Three Ways to Reduce Organizational Change Risk

Organizational change is something we experience and hear about all the time. Don’t you get tired of change? Goodness knows, I do!

How many times has an organizational change, like a merger, acquisition, internal reorganization, or market expansion, not succeeded? Too many times to count. In fact, a CEB 2016 Workforce Change survey showed that 50% of organizational changes were “clear failures” – yes, 50%!

The traditional way of making an organizational change has been from the top-down: the CEO says here is the strategy and vision for the change. Leadership creates the implementation plan and communicates the change to the rest of the organization.

Really, leadership forgets the people aspect of this whole thing called change.

So what happens next? Employees don’t like the idea, so they don’t support the change. And because they are working from someone else’s vision, they are at risk of focusing their efforts in the wrong direction or on the wrong activities.

At this point, you may be asking…what does this have to do with enterprise risk management?

Enterprise risk management (ERM) is all about providing information to leadership for risk-informed decision-making. So hopefully, leadership has pulled you, the risk professional, into the research and discussion phases of these monumental decisions. In fact, I would hope that these types of ideas or possibilities are included in strategic planning. (Check out a couple of my previous posts here and here on this topic.)

ERM’s role in this change is to help reduce risk around the change and increase the chances of success! How can we do that? By providing leadership with the tool and another perspective on ways to reduce the risk.

Here are three things leadership can do to reduce the risk and increase the chances of success with organizational change.

1.   Change strategy co-creation

Front-line employees should be actively involved in the development of the change strategy. Active employee participation in making decisions around organizational change is crucial to getting their buy-in.

2.   Employee ownership of change implementation plan

Leadership should shift ownership of the implementation planning to front-line employees. Studies have shown that having your voice heard is a powerful way of guaranteeing employee support and gaining early adopters to spread the enthusiasm for the change.

3.   Open conversations about change

Instead of “rolling out a communication plan” to tell them (yes, tell them!) about the change and its benefits, leadership should refocus communications to be open conversations. Start a dialogue – a two-way conversation – with employees early in the process.

That same CEB survey showed the following results when organizations used these methods instead of the traditional top-down approach:organizational change

  • Probability of success increased by as much as 24%.
  • Implementation time decreased by as much as 1/3.
  • Employee time spent on the change decreased by as much as 12.6 hours per week per employee.
  • Employee engagement increased by as much as 38%.
  • Intent to stay increased by as much as 46%
  • The number of resistors decreased by as much as 19%.

As risk management professionals, our goal is to help leadership achieve their goals. If change is one of their goals, then it is our responsibility to help them with the change, which means increasing the chances of its success.

What change is your organization facing in the next 12 months? And what is your plan to increase the chances of success?

I would love to hear from you, either in the comments section below or on LinkedIn.

Don’t forget to check out my eBook 5 Effective Methods to Identify Risks. If you are struggling with your ERM program or are just beginning and seeking an outside perspective to help you make progress, complete the form below to be added to the consulting and coaching waitlist…I will reach out when spots become available!!

 

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3 Comments. Leave new

  • William Varela
    August 20, 2017 4:15 pm

    Communication is certainly one of the most important tasks of risk management, however, in many ways it is the less devolved in terms of seeking improvement or in other words with a forward looking perspective. CEOs and other high level members of the governing sphere of companies usually expect risk support in contrast of their past events and it is quite challenging to interviene in a more active way regarding projects of change or other similar business steps.
    Bearing in mind what has been said above, risk management responsible staff should steer the way of their participation in projects, speeking up and contributing with ideas which, as mentioned in your article, increase the chances of business succes.

    Reply
    • William, thank you for commenting. You make several excellent points!
      1) Indeed, robust communication skills for a risk manager are essential and can be the sole reason for risk management failure. (I discussed this in my post on the qualities of a risk manager.)
      2) It is unfortunate that leadership is so focused on examining the past that they forget or don’t think that risk management can help avoid negative possibilities and increase the chances of success.
      3) Risk management is only as successful as the support from the business areas. If the business areas vocalize the need or desire to have risk management involved from the beginning, it helps the organization all around.

      Reply
  • A strong approach is upside down (compared to what has been described).
    1) Someone – may be management, but need not be – defines/spots the need for a change, the rationale and benefits of doing so
    2) A team of those most affected by the change address the purposeand aspiration, and define how best to achieve this … in ideal cases, including discussing with up- and downstream partners to get a higher level of holism into the change. The team makes an implementation plan.
    3) Management formally approves the devised plan and the resource allocation and assigns a change driver
    4) The assignee drives the implementation, including (of course) good risk management … in close cooperation with those affected and the “project” steering committee, which also includes affected employees.

    Reply

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