO/Managing Director) generally had a role(59%), and department heads were often involved as well(49%). Internal teams (those for whom changeresponsibilities were added to their usual responsibilities)played a part almost half of the time.

Management consulting firms – either “name brand” orboutique/niche firms – were not used very often. There wasusage of external players, however: external/independentchange management professionals (21%) and externalinterim/contract workers (23%).

In the last change project you have been part of, what resources havebeen used to lead and deliver change? (tick as many as apply)

The board ie CEO/Managing Director

Departmental heads

Internal team: change responsibilities added to usual responsibilities

External interim/contract workers brought in todeliver aspects of change programme

External/independent change management professionals

Internal team: members seconded or otherwise100% applied to change programme

External “name brand” global consultancy firm

External boutique or niche change management consultancy


0 25 50 75 100 125 150 175

49%

59%

47%

23%

21%

17%

5%

4%

14

Primary Resource vs. Effective Resource

Survey respondents were then asked to indicate whichresources had been the PRIMARY resource for change, andthen which resource had been the MOST EFFECTIVEresource for the change. In most cases, the two statisticsaligned fairly closely. However, the board (i.e.,CEO/Managing Director) was viewed as less effective(relative to its usage), and internal teams dedicated tochange programmes and external/independent changemanagement professionals as more effective.

In the last change project you have been part of, which resource was the PRIMARY one usedto deliver change? Which was the MOST EFFECTIVE one used to deliver change?


Departmental heads








0 10 20 30 40 50 60

18%25%

23%23%

19%20%

16%13%

13%9%

8%7%

1%2%

2%1%

Primary Resource for Change Most Effective Resource for Change

15

Suitability Ratings

When asked to rate each role as to its “suitability for leadingchange management,” respondents tended to favorexternal/independent change management professionals,as well as the board and department heads as being either“excellent” or “average” in their suitability for leadingchange management. Internal teams rated more highlywhen they were “seconded or otherwise 100% applied tothe change programme.” External “name brand” globalconsultancy firms fared the worst in suitability ratings.

Suitability Ratings



Departmental heads







0 20 40 60 80 100 120 140

39%10%

51%

34%19%

47%

43%12%

46%

51%9%

41%

46%17%

36%

52%21%

26%

50%24%

26%

55%32%

13%

Excellent Average Poor

16

Change Management Skillset

Finally, survey respondents were asked to rank a list of skillsin terms of their importance to a person responsible fordelivering change. The top ranked skills were actually rathergeneric qualities: “successful leadership skills,” “excellentcommunication skills,” and “personal charisma/persuasiveness.” Following next in ranked importance weremore experience-related aspects: “experience in thefunction in which the majority of change is concentrated”and “experience in the organisation’s industry.”

Other Skills

Respondents added other skills they felt were important tothe role of an interim manager: “being able to makedecisions,” “constantly being adaptive to change” and“achieving and creating trust and cooperation.” Onerespondent clarified that “vision must come first;” anothercaveat was that “while too often change is based onbooks/theory, it’s really about people and attitude only.”

Change should always involve the people who will

maintain the changes. Change management is

therefore leadership and communication with the rest ofthe business.

Please rank the following skills in terms of their importanceto a person responsible for delivering change

Rank

Successful leadership skills 1

Excellent communication skills 2

Personal charisma/persuasiveness 3

Being goal-oriented 4

Experience in the organisation's industry 5

Successful track record in similar change management programme(s) 6

Experience in the function in which the majority of the change is concentrated 7

Marketing and sales capabilities 8

Technical acumen (modelling, analysis, mastery of formal analytical tools) 9

Sense of urgency 10

Patience 11

17

CONCLUSION

The “challenge of change” continues to stymie the majorityof companies. Consistent with previous survey results, ourSeptember 2009 respondents were not impressed with howwell companies manage change: just 12% said “quite well”or “fairly well” and well over half indicated either “fairlypoorly” or “very poorly.”

Corporate restructure, cost reduction and increasingefficiency were all viewed as significant drivers of changeand were also among the most common planned initiatives,which is not surprising amidst a global recession. Of thecompanies surveyed, just 14% said the recession had notimpacted their change programmes; 39% were continuingbut with more demanding requirements and otherprogrammes had either been put on hold, scaled back, orstopped completely.

Change tended to “go wrong” when staff did not feelempowered and/or when they were expected to continuewith their day jobs as well as helping to implement change.There were also issues around lack of a committed changesponsor/champion, and of overall senior managementcommitment and engagement in the changes planned –another aspect that had come up repeatedly in past research.

The board, department heads, and internal teams were allcommonly tapped to employ change. External/independentchange managers also received a vote of confidence from

many respondents, and given the lack of successcontinually seen across the change programmes cited,perhaps employing more individuals with changemanagement expertise might make sense.

Interestingly, the top-ranked skills for an effective changemanager tended to be more generic qualities vs. morespecific or technical skills. Successful leadership andexcellent communication skills as well as personalcharisma/persuasiveness all ranked highly. Many surveyrespondents commented on the critical importance of the“human side” of the change process, adding furthercredence to the need for strong leadership, communicationand persuasiveness.

The recession has necessitated change across mostcompanies and industries, and the ability of a company tosuccessfully navigate the tides of change will be a factor indetermining who survives. Finding the right formula foreffective change management: what to change; who shouldeffect that change; and how to execute on the chosenprogramme... all of these elements require careful attentionfor success.

Executives Online has a strong track record in findingchange management expertise; feel free to call us ++3311 ((00))2200 33001122115599 if you think we might be able to help.

Corporate restructure, cost reductionand increasing efficiency were allviewed as significant drivers of changeand were also among the mostcommon planned initiatives

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Change Management

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