In today’s dynamic economic environment, businesses tend to make frequent changes to their operations as they navigate shifts in technology, competition, regulations, customer preferences and evolving marketplace trends. But change can be hard on organizations and difficult for employees to embrace. Effective change management processes outline a framework to help coordinate the people side of change, providing employees with greater clarity about changes in business practices, allowing for better communication throughout the change life cycle and ultimately facilitating an organization’s enduring commitment to new ways of working. Investing in change management is critical to ensuring that businesses evolve to keep up with changing times so they can succeed long term.

What Is Change Management?

Businesses have always had to change and adapt to survive, but in recent years the pressure to adjust to ongoing changes amid frequent disruptions and hypercompetition has become significant. So it’s more important than ever for businesses to remain flexible enough to effectively conduct regular change efforts.

As businesses have grappled with the difficulty of navigating changes, the field of change management has emerged over the last several decades, combining insight from various fields, including psychology, behavioral science and engineering. Businesses have adopted multiple change management methods, with the change management process varying based on the type of change an organization is pursuing. Yet, despite any differences in the approach, the ultimate goal remains the same: to provide a clear framework that can be used repeatedly to increase the likelihood that the change will be executed well, adopted effectively and will achieve its anticipated impact.

Change management helps to prepare, equip and support employees in adapting to the proposed change. It also ensures that leaders and managers can effectively communicate, coordinate and carry out the change — whether it means embracing the rollout of new software or strategizing ways to stay ahead of competitors. Well-executed change management increases the likelihood that change efforts proceed on time and on budget and achieve their desired goals. Investing in change management is critical for effective talent management, allowing businesses to hire, train and retain high-quality employees. In contrast, when companies scrimp on change management, they run the risk of increasing employee turnover.

Key Takeaways

  • Change management is a framework for implementing a significant shift in an organization’s processes, technologies or goals.
  • Change management takes a people-centric approach, helping to prepare, equip and support employees through the change effort.
  • Change management offers a number of benefits, including better project performance, greater change adoption, increased control over end-to-end processes and improved outcomes.
  • When adopting a change management model, leaders should consider which approach would align best with the scope of the change.

Change Management Explained

Change management is an umbrella term for the methods a company uses to implement significant changes, manage their impact and ensure their success. Because change efforts often entail many moving parts, adopting a structured approach helps to limit disruption and ensure a smoother transition.

After all, change — from the earliest planning stages to the implementation of a new project — impacts people. Botched changes can usually be traced back to a failure to take employees’ needs, wants and human reactions to disruptions into account. Change management processes are designed to make process shifts easier on the people who must absorb them. A hallmark of successful change management is effective communication: making sure everyone understands the rationale for change, its impact on the organization and each individual, its progress and its benefits. Most change management approaches also include predicting the impact of changes, establishing the necessary steps for implementation and instituting methods for monitoring the process to ensure success. Ultimately, for an organization to change, its people must make it happen.

The goal of change management is to usher in organizational change through various phases, from conceiving the change plan through implementing it and measuring business outcomes. The process typically includes three main phases: preparation, management and sustainment.

Phases of Managed Change

change management
The hallmarks of effective change management are preparation, management and sustainment of an organizational change.

What Are the 6 Steps of Change Management?

Change management helps organizations make a transition to new business processes, technologies or goals. Most change management processes include the following six steps:

  1. Define the change. Prior to making a transition within the organization, developing a clear understanding of the change, including the rationale, anticipated benefits, likely impact and parameters of success, will inform the change management process.
  2. Identify key players. Change management benefits from dedicated leadership, and it’s important to select those who not only have an appetite for change and an appreciation for its impact, but also the people who represent the population that will be impacted by the change and can voice their needs and concerns. It’s helpful to identify business owners for the change to ensure support and ongoing momentum throughout the early stages in the process.
  3. Develop the change plan. With a defined change and key leadership in place, the organization can develop a thorough and informed plan for implementing the change. This should lay out the strategic goals of the change, key performance indictors to measure success, the steps for implementation, any risk factors and plans to address them, a communication plan for each phase of the change management process and a multifaceted training program to ensure that employees are adequately equipped to make the change.
  4. Implement the change. Once the plan is in place, it’s time to execute the change. While it’s important to follow a structured approach, change leaders should maintain flexibility to account for unanticipated roadblocks or resistance. It’s important to engage and empower those impacted by the change during the implementation phase to increase the likelihood they will adopt the change. Continuous communication is also critical through the implementation, which tends to take place in stages.
  5. Embed the change. After the change is implemented, the work is not done. Many employees have a natural tendency to want to return to what’s familiar. Change managers and owners must prepare for this possibility and work to support the full integration of the change into workflows, culture and strategy. New structures, controls, rewards and recognition can help to sustain the change in the long term.
  6. Assess the process. At the end of any change management initiative — whether it went extremely well or failed altogether — it’s important to perform a post-mortem on the process. Conducting this analysis and review of what worked well and what went poorly will help leaders improve future change management efforts.

6 Steps of a Change Management Initiative

change management
Change management is a process with clearly defined steps.

Importance of Change Management

How an organization manages change has an impact on people — employees, customers, partners and suppliers — and ultimately, a company’s performance. Making changes to the way business is done can be stressful, but because of the constantly shifting nature of today’s business climate, change is inevitable. Companies that simply mandate changes with little consideration of their impact — or poorly manage the change process — increase the fear, uncertainty and doubt that naturally accompany change.

Since most change projects are significant investments, failure can have a negative impact on the bottom line, leading to delays in desired outcomes, problems with employee engagement and customer satisfaction, and costly rework. In some cases, the results are so negative that an organization may scrap the change altogether.

Change management is a hedge against the risk of failed change, giving leaders and managers more visibility into and control over the end-to-end process. The adoption of appropriate change management processes can ease the stress of a change, from conception and presentation of the proposed change to the transitional period all the way through the integration of the change into day-to-day operations. Effective change management prepares, supports and guides teams, increasing the likelihood that important projects and new strategies will succeed.

Benefits of Change Management

Businesses constantly need to make changes to their operations to remain competitive. Creating change management plans can make the lead-up, transition and integration of a project smooth. The multiple benefits of change management include:

  • Greater alignment between proposed changes and an organization’s strategy. When change management processes kick in during the deliberation phase of a change, managers can pause to consider the impact of the change on the organization. Taking time to consider how a proposed change fits into an organization’s mission increases the likelihood that it will align with its overall business strategy.
  • Better project performance. Mismanaged change can impact implementation, often leading to delayed timelines and increased budgets. Companies that invest in change management are five times more likely to stay on or ahead of project schedules and twice as likely to remain on or come in under budget, according to ongoing surveys of change management practitioners by Prosci.
  • Greater change adoption and usage. The return on investment depends heavily on acceptance of the change by the people who must integrate new ways of working. Change management processes ensure that those impacted by the change understand why it’s happening, feel heard and supported, and have the right tools and training to get on board. This often results in faster adoption, more proficient use of new systems and greater employee engagement.
  • Improved outcomes. Applying change management principles throughout the life cycle of a new project can increase the likelihood that an organization will achieve its desired results. By monitoring and reporting on progress along the way, the implemented change can meet the organization’s initial goals. Companies that use a best-practices approach to managing change are six times more likely to meet their objectives, according to Prosci.
  • Less disruption. Guiding an organization or group of individuals through the change process, rather than simply making changes by decree, helps to mitigate discomfort and disruptions in the workplace.
  • Improved or consistent morale. People are at the heart of successful change. Organizations that invest in managing the impact of change on their employees can reap rewards beyond the change itself, including a lift in employee morale and higher productively. While poorly managed change can result in employee turnover, well-executed change management can ensure greater retention.
  • Increased standardization. Companies that adopt change management processes and follow them consistently create a more standardized approach to new procedures that can be applied across the organization, leading to a more process-driven culture.
  • Greater innovation. Organizations that invest in change management develop the ability to integrate change consistently and are better equipped to innovate, having acquired the skills that enable them to efficiently absorb repeated changes.

Types of Change Management

Organizational change — the actions a business takes to make adjustments to a significant component of its organization — can take many forms. Leaders may seek to change internal processes, foundational technology or infrastructure, organizational structure, business models or corporate culture. Change can also take place at different levels in an organization — for example, at the enterprise, team or individual level.

Understanding the nature and scope of the change the organization is pursuing helps to dictate what type of change management is most suitable. Common types of change management include:

  • Project-level change management. Project managers can employ a structured process and set of tools to manage the impact of their projects on the organization in order to achieve desired outcomes.
  • Enterprise change management. Organizations that anticipate significant ongoing changes — those focused on high growth or innovation in a short period of time, for example — may make change management a core organizational competency by prioritizing the systematic adoption and deployment of change management skills, tools and processes.

It’s also important to understand the degree of change an organization is considering to determine how best to manage it. Change management can be used for everything from a full digital transformation to more incremental alterations to sales, order and inventory processes. Some common levels of change include:

  • Developmental or adaptive change. These iterative changes are smaller in scope and include improvements to established processes and procedures, such as the rollout of a new version of software, an updated human resources policy or the introduction of a new leader or role.
  • Transitional change. This includes changes required to move an organization, function or team from its current state to a new state to solve a problem or create an opportunity, such as automating a manual process or implementing a merger and acquisition.
  • Transformational change. Transformational changes fundamentally alter the operation or culture of an organization. Examples of these more dramatic shifts include a change in business model, reorganization or digital transformation.
  • Individual change. Just as groups of people benefit from change management, so, too, do individuals, as they are pushed to grow in their roles — for example, through reskilling or taking on stretch assignments.

How to Implement Change Management Processes

To increase the likelihood that a change will go smoothly, companies can take a deliberate approach to implementing change management processes. Here are some guidelines to consider when introducing a change management program.

  • Select an appropriate change management solution. Organizations may employ change management in a number of different scenarios, from the implementation of new technology or business processes to preparing for impending business growth, new organizational structures or leadership. While the principles of change management are relatively universal, the implementation should consider the nature, scope and purpose of the change.
  • Establish change leaders. Establishing change leaders signals the importance of the change and increases internal buy-in. These leaders can motivate and guide others in the organization throughout the transition. Including a cross-functional group helps ensure that they will consider the needs of everyone impacted by the effort.
  • Identify roadblocks and resistance. It’s important to anticipate the possible barriers to change in order to develop mitigation strategies for the implementation. Will a new system or process require significant training and time for adoption? Are employees likely to resist the change for a particular reason, such as fear about job loss? Is a particular team or function more or less likely to adopt the change? Being aware of the potential impediments can offer clues about where to focus change management resources.
  • Plan for a phased rollout. Consider early on how to break up a change into smaller implementation steps to avoid overwhelming those impacted. Research has shown that more gradual change is easier to adopt than sharp, wholesale shifts. Some organizations opt to start with testing a change on a smaller group or department to identify challenges and devise strategies to help with a larger rollout.

How to Build a Change Management Plan

It’s important to develop a clear and thorough change management plan before embarking on a change effort. Creating a change management plan involves the following steps:

  • Create a change proposal. This will document what the change is, the rationale behind it, the anticipated benefits and the intended impact. To ensure clarity, change management experts suggest answering seven specific questions about a proposed change — the so-called seven Rs of change management — to enable a full assessment and understanding of the change, its benefits and its risks:
    • Who raised the change?
    • What is the reason for the change?
    • What is the return from the change?
    • What are the risks involved in the change?
    • What resources are required to deliver the change?
    • Who is responsible for the building, testing and implementation of the change?
    • What is the relationship between this change and other changes?
  • Appoint change leaders. These change champions, who should include representatives of key stakeholder groups, have a vital role, not only in implementing the change management plan but also getting the rest of the organization on board.
  • Develop the communication plan. Successful change demands effective communication. Employees can be resistant to change, so explaining how a change will affect people and creating a plan to help them through the change go a long way toward addressing their concerns. It’s also a good idea to check in frequently to assess any challenges as the change proceeds.
  • Set KPIs for the change. To assess change performance, it’s important to correlate the outcomes to metrics that can be tracked over time. Making these key performance indicators (KPIs) transparent to the organization can help to bolster enthusiasm for the change.
  • Invest in change management technology. A number of systems can help an organization better manage the change management plan and adoption of the change, including specific change management software and employee training tools.
  • Craft a training strategy. One size does not always fit all, so it’s important to offer a variety of training approaches when implementing changes to ensure that employees are equipped to adopt the changes. An organization may offer traditional in-person instruction, online learning, in-app guidance and on-demand support, as well as customized training based on roles.
  • Seek and integrate feedback. Understanding how employees experience a change, in both positive and negative ways, can provide insight that can be applied to future change management plans.

Principles of Change Management

The approach that works best in one organization may fall flat in another. However, change management as an organizational science is built on certain key principles:

  • Change is hard. As humans, we’re hardwired to classify change as dangerous. Change management plans are designed to help move individuals and groups through what can be a painful process.
  • Change starts at the top. An organization’s leaders must embrace change enthusiastically and encourage the rest of the company to follow suit. Leaders should also express empathy for the hard work and stress required to make the change.
  • Successful business change hinges on people. For an organization to change, its people must be willing to make a shift. So change management focuses primarily on the people side of change and the information and support they need to change.
  • The rationale for change is never self-evident. If an organization wants to make a change, its leaders must make the case for the change. The reasons for the change should be clear, compelling and credible. Assuming that everyone understands the reasoning and is on board with the change is a mistake. Change management experts consider it a best practice for leaders to communicate, communicate and then communicate again through multiple, redundant channels.
  • Ownership is key. Successful change requires that someone take ownership of the change, passionately evangelizing it throughout the organization and driving it through the transition to the end state.
  • A formal, but flexible plan works best. A systematic approach to managing change helps guide an organization, including its leaders, stakeholders and employees, through the change and should be developed before a change effort begins. It should also be adjusted as needed.
  • Culture eats change for breakfast. Assessing the culture of the organization at various levels and determining change readiness can make a difference in an organization’s ability to adopt lasting change. Identifying sticking points, potential conflicts and areas of resistance is important when developing a roadmap for change.

Popular Change Management Models

Many approaches to change management have been developed over the years, some of which have been codified into popular models that have been widely implemented:

  • Lewin’s change management model. Psychologist Kurt Lewin developed a framework that divides change into three stages: unfreeze, change and refreeze.
  • Kotter’s eight-step process for leading change. Harvard University Professor John Kotter developed a model that guides the user, from creating a sense of urgency and building a guiding coalition to sustaining acceleration and instituting change.
  • The Prosci Methodology. This best-practices approach incorporates the Awareness, Desire, Knowledge, Ability and Reinforcement (ADKAR) model for individual change, as well as a three-phase process for organizational change.
  • McKinsey 7-S. Consultants Tom Peters and Robert H. Waterman outlined seven factors that affect change: shared values, strategy, structure, systems, style, staff and skills.
  • Bridges’s transition model. William Bridges developed a three-stage model for outlining how people adapt to change: letting go, uncertainty and confusion, and acceptance.
  • IT Infrastructure Library (ITIL). The ITIL(opens in a new tab) framework offers guidance specifically for IT operational changes.

Some of these models are best suited to specific types of changes. For instance, the Bridges Transition Model, with its focus on emotions and behavior, may prove helpful to understanding and managing people-centric change. Process and systems transformations may pair better with approaches like Prosci’s ADKAR model or Kotter’s 8-Step Process. When embarking on a change effort, it’s important to consider which model might work best based on the type and scale of change.

Why Change Management Initiatives Fail

To set your organization up for change management success, it can be helpful to understand why change management initiatives fail. Some common issues can contribute to the failure of a change management effort:

  • Lack of clarity about the change. Without a clear understanding of what’s driving a change, it may be difficult to communicate it to the organization and gain momentum for the change.
  • Limited buy-in. Effective change management depends not only on leadership support, but also on the commitment of the people impacted by the change.
  • Ineffective communication. When the rationale for change is not shared early and often, fear and uncertainty about the proposed change can grow. Clear, specific and frequent communication is the hallmark of successful change management.
  • Inadequate resources. Effective change management requires a significant investment of time and money. Shortchanging the effort may lead to additional costs down the road.
  • Poor planning. While leaders may not be able to anticipate every problem that might arise with a project, taking the time to consider potential barriers and resistance to the change and developing mitigation strategies can help ensure that the process goes smoothly.
  • Lack of metrics. You can’t manage what you don’t measure. Without key performance indicators, it becomes difficult to assess progress and address issues before they become overwhelming.
  • Inadequate momentum. Many leaders make the mistake of pumping the brakes too soon on their change management efforts. Sustained change requires building enough ongoing momentum to see the transition through to its end state.
  • Inadequate training. Since most changes require people to work in new ways, without adequate training, employees won’t be able to adopt the new processes.
  • Poor timing. Deciding when to change is important. Implementing a change at an already hectic time when other significant changes are taking place can be a recipe for disaster. Many change experts say that shorter, incremental change programs are effective.

Examples of Change Management Successes

While change management failures tend to make the headlines, plenty of change management success stories illustrate the value of investing in the practice. Some high-profile examples of effective change management include transformation efforts at Netflix, Domino’s and Coca-Cola:

  • Netflix faced an existential crisis as the company that built itself on its mail-order DVD business faced the digital disruption of streaming media. When the company initially launched its own digital streaming services in 2007 — at an extra cost to customers — many subscribers protested. But Netflix leadership stayed true to the new mission, embracing change management principles and ultimately succeeded in shifting to a digital business model and wooing subscribers from legacy cable companies.
  • Domino’s was a pizza delivery brand struggling to remain relevant when, in 2008, its leaders decided to shift its approach. As consumers began to embrace online ordering, Domino’s put a stake in the ground early by investing in the online ordering experience, setting it apart from other national delivery brands. The company embraced change management, becoming a digital innovation leader by implementing successive technology-enabled innovations over the years, from text message ordering to drone and robot delivery.
  • Coca-Cola’s growth had stalled in 2004 when it brought in new leadership to reenergize the organization after it had gone through two failed reorganizations. This time was different. A newly appointed HR executive, along with other key leaders, conducted a seven-month internal analysis. It was an inclusive effort, informed by a survey of top managers on the company’s key challenges who later broke into cross-functional teams working on developing a new mission, vision and values, as well as new approaches to employee rewards and recognition. The end result, called The Manifesto for Growth, laid out the proposed changes, which included performance evaluations and incentives aligned with the company’s clarified mission (to refresh the world in body, mind and spirit; to inspire moments of optimism; and to create value and make a difference). HR partnered with public affairs and communication specialists to roll out The Manifesto worldwide. Unlike the previous attempts at transformation, this one succeeded, resulting in jumpstarting growth and increasing employee engagement.

Change (In Silos) Is Hard

When change management fails, poor data sharing’s often to blame. The answer: ERP-driven collaboration — just one of 13 key business benefits.

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Manage Change With NetSuite

An effective management strategy is crucial to ensuring that an organization and its people successfully adopt and sustain necessary changes. Guiding organizational change from start to finish offers numerous benefits, including greater alignment with the broader business strategy, better project performance, increased adoption and smoother integration of the change, less disruption and improved outcomes.

One of the smartest ways to manage change and achieve organizational alignment is to invest in an enterprise resource planning (ERP) system that brings together a variety of business functions in one place. Change management built on an ERP foundation eliminates silos of information, offers better integration and keeps everyone on the same page as the organization advances through a particular change effort.

NetSuite ERP helps to automate time-consuming manual processes and free up resources needed to adapt to change, drive innovation and remain competitive. The system enables organizations to manage accounting, inventory, distribution and more from a single cloud-based application, creating real-time visibility into crucial data that helps leaders monitor the effectiveness of business growth and change. When conducting change initiatives, leaders can use the system to standardize business processes within a specific function or streamline several processes throughout the organization — from managing orders and monitoring inventory to increasing warehouse efficiency and optimizing the supply chain.

When organizations integrate change management practices as a business competency, they can better adapt to ongoing change and instill greater flexibility among the workforce, which encourages increased responsiveness and innovation. In today’s dynamic marketplace where change is frequent and necessary, change management is an important investment that often yields significant returns.

Change Management FAQs

What is the most popular change management model?

Some of the most popular change management models include Lewin’s Change Management Model, Kotter's eight-step process for leading change and the Prosci Methodology. The model that’s right for an organization depends on the kind of change that’s being made.

What does a change management department do?

Some organizations that anticipate frequent or ongoing change may establish a change management department. This group has expertise in guiding the organization through transitions in business goals, processes or technologies. The change management department can implement strategies for managing change while helping people adapt, which increases the likelihood that the organization will effectively sustain the new approaches.

What is a change management strategy?

A change management strategy is a framework for implementing change within an organization, department or team that takes into consideration the impact of the change on employees and guides them through the transition. A change management strategy typically includes a change proposal, a leadership group, a communications plan, approaches to addressing anticipated challenges and resistance, and metrics for measuring progress and success.

What are the five stages of change management?

Change management is a structured, although ideally flexible, approach to ushering a change through a business, from ideation and preparation to transition and assessment. Five overarching stages of this process are:

  1. Defining the change, including its rationale, anticipated benefits, likely impact and ideal outcomes.
  2. Identifying key players, including change leaders and change owners.
  3. Developing the change plan, including devising strategic goals, key performance indicators, the scope, implementation steps, key risk factors, a communication plan and training program.
  4. Implementing the change according to the plan and making adjustments as issues arise.
  5. Embedding the change in the company, its culture and processes. Organizations may also want to perform after-action reviews of the change process to analyze what worked and what didn’t to inform future change initiatives.