By Dora Wang
Part 1 of 3
Organizational change can cause a lot of anxiety for companies — and for good reason.
According to a recent Towers Watson survey, only 25% of change initiatives succeed over the long term. It's a baffling number since these moves range from mergers to reorganizations to business pivots. The stakes are high every time.
While some companies might prefer to keep things the way they are, change is necessary every now and again if organizations want to keep their doors open for the foreseeable future. There's no such thing as a news company that still requires reporters to use typewriters, for example.
Still, even though a majority of organizational change efforts fail, a considerable amount of them succeed. Like everything else in business, companies are much more likely to have their charge initiatives turn out the way they hope when they have the right approach.
It's no secret that organizational change is difficult to get right. When done in a brash or undeliberate manner, you're simply setting yourself up for failure.
But when it's done correctly, you end up with a more efficient and effective company — one that's better to work for from an employee's perspective and provides more value to its customers and stakeholders.
There's a reason, however, why so many companies fail to make organizational change work: It's incredibly tricky to do. For change initiatives to succeed, companies really need to know what they're doing and have a detailed plan that outlines how they will achieve their goals.
To that end, let's take a look at some companies that have successfully enacted change as well as some that didn't enjoy the same level of success to see why their efforts turned out the way they did.
Organizational Change Case Studies
In 2011, Atlassian decided it was time to overhaul its performance management strategy. The company had determined the traditional ratings-based biannual performance review system wasn’t achieving the intended results.
Because reviews were infrequent, employees dreaded them. And since numeric ratings of performance determined whether a worker got bonus, undue attention was heaped on whether someone was a “four” or “five” — a relatively arbitrary difference.
To address the issue, Atlassian trashed its existing review process in favor of a more continuous and less numeric model. Instead of a biannual formal review, managers and employees now discuss performance once a month, during an already-scheduled one-on-one meeting.
Publishing giant Pearson took on a much bigger change project at the end of 2012 when John Fallon took the CEO reins from longtime leader Marjorie Scardino.
Rather than getting a feel for the way the company operated during his first few months on the job, Fallon announced an entirely new game plan — termed the “Global Education Strategy” — from the outset.
Further, he implemented a massive reorg that grouped the workforce into six discrete business units.
How the Companies Pulled It Off
So how did both Atlassian and Pearson lead successful organizational initiatives? There were some similarities to their approaches.
01. Both companies went big
Atlassian didn’t just change one aspect of the performance management — it changed the entire process. And Pearson didn’t just add an addendum to its strategy — it shifted the company’s focus entirely and reorganized fully to support the new plan.
02. Each initiative was launched in a top-down manner
At Pearson, Fallon took to the company intranet to blog about changes and explain what to expect. At Atlassian, HR invested in training to teach managers how to coach employees effectively.
03. They leveraged technology
Both companies leaned on technology to achieve their ends — the intranet at Pearson and a new performance management system at Atlassian.
However, there were also two key differences:
01. Atlassian’s change management initiative was spurred from an internal observation (reviews are not effective), while Pearson’s materialized from an external force (a new CEO and a changing industry).
02. Pearson seemingly issued more internal marketing among its employees than Atlassian.
Transparency and communication are best practices for all kinds of change management initiatives. Employees will come around to the change more quickly if they feel consulted and informed.
Now that we've looked at some examples of successful change mangement, let's shift our focus to some instances where things didn't work out as planned.
This article by Dora Wang originally appeared in TINYpulse.