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Chapter 13: Strategic Change Management

Strategic Healthcare Management: Planning and Execution

by Stephen L. Walston

Learning Objectives

Know the three phases of organizational change.

Be aware of activities that should be accomplished prior to implementing change.

Be familiar with the use of surveys to identify preparedness for, readiness for, and resistance to change.

Discover the nature of resistance to change and methods of minimizing its negative effects on change efforts.

Understand that readiness includes leaders’, participants’, and the overall organization’s level of preparedness for change.

Learn how short-term wins can be used and their beneficial effect on strategic change.

Comprehend that change cannot be sustained unless it is anchored in an organization’s culture and processes.

Difficulty of Change Management

Studies have shown that the majority of organizations are involved in significant change several times a year, yet 40 percent feel that the changes they make are not successful (Maurer 2009).

Consultant engagements produce limited results if top executives fail to become champions of the change effort and neglect to prepare and involve important stakeholders.

Research has shown that without proper management of the change process, significant resistance often arises among key stakeholders, especially physicians in clinical settings. Their resistance can stop or seriously impede change (Tarantino 2005).

Phases of Strategic Change

Change involves three interconnected, sequential phases: (1) prechange preparation, (2) implementation/execution, and (3) sustainment/maintenance. This model was developed by Kurt Lewin.

Refer to Exhibit 13.1

PreChange Preparation

Key stakeholders must perceive an appropriate rationale for the change.

Key stakeholders should be dissatisfied with the status quo and perceive the proposed changes as necessary to addressing present and future challenges.

Vision statements can be powerful motivators. Organizational leaders should understand and communicate what must be done differently and how supporting systems, jobs, processes, functions, capabilities, and personnel must be altered to accomplish the vision.

Leaders should formulate simplified versions of the mission, vision, and strategic direction that can be quickly communicated.

Coalitions

Formation of a coalition sufficient to support and embed change is another critical preimplementation step.

Coalitions facilitate employee empowerment and delegation of authority.

Managers who fail to build a coalition early in the change process often fail to successfully implement change efforts (Kanter, Stein, and Jick 1992).

Coalitions should include top executives and other influential stakeholders.

Coalitions do not necessarily need to include members of the upper ranks of the traditional firm hierarchy.

Diagnosing Readiness for Strategic Change

To better gauge readiness, some organizations use surveys, focus groups, or other methods. Often this determination is based on leaders’ “gut feeling.”

Key indicators include

—leaders’ preparedness,

—participants’ preparedness, and

—overall organizational preparedness.

Sample Questionnaires

Questionnaires for leaders, participants, and the organization can be prepared that determine each group’s level of readiness for strategic change.

Survey participants are considered prepared if they scored higher than 88 percent. Scores between 60 and 87 percent indicate that they are possibly prepared, and scores below 60 percent signify that they are unprepared.

Preparedness Matrix

Refer to Exhibit 13.

Alignment of Participant Opinions

Efforts should be made to align organizational stakeholders before and during strategic change efforts.

For example, leaders might

—offer stakeholders incentives to develop innovative practices for implementing change,

—communicate more often and more effectively with them, and

—encourage them to become more involved in the change program.

Implementation and Execution

Implementation in many ways is far more important than having a great strategy.

Two methods of facilitating the implementation process:

1. Identifying resistance and removing obstacles

2. Achieving short-term wins

Resistance

What is resistance?

How does it express itself?

Does resistance signify incompetence or disloyalty?

What effect does threats, anger, and punishments have on resistance?

What is the leader’s role in resistance?

Why identify resistance?

Identifying Resistance

Stakeholder surveys can be used to identify resistance and measure its intensity.

By identifying and understanding the source of resistance, organizations can target communications to those at the source, engage stakeholders to build their trust, and eliminate obstacles to change.

Achieving Short-Term Wins

Short-term wins demonstrate success, and nothing motivates an organization more than success.

Short-term wins must be visible, real, meaningful, and achievable.

Only projects that have a 100 percent probability of being accomplished should be chosen.

Less expensive projects should be selected. Smaller investments often earn proportionally greater returns in less time.

Example: Grouping a Project Into Categories to Achieve wins

1. Foundational projects:

Projects deemed to be essential to implementing countrywide, interoperable, patient-centric clinical systems

Projects that provided the necessary tools and infrastructure for mission-critical operations

Projects necessary to establish electronic business and clinical support at locations that did not yet have technology

2. Short-term win projects:

Projects that required only connectivity and hosting to be implemented

Projects that could deliver early, visible value (benefits) to residents or ministry of health employees

Projects that were building blocks for later phases of implementation

3. Projects that provided other functions needed to achieve the vision

Sustainment/Maintenance

If leaders impose change that is not supported by the values, beliefs, and routines of their organization, changes will be superficial and will not last.

Leaders should make a continuous effort to ensure that the benefits and results are widely seen and understood.

Leaders need to periodically monitor change efforts to make certain that changes are maintained.

Leaders need to use every opportunity they have to tell success stories.

Example: Disappearing Strategic Changes

With the help of consultants, a large medical center designed a comprehensive strategic change program to lower its costs and reposition it to better compete in its market. The changes called for significant alterations to the roles and responsibilities of its clinical staff and the reorganization and reengineering of its nursing units. After extensive efforts, the medical center’s executives launched the change program and within six months proudly announced that the changes had been accomplished.

They awaited the anticipated results, but after three months the center’s costs had not decreased. The center brought in a consultant to examine the changes and determine what had gone wrong. After visiting the 14 nursing units in which the strategic changes had been implemented, the consultant reported that all of the units had implemented the changes but only 4 units were maintaining them; the other 10 units had abandoned all or some of the changes soon after implementation. In fact, one of the units reversed the changes just 12 hours after they were implemented. The units cited lack of training, new cumbersome processes, and general role confusion as the reasons they reverted to past practices. None of these issues had been reported to the medical center’s executives.

Use of Checklists/Audits

Another method of embedding change and monitoring the progress of a change effort is the use of checklists/audits that clearly identify important actions and engender accountability.

Data generated by the use of checklists/audits engage employees in the change effort and keep managers focused on embedding change.

Checklists/audits need to be simple and easily understood, and the results must be made public.

Sample Checklist

Training Questions

1. Does the organization have a documented training program?

2. Has a competency assessment method been documented and established?

Process Questions

1. Are procedures documented at each point of use?

2. Is there documented evidence of compliance with the procedures?

Performance Questions

1. Are performance expectations documented for all staff?

2. Does the organization have a documented process for providing performance feedback?

3. Does the organization have an employee development program?

4. Have visible performance targets been established?

5. Does the organization have a documented process for corrective action?

Benchmarking Questions

1. Does the organization have a documented process for benchmarking?

2. Have the results of benchmarking activities been documented?

3. Have actions taken to address the benchmarking results been documented?

Communication Questions

1. Does the organization have a documented process for giving directives and asking questions?

2. Does the organization have a documented process for collecting and acting on stakeholders’ feedback?

Performance Audit

Can identify what key aspects of the changes are continuing

Can identify problematic issues that need to be addressed

Can help focus management’s attention (Too often, leaders become distracted by the many priorities and challenges they face and may forgo the attention needed to anchor the strategic changes.)

Creates data that can keep the attention of managers and engage employees

Chapter Questions

What makes change so difficult for many organizations?

Why must an organization prepare for each phase of change?

Who might be some of the key stakeholders an organization should address in a change effort?

What actions might an organization take if leaders diagnose that it is not prepared for change?

Why does resistance to organizational change arise so frequently?

Why are short-term wins often necessary?

How can change be anchored in an organization’s culture and processes?

How can checklists and audits help ensure that change has taken place?

Chapter Case

Read the case “A Shift to a Value-Based Care Organization” at the end of the chapter

Review the questions that follow the case.