Organizational Change Management

In today’s hyper-connected omnichannel environment, retailers and consumer brands must embrace organizational change management as a key tenet of not only their survival but indeed their success. New shopping habits formed by customers during the last few years challenged every retailer and CPG company to integrate new technologies and create fresh and innovative shopping experiences that also addressed new shopping behaviors resulting from the COVID-19 pandemic. Over the last decade, organizational and technological transformations permeated every function of the ecosystem, bringing change, disruption, and growth to those who leaned into the opportunities.

Much has been written and posited about organizational change and business transformation, but what does it mean to the retail and CPG industries?

In this article, Parker Avery experts take a deep dive into understanding organizational change management (OCM). We also outline modern, proven approaches to how OCM can improve a business’ transformation efforts and how retailers and CPG companies can adopt this capability for their unique needs.

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What is organizational change management (OCM)?

Traditionally, organizational change management is defined as a repeatable process with a set of supporting tools and frameworks which assess and define strategies for organizational engagement, communication, training, and change leadership. However, based on Parker Avery’s client experience, we know that tools and frameworks are not enough to support the ever-changing retail business landscape and drive transformational change. We believe every approach to change management must be based on the premise that all organizations are comprised of individuals, who react to change in varying ways.

It is important to clarify that OCM is never a stand-alone project, nor is it an option. Successful companies integrate change management as a key component of any project or initiative that impacts the organization’s people.

Therefore, Parker Avery defines OCM as all enabling activities required to achieve the desired outcomes of any transformation as it pertains to the people involved. This means defining a pragmatic change strategy, which considers the organization’s culture, communication practices, and learning and development philosophy. Our approach to organizational change management also includes assessing the impact on existing positions in the company and considering what roles and responsibilities need to be altered or redefined. We then engage in deliberate planning and execution of effective communications and comprehensive learning programs to support transformation efforts. Lastly, we build frameworks intended to support adoption so the effort can be sustained and continuously improved upon.

Why is organizational change management important?

Changes to an organization are inherently disruptive to day-to-day operations and the people involved. This tenet holds true regardless of the type of change. It may be an adaptive change, comprised of small, phased changes, or transformational change, which are more sweeping and all-encompassing in nature. Often the organization has invested substantial time and money in the initiative that is driving the change.

Without purposeful, benefit-driven communication and education, individuals often end up feeling like the change was shoved on them. This approach leads to disengagement, discouragement, lack of adoption, anxiety, and even fear. This uncertainty also impacts employee productivity and trust. Rather, communicating, listening, and gathering feedback from employees as the change is shaped and implemented will lead to higher engagement and ownership levels because the organization’s people are actively involved in the change. Prosci’s Flight/Risk model demonstrates that productivity loss and employee turnover are inevitable, but they can be neutralized with a purposeful change program. With organizational change management appropriately deployed, the investment succeeds, and a company is in a much better position to reap the intended business results, as opposed to another unsuccessful technology implementation or company initiative.

Companies that employ strong change programs are six times more likely to realize their project objectives while staying on budget and delivering on time. OCM drives the successful adoption and sustainment of change within the business by helping employees commit to the shift and work effectively during periods of change. This commitment and subsequent behaviors minimize productivity losses typically associated with change initiatives.

Further, there is little value in a new process or system that employees circumvent. Often, we witness avoidance of new behaviors or process workarounds due to misunderstanding of the future state, but this situation also results when employees do not understand how a transformation helps their personal role within the company or their professional growth. Organizational changes represent as much the individual’s growth as they do the organization’s. Benefit realization happens when a company makes it personal for their impacted employees, i.e., “Here’s what’s in it for you.”

What key activities are involved in OCM efforts?

The most successful OCM approaches employ a set of repeatable processes and tools, which can be applied to any project. Working with a company’s leadership team, The Parker Avery Group develops a people-centric change strategy tailored to a company’s environment and includes the following key elements.

  • Organizational Alignment

In this initial phase, the overall OCM strategy is tailored to a company’s unique organization. Typically, the strategy is comprised of project and change governance, stakeholder analysis, change impact assessment, and risk mitigation plans. This phase may also include change leadership and executive coaching sessions delivered through group facilitation and follow-up one-on-one sessions.

  • Communication

As the cornerstone of a change strategy, it is important to leverage both quantifiable and qualitative data points to analyze and segment the pertinent audiences, develop benefit-driven messaging, and establish meaningful feedback loops. Using these factors, communication templates, content, collateral, and a detailed communication plan are designed. The communication plan should also leverage formal and informal company events to keep the change initiative top of mind continually.

  • Learning and Development

A key tenet of our approach is that learning plans must incorporate adult-learning principles to support participants through all phases of learning, retention, and proficiency. To inform the training strategy and training curriculum, a thorough needs assessment should first be conducted. Parker Avery routinely leads clients through these activities, and when needed, we design style guides and training templates, as well as oversee the learning content development. To aid in employee adoption, we encourage company ownership and delivery of the material. As such a rigorous train-the-trainer program should be employed to support in-house facilitators.

  • Sustainment

Learning does not end after participants attend a few training sessions. It is when impacted employees use the training content and activities in real-world situations that the learning begins. Hence we encourage a disciplined post-training reinforcement plan which includes certification programs, ongoing skill assessments, and activities designed to build participants’ proficiency.

What resources should be involved in change management?

We firmly believe any retail business transformation should be driven by the business users who drive business strategies and outcomes. All such projects require a project sponsor from the business, and companies must commit ample time from resources on both the business and IT teams to participate in interviews, workshops, testing, skill-building, and other change-related activities.

Other roles related to organizational change management are project managers and technology leads.  These roles are typically tied to a system implementation effort and may not be present in all change management efforts. However, for projects that include the implementation of new technology, there must be strong working relationships between these roles to ensure any changes in the project schedule or scope are addressed relative to impacts on the organization’s people.  The change management team must be informed of project changes, risks, and issues to ensure they are appropriately incorporated into OCM activities.  Conversely, the project manager and technology leader must be informed and consulted about project-related OCM efforts to ensure they properly reflect reality.

Related Case Studies

Developing a Comprehensive Change Management Competency

Developing a Comprehensive Change Management Competency

Retail Change Management Roadmap and Communication Strategy

Retail Change Management Roadmap and Communication Strategy

Comprehensive Organizational Alignment Diagnostic

Comprehensive Organizational Alignment Diagnostic

What is the best way to approach organizational change management?

Start at the beginning

What must be understood is that your organization’s initiatives and the resulting impacts should be comprehensively defined, planned, communicated, and understood so that your employees are not only fully aware from the beginning but can also become excited about and embrace the change instead of resisting it.

This means involving anyone even remotely impacted from the very beginning through a structured and well-executed communication strategy and plan. Over 60% of change initiatives fail, due in part to the absence of organizational acceptance. Do not get caught up thinking that a few emails throughout the initiative will be “good enough” because it is not. Communicate early, often, and through multiple vehicles to the appropriate audiences. You cannot fall short on this critical organizational change management element. People react to communications in different ways, so using multiple vehicles and correct timing is key. Soliciting feedback and having an open, non-judgmental forum for questions, comments, and concerns is also vital so employees feel they have a voice and a role in the initiative.

Prepare for continual transformation

Change is not limited to drivers from within the organization. Today’s fast-paced, ever-moving world has created tremendous opportunities for companies to completely reinvent themselves and to discover new customers, new markets, new products, new fulfillment methods, and other new ways of operating. With any major initiative comes the chance to dramatically change how a business operates to become more relevant in the market and more successful. This rapidly evolving world and its transformational opportunities must be proactively addressed by understanding and embracing the essential value of organizational change.

Retail and CPG organizations should no longer operate the way they did five years ago. The COVID-19 pandemic and surrounding disruptions were certainly wake-up calls for most companies, pushing them far beyond traditional comfort levels. While discussed frequently pre-pandemic, retail and CPG companies are now starting to migrate away from their former siloed models towards much more collaborative structures. But there is still much work to do.

The increasing customer-centric movement means no longer being product-focused, and this has wide-ranging implications for marketing, operations, and merchandising departments. New supply chain models that are much more collaborative and have stronger supplier-retailer partnerships impact how distribution, warehousing, and logistics teams operate. New technologies like artificial intelligence, machine learning, and augmented reality are pushing retailers to embrace vastly different ways of operating. Many of these innovations are no longer futuristic; indeed, they are becoming table stake enablers of competitive capabilities.

All these changes to the retail and consumer goods industries mean redesigning business processes, roles, and responsibilities; clearly communicating the new processes and relationships; and implementing well-designed, ample learning programs to help companies embrace the transformation and achieve the expected benefits.

Be prepared to keep going

“Are we there yet?”

The answer will—and should always be—a resounding “No!” This is fortunate, depending on your perspective, because right around the corner is a new technology, a new competitor, a new consumer demand, or a new opportunity. These dynamic forces of change will and should instill the fact that organizational change does not stop when a project is over. There will always be the opportunity to transform. Change can entail large or small transformations, so projects need a set of repeatable processes and tools which can be applied to any initiative. As noted earlier, an organization’s capabilities are the sum of its employees’ competencies, so change competencies must be modeled, taught, and reinforced so they become second nature to the entire organization. With this approach and organizational mindset, any initiative can be sustained and improved.

Many companies bring in outside consultants who are experts in organizational change management. However, some organizations have internalized their OCM capability. There is a trend toward building in-house change management capabilities, which we wholeheartedly endorse if the organization is far enough along in its change maturity.

Change leadership skills cannot sit with a select few. Organizational change management is not a task force, a function, or even a role. Every level of management needs to be competent in leading change because employees are more likely to engage with leaders they trust. According to Gartner, “employees with high trust have 2.6 times greater capacity to absorb change” (than those with lower trust levels). As we continue to see the speed of change accelerate, change leadership must permeate throughout the organization. The implication is that even your independent contributors must possess change-oriented attributes like adaptability, resilience, and empathy.

What common mistakes or challenges occur with change management?

Many organizational change management approaches fail or stall because companies repeatedly make the same mistakes. Let’s explore the mistakes we most commonly encounter during client projects.

  • Underestimating employees’ resilience

Today, organizations simply assume their people will roll with the changes, however in recent research released by Gartner, today’s average employee can absorb half as much change before becoming fatigued as they could manage in 2019. The last few years have demonstrated the most resilient employees are not bouncing back people the way they did two or three years ago. Also, the people closest to the work have the best insight into obstacles and potential solutions. It is imperative to involve these individuals so they will become invested advocates for the initiative.

  • Underestimating the “known devil”

Often leadership assumes because “everybody hates” the existing process, system, organization structure, etc. that employees will automatically embrace the new and improved way. Be careful what you wish for – the known (while imperfect) is more palatable than the unknown especially as new ways of operating get closer to reality. The last two years have brought an onslaught of change, and no one is immune to change fatigue. Former processes are familiar and comfortable, and already overwhelmed employees must continuously summon the needed energy to step out of their comfort zone to help the company succeed, while simultaneously furthering their own personal growth.

  • Under-communicating

It is not uncommon the hear a senior leader comment, “We introduced the new approach in our last town hall, so everyone is aware of direction.” While that is a good first step, the average adult needs to hear or see new information an average of seven times before it sticks. It is important to move employees along a continuum that starts with awareness but also builds knowledge, desire, and commitment. Repetition is key so important messaging gains “stickiness.” Messages are sticking when the business users repeat key phrases or benefits of the project in day-to-day conversations. At that point, employees have moved past awareness onto commitment.

  • Letting project managers handle change management

The old concept of change management as a sibling of project management no longer works because transformations typically have no definitive start date and end date. Project management focuses on the processes and activities needed to complete a project, while organizational change focuses on the people affected by the transformation who need to continually shift mindsets and behaviors. True transformation is not a process to be managed, but a journey to be embraced. If your organization is less mature in its change curve, dedicated change resources must be allocated. For major change initiatives, Gartner’s research suggests a minimum of 15% of the project’s budget should be dedicated to change resources. The upfront investment in change management offsets the downstream costs when the project is struggling with delayed timelines and budget overruns.

  • Letting IT handle change management

Not all transformations are IT-driven. This is one of the biggest errors we see our clients make because the terminology is similar, and typically there is some level of vendor-supplied training content associated with system implementations. However, the IT change process is focused on technical change requests as opposed to changes to the organization. To ensure lasting transformation, the business needs to lead any change effort to ensure the teams are in lockstep throughout every phase. The business leaders must be visible because their teams are more likely to engage with the leaders they trust. Remember: employees with high trust in their managers have nearly three times greater capacity to absorb change than those with lower trust levels.

What are other change management factors to consider?

There are several areas to consider to successfully realize an organizational transformation. It first begins with an honest appraisal of your current state of change readiness, pinpointing the gaps, and proactively developing a strategy that offsets the gaps and leans into the strengths of the organization. Some key questions to ask:

Do we understand the organization’s ability to absorb the change?

Surveying the organization on their cognitive, emotional, and physical state to absorb a change is a wise first step. The results may guide you to:

  • Break down the initiative into smaller “chunks”
  • Level up your leadership and middle management change leadership skills
  • Engage in smaller, more intimate dialogues with employees which allow for two-way conversations
  • Re-prioritize the current initiatives in flight
  • Provide additional one-on-one coaching for all management levels

The survey results essentially help set the stage for the transformation’s success.

What has our past change management track record shown us?

Often, when executives are candid with us, we hear the following responses:

  • In past projects, companies often fall prey to the “too late, too little” syndrome. Change experts were brought in too late to the process, and there was too little change management employed to right the ship.
  • The organization lacked a structured process that ensured constant communication to the most impacted cohorts.
  • Leadership neglected to emphasize the benefits of the transformation to the individuals and instead continued to highlight what the organization stood to gain.
  • The company forgot about the middle managers. Engaged executive sponsors are critical, but middle managers’ participation is essential. Research from Harvard Business Review indicates the “messy middle” (i.e., middle management) will be the lynchpin through which teams’ resilience can be nurtured and sustained long term.

Is our executive sponsor and leadership team equipped to successfully navigate a transformation?

In the past, clients told us they overestimated their leadership team’s ability to model and coach critical change competencies, which impeded the transformation’s success. Before embarking on any change initiative, it is critical to assess each stakeholder’s change leadership competency. This exercise will allow you to:

  • Understand critical needs ahead of time, so customized facilitation methods and coaching plans can be implemented
  • Align leadership by developing a shared language and understanding of the transformation
  • Create psychological safety among your leadership team
  • Offer a safe space to trial new behaviors and iterate as needed
  • Level up your leadership team

This is not the time to assume company leaders “get it.” A company’s transformation’s success depends on the leadership team’s ability to lead change as well as teach and motivate their people to lead change.

Final word

Parker Avery’s transformational change management approach is successful because it comes from the perspective of professionals that have worked in retail and CPG for many decades. Our approach does not come from the lens of an HR practitioner or a change management generalist. We bring deep transformational change management expertise, but we also understand the nuances of roles and business processes across buying, planning, stores, and supply chain—as well as how key functions need to function and work together. We understand how to work with geographically dispersed teams and the field managers who lead them.

Perpetual dynamics in the global landscape are shifting the retail and consumer goods industries faster every day. The old notion of change management as a sibling of project management no longer works because change is not a “one and done.” That approach may have been successful years ago when changes were more discrete and episodic. However now we must also consider the best way to tap into the ability of people to adjust and adapt, so your organization lives in a state of change readiness.

Without a doubt, true, transformational organizational change is difficult and takes a lot of energy, determination, and commitment from all levels of the organization. It also takes creative and innovative leadership to identify opportunities, craft strategic initiatives, make tough decisions, move past old behaviors, and ultimately have the courage to take the leap and support a continuous improvement model that will bring meaningful and sustainable change to the organization.

Recommended Reading

Delivering Success: A Best-of-Breed Approach to Change Management

Delivering Success: A Best-of-Breed Approach to Change Management

True Business Transformation Needs Change Management

True Business Transformation Needs Change Management

The New Pace of Change Management: Accelerating the Journey for Tomorrow’s World

The New Pace of Change Management: Accelerating the Journey for Tomorrow’s World

Author

Kathi Toll, Principal

Kathi Toll
Principal, OCM Leader

The Parker Avery Group is a leading retail and consumer goods consulting firm that transforms organizations and optimizes operational execution through development of competitive strategies, business process design, deep analytics expertise, change management leadership, and implementation of solutions that enable key capabilities.

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