human resource

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JWI 556 (1196) Page 1 of 8

JWI 556 Leading Change by Putting People First

Week One Lecture Notes

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JWI 556 (1196) Page 2 of 8

WHY IS CHANGE SO DIFFICULT? What It Means To acknowledge that change is difficult is to recognize a fundamental force of nature – inertia. Once something is set in motion, it will tend to continue in that direction until a strong enough force acts on it to change the direction. Inertia applies to people and businesses. Change is especially difficult when everything is going along “well enough.” We think, if there is no crisis or imminent threat, we carry on as if everything will stay this way forever. We get comfortable in our familiar ways, and won’t willingly change from them unless there is a compelling reason to break free from the status quo. Why It Matters

• An increasingly global and competitive market will force change onto most organizations whether they want it or not. Those that aren’t able to change proactively (i.e., before they need to) will find themselves on the losing end of the battle for market share, and will eventually be made obsolete.

• Leaders need to understand the forces that undermine change or they will continue to repeat the same mistakes.

• Leveraging a proven change model is the best way to harness the positive forces that can drive change, and head off the negative forces before they can do irreparable damage.

“Change takes time, change takes buy-in from lots of people for meaningful and lasting success.”

Jack Welch

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INTRODUCTION

“If the rate of change on the outside is faster than the rate of change on the inside, the end is near.”

Jack Welch

Welcome to the course. Over the next ten weeks, we will explore change leadership with a particular focus on the role that HR professionals can, and should, play in it. The lecture notes for this course are designed to draw out key themes that are covered each week. This is intended to both help you better focus your learning activities, and present additional tips and guidance on how the practices and tools we are studying can be applied to your job as a current or aspiring HR professional. Our course is organized around three broad change themes. Since HR leadership is a complex interconnection of forces, you can expect that many of these themes will be revisited throughout the course and will have multiple applications during our ten weeks together.

1. Identifying and Managing Change in One’s Own Career We begin with an examination of the key principles of change leadership. We introduce the challenges that change leaders face, and explore the reasons so many change initiatives fail to deliver on their promise. As part of this, we introduce key elements of proven change models, and look at our own personal tendencies in approaching change.

2. Leading Change in HR and in Teams Over the next three weeks, we focus on leading change in teams. While the principles of leading team change are fundamentally the same as those of organizational change, it is helpful to look at team-level change first. This will help you apply what you have been learning in your other courses in your HR concentration at JWMI, and it serves as a proving ground before moving on to bigger change projects.

3. Leading Organizational Change The second half of our course is focused on BIG CHANGE. This is the sort of large-scale initiative that is driven by the C-suite. We look at the similarities and differences between team change and organizational change. We will also focus on how to tailor your approach to better match both the specific type of change initiative being undertaken, and the cultural forces at work in the organization. We will conclude the course with a review of our change journey and a look at what’s next.

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THE NEED FOR CHANGE AND CHANGE LEADERSHIP IN ORGANIZATIONS

Whether you want them to or not, organizations evolve over time. Companies react to competitive pressures. Leaders pursue new agendas. Products progress through life cycles. Yet, people resist change. Managers block or ignore the inevitable. Leaders make big investments in yesterday’s products and services. Too many organizational cultures value, reward, and perpetuate complacency. Organic change occurs “naturally” as products and systems evolve over time. But organic change is rarely enough to ensure an organization’s ongoing success. So, when we talk about organizational change in this course, we mean transformational change. We’re focusing on the kind of change that a leader instigates and drives forward in order to better position the organization for greater relevance and success. John Kotter, one of the most respected experts on change, and whose model for change leadership will form the foundation of our course, characterizes our history with change as follows:

“People of my generation or older did not grow up in an era when transformation was common. With less global competition and a slower-moving business environment, the norm back then was stability and the ruling motto was: ‘If it ain’t broke, don’t fix it.’ Change occurred incrementally and infrequently…The challenges we now face are different. A globalized economy is creating both more hazards and more opportunities for everyone, forcing firms to make dramatic improvements not only to compete and prosper but also to merely survive. Globalization, in turn, is being driven by a broad and powerful set of forces associated with technological change, international economic integration, domestic market maturation within the more developed countries, and the collapse of worldwide communism…No one is immune to these forces. Even companies that sell only in small geographic regions can feel the impact of globalization.”

Leading Change, p. 20 TECHNOLOGY & GLOBALIZATION: THE LEADING FORCES OF CHANGE Over the past 30 years, the pace of change in business has increased dramatically. Of the many contributing factors, the most important have been breathtakingly rapid developments in technology and globalization. Throughout organizations of all sizes, technology has:

• Multiplied the speed and quantity of work that can be done • Distributed work across traditional boundaries of function, organization, and geography • Restructured traditional industries like telecommunications and banking, and given rise to new

ones • Facilitated the tracking and analysis of vast quantities of data, transforming everything from

managerial decision-making to the behavior of capital markets • Reshaped consumer behavior – how people shop, choose among competing products, and

entertain themselves

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JWI 556 (1196) Page 5 of 8

During the same period, globalization has stitched together the world’s economies, removing traditional barriers to the flow of goods, money, information, and expertise across national and regional boundaries. Thanks to breakthroughs in containerized shipping and Internet-based telecommunications, entire classes of jobs – from manufacturing to computer programming – have shifted to lower-cost environments. Tariffs on trade have fallen – notwithstanding sporadic outbreaks of protectionism – while the number of preferential trading blocs has mushroomed. Across the business landscape, globalization has:

• Intensified competition, not just from local businesses, but also from best-in-class organizations around the world

• Widened access to a global talent pool and low-cost production options • Expanded market size and economies of scale • Increased political and financial risk • Driven product innovation to serve the unique needs and tastes of rapidly emerging middle-class

consumers in developing countries The world is also seeing other powerful new trends emerge. The environment is becoming an ever- greater concern, bringing increased regulation. Resources like oil and water are showing signs of real scarcity. Finally, the recent financial crisis has forced organizations to change many longstanding practices of how they manage debt and equity. In the face of all these external forces of change, some organizations will be able to pull far ahead of the competition while others will be left behind. THE ROLE OF MANAGEMENT AND LEADERSHIP IN CHANGE So, if transformational and often large-scale change is the new normal, who are the leaders that will guide us on the journey? Is this purely the domain of the CEO and perhaps a few select members of the C- suite? What role should Human Resources professionals play in leading change? These are questions we will explore throughout the course. But before we go any further, let’s consider what Kotter finds to be an important distinction between management and leadership.

• Management is a set of processes that can keep a complicated system of people and technology running smoothly. The most important parts of management include planning, budgeting, organizing, staffing, controlling, and problem solving.

• Leadership defines what the future should look like, aligns people with that vision, and inspires them to make it happen despite the obstacles.

Leading Change, p. 28

This distinction is critical in Kotter’s view, and he argues that “successful transformation is 70 to 90 percent leadership and only 10 to 30 percent management. Yet for historical reasons, many organizations today don’t have much leadership. And almost everyone thinks about the problem here as one of managing change.”

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JWI 556 (1196) Page 6 of 8

“The combination of cultures that resist change and managers who have not been taught how to create change is lethal…A powerful enough guiding coalition with sufficient leadership is not created by people who have been taught to think in terms of hierarchy and management.”

Leading Change, p. 30

To be clear, however, Kotter is not anti-management.

“Managing change is important. Without competent management, the transformation process can get out of control. But for most organizations, the much bigger challenge is leading change. Only leadership can blast through the many sources of corporate inertia. Only leadership can motivate the actions needed to alter behavior in any significant way. Only leadership can get change to stick by anchoring it in the very culture of an organization.”

Leading Change, p. 33

WHY DO SO MANY MAJOR CHANGE EFFORTS FAIL? It sounds too simple, but the reason that so many people in organizations don’t change is that they don’t have to. Their leaders may talk about why change is needed, but they fall short of demanding the results that can only be achieved through change. It’s a leader’s job to know when an organization needs to change, determine the direction, and make it happen. But determining when change is needed is not always easy. It requires a leader who is adept at looking into the future and staying several steps ahead of everyone else.

“People who have been through difficult, painful, and not very successful change efforts often end up drawing both pessimistic and angry conclusions. They become suspicious of the motives of those pushing for transformation; they worry that major change is not possible without carnage; they fear that the boss is a monster or that much of the management is incompetent. After watching dozens of efforts to enhance organizational performance via restructuring, reengineering, quality programs, mergers and acquisitions, cultural renewal, downsizing, and strategic redirection, I draw a different conclusion. Available evidence shows that most public and private organizations can be significantly improved, at an acceptable cost, but that we often make terrible mistakes when we try because history has simply not prepared us for transformational challenges.”

Leading Change, p. 19

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JWI 556 (1196) Page 7 of 8

JOHN KOTTER’S EIGHT-STAGE PROCESS FOR LEADING CHANGE We have selected Leading Change by John Kotter as our main text in the course. While Kotter’s is certainly not the only model for leading change, it has proven itself over the years. It remains one of the most widely-referenced sources on the topic in both academic and corporate circles. Kotter’s eight-stage framework is based on his research that shows major change does not happen easily or naturally, and that it must be supported by a series of steps that address the eight most common errors that occur during large-scale change initiatives. The errors are:

1. Allowing Too Much Complacency

2. Failing to Create a Sufficiently Powerful Guiding Coalition

3. Underestimating the Power of Vision

4. Undercommunicating 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 Corporate Culture

Leading Change, pp. 4-15 As we explore change leadership and management practices in this course, we will revisit Kotter’s model frequently. We will also feature readings by other experts presenting research that argues Kotter’s model may not go far enough in some areas, or that it does not address key factors that have a significant impact on the success of change initiatives. You are encouraged to consider these points of alignment and difference carefully, and to continue your exploration and application of the practices presented in the course in your own career.

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JWI 556 (1196) Page 8 of 8

SUCCEEDING BEYOND THE COURSE Throughout this course, we will explore principles and tools of effective change leadership. You should always think about how what you learn can be tested and applied in your own workplace. At the end of each week’s lecture notes, you will find tips on how to do this. These tips are directly connected to the key learning outcomes for the week. For most of the ideas, it will be helpful to apply them to a specific change initiative you are considering or are already engaged with. It doesn’t have to be a large-scale change. In fact, it may be better if it isn’t. But having a real-world scenario to work through allows you to apply what you are learning and evaluate the results you get.

• Understand the need for change and change leadership in organizations Commit to not becoming complacent about the need for change. Be on the lookout for examples of organizations that wouldn’t or couldn’t change, and ended up losing market share or even going out of business. Research the biggest changes that have happened in your industry in the last decade. What drove them? Which companies came out as winners and which as losers? What did the winners do that allowed them to make the needed changes ahead of other companies? As you are researching change in your industry, take a look around the inside of your organization also. Who are the change leaders? What role has HR played in leading change? What factors led to this role?

• Examine the reasons so many companies fail at major change efforts As you learn more about the forces that impede change, start looking for real-world examples in your organization. Have there been situations where change has been attempted and failed? Looking back on these, conduct a post mortem. Were key steps missed? What could have been done differently that may have led to more positive outcomes? If you can’t see an obvious problem (and you typically won’t at first), ask questions. See if you can find out who the change leaders were and talk with them. Let people know that you are taking a course on change leadership, and want to deepen your understanding. Be careful that you express your genuine interest in learning about the challenges of change and do not come across as someone looking to assign blame.

• Explore John Kotter's eight-stage process for leading change Leverage the framework as a model for your examination of real-world change initiatives. You don’t have to buy into every element of it for it to be a good evaluation tool. Even Jack made adaptations to the model and developed a GE version called the Change Acceleration Process (CAP). What change models have been used in your organization in the past, or are currently being used? Research other models. Learn how they align or differ. Use Kotter’s model as a framework to weave other support tools and methodologies around.