Leaders Focus Too Much on Changing Policies, and Not Enough on Changing Minds
The age of globalization has changed the way business is done. Everything is much faster, everyone can have access to any information about the market and the business environment is constantly moving and changing.
In order for companies to survive in that kind of environment, they need to be ready to change and adapt to the ever-changing market conditions, which doesn’t just require the ability to create a better product or find new ways of production.
All of this is useless if the company doesn’t know how to handle that situation, how to apply that new way of production or to whom to sell that new product.
And when their changed policy fails, companies just tend to find another policy and hope it will bring something good, instead of trying not just to change policies, but also try changing minds.
In this text, we will try to explain why that is the case, what are the different types of changes company can do, what are the usual results of those changes, what should be done in order for a change to be successfully implemented and how can that affect managers and their relations with other people in the company.
TYPES OF CHANGES
We have already noted that the only way to be successful in today’s business is to be able to adapt to the constantly changing market conditions.
A study which was conducted by BCG revealed that around 85% of firms have made some changes in the past 10 years.
Another thing which is important to note here is that many of these firms tried to make changes on several fronts.
“Why is that important?” – You may ask.
Well, in business, it is crucial to survive and every change brings risk with itself. And the best way to fight a risk is to disperse it.
That is why every firm tends to make changes in multiple fields at the same time.
That way, the firm is protecting itself in case one of the options meets failure. If one fails, another might succeed.
It is also important to, not just try to invest in several changes at once, but those changes should be from a different category because sometimes the market conditions do not allow some changes to be made successfully and it that case, it is important to invest in changes of another region of the firm.
That said, there are several types of changes which could be applied in any firm. They can be divided into 2 categories:
- Overall changes which concern the entire firm;
- Changes which target specific areas of the firm and the way those areas function.
The first group includes activities like changing the business model, executive organization achieving fast financial growth.
The idea of these activities is to improve how the company as a complete entity works, by focusing on the reorganization of the most important activities in the firm.
The second group includes changes which are focused more on improving the specific sectors inside the company.
It is associated with activities like research and development, operational and commercial tasks or some support functions, like HR.
Whenever the firm wants to make some changes, they tend to do a SWOT analysis (strengths, weaknesses, opportunities, and threats) in order to find what are the most suitable areas which could be changed and improved and then decide between them and start making the transformation strategy.
THE NEW POLICY – NO POSITIVE RESULT! WHY?
Do you remember that 85 % of the firms we mentioned a bit earlier?
Would you be surprised if we told you that around 3/4 of those firms do not succeed to achieve their goals by changing their policies?
That is a hell of a number!
You may ask what were they doing wrong or why they even tried to change themselves.
Well, as we’ve already said, it is crucial for the firms to make changes nowadays, because of the fast-changing environment.
There is no discussion there; it is a must for them.
Then the right question isn’t “Why they are trying to change?”, but instead “What are they doing wrong?”.
There are multiple causes, that’s for sure.
1. Not thinking about the long-term effects
When firms want to make some changes, they usually do that because the company’s current performance is probably not so good.
But, since humans are usually not known for their patience, then the long-term strategies suffer.
The firms are mostly focused on improving their performance and in return, they usually expect almost immediate results.
Like John Maynard Keynes had said: “In the long run we are all dead”.
But we know that is not always the case. Sometimes you need to think wider and have a bigger picture in your mind.
That is exactly the problem with some of the changes made in firms.
Managers often just want to fix the problem as fast as possible because they want to see fast results.
And adding to that, their salary also depends on how well the firm performance is, so that is one of the reasons they are mostly focusing on the short run.
2. Not changing how employees work
Whenever you get a new, more modern TV or any other device, you need to learn how it works, what are the new options, what is different from your old device.
It is the same in business. Whenever you, as a firm, change policies or some operational or organizational systems and tasks, the same principle applies.
People need to learn about the new system, adapt and just then try to meet the company’s expectations.
The problem occurs because firms do not create such environments, where people can think about what they do, where they can try to be innovative, thus improving the system.
Most companies do not encourage their employees to do that, some even try to restrain innovative thinking, despite knowing that it is one of the most important ways for a firm to develop and rise.
3. All for one and one for all
We mentioned that firms often tend to pursue changes in multiple areas in order to minimize the risk of failure, which is completely fine.
But the problem can occur when they are looking at each area separately.
What is the main goal of these changes? No matter if you just make changes in one area or 6 areas, all of these changes have one same goal to achieve.
And that is to improve the company’s overall performance.
Then why would you, as a manager, look at just one or 2 aspects of the firm separately and decide for each of them separately?
What is meant to be done is to look at the firm as a complete puzzle and its areas as puzzle pieces. The puzzle cannot be completed if even one of the pieces is wrong.
The firm cannot just do an analysis of one sector it wants to change and make a prediction just for that sector and how it would influence the company’s performance.
I mean, theoretically, it could, but then it wouldn’t be a very thoughtful company.
Instead, the firm should analyze sectors in which it wants to make some changes, then do analysis on how those changes would affect not just the company as a whole, but the other sectors as well, and only then it should decide if the changes in certain sectors would be efficient and effective.
WHAT ARE THE CRUCIAL THINGS TO FOCUS ON?
We just saw why there is a high percentage of the companies who tried to change something but didn’t succeed. But there is still 1/4 of them who were successful.
Let us find what they did right and what their main focus while making those changes was.
The firms we are about to talk about didn’t just focus on changes which could benefit them in the short run.
They focused on changes which would create a long-term functioning business.
According to the research done about these companies, we can segregate the six most important things they focused on when they conducted their changes.
1. Give your employees a purpose
When managers want to make changes, they should try to tell other employees what is the nature of those changes, why it is so important to make them and how employees, who are bones and skeleton of a company can help in that process.
That way, employees would know they are a part of something important and good, so they would be more reluctant to help in any way they can.
By telling employees how they can contribute to the very important cause, managers can share the load of the entire process, which should make it much easier, because when the employees are satisfied and prepared to help their firm, they are more reluctant to accept any changes which could benefit the entire firm.
2. Change is a marathon, not a sprint
As the title says: “Change is a marathon, not a sprint”. That means that results cannot come overnight, nor can the process of conducting changes be done in a short time.
That said, a firm need to know when it’s a good time to slow down a bit and when it’s a good time to push things forward.
It is really important not to overload the employees too much, because they still have their work schedule and if they, apart from that, had more additional work, eventually their ability to help with the changing process would be lessened.
3. Adapt and learn new abilities
Whenever there are changes in any company, it often requires an adaptation and sometimes knowledge of a new set of abilities, because some of the regular processes could be changed or refined.
The firm has a task to create an environment in which their employees can adapt to that new system and learn new abilities, needed for effective functioning of the entire firm.
4. Create a flexible composition
In order for the people to adapt to changes and learn the new skills, the firm should create an environment where people have some level of autonomy, so they could learn their own ways which could make it easier for them to adapt and acquire new skills.
The firm can do that by reorganizing its structure so it is more lenient towards its employees.
In that kind of environment, employees would be able to try to solve problems on their own, learn more about their jobs and even learn more about other people’s jobs, which could be very useful if they needed to move to do another work in the firm.
5. Encourage employees to learn
In the more lenient environment mentioned in previous part, employees tend to be more encouraged to think on their own and solving their own problems and by doing that, they can learn a lot of new and useful things.
A good company should always encourage its employees to seek more knowledge.
Yes, there is always a risk that employee will leave the firm, but the potential benefits outweigh that risk because that employee can contribute much more to the firm, thus improving its performance.
Firms can do that by organizing special training for a specific individual or a group of people, where they could acquire more knowledge and some new skills.
6. The built-inteam responsible for the change
When firms make changes, they tend to change the management team at the same time.
Now, the argument about new people being able to look at the problem from a different perspective is valid, but there are a lot of things new management team from the outside wouldn’t know.
That’s why it is a good thing to build a team inside the company which would serve as a managing body when it comes to the process of making changes.
People from that body would already know what are the strengths and weaknesses the company has and what opportunities it can grab to improve its performance.
WHY IS HR SO IMPORTANT?
The human resources sector is usually considered as a sector which supports all other sectors and serves as a link between the leadership and employees.
But, when the firm starts making changes, HR has to become much more, not just because it is an important link with employees, but because it is one of the two crucial factors which contributes to the success of a process of making changes.
HR sector has to be there when some important decisions about the changes are made and when the overall transformation strategy is delivered, in order for it to be able to assess and predict what kind of influence it would have on the employees and the way they are doing their jobs.
If HR assumes the strategy would be ineffective or harmful in any way, it could present it to the board and then a better strategy could be created and delivered.
That is why it is very important for the HR sector to be connected and acquainted with everything related to the process of making changes.
THE EFFECT ON THE LEADERSHIP
When we talked about the importance of the HR during the process of making changes, we mentioned it is one of the two crucial factors which contributes to the success of the process. Well, the other crucial factor is leadership.
Managers and managing boards probably have the toughest job when it comes to this process.
They need to be aware of everything, from the minor changes in some specific sector to a major change in the organization etc.
Apart from that, the managing body needs to coordinate all activities related to the process of making changes and make sure that all six of the most important tasks we mentioned above are implemented and used, in order to guarantee success.
Being a leader is not for everyone, so it is crucial to select the right people to lead in order to make, not just the process of making changes, but other activities successful as well.
You now know why the change is so important part of every firm. You also know that every change comes with a risk and its own dangers.
Success is never guaranteed and the consequences can be lethal to the company.
You have seen that a lot of companies who conduct this process of making changes don’t succeed in their efforts, but it is not like that because change is bad.
The problems occur when companies do not conduct those changes as they are supposed to, following the important guidelines and including those six important factors we mentioned earlier.
But, without the change, the firm wouldn’t be able to survive in today’s ever-changing business environment.
Therefore, what distinguishes the firms who survive and the ones who don’t is the ability to adapt, evolve and successfully make changes when it is necessary.