What Is Organizational Change Management?

Virtually every organization will, at some point, undergo a transition or change to remain viable and scale. Whether onboarding new employees, growing a department, or merging with another company, these changes challenge the status quo and significantly influence business outcomes and shape long-term success.

Unfortunately, the organizational change process isn’t always easy to adapt to and can be intimidating for all team members who find themselves impacted by it.

For business leaders tasked with overseeing organizational change or guiding employees through it, it’s important to know what the process entails and what to expect. Change, although challenging, can be a major opportunity for growth and career advancement, so long as you know how to approach it.

Here’s a primer on what organizational change management is and some tips for navigating it.

What is Organizational Change Management?

Organizational change refers to the actions in which a company or business alters a major component of its organization, such as company culture, the underlying technologies or infrastructure it uses to operate, or its internal processes. Organizational change management is the process of guiding organizational change to a successful resolution, and it typically includes three major phases: preparation, implementation, and follow-through.

What Causes Organizational Change?

Many factors make organizational change necessary. Some of the most common faced by managers include:

• New leadership at the helm of the company or within its departments
• Shifts in the organizational team structure
• The implementation of new technology
• The adoption of new business models

To ensure a smooth transition, it’s important to have a set organizational change management strategy that can be applied across various types of change, particularly adaptive and transformational changes.

Types of Organizational Change

Adaptive changes are small, incremental changes organizations adopt to address needs that evolve over time. Typically, these changes are minor adjustments managers fine-tune and implement to execute business strategies. Throughout the process, leadership may add, subtract, or refine processes.

Adaptive change examples include:

• Training employees in new tools or technologies
• Streamlining communication channels to improve information flow
• Upgrading existing hardware and software to improve security and performance
• Adjusting pricing strategies to remain competitive

Transformational changes have a larger scale and scope than adaptive changes. They can often involve a simultaneous shift in mission and strategy, company or team structure, people and organizational performance, or business processes. Because of their scale, these changes often take a substantial amount of time and energy to enact. Though it's not always the case, transformational changes are often pursued in response to external forces, such as the emergence of a disruptive new competitor or issues impacting a company’s supply chain.

Transformational change examples include:

• Adoption of a customer relationship management software (CRM), which all departments are expected to learn and employ
• Company reorganization of departments and teams to improve efficiency
• New product or service launches to disrupt the market
• Global expansion, which requires adapting to different cultures, legal regulations, or business practices

Another example of transformational change discussed in the online course Leading Change and Organizational Renewal involves Ingrid Johnson, former managing director of business banking at Nedbank. Johnson noticed that her team wasn’t working cohesively due to leaders entering the company at different times and stages. To improve business efficiency, she implemented a reorganization starting with existing team members. Modifying some of the team’s positions to set them up for success made a huge difference.

“I can’t describe the difference of just changing a few people and how the whole team just—it just clicked,” Johnson says in Leading Change and Organizational Renewal. “And we started to have different conversations. And what is so interesting for me is it’s important, the people you have around the table. It’s about the capability, the character, and the team cohesion.”

Many changes will fall somewhere between adaptive and transformational on the spectrum. For this reason, managers need to understand that the change process must be tailored to the unique challenges and demands of each situation.

Why Is Organizational Change Management Important?

Organizational change is necessary for companies to succeed and grow. Change management drives the successful adoption and usage of change within the business. It allows employees to understand and commit to the shift and work effectively during it.

Without effective organizational change management, company transitions can be unpredictable and expensive in terms of both time and resources. They can also result in lower employee engagement, morale, and skill development.

A company’s reaction and adaptation to change is critical for key stakeholders like investors, suppliers, and prospective employees when deciding whether to work with or for a company. As a result, a lack of effective change management can lead to an organization’s failure.

A Manager’s Role in Organizational Change

Within an organization, every employee has a different role in assisting with change. While many staff members may complete heavily detailed work, senior-level executives with longer tenure might have different goals. Even within management, leaders and managers perform different tasks.

Leaders, for example, must be courageous by taking on risks. They need to look at the big picture and articulate high-level change to the company, explain why it’s occurring, and motivate people to support the transition. To be a successful change manager, you must be insightful and know who to put in charge of carrying out change processes.

Managers are more concentrated on making business transitions successful. They focus on implementing change by determining the discrete steps that need to happen and their sequence. Managers are also typically responsible for allocating resources, such as personnel, and determining how success is measured. Ideally, leaders will also be managers, but it’s the primary responsibility of a manager to know how to design, direct, and shape change processes.

To achieve this, you must have a wide array of management skills, such as:

• Effective communication, including actively listening to your team and colleagues
• A highly developed level of emotional intelligence
• Strong organizational skills
• Attention to detail
• Problem-solving and decision-making skills
• Delegating without micromanaging

Preparing for Organizational Change

To prepare for organizational change, it’s essential to first define the organizational change, understand why it’s critical, and garner support from your colleagues.

Then, create a roadmap that clearly articulates and measures success and explains how the business—and its employees, customers, and constituencies—will be affected.

Ensure the process plan aligns with business goals and outlines the implementation and sustainability of the organizational change. Note what challenges may arise and be flexible enough to adjust accordingly. Be sure to celebrate small victories along the way.

Change management doesn’t stop once you’ve successfully executed an organizational transition. Both during and after the process, you need to continuously assess outcomes, track performance to goals, train employees on new methodologies and business practices, and readjust goals as necessary to increase the likelihood of success.

Developing the Skills You Need to Manage Organizational Change

Many managers experience organizational change throughout their careers. By learning how to preempt and address the challenges associated with change, you can ensure you’re equipped with the skills and knowledge needed to manage it.

If you’re looking for opportunities to improve your organizational change management abilities and execute strategic transformation, consider enrolling in an online course. HBS Online offers three programs that can help you drive organizational success, including:

• Leading Change and Organizational Renewal: Gain practical frameworks, tools, and skills to anticipate and respond to external shifts, overcome barriers to change, and drive transformation.
• Management Essentials: Master four vital managerial processes: decision-making, implementation, organizational learning, and change management.
• Organizational Leadership: Elevate your leadership skills to rise to expanded responsibilities and guide your organization effectively.

If you take all three within 18 months, you can earn an advanced Certificate of Specialization and signal to employers your commitment to professional growth and lifelong learning.

Do you want to level up your leadership skills? Explore our online leadership and management courses. Not sure which one is the right fit? Download our free flowchart to find the program for you.

This post was updated on December 12, 2024. It was originally published on January 21, 2020.