Managing Organizational Change

ScopeThis article provides an overview of key considerations in planning andimplementing major organizational changes. It focuses mainly on the scope andimpact of change on business, steps to take to ensure the success of organizationalchange initiatives, and how to overcome common obstacles encountered duringchange. Additionally, this article highlights HR issues and challenges in handlingspecific types of major organizational change.

Overview

Change management is the systematic approach and application of knowledge, tools and resources to deal with change. It

involves defining and adopting corporate strategies, structures, procedures and technologies to handle changes in external

conditions and the business environment. Effective change management goes beyond project management and technical

tasks undertaken to enact organizational changes and involves leading the “people side” of major change within an

organization. The primary goal of change management is to successfully implement new processes, products and business

strategies while minimizing negative outcomes.

This article discusses the management of large organizational changes that may have far-reaching impacts on the organization

and its workforce, including the following topics:

The nature and extent of organizational change.

The business case for a systematic approach to change management.

The roles of management and HR during major change initiatives.

Steps to take in managing organizational change.

How to overcome common obstacles encountered during organizational change.

Legal and global considerations in managing change.

This article also highlights some of the special issues and challenges in implementing certain types of major organizational

change, including mergers and acquisitions, downsizing, bankruptcy, business closure, outsourcing, and changes within the HR

function.

Background

To keep pace in a constantly evolving business world, organizations often need to implement enterprisewide changes affecting

their processes, products and people. Change is a fact of life in businesses today. It can be difficult, and people often resist it.

But to develop an agile workplace culture, organizations should follow a systematic approach to managing major change.

Organizational development experts have established approaches for successfully navigating through change.

Organizational leaders must identify and respond quickly to market changes and unexpected challenges, but most are not in a

position to create an agile culture. Yet agile leadershipfrom CEOs down to line-level managersseparates high-performing

from lower-performing organizations. Companies that consistently outperform competitors in profitability, market share,

revenue growth and customer satisfaction reported much greater agility than lower performers. See Don't Just Adapt to

ChangeLead It (www.shrm.org/hr-today/news/hr-magazine/0817/pages/do-not-just-adapt-to-change-lead-it.aspx).

Business Case

The rate of major organizational change has accelerated dramatically in this decade. Global research and advisory company

Gartner reports that the average organization has undergone five enterprise changes in the past three years and 73% of

organizations expect more change initiatives in the next few years.

As change initiatives have become more frequent and widespread, the importance of managing individuals through change

has gained credence. Major changes can affect organizations across all levels. Many corporate leaders have concluded that

failing to manage employees through change can be costly: Employees who are dissatisfied with or upset by change are

generally less productive.

An employer that is serious about change management should develop a communication plan, a road map for change

sponsors, integrated training programs and a plan for dealing with resistance. See SHRM Foundation Report a Primer for

Change Management (www.shrm.org/resourcesandtools/hr-topics/organizational-and-employee-development/pages/shrm-

foundation-report-change-management.aspx).

HR should be involved in major organizational changes from the beginning and can assist by influencing the following:

Improving employees' understanding of change.

Increasing communication between management and employees.

Identifying and mitigating risks.

Enhancing employee satisfaction.

Boosting trust between management and employees.

Improving employee skills and proficiency through change-related training initiatives.

See How Leaders Can Help Employees Accept Technology Changes. (www.shrm.org/hr-today/news/hr-

magazine/0716/pages/how-leaders-can-help-employees-accept-technology-changes.aspx)

The Roles of Management and HR

Business managers who want to undertake major transformation to stay competitive must work with HR staff to gain employee

acceptance and support.

M a n a g e m e n t 's r o l eM a n a g e m e n t 's r o l e

1

Having the right leadership and buy-in from the executive team is critical to unifying the organization behind a common

strategic direction.

Another key is making sure all managers are equipped to coach their direct reports toward commitment. One-on-one

conversations help individual team members analyze how the change will affect them, determine their level of commitment

and choose how they will act. Questions managers should address with employees include:

What is changing?

Why is it changing?

How will it affect your area?

How will it affect you directly?

See Changing the Change Rules at Google (https://blog.shrm.org/blog/changing-the-change-rules-at-google-0).

Unfortunately, many managers are not adept at change management. The lack of change management skills among managers

can make change initiatives difficult to achieve. A Towers Watson Change and Communication ROI Survey found that 87

percent of employers train managers on effective change management; however, only one-quarter of those employers found

the training to be effective. To increase managers' skills, HR should provide training that is tailored to the specific change

initiative and the competencies necessary to lead successful change. See Leadership Critical to Organization Change Efforts

(www.shrm.org/hr-today/news/hr-news/Pages/leadershipcriticaltochangeefforts.aspx) and Senior Leader Accountability: Critical

to Successful Change (www.shrm.org/ResourcesAndTools/hr-topics/organizational-and-employee-

development/Pages/SeniorLeaderAccountability.aspx).

H R 's r o l eH R 's r o l e

HR can play a dual role in change management by initiating and leading the change and by serving as a facilitator for changes

that other leaders and departments initiated. See What is HR's Role in Managing Change? (www.shrm.org/hr-today/trends-and-

forecasting/special-reports-and-expert-views/pages/deb-cohen.aspx) and HR Can Improve Employee Buy-In for Organizational

Change (www.shrm.org/ResourcesAndTools/hr-topics/organizational-and-employee-development/Pages/ImproveBuyIn.aspx).

The HR department performs a variety of functions associated with the communication, implementation and tracking of major

changes. Most commonly, HR professionals assist employees by serving as a point of contact for questions and concerns and

by explaining any impact on staffing. In addition, HR often coordinates meetings and communications about the change and

related initiatives. Other common HR roles and responsibilities include:

Providing initial employee communications about changes.

Developing training programs.

Preparing informational documents.

Assessing readiness before the change.

Analyzing potential impact.

HR can also play a strategic role in change management by calculating the post-implementation return on investment by

identifying key performance indicators (KPIs) to be measured and by tracking and communicating these results.

By championing change, HR can help the organization increase buy-in, comfort and support for change across departments,

thereby increasing the success of change initiatives. See Managing Organizational Change with an HR Department of One

(www.shrm.org/resourcesandtools/hr-topics/behavioral-competencies/relationship-management/pages/managing-

2

organizational-change-with-an-hr-department-of-one.aspx).

Steps in the Change Management Process

Organizations should systematically prepare for and implement major organizational change. John Kotter, a Harvard Business

School professor, developed a well-known and widely adopted approach for managing organizational change. This approach,

updated in Kotter's book Accelerate, involves the following eight stages:

1. “Create a sense of urgency.” Successful transformation efforts usually begin when leaders examine the market for

changes that may lead to new competitive realities for the organization. These changes can stem from demographic

shifts, social trends, new technology, market or competitor changes, or new government regulations. The leaders

should explain that a potential crisis or major opportunity is imminent, and they should encourage frank discussion

throughout the organization. Creating a sense of urgency that the status quo is no longer acceptable is essential to

gain the workforce's energetic cooperation.

2. “Build a guiding coalition.” Once employees feel a sense of urgency, leaders should establish a group with

enough power to lead the change. Members need substantial authority based on position, expertise, credibility and

leadership, as well as effective management skills and proven leadership abilities. This coalition must learn to work

together based on trust and set a common goal. Many guiding coalitions build trust through offsite meetings, joint

activities and conversation.

3. “Form a strategic vision and initiatives.” The guiding coalition should craft a clear vision for the future, motivate

people to take appropriate actions and coordinate their actions. An effective vision is imaginable, desirable, feasible,

focused, flexible and communicable, according to Kotter. Creating an effective vision takes time and can be a

challenging process, but the end product provides a clear direction for the future.

4. “Enlist a volunteer army.” Once the guiding coalition has developed the vision, its members should provide

extensive communications about how the change will improve the business and how those improvements will benefit

employees. Key elements in effective communications include simplicity, use of examples, multiple forums, repetition,

explanation of apparent inconsistencies and two-way communication. The group should model the behavior expected

of employees.

5. “Enable action by removing barriers.” To empower workers to support change and act on the vision, change

leaders should identify and remove obstacles. Four categories of important obstacles are:

1. Formal structures that make it difficult for employees to act.

2. A lack of needed skills.

3. Personnel or information systems.

4. Supervisors who discourage actions toward implementing the new vision.

3

6. “Generate short-term wins.” Successful and enduring change takes time, which can be discouraging to

employees at all levels of the organization. To maintain urgency, leaders should create conditions that support early

successes and visible improvements. The key is to actively search for opportunities to score early achievements and

to recognize and reward those who made these accomplishments possible. Good short-term wins have unambiguous

results, are visible to many people and are clearly related to the change effort.

7. “Sustain acceleration.” Until major changes are embedded in an organization's culture (which could take up to a

decade), they remain vulnerable to resistance and regression. It is important to use the early successes as a

foundation for larger challenges and to revise all systems, structures and policies that do not fit the change vision. HR

can consolidate gains by hiring, promoting and developing employees who can implement the transformation vision.

Additionally, the change process can be reinvigorated with new project themes and change agents.

8. “Institute change.” The final stage in Kotter's model for successful change is linking the changes to two key

components of corporate culturenorms of group behavior and shared values.

Another model for organizational change includes a four-phase change management process:

1. DefineAlign expectations regarding the scope of the change as well as timing and business impact.

2. PlanUnderstand how the change will impact stakeholders and design a strategy to help them navigate it.

3. ImplementEngage with leaders and associates to execute the change.

4. SustainWork with leaders and employees to track adoption and drive lasting change.

A large global retailer uses this model to increase the speed and impact of change initiatives while reducing the downturn of

performance, thereby achieving desired outcomes quicker.

Overcoming Common Obstacles Encountered in Implementing Change

Organizations can have a clear vision for changes and a technically and structurally sound foundation for making changes, but

the initiatives can still flounder due to obstacles that arise. Employee resistance and communication breakdown are common

obstacles faced during major organizational change. See How to Avoid Common Mistakes in Change Management

(www.shrm.org/hr-today/news/hr-magazine/0218/pages/how-to-avoid-common-mistakes-in-change-management.aspx).

E m p l o y e e r e s i s t a n c eE m p l o y e e r e s i s t a n c e

Successful change starts with individuals, and failure often occurs because of human nature and reluctance to change.

Employees may also lack the specific behavioral traits needed to adapt easily to changing circumstances, which could

decrease employee engagement and effectiveness and put organizational productivity at risk. How organizations treat workers

during a change initiative determines how successful the changeand the organizationwill be.

There are six states of change readiness: indifference, rejection, doubt, neutrality, experimentation and commitment.

Organizations about to embark on a transformation should evaluate workforce readiness with assessment instruments and

leader self-evaluations to identify the areas in which the most work is needed.

Leaders should have a solid strategy for dealing with change resistance. Some actions to build employee change readiness

include:

Developing and cascading strong senior sponsorship for people-focused work. In the absence of visible sponsorship,

leaders should build alliances, meet business needs and promote wins.

Developing tools and information for front-line supervisors and managers. Organizations should involve them early

train them, prepare them and communicate regularly.

Coaching employees to help them adapt and thrive during change.

Rewarding desired behaviors and outcomes with both tangible and intangible rewards.

Relying on insights from both those in the field and subject-matter experts.

See Is Change Stressing Your Workers? Turn to a Millennial (www.shrm.org/resourcesandtools/hr-topics/behavioral-

competencies/global-and-cultural-effectiveness/pages/millennials-and-change.aspx) and Wanted: Workers Who Can Adapt to

Change (www.shrm.org/hr-today/news/hr-magazine/0617/pages/workers-who-can-adapt-to-change.aspx).

C o m m u n i c a t i o n b r e a k d o w nC o m m u n i c a t i o n b r e a k d o w n

Sometimes decisions about major organizational changes are made at the top management level and then trickle down to

employees. As a result, why and how the company is changing may be unclear. According to a Robert Half Management

Resources survey, poor communication commonly hinders organizational change-management efforts, with 65 percent of

managers surveyed indicating that clear and frequent communication is the most important aspect when leading through

change.

To avoid this problem, HR should be involved in change planning early to help motivate employees to participate. Effective

communication promotes awareness and understanding of why the changes are necessary. Employers should communicate

change-related information to employees in multiple forms (e.g., e-mails, meetings, training sessions and press releases) and

from multiple sources (e.g., executive management, HR and other departments). See Why United Airlines' Lottery-Based Bonus

Idea Fell Flat (www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/united-airlines-bonuses-by-lottery-.aspx).

To avoid communication breakdowns, change leaders and HR professionals should be aware of five change communication

methodologiesfrom those that provide the greatest amount of information to those that provide the least:

“Spray and pray.” Managers shower employees with information, hoping they can sort significant from insignificant.

The theory is that more information equates to better communication and decision-making.

“Tell and sell.” Managers communicate a more limited set of messages, starting with key issues, and then sell

employees on the wisdom of their approach. Employees are passive receivers, and feedback is not necessary.

“Underscore and explore.” Managers develop a few core messages clearly linked to organizational success, and

employees explore implications in a disciplined way. Managers listen for potential misunderstandings and obstacles.

This strategy is generally the most effective.

“Identify and reply.” Executives identify and reply to key employee concerns. This strategy emphasizes listening to

employees; they set the agenda, while executives respond to rumors and innuendoes.

“Withhold and uphold.” Executives withhold information until necessary; when confronted by rumors, they uphold the

party line. Secrecy and control are implicit. The assumption is that employees are not sophisticated enough to grasp

the big picture.

Experts estimate that effective communication strategies can double employees' acceptance of change. However, often

companies focus solely on tactics such as channels, messages and timing while failing to do a contextual analysis and consider

the audience. Some of the specific communication pitfalls and possible remedies for them are the following:

The wrong messengers are used. Studies have found that employees tend to trust information from managers.

Understanding the organization's culture will dictate who is the best messenger for changethe manager, the senior

executive team or HR.

The change is too sudden. Leaders and managers need to prepare employees for change, allow time for the

message to sink in and give them an opportunity to provide feedback before a change is initiated.

Communication is not aligned with business realities. Messages should be honest and include the reasons behind

the change and the projected outcomes.

Communication is too narrow. If the communication focuses too much on detail and technicalities and does not link

change to the organization's goals, it will not resonate with employees.

Executive leaders and HR professionals must be great communicators during change. They should roll out a clear, universal,

consistent message to everyone in the organization at the same time, even across multiple sites and locations. Managers

should then meet both with their teams and one on one with each team member. See Say What?! Honing Communication Skills

at the Top (www.shrm.org/ResourcesAndTools/hr-topics/organizational-and-employee-

development/Pages/HoningCommunicationSkills.aspx).

Leaders should explain the change and why it is needed, be truthful about its benefits and challenges, listen and respond to

employees' reactions and implications, and then ask for and work to achieve individuals' commitment. See Keep it Clear: Three

Ways to Help Communicate Change in Your Organization (https://blog.shrm.org/blog/keep-it-clear-three-ways-to-help-

communicate-change-in-your-organization) and Managing Organizational Communication

(www.shrm.org/ResourcesAndTools/tools-and-samples/toolkits/pages/managingorganizationalcommunication.aspx).

O t h e r o b s t a c l e sO t h e r o b s t a c l e s

Employee resistance and communication breakdowns are not the only barriers that stand in the way of successful change

efforts. Other common obstacles include:

Insufficient time devoted to training about the change.

Staff turnover during the transition.

Excessive change costs.

An unrealistic change implementation timeline.

Insufficient employee participation in voluntary training.

Software/hardware malfunctions.

Downturn in the market or the economy.

See How Leaders Can Help Employees Accept Technology Changes. (www.shrm.org/hr-today/news/hr-

magazine/0716/pages/how-leaders-can-help-employees-accept-technology-changes.aspx)

Change management experts have suggested that unsuccessful change initiatives are often characterized by the following:

Being too top-down. Executives relate their vision of what the end result of the change initiative should be, but do not

give direction or communication on how the managers should make the change happen.

Being too “big picture.” The organization's leaders have a vision of the change but no idea of how that change will

affect the individuals who work there.

Being too linear. Managers work the project plan from start to finish without making even necessary adjustments.

Being too insular. Most organizations do not seek outside help with change initiatives, but businesses may need

objective external input or assistance to accomplish major changes.

Successful change management must be well-planned, well-timed and well-integrated. Other critical success factors include a

structured, proactive approach that encompasses communication, a road map for the sponsors of the change, training

programs that go along with the overall project and a plan for dealing with resistance. Change leaders need to be active and

visible in sponsoring the change, not only at the beginning but also throughout the process. Turning their attention to

something else can send employees the wrong messagethat leaders are no longer interested. See Executive Briefing: How

to Combat Change Fatigue (www.shrm.org/hr-today/news/hr-magazine/pages/0415-execbrief.aspx) and Dan Heath: Find the

'Bright Spots' to Generate Change. (www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/DanHeath.aspx)

Managing Varied Types of Major Organizational Change

Organizational change comes in many forms. It may focus on creating new systems and procedures; introducing new

technologies; or adding, eliminating or rebranding products and services. Other transformations stem from the appointment of

a new leader or major staffing changes. Still other changes, such as downsizing or layoffs, bankruptcy, mergers and

acquisitions, or closing a business operation, affect business units or the entire organization. Some changes are internal to the

HR function.

In addition to the general framework for managing change, change leaders and HR professionals should also be aware of

considerations relating to the particular type of change being made. The subsections below highlight some of the special

issues and HR challenges.

M e r g e r s a n d a c q u i s i t i o n sM e r g e r s a n d a c q u i s i t i o n s

A merger is generally defined as the joining of two or more organizations under one common ownership and management

structure. An acquisition is the process of one corporate entity acquiring control of another by purchase, stock swap or some

other method. Nearly two-thirds of all mergers and acquisitions (M&As) fail to achieve their anticipated strategic and financial

objectives. This rate of failure is often attributed to HR-related factors, such as incompatible cultures, management styles, poor

motivation, loss of key talent, lack of communication, diminished trust and uncertainty of long-term goals.

HR professionals face several challenges during M&As, including the following:

Attempting to maintain an internal status quo or to effect changeeither to facilitate or thwart (in the case of a hostile

takeover) a possible merger or acquisition, as instructed by upper management.

Communicating with employees at every step in the M&A process with appropriate levels of disclosure and secrecy.

Devising ways to meld the two organizations most effectively, efficiently and humanely for the various stakeholders.

Dealing with the reality that M&As usually result in layoffs of superfluous employees. This process entails coordinating

separation and severance pay issues between the combining organizations.

Addressing the ethical dilemmas involved, such as when an HR professional may be required to eliminate his or her

own position or that of a co-worker or an HR counterpart in the combined organization.

D o w n s i z i n gD o w n s i z i n g

Successfully implementing a layoff or reduction in force (RIF) is one of the more difficult change initiatives an HR professional

may face. Tasks HR professionals will need to undertake include:

Planning thoroughly. Each step in the process requires careful planning, considering alternatives, selecting

employees to be laid off, communicating the layoff decision, handling layoff documentation and dealing with post-

layoff considerations.

Applying diversity concepts. HR should form a diverse team to define layoff criteria and make layoff selections.

Addressing the needs of the laid-off. This step involves reviewing severance policies, outplacement benefits,

unemployment eligibility and reference policies.

Dealing with the emotional impact. HR professionals should understand and prepare for the emotional impact of

layoffs on the downsized employees and their families, on the managers making layoff decisions, on other HR

professionals involved, and on remaining employees and managers working with the post-layoff workforce. In some

situations, an HR professional may even be responsible for implementing his or her own layoff, a case calling for the

utmost in professional behavior.

Managing the post-layoff workforce.

See Managing Downsizing by Means of Layoffs (www.shrm.org/ResourcesAndTools/tools-and-

samples/toolkits/Pages/managingdownsizing.aspx) and Drive Team Performance Using Organizational Transformation

(www.shrm.org/resourcesandtools/hr-topics/organizational-and-employee-development/pages/drive-team-performance-using-

organizational-transformation.aspx)

B a n k r u p t c yB a n k r u p t c y

Filing for a business bankruptcy and successfully emerging from the process is generally a complex and difficult time for all

parties. HR may have to cut staff, reduce benefits, change work rules or employ a combination of such actions. A major

strategic concern during a Chapter 11 bankruptcy is retaining key personnel.

Compassion, frequent communication and expeditious decision-making will help reduce the stress an organization's

employees are likely to experience during this difficult organizational change. Showing genuine respect for people and treating

them with honesty, dignity and fairnesseven as difficult decisions are being made about pay, benefits and job reductionswill

drive the success or failure of an organization post-bankruptcy. See Managing Human Resources for a Company in Bankruptcy

(www.shrm.org/ResourcesAndTools/tools-and-samples/toolkits/Pages/companyinbankruptcy.aspx).

C l o s i n g a b u s i n e s s o p e r a t i o nC l o s i n g a b u s i n e s s o p e r a t i o n

Businesses make the difficult decision to close all or part of their operations for many reasons, including economic recession,

market decline, bankruptcy, sale, a realignment of operations, downsizing, reorganization, outsourcing or loss of contracts.

HR professionals will play an integral role during such business closures, from developing the plan for the closure through the

final stages of shutdown. Some of HR's major responsibilities during this type of organizational change are listed below:

Following facility-closing notification laws. HR must determine whether and to what extent the business must comply

with notification requirements under federal or state laws for mass layoff and facility closings. HR will also lead the

announcement process and participate in all aspects of employee communications, which may include all-employee

meetings, written announcements and media interviews.

Announcing the closure news. HR has an important role to play in anticipating and responding to workforce reactions

by having as much information and resources on hand as possible. To avoid hostilities or other destructive behavior,

HR should consider using an employee assistance program or an outplacement firm.

Providing employee benefits information. After the shock of the announcement subsides, the most frequently asked

questions involve benefits, including unemployment compensation, health care continuation, pension plan issues, and

retirement plan distributions and rollovers.

Coordinating outplacement services. Offering outplacement services for departing employees may enable business

owners and managers to provide much-needed support and protect the organization's reputation. If financially

feasible, the organization may offer departing employees outplacement services from a private outplacement

consulting firm or, in some states, a state agency.

Negotiating with unions. In unionized facilities, employers have a duty to bargain about the effects of a business

closure decision. These negotiations typically involve assistance benefits, seniority issues, pension plan issues and

employment opportunities at facilities not affected by the closure.

Costing the closure. Anticipating the costs of a business closure is critical from an early stage of the process and will

fall heavily on HR. This procedure involves assessing the cost of winding down employee benefits, assistance benefits,

payroll and administrative costs, severance payments, union demands, unresolved employee claims or charges,

security precautions, and any closing notification penalties.

Disposing of company property. HR should know the organization's policy for disposal of company property and

respond to employees' requests for office furniture, equipment, machinery and other tangible business assets. If the

business does not sell or transfer assets or is not in debt to creditors, HR may help determine whether to give items to

employees, community groups, schools or other potential recipients.

Complying with legal requirements. Numerous legal issues surround the closing of a business. Depending on the

number of employees and the employer's commitments to employee benefits programs, legal compliance may require

following closing-notification requirements, sending out COBRA notices and termination letters, issuing final

paychecks, making any required severance payments and communicating unemployment compensation. HR must

know how to comply with the laws and avoid litigation risks.

O u t s o u r c i n gO u t s o u r c i n g

For several reasons, including cost savings and freeing staff to focus on more strategic efforts, an organization may decide to

outsource HR or other business functions. Outsourcing is a contractual agreement between an employer and a third-party

provider whereby the employer transfers the management of and responsibility for certain organizational functions to the

external provider. Many types of outsourcing options are available to employers, from outsourcing one aspect of a single

function to outsourcing an entire functional department. This change can have a similar impact on employees as downsizing or

closing a department.

When deciding whether to outsource, an organization should carefully consider questions about its needs in a particular

functional area, current processes, business plan and outsourcing options, including:

Does the situation merit outsourcing?

Is the department providing excellent service with existing staff and processes? Is it meeting the organization's needs?

Can the affected department handle outsourcing without disrupting operations?

Will the CEO and top management team support and pay for an outside vendor?

How might an outsourcing arrangement fall short of expectations? How can such risks be mitigated?

During an HR outsourcing process, HR professionals may be asked to identify solutions to guide organizations through vendor

selection and management of the outsourcing relationship. See Outsourcing the HR Function

(www.shrm.org/ResourcesAndTools/tools-and-samples/toolkits/Pages/outsourcingthehrfunction.aspx).

C h a n g e s w i t h i n H RC h a n g e s w i t h i n H R

HR professionals frequently help other parts of the organization respond to change, but what happens when the HR

department becomes the epicenter of change? These kinds of transformations, such as moving to a shared services model,

integrating with another HR function following a merger or delivering new services to new clients, can be more difficult for HR

professionals to manage than other types of organizational changes.

During major changes within the HR function, HR should do the following:

Lead by example. Do exactly what HR asks other leaders and managers to do during major change initiatives.

Remember that HR professionals' responsibilities never cease. The HR department must continue to serve

employees while contending with the discomfort, confusion and demands that department-specific change creates.

Keep in mind that few organizational changes occur in isolation. If senior leaders decide to implement an HR shared

services model, for instance, the information technology, finance and procurement functions also could move to a

similar model or initiating efficiency projects.

Measure the degree to which HR staff is prepared to change before plunging into the change. HR leaders should

assess staff readiness and engagement through interviews and surveys. After evaluating the results, they should make

necessary adjustments in staff readiness and engagement levels before proceeding.

Realize that most HR transformations require fresh, or refreshed, talent. HR leaders can fire and hire, or they can

retrain and develop.

Legal Issues

In addition to managing the “people side” of organizational change initiatives, HR professionals should keep leadership

informed of any applicable employment laws and the potential legal implications of various types of change. Typically, HR will

be responsible, in consultation with legal counsel, for ensuring compliance with pertinent federal, state, local and international

employment laws and regulations.

Legal compliance requirements may vary considerably based on the nature of the change initiative, the location(s) and size of

the organization, whether the employer is unionized, and other factors. Federal laws that may apply to particular organizational

change initiatives include:

Title VII of the Civil Rights Act of 1964.

Age Discrimination in Employment Act (ADEA).

Americans with Disabilities Act (ADA).

National Labor Relations Act (NLRA).

Worker Adjustment and Retraining Notification Act (WARN) of 1988.

Employee Retirement Income Security Act (ERISA).

Health Insurance Portability and Accountability Act (HIPAA) of 1996.

Consolidated Omnibus Budget Reconciliation Act (COBRA).

See Federal Statutes, Regulations and Guidance (www.shrm.org/ResourcesAndTools/legal-and-compliance/employment-

law/pages/federal-statutes-regulations-and-guidance.aspx).

HR professionals may also be responsible for negotiating contracts with unions, service providers or vendors. In such cases,

they need to be familiar with key contract terms and issues and be able to represent the organization's interests effectively in

contract negotiations and management. See Conducting Effective Business Negotiations

(www.shrm.org/ResourcesAndTools/tools-and-samples/toolkits/pages/conductingeffectivebusinessnegotiations.aspx).

Global Issues

Significant organizational changes can create ongoing conflict between two locations in the same country. But conflict is more

likely to occur, and is harder to address, when differences in language, time zones, institutions and business practices exist.

According to research conducted by the Economist Intelligence Unit, companies will continue to become larger and more

global, handling operations in more countries than they do today.

Culturally based assumptions about customer needs, infrastructure, competitive threats and other factors make it more difficult

to find common ground during a cross-cultural change initiative. What differentiates an organization's products or services in

one country may not be the same elsewhere, and the strengths that it has in its home market may not be easily replicated in

other countries.

Common problems in cross-cultural change initiatives include:

Lack of a partnership approach. It is natural for an organization to consider its home market and its largest customers

when planning change efforts. However, those voices can easily drown out the needs of employees or clients in

distant markets, including those that could have high growth potential. By partnering with all employees and clients

from the beginning and considering future potential for revenue, profit and growth, an organization can build an

approach to change that integrates the patterns of past successes with future directions.

Misreading similarities and differences in markets. Multinational organizations might project solutions suitable for

one country onto another country or assume that customers abroad want to behave “more like us.” To make matters

more complicated, foreign products may have considerable appeal in some markets but often for reasons that only

make sense in the local context. Companies may expect the same competitive landscape, yet the largest competitive

threats may come from companies that are unknown back at headquarters.

Not enough accountability. Establishing accountability at the local level is difficult when employees lack a sense of

4

Contact Us (www.shrm.org/about-shrm/Pages/Contact-Us.aspx) | 800.283.SHRM (7476)

© 2019 SHRM. All Rights Reserved

SHRM provides content as a service to its readers and members. It does not offer legal advice, and cannot guarantee the accuracy or suitability of its content for a particular

purpose.

Disclaimer (www.shrm.org/about-shrm/Pages/Terms-of-Use.aspx#Disclaimer)

ownership for a new initiative. This situation can be exacerbated by the typical matrix organizational structure at many

global companies. Employees who report into both a global business unit and a local management structure frequently

pay the closest attention to the managers they encounter every day who are most likely to affect their futures.

Leaders of global change initiatives should consider these potential problems and plan to address them in advance. They will

be far more likely to avoid change-related pitfalls; achieve their objectives; and build business partnerships characterized by

mutual learning and superior business results.

Endnotes

Gartner. (2018). Change Management. Retrieved from https://www.gartner.com/en/insights/change-management

(https://www.gartner.com/en/insights/change-management)

Willis Towers Watson. (2013, August 29). Only one-quarter of employers are sustaining gains from change management

initiatives, Towers Watson survey finds. Retrieved from https://www.towerswatson.com/en/Press/2013/08/Only-One-Quarter-of-

Employers-Are-Sustaining-Gains-From-Change-Management (https://www.towerswatson.com/en/Press/2013/08/Only-One-

Quarter-of-Employers-Are-Sustaining-Gains-From-Change-Management)

Kotter, John. (2014). Accelerate: Building strategic agility for a faster-moving world. Boston, MA: Harvard Business Review

Press.

Economist Intelligence Unit. (2010). Global firms in 2020: The next decade of change for organisations and workers. Retrieved

from https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/10-Economist%20Research%20-

%20Global%20Firms%20in%202020.pdf (www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/10-

Economist%20Research%20-%20Global%20Firms%20in%202020.pdf)

1

2

3

4