The importance of change management for businesses

By Indeed Editorial Team

Published 8 July 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Significant organisational change requires complete cooperation across teams and different business levels. Taking a structured approach to change ensures a business makes a successful transition while mitigating any risks or disruptions. Change management focuses on the ‘people side' of change and ensures that employees make full use of the available technologies and resources. In this article, we discuss what change management is, the importance of change management and the consequences of ignoring it.

What is change management?

Change management is a systematic approach to preparing and dealing with changes in the workplace. It defines how a business implements changes relating to its external and internal processes, such as company goals, technologies or people. Change management also involves monitoring change pre- and post-implementation to ensure employees feel supported at every stage. There are three main changes that businesses may implement: developmental change, transformational change and transitional change.

The primary goal of change management is to ensure that new implementations move the business closer to its objectives. Change management varies in scope and purpose, and there are several methodologies that businesses can choose from. For instance, a business may invest in change management to implement new technologies that allow it to streamline some of its production processes or use it as a means of restructuring the company after a merger.

Related: 10 change management models to use in the workplace

The importance of change management

Change management is essential when making transitional, developmental or transformational changes to a business. Change management ensures you consider all business elements and implement a strategy that leads to organisational success. Here are some reasons why change management is important:

It enables cross-functional change

Cross-functional teams occur when groups of people with different functional expertise work towards the same goal. Businesses often require cross-functional changes to help teams collaborate and open up new communication channels. Change management allows you to align your proposed changes with the overall common goal that teams work towards. This means they have an increased understanding of how change impacts them and their daily operations in relation to the overarching objectives. If any issues arise among cross-functional teams during implementation, change management makes it easier to identify and resolve these problems.

Related: The importance of managing a team through change (plus tips)

It improves performance and productivity

When a business successfully adapts to new ways of working, it tends to benefit from increased performance and productivity. Change management helps you eliminate the complexity and waste associated with mismanaging change and achieve results much quicker. It also allows you to identify any productivity gaps and fix them before they hinder operations. Improved performance and productivity encourages employees to share more in the success of the business and leads to a healthier working environment.

It aligns organisational practice with organisational values

Company values help employees understand what the business stands for and guide them to make decisions that help the business achieve its goals. Implementing change that conflicts with the company's values can have a negative impact on how employees view these values and may lead them to contradict them unintentionally. Change management ensures you implement change that's consistent with the process-driven culture of the business. This means you consider all aspects of the business, including members, processes and resources. A 360-degree view of change means you're less likely to implement new organisational practices that undermine business and employee values.

It aids organisational transition

Change management is important when it comes to making structural changes to a business. This is because it encourages managers to restructure job responsibilities and business processes and implement new technologies that align with each. Considering how these organisational changes impact each other leads to smoother structural transitions.

It takes external factors into account

It's important to consider external factors when implementing change in a business. Some of these external factors include industry developments, global and market trends and digital solutions. Ignoring these external factors can hinder the success of a business, as competitors capitalise on new developments and use them to their advantage. There are several change management methodologies that require you to consider the impact of external factors on business. Change management often involves performing market research and analysing client or consumer trends.

It reduces costs

Positive business change results in less waste and reduced costs. This is because change management encourages businesses to consider their options and make smart choices. Reducing costs can improve a company's profitability by increasing return on investment (ROI).

It engages people in the change process

Negative change can lead employees to become confused and unmotivated in the workplace. Change management ensures you engage people affected by change initiatives and help them navigate new processes. Some businesses choose to include employees in the creation of change management plans since they have a better understanding of ground operations and can suggest areas for improvement. This focus on communication makes employees feel like they have some control over the proposed changes and decreases resistance to change initiatives.

The downfalls of not implementing change management

Failure to implement effective change management can have several negative consequences for a business. Learning about the downfalls associated with a lack of change methodology allows you to recognise when a business has a poor approach to change and rectify it immediately. Some negative consequences of not implementing change management include:

System-related issues

Continuous improvement is important for businesses that want to keep up with industry advancements and technological developments. Continuous change management is necessary to make these continuous improvements and keep your systems up to date. If you implement a short-sighted change management plan, you risk overlooking new system enhancements and skipping upgrades that your competitors may capitalise on. This means your systems become misaligned with your commitment to continuous business growth.

Lost opportunities

Change management encourages you to brainstorm various options and perform necessary research into business competitors, markets and audiences. Without considerable research and discussion, a business loses its ability to compete at its highest capacity and misses out on new potential opportunities. This means the maximum success level of a business is never realised.

Product obsolescence

This negative consequence specifically relates to customer-facing businesses. Even though every product or service starts as new, they can quickly become outdated as consumer preferences and technologies change. An unwillingness to change means you fail to keep up with these field advancements and eventually fall behind in the market. This is because the business continues to produce goods or services that aren't necessary to the public anymore.

Low morale

Stagnant businesses can significantly contribute to low employee morale and make them feel like the business isn't doing anything to further their career advancement. Where businesses fail to invest in their employees, employee turnover increases as more individuals seek opportunities elsewhere. Alternatively, poor change management can confuse employees, especially when effective communication channels aren't supported.

Unidentified risks

Change management ensures that you consider all aspects of new proposals before implementing them. This means you can identify risks and work to mitigate them before they cause significant problems. An ineffective response to change could lead you to overpromise on project timelines, cause systematic issues or alienate employees.

Increased resistance

Enacting change in a business requires you to communicate with employees and get their feedback on proposed implementations. Without this, employees may feel like you're forcing change upon them, which can sometimes cause active resistance to change. Be sure to consult employees by giving them a platform to raise concerns and have some control over decisions that affect their roles in the workplace.

Related: How to overcome resistance to change at work in 6 steps

Lack of ownership

Business change requires continuous monitoring and checking to ensure implementations remain relevant and successful. This requires someone to take ownership of the change and ensure its sustainability once the workplace returns to business as usual. Without this ownership, companies fail to initiate a shared vision that ensures change continues in the right direction. This renders early implementations futile and leads to a waste of time and resources.

Related: Managing workplace change (with helpful tips and examples)

Reduced customer service

Remember, employees have a direct impact on how customers view your business. Confused or disgruntled employees may find it hard to hide their dissatisfaction regarding change when conversing with customers. Where employees are unable to answer customer queries or respond negatively, businesses suffer from a drop in customers and a damaged reputation.

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