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Firms floundering in seas of change

For most organisations, change of one type or another is a constant companion. When it comes to managing change, however, many organisations struggle to successfully implement their strategies and fail to clearly communicate the rationale behind decisions to their employees.

Towers Watson’s recent 2013 Change and Communication ROI Survey, which canvassed 276 large and mid-size employers across North America, Europe and Asia, found that only 55 per cent of change-management initiatives meet their initial objectives. Even worse, only 25 per cent of respondents said they are able to sustain gains from their change-management initiatives over the long term.

According to Jowie Yu, Hong Kong senior consultant for rewards, talent and communication at Towers Watson, change-management initiatives can include things like the way salaries and bonuses are paid, the introduction of a new IT system, and mergers and acquisitions.

Yu says the lack of continued success with change-management initiatives can be partly attributed to companies’ incapability to prepare and train managers to be effective change leaders. “Quite often it is a case of the reasoning not being clearly communicated through the management chain,” he says.

He adds that Towers Watson research shows that only 68 per cent of senior managers say they are getting the message about the reasons behind major organisational decisions. Below the senior management level, the message dwindles further. Only 53 per cent of middle managers and 40 per cent of first-line supervisors say their management does a good job of explaining reasons behind major decisions.

“Any changes being planned or implemented need consistent, transparent, top-down engagement through the management chain to all employees,” Yu says.

He points out that across most industries, when significant changes are introduced, twice as many employees as normal start to look for new employment opportunities – even though they may not be directly affected by the changes.

While most companies recognise that managers have an important role to play in managing change – reflected by 87 per cent of respondents saying they provide training for their managers to manage change – only 22 per cent report that their training is effective. To prepare managers to be successful change leaders, Yu says employers must ensure that they focus on informing, engaging and enabling their employees.

“Even though managers often say they are not equipped with the skills to manage change, they can apply the way they have dealt with change in their personal lives and apply the principles to the workplace,” he says, adding that previous experiences can also help them to understand why people resist change.

Towers Watson research also indicates that Hong Kong employees are more critical of change initiatives than their Asia-Pacific counterparts. According to the firm’s latest employee survey, 17 per cent of Hong Kong respondents reported changes made by their employers during the last 12 months were poor or very poorly executed. This compares to 10 per cent of Asia-Pacific respondents and 16 per cent globally. Yu believes that Hong Kong’s relatively stable business environment could be a reason why employees don’t view changes as being effective in raising productivity or producing financial benefits.

Professor Paul Hempel, programme leader of the City University of Hong Kong’s (CityU) MSc in Organisational and Change Management, says that when making changes, companies often focus too much on formal procedures and the “rulebook”. “It doesn’t matter what company policies say, what really matters is the day-to-day behaviour of managers and their interaction with employees,” he says.

Hempel adds that there is significant demand for managers who can manage change coming from companies operating on the mainland. “As labour becomes more expensive, and companies move away from strategies emphasising low-cost manufacturing towards innovation and service quality, there is a need to fundamentally alter the way in which management is applied,” he says.

For the upcoming year, Hempel says that classes on organisational consulting have been added to CityU’s MSC in Organisational and Change Management programme. “We have found that many of our younger students are interested in consulting careers, or take entry-level managerial or professional positions in multinational corporations,” he says.

A strategic-change stream has also been added, which is aimed at senior managers. “Rather than offering a programme for organisational-change specialists, this stream focuses upon the implementation of organisational strategy as well as implementing changes,” Hempel says. “The programme is designed to provide the skills that these managers and executives need in order to achieve objectives.”