Despite a lacklustre global economy, companies are increasing their spending on change programmes.

An Economist Intelligence Unit survey , sponsored by Celerant Consulting, found that business leaders are responding to the economic slowdown by launching more change programmes and spending more money on them. Although change programmes in the last year have had cost reduction as their primary goal, our survey found that, over the next year, the goal will be organisational flexibility for operational efficiency - 57 percent of companies surveyed put this at the top of their agenda.

In spite of this enthusiasm for change, few companies are consistently successful at it. Although change management, as a business discipline, has been around since the 1940s, most companies still struggle to put theory into practice. Of the 607 senior executives polled for this survey, 58 percent say that, over the past five years, half or fewer of their change initiatives have been successful. The US fares a lot worse with 75 percent of respondents stating that half or fewer of their change initiatives have been successful.

The element of change management that companies have the most difficulty with is “winning hearts and minds” (51percent). This was followed, in second place, by “lack of management buy-in” (31percent).

“The tricky element in change management is always people,” says Robin Bew, Editorial Director at the Economist Intelligence Unit. ”Too often, managers think if they get the process and the technology right, the people will follow. Our survey shows that this is rarely the case. Successful agents of change are those who understand the art of persuasion.”

When change management initiatives fail, companies’ blame “lack of clearly defined or achievable milestones” (24 percent). Next on the blame-list is “lack of commitment by senior management” and “poor communication” (both with 19 percent). In other words, the ingredients that are required to convince people of the case for change.

Other key findings of the report include:

• Successful change management requires a charismatic leader, not a box-ticker. The best leaders of change are not ones who dictate their plans, but those who bring vision; inspire people with a sense of urgency; and then help them to bring their own creativity to the project.
• Culture may seem a smaller challenge in its own right, but it complicates many of the others. The EIU survey panel ranked cultural issues a distant fifth in terms of difficulties in implementing change successfully. However, interviews with experts indicate that cultural matters can significantly complicate the bigger challenges, such as winning people over.
• Money is rarely the reason for successful or failed change initiatives.
• On average, companies spend just 0.1 percent of annual revenues on change programmes and only 8 percent consider a lack of funding an important reason for their failure in the last year.  

3 June 2008

[Copyright Expatica 2008]