CHAPTER 3

CONCEPTS AND PRINCIPLES OF CHANGE MANAGEMENT

DR. G. SUDHAKAR

3.1. INTRODUCTION
‘The Principles of Change Management’ is one of the applicable theories for
Change Management. Through the implementation of these principles, any
member from the top to the bottom in the enterprise can understand how to deal
with an individual change. Furthermore, more findings about how to apply their
personal change management skills in the organizational level of change
management can be done.
Since the mid-2000s, organizational change management and transformation
have become permanent features of the business landscape. Vast new markets
and labour pools have opened up, innovative technologies have put once-
powerful business models on the chopping block, and capital flows and investor
demand have become less predictable. To meet these challenges, firms have
become more sophisticated in the best practices for organizational change
management. They are far more sensitive to and more keenly aware of the role
that culture plays. They have also had to get much better on their follow-
through. Yet according to a global senior executives on culture and change
management, the success rate of major change initiatives is only 54 percent.
This is far too low. The costs are high when change efforts go wrong not only
financially but in confusion, lost opportunity, wasted resources, and diminished
morale. When employees who have endured real upheaval and put in significant
extra hours for an initiative that was announced with great fanfare see it simply
fizzle out, cynicism sets in.
3.2. MAJOR HURDLES TO OVERCOME
The experience with organizational change management suggests that there are
three major hurdles to overcome.
The first is “change fatigue,” the exhaustion that sets in when people feel
pressured to make too many transitions at once. The change initiatives have
been poorly thought through, rolled out too fast, or put in place without
sufficient preparation. Fatigue is a familiar problem in organizational change
management, especially when splashy “whole new day” initiatives are driven
from the top.
The second major obstacle is change initiatives also flounder because
companies lack the skills to ensure that change can be sustained over time.
Leaders might set out eagerly to raise product quality, but when production
schedules slow and the pipeline starts looking sparse, they lose heart. Lacking
an effective way to deal with production line problems, they decide their targets
were unrealistic, they blame the production technology, or they accuse their
frontline people of not being up to the task. A much better way to solve the
problem is to invest in operational improvements, such as process design and
training, to instill new practical approaches and give people the knowledge and
cultural support they need.
The third major obstacle is that transformation efforts are typically decided
upon, planned, and implemented in the C-suite, with little input from those at
lower levels. This filters out information that could be helpful in designing the
initiative while also limiting opportunities to get frontline ownership of the
change.

3.3. CORE CONCEPTS FOR CHANGE MANAGEMENT

The central concepts that will impact change management activities are shown
in the Figure below. The overview of concepts and ideas presented are not
intended to be an in-depth psychological analysis. The focus is on the key
insights from these concepts that impact the effective application of change
management.
CONCEPT 1 - SENDERS AND RECEIVERS
Every change can be viewed from the perspective of a sender and a receiver. A
sender is anyone providing information about the change. A receiver is anyone
being given information about the change. Senders and receivers are often not
in a dialogue at the onset of a change. They can talk right past one another as a
sender focuses on the business issues and the receiver processes the personal
implications. What a sender says and what a receiver hears are often two very
different messages.
For example, if a supervisor sits down with an employee to discuss a major
restructuring project within the company, the supervisor may be enthusiastic
and positive. He may cover all the key messages including the business reasons
for change, the risk of not changing and the urgency to change for the
organization to remain competitive. The supervisor may even emphasize that
this is a challenging and exciting time. However, when the employee discusses
this change at home over dinner, the key messages to his family are often:
“I may not have a job.”
“The company is having trouble.”
The supervisor may spend 95% of the conversation talking about the business
and 5% talking about the implications to the employee. At home, the employee
is more likely to spend 95% of the time talking about the impact on him
personally and 5% on the issues facing the company.
CONCEPT 2 - RESISTANCE AND COMFORT
A common mistake made by many business leaders is to assume that by
building awareness of the need for change, they have also created a desire
among employees to engage in that change. The assumption is that one
automatically follows the other. Some managers fall into the trap: If I design a
“really good” solution to a business problem, my employees will naturally
embrace that solution. Resistance from employees takes these managers by
surprise and they find themselves unprepared to manage that resistance.
Change creates anxiety. The current state has tremendous holding power, and
the possibility of losing what we have grown accustomed to (and comfortable
with) creates worry and uncertainty. The future state of workplace changes is
often unknown or ill-defined, and this creates fear about what lies ahead.
Anxiety and fear are powerful emotions that by themselves create resistance to
change.
CONCEPT 3 - AUTHORITY FOR CHANGE
When we think of change, we often think of leaders. Some person or group is
the guiding authority that determines and enables change to occur. The notion
that we need people to set direction, solve problems, create a vision and lead us
to a better future is part of our heritage. It is present in families, communities,
companies and government.
In the common language of change management, the leader has the name
sponsor or primary sponsor. Connor defines sponsor as “the individual or group
who has the power to sanction or legitimize change.” Using this definition, we
can readily identify the leader(s) who can enable a specific change to happen.
What is equally important is what these leaders do:
• Sponsors actively and visibly participate in the change.
• Sponsors build a coalition of sponsorship between key business leaders.
• Sponsors communicate directly with employees about why the change is
needed.
When these roles are carried out effectively by a leader of a change, several
things can be observed. First, sufficient resources and funding are available and
priorities are established between competing initiatives. Roadblocks are
removed and the sponsor stays active throughout the entire project. Second,
other senior leaders sponsor the change in their areas and manage resistance as
necessary. A coalition of sponsorship is formed that leads and supports the
change. Finally, employees understand why the change is being made and how
the change aligns with the vision for the organization. If they have objections or
resistance to the change, they have a productive channel through which they can
resolve their objections.
CONCEPT 4 - VALUE SYSTEMS
The values are the centerpiece of traditional, hierarchical organizations: control,
consistency and predictability. These values dictate that decision making is at
the top of an organization, leaving the execution and implementation to the
middle and bottom layers.
The belief system in this type of organization is more akin to a military
structure. The predictable and desired reaction to a change is compliance with
any new direction, and this behavior is encouraged and rewarded. For a leader
in this type of organization, authority is typically not questioned. The value
systems reinforce compliant behavior, and employees understand how they will
be rewarded or punished. The values of control, consistency and predictability
create an environment where change is simply a plan to implement or an
adjustment to a mechanical system. Decision making is top-down. Then value
systems began to shift. A new culture evolved within many businesses.
Employees began to take ownership and responsibility for their work. They
began striving to improve their work processes and overall performance. These
new values have improved business productivity and the ability to react to
customer needs. However, the evolution from the traditional values of control,
predictability and consistency – values that made change relatively simple to
implement – to the new values focused on accountability, ownership and
empowerment has made the implementation of top-down business change more
difficult.
CONCEPT 5 - INCREMENTAL VERSUS RADICAL CHANGE
Employees will react differently to a change that is incremental as compared to
a change that introduces a dramatic shift to what they know – a radical change.
The right approach and amount of change management required by a given
project or initiative is unique and specific to the magnitude of the change,
specifically how different the change is from the current state. Change can be
broken down into two types.
Type 1 – Incremental change: In this change environment, a change will take
place over a long period of time. The objectives of the change are small and
deliberate. These types of changes are not normally driven by financial crisis or
immediate demand for improvement, but rather a general focus on performance
improvement.
Type 2 – Radical change: In this environment, immediate and dramatic change
is required over a short time period. Often driven by a crisis or significant
opportunity, these changes are meant to produce dramatic performance
improvements in business processes, structure or systems.

Changes that are incremental in nature typically require less change

management because you are asking your employees to make a smaller leap
from what they know and are comfortable with. Radical changes, on the other
hand, require more change management. The future state is more uncertain than
in incremental change, and the comfort of the status quo is left farther behind
when we ultimately make the change.
CONCEPT 6 - THE RIGHT ANSWER IS NOT ENOUGH
It is important to come up with the right solution to an issue or opportunity
facing the organization. Project teams and consultants have experience and
technical expertise in identifying what needs to change, evaluating different
solution alternatives, selecting the right approach, and developing a solution to
meet the technical requirements of the situation. Most of the time the team is
able to create a solution that solves the technical issue or opportunity.
However, simply arriving at the “right” or “best” solution is not sufficient to
ensure that performance is improved or results are achieved. Ultimately,
changes come to life through the behaviors and work processes of individual
employees. The right answer alone does not create buy-in. The right answer
alone does not create commitment. The right answer alone does not mitigate
resistance or eliminate fear.
Just having a solution that is technically “right” does not guarantee that
employees will make the necessary changes to their behaviors and work
processes. Employee commitment, buy-in and adoption do not stem from the
rightness of the solution, but rather from employees moving through their own
change process. It takes more than the right solution to move employees out of
the current state that they know and into the future state they do not know.
“The right answer is not enough,” is very important for change leaders. Many
business leaders believe that if they can develop a great solution, there won’t be
resistance to change. In rank order, the top reasons employees resist change are:
1) Lack of awareness of the need for change,
2) Impact on current job role,
3) Organization’s past performance with change,
4) Lack of visible support from managers and
5) Job loss.
CONCEPT 7 - CHANGE IS A PROCESS
By breaking change down into discrete time periods or states of change, leaders
can adapt their strategies and techniques based on where they are in the change
process.
The most common lesson from this model for change is that we must avoid
treating change as a single meeting or announcement. Change is not
implemented in a single moment, and likewise, the role of business leaders in
sponsoring change should not be reduced to a single event. The sponsor’s role
in change must be to be active and visible in all phases of the change process.
A larger lesson from the principle of change is a process is found when you
examine how individuals navigate change. The Prosci ADKAR Model
characterizes the process for individual change in five key steps:
• Awareness of the need to change
• Desire to participate in and support the change
• Knowledge about how to change
• Ability to implement new skills and behaviors
• Reinforcement to keep the change in place
The ADKAR Model captures how a single person goes through change.
Awareness includes the nature of the change and why the change is happening.
Desire is that personal choice to embrace the change and commit to moving
forward. Knowledge includes education and training on how to change
(behaviors, skills, processes) and implement the change effectively. Ability is
the demonstrated proficiency with new tools, processes and job roles such that
the desired outcomes of the change are achieved. Reinforcement includes
reward, recognition, compensation or other performance management activities
that sustain the change for that person. A final observation for the concept that
change is a process is to match the speed that employees navigate the change
process to the speed of the business change.

3.4. GUIDING PRINCIPLES FOR CHANGE

The following list of 10 guiding principles for change which help executives
navigate the treacherous shoals of transformation in a systematic way.
1. Lead with the culture. Company culture is an amalgam of shared history,
explicit values and beliefs, and common attitudes and behaviours. Change
programs often require amending, creating (in new companies or companies
built through multiple acquisitions), retaining (in storied consumer goods or
manufacturing concerns), or merging (in mergers or acquisitions of large
companies) culture to be successful. Culture should be addressed as thoroughly
as any other area. Business people today understand this. The widespread
recognition of culture is importance because change management designers
view their company’s culture as the legacy of a past from which they want to
move on or they get so focused on structural details like reporting lines,
decision rights, and formal processes that they forget that human beings with
strong emotional connections to the culture will be enacting these changes.
2. Start at the top. Change should start at the top and should begin on day one.
Change is inherently unsettling for people at all levels of an organization, and
when it is on the horizon all eyes will turn to the CEO and the leadership team
for strength, support, and direction. The leadership must change first to
challenge and motivate the rest of the institution, speaking with one voice and
“walking the talk” to model desired behavior. At the same time, individual
executive team members are going through their own personal changes and
need to be supported so that they can be in agreement with their executive team
members. Executive teams that work well together, that are aligned and
committed to the direction of change, that understand the culture and behaviors
it intends to introduce, and that can model those changes themselves are best
positioned for success.
3. Involve every layer. As transformation programs progress through strategy
setting, target setting, design, and implementation, they affect different levels of
the organization. Change efforts must include plans for identifying leaders and
pushing responsibility for design and implementation down through the
organization. Strategy and target setting is usually the responsibility of the
leadership team and its direct reports. Design teams drawn from the next layer
of executives and senior managers must be prepared to work across silos and
lead the change. Implementation relies on line managers and individual
contributors. Each of these layers must have identified, trained leaders who are
aligned to the company’s vision, equipped to execute their specific mission, and
motivated to make change happen. These change leaders must be released from
their current assignments and dedicated to the work of change.
One common aphorism in change management is “you have to go slow to go
fast.”
4. Make the rational and emotional case together. Leaders will often make
the case for major change on the sole basis of strategic business objectives such
as “we will enter new markets” or “we will grow 20 percent a year for the next
three years.” Such objectives are fine as far as they go, but they rarely reach
people emotionally in a way that ensures genuine commitment to the cause.
Human beings respond to calls to action that engage their hearts as well as their
minds, making them feel as if they are part of something consequential.
Any transformation of significance will create people issues. New leaders will
be asked to step up, jobs will be changed, new skills and capabilities must be
developed, and people will be uncertain and will resist. This fact-based
approach demands as much data collection and analysis, planning, and
implementation discipline as a redesign of strategy, systems, or processes. It
should be fully integrated into program design and decision-making, both
informing and enabling strategic direction.
5. Act your way into new thinking. Many change initiatives seem to assume
that people will begin to shift their behaviours once formal elements like
directives and incentives have been put in place. People who work together on
cross-functional teams will start collaborating because the lines on the chart
show they are supposed to do so. Managers will become clear communicators
because they have a mandate to deliver a message about the new strategy.
The change team demands that leaders adopt three specific behaviours:
 Make major, visible decisions in days instead of weeks or months.
 Spend time with people at the frontline leadership (supervisory) level,
asking for their input and engaging them in frank discussions.
 Ensure the middle and lower ranks have direct contact with real-life
customers.
6. Engage, engage, engage. Leaders often make the mistake of imagining that
if they convey a strong message of change at the start of an initiative, people
will understand what to do. Nothing could be further from the truth. Powerful
and sustained change requires constant communication, not only throughout the
rollout but after the major elements of the plan are in place. The more kinds of
communication employed, the more effective they are. Symbols reinforce the
impact of words. The multifaceted and on-going communication efforts keep
the message alive, giving every employee an understanding of the change and a
stake in the outcome.
7. Lead outside the lines. Change has the best chance of cascading through an
organization when everyone with authority and influence is involved. In
addition to those who hold formal positions of power like the company’s
recognized leaders. This group includes people whose power is more informal
and is related to their expertise, to the breadth of their network, or to personal
qualities that engender trust. These informal leaders are called “special forces.”
They can be found throughout any organization. They might include a well-
respected field supervisor, an innovative project manager, or a receptionist
who’s been at the firm for 25 years.
There are three distinct kinds of informal leaders:
Pride builders are great at motivating others and inspiring them to take pride in
their work.
Trusted nodes are go-to people. They are repositories of the organization’s
culture. They are the ones approached by people who want to know what’s
really happening in the organization
Change or culture ambassadors know, as if by instinct, how to live the change
the organization is making. They serve as both exemplars and communicators,
spreading the word about why change is important.
8. Leverage formal solutions. Persuading people to change their behaviour will
not suffice for transformation unless formal elements such as structure, reward
systems, ways of operating, training, and development are redesigned to support
them.
9. Leverage informal solutions. Even when the formal elements needed for
change are present, the established culture can undermine them if people revert
to long-held but unconscious ways of behaving. This is why formal and
informal solutions must work together. But one of the most powerful solutions
was purely cultural and informal, changing the informal motto that governed
frontline decision making.
10. Assess and adapt. Many organizations involved in transformation efforts
fail to measure their success before moving on. Leaders are so eager to claim
victory that they do not take the time to find out what is working and what is
not, and to adjust their next steps accordingly. This failure to follow through
results in inconsistency and deprives the organization of needed information
about how to support the process of change throughout its life cycle.
These 10 guiding principles offer a powerful template for leaders committed to
effecting sustained transformational change. The work required can be arduous
and exacting. But the need for major change initiatives is only going to become
more urgent. It behoves us all to get it right.
3.5. STRATEGIES FOR MANAGING CHANGE
The four basic strategies used to manage change in and to organizations:
1. Empirical-Rational (E-R)
2. Normative-Reeducative (N-R)
3. Power-Coercive (P-C)
4. Environmental-Adaptive (E-A)
Most successful change efforts will require some mix of the four strategies;
rarely will a single strategy suffice.
1. THE EMPIRICAL- RATIONAL STRATEGY
UNDERLYING ASSUMPTIONS . People are rational beings and will follow
their self-interest once it is revealed to them. Successful change is based on the
communication of information and the proffering of incentives. For the most
part, people are reasonable and they can be reasoned with. In short, they can be
persuaded. Value judgments aside, they can also be bought. This is the “carrot”
side of carrot-and-stick management. But for reason and incentives to work,
there has to be very little in the way of a downside to the change and/or the
upside has to greatly outweigh it.
SELECTION FACTORS . Change strategy here centers on the balance of
incentives and risk management. The Empirical-Rational strategy is difficult to
deploy when the incentives available are modest. Why risk what we have for an
uncertain future that promises to be no more than modestly better than the
present? This is especially true when people currently have it pretty good.
A by-product of the Rational-Empirical strategy consists of converts, that is,
people who buy the story. Some will see the light and want to sign on. These
people can be very helpful. However, depending on their stature in the
organization, you might not want them. Another stratagem here is to
systematically target converts, that is, thought leaders and influencers who, if
they buy the story and buy into helping make the change, will influence others.
2. THE NORMATIVE - REEDUCATIVE STRATEGY
UNDER LYING ASSUMPTIONS . People are social beings and will adhere
to cultural norms and values. Successful change is based on redefining and
reinterpreting existing norms and values, and developing commitments to new
ones. For the most part, most people do want to “fit in” and “go along.” They
will “go with the flow.” The trick here is figuring out how to establish and
define the flow. Again, set aside value judgments and you will see such
commonplace practices such as advertising, positioning, and so on. Central here
also is charismatic and dynamic leadership.
SELECTION FACTORS . The Normative-Reeducative strategy focuses
squarely on culture – what people believe about their world, their work and
themselves and the ways in which people behave so as to be consistent with
these beliefs. Ordinarily, culture doesn’t change quickly and certainly not
overnight. The Normative Reeducative strategy works best when relationships
between the formal and informal organizations are at least cordial and hopefully
harmonious. If they are at odds with one another, this change strategy is denied
to management.
3. THE POWER- COERCIVE STRATEGY
UNDER LYING ASSUMPTIONS . People are basically compliant and will
generally do what they are told or can be made to do. Successful change is
based on the exercise of authority and the imposition of sanctions. This can
range from the iron hand in the velvet glove to downright brutality – “My way
or the highway.” The basic aim here is to decrease people’s options, not
increase them. Surprisingly, in many situations, people actually want and will
readily accept a Power-Coercive strategy, particularly when all feel threatened
and few know what to do. This strategy is the “stick” side of carrot-and-stick
management.
SELECTION FACTORS . Two major factors influencing the choice of the
Power-Coercive strategy are time and the seriousness of the threat faced. If the
organization sits astride the fabled “burning platform,” the threat is grave and
the time for action is limited. The metaphor of a burning platform is useful but
only if all concerned can in fact see that the platform is on fire. This is rarely the
case in an organization. Few companies are filled with people who understand
the way the business works and fewer people still appreciate the threats it faces
or the opportunities it encounters. A mitigating factor here is the culture. If the
culture is basically one of a benign bureaucracy that is clearly threatened, its
members are likely to go along with a sensible program, no matter how high-
handed. Conversely, if the culture is laced with autonomy and entrepreneurship
but has grown fat, dumb and happy, people will resent and perhaps oppose or
resist authoritarian moves. In this case, key positions might have to be filled
with new people.
4. THE ENVIRONMENTAL- ADAPTIVE S TRATEGY
UNDER LYING ASSUMPT IONS . People oppose loss and disruption but
they adapt readily to new circumstances. Change is based on building a new
organization and gradually transferring people from the old one to the new one.
This strategy shifts the burden of change from management and the
organization to the people. It exploits their natural adaptive nature and avoids
the many complications associated with trying to change people or their culture.
Also known as “the die-on-the-vine” strategy, the Environmental-Adaptive
strategy hinges on the commonplace observation that, although people are often
quick to oppose change they view as undesirable, they are even quicker to adapt
to new environments. Consequently, instead of trying to transform existing
organizations, it is often quicker and easier to create a new one and gradually
move people from the old one to the new one. Once there, instead of being able
to oppose change, they are faced with the prospect of adapting to new
circumstances, a feat they manage with great facility. The old organization,
then, is left to die on the vine.
SELECTION FACTORS . The major consideration here is the extent of the
change. The Environmental-Adaptive strategy is best suited for situations where
radical, transformative change is called for. For gradual or incremental change,
this is not the strategy of choice. Time frames are not a factor. This strategy can
work under short time frames or longer ones. However, under short time
frames, a key issue will be that of managing what could be explosive growth in
the new organization and, if it is not adequately seeded with new folks, the rapid
influx of people from the old culture can infuse the new organization with the
old culture.
CONSIDERATIONS IN FORMULATING A STRATEGY MIX
Generally speaking, there is no single change management strategy. You can
adopt a general or grand strategy (say, a Power-Coercive one) but, for any given
initiative (and there will always be multiple initiatives), you are best served by
some mix of strategies and tactics.
1. DEGREE OF CHANGE . Radical change or transformation argues for an
Environmental-Adaptive strategy (i.e., “wall off” the existing organization and
build a new one instead of trying to transform the old one). Less radical changes
argue against this strategy.
2. DEGREE OF RESISTANCE . Strong resistance argues for a coupling of
Power-Coercive and Environmental-Adaptive strategies. Weak resistance or
concurrence argues for a combination of Rational Empirical and Normative-
Reeducative strategies.
3. POPULATION . Large populations argue for a mix of all four strategies,
something for everyone so to speak. Diverse populations also call for a mix of
strategies. This implies careful segmentation.
4. STAKES . High stakes argue for a mix of all four strategies. When the stakes
are high, nothing can be left to chance. Moderate stakes argue against a Power-
Coercive strategy because there is no grand payoff that will offset the high costs
of using the Power-Coercive strategy.
5. TIME FRAME . Short time frames argue for a Power-Coercive strategy.
Longer time frames argue for a mix of Rational-Empirical, Normative-
Reeducative, and Environmental-Adaptive strategies.
6. EXPERTISE . Having available adequate expertise at making change argues
for some mix of the strategies outlined above. Not having it available argues for
reliance on the Power-Coercive strategy.
7. DEPENDENCY. This is a classic double-edged sword. If the organization is
dependent on its people, its ability to command and demand is limited. On the
other hand, if the people are dependent on the organization, their ability to
oppose is limited. (Mutual dependency almost always signals a requirement to
negotiate.)
FOUR STRATEGIES SUMMARIZED
3.6. ERRORS COMMON TO ORGANIZATIONAL CHANGE EFFORTS
There can be a significantly negative impact on the department or Faculty when
a change initiative fails, or its implementation is unplanned. According to John
P. Kotter (author of Leading Change), organizations often commit the
following common errors that will hinder their change efforts and they are noted
below.
Eight Errors Common to Organizational Change Efforts:
1: Allowing too much complacency
2: Failing to garner leadership support
3: Underestimating the power of vision
4: Under communicating the vision
5: Permitting obstacles to block the new vision
6 Failing to create short-term wins
7: Declaring victory too soon
8: Neglecting to anchor changes firmly in the culture
Consequences:
a) New strategies aren’t implemented well
b) Re-engineering takes too long
c) Quality programs don’t deliver hoped-for results