Why Corporate Transformation Change Efforts Fail?


Change can be forced upon an organization by pressures from the external environment some of which would include:

  • New technological developments

  • Loss of traditional international and global markets

  • New governmental legislation or deregulation

  • Environmental considerations

  • Socio political events

  • Different social and cultural values

OR

Change can be initiated within the organization itself in order to improve its overall effectiveness (the results it achieves) and efficiency levels (how work gets done). Whatever the initial stimulus, organization change, in order to be successful needs a planned and systematic organization-wide approach. This approach needs to be based upon sound knowledge of organization and management behavior strengthened by the application of practical management skills.

In this article I plan to examine the reasons why so many corporate change efforts fail and to develop some guidelines that may be useful for those about to embark on an organization change effort. The following represents a list of some of the more common reasons for failure of these initiatives.

  1. Lip-service commitment from the Chief Executive Officer

  2. Adherence to traditional “win-lose” attitudes and the unwillingness to change “Mindset”

  3. Inadequate involvement of employees, end-users, and stakeholders at all levels

  4. Insufficient attention to and commitment by middle management

  5. Lack of support and follow through by first-line supervision

  6. Inappropriate pacing of the change effort

  7. Inappropriate level of expectation

  8. Failure by management and stakeholders to internalize the process and get with the game plan

  9. Inadequate application of a reliable diagnostic process to collect necessary information and data prior to embarking on the effort

  10. Failure to ensure that the organization’s systems, processes, and infrastructure reinforce the change effort

  11. Lack of overall measurable objectives, deliverables and metrics to ensure desired outcomes

  12. Inadequate emphasis on communicating the purpose of the change throughout the organization

  13. Lack of feedback and evaluation, and the application of lessons learned

  14. Inability to identify and select appropriate external and internal change agents

I will now examine the above reason for failure in more detail and in doing so will hopefully provide some guidelines for ensuring successful change efforts.

1. Lip-Service Commitment From the Chief Executive Officer: The key to any change effort is the degree of commitment and involvement of the CEO. Not only is it essential for him to be committed and involved but he must be seen to be modeling the behavior that is called for in the change effort. If the CEO talks about “changing people’s attitudes” without modeling the desired behavior the change effort will lack credibility and is almost certain to fail.

2. Adherence to Traditional “Win-Lose Attitudes” and “Mindset”: The change will fail unless it reflects a “win-win” approach to change. Focusing on scape-goating or recriminating individuals or groups for past mistakes severely impedes a change effort. People normally welcome the cessation of blame-placing, as well as emphasis being placed on working together to solve problems.

3. Inadequate Involvement of Employees, End-Users, and Stakeholders: Employees will not believe in the effort unless they have an opportunity to help plan I, provide feedback, experience it, (not just hear it), and develop a sense of “ownership” in the change process. Failure to involve employees can lead to a great deal of cynicism about the effort and statements on the grapevine such as “Nothing really changed around here” or “They won’t Change!”

4. Insufficient Attention to and Commitment by Middle Management: These employees often see change programs as “The latest thing that the boss has brought back from the senior managers to whom they report, and they frequently feel confused if the direction of the change seems to bypass them and concentrate on direct dialogue between workers and senior management. Sometimes members of middle management are seen as lacking motivation when the real problem could be due to failure to involve them in the effort.

5. Lack of Support and Follow Through by First-Line Supervision: The effect of a change program is most often severely felt between employees of the younger generation and the older first-line supervisors who have been promoted, not so much for their supervisory skills, but for loyalty and hard work. Unless these supervisors are given some help in re-orienting their thinking, they may have difficulty in adjusting to their changed role, in which they may be required to act more as advisers and consultants than as bosses.

6. Inappropriate Pacing of the Change Effort: In a large organization it can take three to five years to accomplish any major organizational change initiative. The pacing of the change initiative is therefore very important. The error is to move either too slowly to build momentum and confidence, or too fast and thus interfere with daily operations, and become a taxing and ultimately wearing effort.

7. Inappropriate Level of Expectation: Given that people basically do not believe they can change organizations, the need for leadership to truly believe that the organization can change is essential. On the other hand changing an organization requires a systematic effort over time. Although signs of change should become evident at an early stage, it is unrealistic to expect bottom-line results in less than eighteen months to two years.

8. Failure to Internalize the Change Process: The internal change agent plays a crucial role in the change effort in terms of providing an objective analysis of the existing organization, training the members in the concept and methodology of change, refining and modeling the application of the change strategies, and evaluating early results. However a crucial element of the change program is the assumption of the change agent role by both organizational leadership and all the members of the organization. If the change process does not become internalized, and a permanent part of the organizational functions, the accomplishments of the program will not be maintained.

9. Inadequate Application of a Reliable Diagnostic Process to Collect Necessary Information: At the beginning of every change a diagnostic process focusing on the total organization is essential. Sometimes the apparent problems are only symptomatic of other issues within the organization. If the diagnosis has been well done, it will provide a database for planning the change effort and will also provide a starting point for measuring progress towards achievement of the objectives of the effort.

10. Failure to Ensure That the Organization’s Systems Reinforce the Change Effort: All the organization’s systems, processes and policies, including in particular the reward system, must be altered to reinforce the change in behavior sought as a result of the change effort. People must be rewarded for acting in support of the change effort. When we speak of the “reward” system I include the intangible aspects as well as the purely material benefits. In this regard the performance management process is a remarkable potent tool for reinforcing change.

11. Lack of Measurable Objectives, Deliverables, and Metrics: Because there is so much skepticism about being able to change organizational culture, it is absolutely necessary to state specific measurable objectives which everyone agrees will, upon accomplishment, constitute satisfactory achievement and change. Progress towards the achievement of these objectives can then be monitored and fed back regularly in order to give support and confidence to those people who initially become committed and work towards change. This feedback can convert the many skeptics in most organizations, who will usually not try to change until they begin to experience actual change.

12. Inadequate Emphasis on the Communicating of the Purpose of the Change Throughout the Organization: An essential element in creating a climate receptive to change is to ensure that the purpose of the change effort is clearly understood by all employees and that they are provided with accurate and complete information.

13. Lack of Feedback and Evaluation, and the Application of Lessons Learned: Since it is never possible to predict accurately at the beginning of the effort which change strategies will work and which ones will fail, it is essential to ensure a that there is a regular flow of progress data back to the organization leadership. This will enable senior management and the change agent(s) to modify or discard a change strategy that is not working properly.

14. Inability to Identify and Select Appropriate Internal and External Change Agents: In addition to ensuring that the change is a professional who has the necessary knowledge, skills and experience in the management of change in a variety of organizations, it is essential that the selection process take into account certain factors. Some of the more important of these factors are:

  • The chemistry is right between the change agent and those internal resources responsible for managing the change effort

  • The change agent is willing to confront senior management with unpalatable information or opinions, rather than telling the client what he wants to hear

  • The change agent models the same behavior that he is prescribing for the client system

  • The change agent will help the members of the organization to find their own solution to problems, rather than provide “expert” solutions

  • The change agent will transfer skills and knowledge to internal resources so that he is able to withdraw gradually, leaving behind the capacity for ongoing renewal.

Out of all the reasons for failure cited above. There is obviously one which is crucial, and that is lip-service commitment from the Chief Executive Officer. On the other hand, if the CEO is leading the effort, and he and the senior management team are enthusiastically modeling the behavior, which is called for in the change program, success can almost be guaranteed.

The next most important reason for failure lies in the selection of the change agent. While the CEO can be expected to know all about his business, it is unlikely that he will be an expert on the management of change. This is where the CFO needs the support of a competent external resource who not only understands the dynamics of change, but has considerable experiences in the management of change in a variety of organizations.

Most of the other reasons for failure are incidental to, and dependent upon the leadership of the CEO, and the skill and acceptability of the change agent.

If these two are able to work together effectively, it should be possible to involve all employees of the organization in a successful change effort that will not only achieve its objectives, but will leave the organization with an ongoing capacity for self-renewal.

Dr. Karl Larson

HR Expert / Management Consultant

Karl brings to his clients over 40 years of professional experience from the fields of international consulting, corporate management, retained executive search, executive outplacement and higher education.

For many years he owned and operated his own international consulting firm with offices in Houston, New York, Los Angeles, Manila, Singapore and Sydney. He has had extensive living periods while serving clients in the United Kingdom, France, Australia, Holland, the Philippines, the Balkans-Macedonia, Saudi Arabia and Bahrain.

His corporate experience has included senior level positions with Corning Glass, Rockwell, and Tiger International. He also has held various administrative and academic appointments at Northeastern University, UCLA, Springfield College and the University of Texas at Austin where he taught graduate MBA courses in Strategic Management, Global Marketing and Human Resources Management.

Karl also served as Senior Vice President for a retained executive search firm in Southern California as well as an Executive Vice President for a well-known retained Outplacement Firm.

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