Change management is vital in the business world, where organizations must continuously evolve to stay competitive. It involves taking a clear, organized approach to ensure these transformations are well-organized and lasting.
This article will explain what change management means, how it works, and why it’s increasingly relevant for organizational success.
Understanding Change Management
As the American Society for Quality (ASQ) explains, change management is the “methods and manners in which a company describes and implements change within both its internal and external processes.” Managing change involves developing a structured approach while preparing and supporting employees through the change process to ensure a successful outcome.
People are core to the change management process. According to Prosci, a global change leader and consulting company, the ultimate goal of change management is to drive results by “engaging employees and inspiring them to adopt a new way of working.” From the top down, an entire system of people must support a change effort for it to succeed.
“In my experience, employees at all levels of a business play crucial roles in the process of organizational change management,” says Simon Cleveland, PhD, EdD, faculty member in the School of Business and Information Technology at Purdue Global.
Cleveland says that frontline employees have firsthand knowledge of operational challenges and customer needs. This makes their input invaluable for identifying necessary changes and how to implement them effectively.
“Middle managers, on the other hand, act as vital conduits between senior leadership and frontline staff, ensuring strategic decisions are communicated clearly and feedback from the frontlines is relayed back to the top,” Cleveland adds. “Senior leaders must set the vision and direction for change, but the success of any change initiative largely depends on the engagement and participation of employees at every level.”
Ultimately, Cleveland explains, when all employees are involved in the change process — whether they’re leadership, management, or frontline staff — it creates a “greater sense of ownership and commitment, leading to smoother transitions and more sustainable outcomes.”
Types of Organizational Change
Organizational change encompasses many types, which can be viewed on a spectrum. At one end lies adaptive change, while transformational change sits at the opposite end:
- Adaptive change is generally focused on incremental adjustments and fine-tuning existing processes. Managers play an important role by emphasizing how small-scale changes can fit into the big picture and an organization’s long-term success.
- Transformational change is more radical and can fundamentally alter organizational culture and operations. Managers here need to be “persuaders and visionaries,” whose primary role is to inspire commitment to the new direction.
Why Is Change Management Important for Businesses?
According to Gartner, the average company has undertaken five major firmwide changes in the past three years, with 75% expecting more in the future. Yet, managing change has its challenges. Half of change initiatives fail, while Gartner says less than a third are a “clear success.”
As Prosci states, the costs of poorly managed change are immense. At a project level, this can include:
- Project delays
- Missed milestones
- Budget overruns
- Rework
- Project failure
Thus, effective change management is essential to avoiding these outcomes. As Cleveland explains, that’s where popular change management models come into play, providing businesses with “valuable frameworks to guide them through the complexities of change.”
Popular Change Management Models
According to a study published by the National Library of Medicine (NLM), “change management consists of models and strategies to help employees accept new organizational developments.” However, because “change is chaotic,” a universal framework that works in all settings is unlikely.
The NLM researchers argue change managers must consider various approaches for different implementations. Here are two common examples:
Lewin’s Change Management Model
“Kurt Lewin's three-step change theory — unfreeze, change, and refreeze — offers a simple yet powerful model for understanding the phases of change,” Cleveland says. “It emphasizes the importance of preparing an organization for change (unfreezing), implementing the change (changing), and solidifying new practices (refreezing).”
As Cleveland explains, this change model is particularly useful in situations with resistance to change, as it highlights the need to disrupt the status quo before employees can adopt new behaviors. To demonstrate by example, Cleveland recalls the adoption of new regulatory requirements after the 2008 financial crisis.
“At the time, financial institutions were faced with significant regulatory changes, such as the Dodd-Frank Act in the United States, which required them to adopt more stringent risk management practices and enhance transparency,” Cleveland says. “Applying Lewin's model, financial institutions had to first ‘unfreeze’ by acknowledging the need for change due to increased regulatory scrutiny and the potential consequences of non-compliance.”
Later, during the “change” phase, Cleveland says financial institutions implemented new compliance procedures, invested in risk management systems, and trained employees on their new regulations. This required overcoming “significant resistance, particularly from those accustomed to the old ways of operating.”
“Finally, in the ‘refreeze’ phase, the new procedures and systems became the norm,” Cleveland adds. “Organizations integrated these changes into their daily operations, ensuring compliance with the new regulations became part of the corporate culture. This final phase was essential in maintaining long-term adherence to the new standards and preventing a relapse into previous practices.”
Kotter’s Eight-Step Change Management Framework
On the other hand, John Kotter’s eight-step model provides a more detailed, sequential approach.
“It focuses on creating a sense of urgency, building a guiding coalition, and generating short-term wins to build momentum,” Cleveland shares. “Kotter’s model is highly practical and has been widely adopted across industries because it addresses both the emotional and practical aspects of change.”
At a glance, Kotter's eight steps are:
- Create a sense of urgency
- Build a guiding coalition
- Form a strategic vision
- Enlist a volunteer army
- Enable action by removing barriers
- Generate short-term wins
- Sustain acceleration
- Institute change
In one example, Cleveland reflects on his firsthand experience in the IT industry during a company’s transition to the Agile methodology, a project management framework. The organization’s leaders created a sense of urgency by highlighting delays in product releases. Then, a guiding coalition of managers and Agile coaches led the change. Piloting the methodology in smaller teams led to early wins, such as faster project deliveries, and built momentum.
“Over time, Agile practices were embedded across the organization, with continuous training to sustain the change,” Cleveland notes. “This approach effectively managed both the emotional resistance to new processes and the practical implementation challenges.”
The Benefits of Change Management
An effective change management strategy can yield many advantages. According to Prosci’s research, it could help organizations reduce costs, meet objectives, and expedite the change process.
Change management and project success have a direct correlation. Prosci’s study of more than 2,600 change practitioners quantified a management strategy's impact on a change project and its ability to meet objectives. Projects with “excellent change management” are:
- 7 times more likely to meet objectives than those with “poor change management”
- 5 times more likely to be on or ahead of schedule
- 1.5 times more likely to stay on or under budget
Notably, even with a fair change management strategy, Prosci says organizations can still achieve a threefold improvement in project outcomes.
Best Practices for Effective Change Management
Leading change is rarely simple. Cleveland considers the following three best practices as crucial for managing a successful change initiative:
1. Implement an Overall Change Management Strategy
“An organization-wide change management strategy is essential for ensuring change initiatives are aligned with the organization’s overarching goals and values,” Cleveland says. The right approach, tied to business strategy, provides a cohesive framework to guide all change efforts. This ensures consistency across different departments and projects.
As Cleveland explains, creating this strategy involves several key steps:
- Assessing the current state: Understanding the organization's current strengths, weaknesses, opportunities, and threats
- Defining the vision for change: Clearly articulating the desired future state and the reasons for change
- Engaging stakeholders: Involving employees, managers, and other key stakeholders in the planning process to ensure buy-in and address concerns
- Developing a roadmap: Outlining the specific actions, timelines, and resources required to achieve the change
- Communicating the plan: Ensuring all employees know the strategy and understand their roles in the change process
Cleveland adds the strategy must also be flexible enough to adapt to unforeseen circumstances in the external environment. Ultimately, he says the tangible benefits of having an organization-wide change management plan are numerous:
- Minimized resistance: First, Cleveland asserts it helps reduce resistance to change by “ensuring all employees understand the reasons for the change and how it will benefit them and the organization.” Plus, he adds, this often leads to increased engagement and morale.
- Improved project success: According to Cleveland, “Having a plan in place improves the likelihood of successful implementation by providing a clear roadmap for the change process, which helps reduce the risk of miscommunication and confusion.”
- Enhanced strategic outcomes: Cleveland explains that a change management strategy may help organizations achieve strategic objectives by ensuring all initiatives are “aligned with the overall vision and goals.”
- Better financial performance: Finally, Cleveland emphasizes that an effective plan can improve financial performance by empowering the business to “adapt more quickly and effectively to changes in the external environment.”
2. Make a Change Management Plan for Each Specific Change Effort
According to Cleveland, an organization’s “big-picture change management strategy” provides the overall framework for managing change. By contrast, case-by-case plans are designed to address specific instances of change. The big-picture plan ensures all individual change initiatives align with the organization’s business strategy. Meanwhile, case-based plans provide the flexibility to tackle unique challenges and opportunities of specific efforts.
“For example, an organization may have a big-picture strategy that emphasizes digital transformation as a key priority,” Cleveland explains. “Within this framework, case-by-case plans might be developed to address specific projects, such as implementing new software, automating processes, or enhancing cybersecurity measures.”
3. Use Change Management Tools Effectively
“Technology plays a pivotal role in modern change management,” Cleveland says, “by providing tools and platforms that facilitate communication, collaboration, and monitoring throughout the change process.”
Cleveland highlights project management software as a tool organizations can use to help teams track progress, manage tasks, and maintain alignment. According to Cleveland, employees should receive proper training and ongoing support to become adept with these change management tools.
“This may include formal training sessions, online tutorials, and opportunities for hands-on practice,” Cleveland says. “Fostering a culture of continuous learning and experimentation can encourage employees to explore new tools and technologies and integrate them into their daily workflows.”
Do You Have a Future in Change Management?
Companies need change management professionals — both for individual projects and large-scale initiatives. Business administration programs allow students to focus on such areas, honing their abilities as potential change leaders.
If this is a field you’d like to explore, Purdue Global offers several online business degree programs where you can earn a degree while learning the ins and outs of change management. They include:
- Bachelor of Science in Business Administration
- Master of Business Administration
- Master of Science in Management and Leadership
Request more information to get started today.
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