Causes of Change Management Failure

According to a recent survey of more than 1,500 executives who had undertaken a significant change effort in the past five years, only 37% felt that the implementation was successful.

While it pays to understand the change management models and theories that contribute to successful change management, it’s equally important to know where change management failure can occur. What is change management? This refers to the actions required to manage the “people side” of change. It’s about helping your workforce embrace new technology and business processes.

Ultimately, many factors determine the course of a transformative business change – these range from executive buy-in and support to change initiative prioritization. Today, we’re taking a look at a few common reasons why change initiatives fail to transition employees or ensure the adoption of new processes and technology. Understanding these familiar pitfalls can help you avoid the same wrong turns.

The Challenges of Creating and Executing a Change Management Plan

A change management plan defines all the activities involved in managing and controlling organizational change. It also establishes corresponding timelines and resources.

Any time a sweeping change is proposed within an organization, there is an impetus to begin the project right away. This is because the change is typically catalyzed by a time-sensitive pain point, such as an outdated legacy system that’s slowing down workplace performance. As such, executives may be wary of taking too much time to develop an organizational change management plan.

In addition to feeling rushed, executives face many other challenges when developing a change management plan:

• Managing inputs from multiple teams
• Balancing multiple changes
• Differentiating needs according to site
• Understanding the change management process
• Gaining appropriate leadership approvals

These challenges are especially prevalent when the change is associated with new technology, such as enterprise resource planning (ERP) software. An ERP change management plan includes many aspects that executives may overlook.

6 Causes of Change Management Failure

Research shows that one in 10 executives admits to being involved in a transformation that was either “completely” or “mostly” unsuccessful. Let’s take a look at a few of the top reasons why change management efforts fail:

1. Not Understanding All of the Key Components

Before you can create an effective change management plan, it’s critical to understand all the components that should be included. Commonly overlooked components include coaching plans, feedback loops, resistance management and focus groups.

Many companies start with a bare-bones change management plan only to realize that a more robust strategy is necessary. By this time, however, they have already obtained executive approval, and they must go back and ask for additional time, money and resources.

It’s common to underplay the magnitude of the change. Rather than guessing or keeping mental notes, we recommend using a concrete process to crunch the numbers and learn the facts. This way, you’ll be better positioned to present accurate ERP budget and timeline estimates to your C-suite the first time.

As you work through these estimates, it’s essential to understand that many ERP vendors and software consultants don’t provide comprehensive change management plans. Instead, they may provide a basic framework and expect you to fill in the gaps and provide the necessary resources.

2. Not Understanding the Importance of Change Management

Change management efforts can also fail when executives are unable to see the importance of change management and only approve a very minimal approach.

“Can’t you just install the new software, conduct one training session and hope for the best?” they ask.

Wouldn’t this be nice? Unfortunately, numerous ERP failures across industries and company sizes have revealed the shortcomings of this approach. Even companies that have implemented a top ERP system have experienced failure when they neglected the human aspect of change.

3. Lack of Strategic Alignment

Before implementing a new ERP system, it’s important to clearly define an enterprise strategy so you can determine how ERP software fits into the picture and what level of change management is necessary to achieve your goals.

If everyone is aligned around business goals, then they are more likely to be aligned regarding what components to include in a change management plan. In other words, when your team agrees on the scope, scale and significance of the project, your change management efforts will result in measurable business benefits.

When hiring an ERP consulting firm, be sure to evaluate their methodology to determine if they provide a top-down approach to business transformation. While many ERP implementation companies only offer a tactical approach, Panorama provides both options to meet a variety of client needs.

4. Lack of Executive Buy-in

We’ve talked about how executives may be indifferent toward the importance of change management, but even worse than this is indifference toward the project itself. While executives may sign off on the project, they are not fully supportive of it and are minimally involved in strategic project decisions.

Unless your C-suite is entirely behind the project itself, your change management efforts will fail. This is because employees emulate executives’ attitudes and actions.

So, how do you gain the level of executive buy-in that leads to employee buy-in? Here are a few tips:

• Clearly describe the need for the change
• Articulate the results expected
• Explain the costs and consequences of applying the change too late
• Demonstrate the relationship between the proposed change and project benefits

Ultimately, this is one of the most substantial steps forward you can take for your project, and it all hinges on effective and timely communication.

5. Not Communicating with All Affected Employees

When implementing any new processes or technology, it’s essential to identify the full breadth of employees it will affect. Often, this goes deeper than upper-level managers.

For example, if you’ve conducted business process reengineering, you will likely have many change impacts to employees across the organization. Fortunately, a robust process reengineering framework enables you to map these impacts with clarity and detail.

Once you’ve assessed change impacts, we recommend developing a targeted communication plan and developing customized ERP training that accounts for the unique change impacts to each role. Employees should feel equipped and empowered with the knowledge they need to confidently embrace the new normal.

6. Cultural Misalignment

Sometimes, a change doesn’t fail because of a lack of buy-in or strategy. Instead, it doesn’t gain any steam because it’s simply the wrong fit for the company culture.

When you allow culture and change to fall out of alignment, your company’s entire foundation could be in jeopardy. Not only could you confuse and disorient employees, but your public image could take a hit, along with your turnover rate.

Before starting an ERP project or business transformation, make sure it corresponds with the brand image you’ve projected and the in-house culture you’ve cultivated. If it doesn’t correspond, you have two choices: reconsider your project or change your organizational culture.

Change Management Failure Doesn’t Happen Overnight

When you know how change management is supposed to work, it’s easier to spot any potential failure points. However, it can be challenging to see these when you’re the sole person driving.

Looking for support as you begin developing your change management strategy? We can provide an extra set of eyes or help you develop a plan from the ground up. Our organizational change management consultants can work closely with your team to ensure your employees have the tools and information they need to enable ERP benefits realization. Request a free consultation below to learn about change management and other ERP implementation best practices.