1 Anabel Houben Carsten Frigge C4 Consulting GmbH Rainer Trinczek Hans J. Pongratz Technical University of Munich Success in Change Representative Survey on Success and Failure in Managing Change Management Summary
3 PREFACE 3 Dear reader: For the first time the question on how to manage change successfully was answered in a representative complete survey of all large enterprises in Germany. This management summary provides you with an overview of the most relevant results derived from this broad and unique study. All data generated was analyzed based on scientific measures in empirical social sciences. Thus, the insight resulting from this study by far exceeds common rankings of success factors or factors leading to failure. This study was enabled through the trustworthy collaboration between the Chair of Sociology at the Technical University of Munich and C4 Consulting, a consultancy specializing in the management of large-scale change. This collaboration combines the scientific insight from sociology and psychology with the encompassing practical experience in managing complex change processes. As consultants we have managed numerous change projects in large German groups over the past 10 years. Moreover, we advised the top management of international corporations from more than 30 countries in various change situations. In such projects we co-operate with our international partners from the Global Change Alliance. We were able to contribute our practical and conceptual experience when designing the study at hand. Assumptions on the right management of change vary significantly within corporations. Line management may have a critical view on what is considered common knowledge by Human Resources. The results of this study form the basis for an objective discussion on the right approach in change management. The following pages provide you with a precise overview of the most relevant results of our study. Due to the variety and thoroughness of the results we had to make a selection. Anabel Houben Managing Director C4 Consulting Carsten Frigge Managing Director C4 Consulting
4 4 KEY RESULTS Key Results The survey provides evidence on key questions: When are large-scale changes successful? What are the key reasons for failure? How important are large-scale change processes for enterprises overall? The complete survey was conducted on all German enterprises with more than 1,000 employees subject to social insurance contribution. The top management of large enterprises and leading industrial groups in Germany provided the majority of responses. More than half of the respondents work on an executive level. This means that the managers reporting on their experiences are those who are in charge of large-scale changes. The survey results call for attention: They provide clear evidence that conventional approaches for managing large-scale change are by far not sufficient to ensure success. German enterprises do not systematically minimize the risks associated with change processes, although the targeted change is often crucial for their future prosperity. Change initiatives fail over and over again. At the same time no improved approach for the successful implementation of change is developed. The survey results illustrate that managing large-scale change requires a new way of thinking! The study shows precisely which factors really need to be addressed when managing change. These factors to be considered are soft factors in particular. The necessity to adequately deal with soft factors has repeatedly been mentioned in theory. However, in practice little attention is paid to this insight. The study also proves, for the first time, that dealing with soft factors in an appropriate way significantly improves the success rate of change initiatives. Up until today, executives deny the importance of soft factors for the success of change processes. They rely exclusively on the power of factual changes. This approach is now vitiated by the top managers themselves: they show that only the simultaneous consideration of hard and soft factors is the key to successfully implementing change! An overview on the key findings: 1. When are large-scale successful? Three factors were found essential for the success of change initiatives. Conventional change approaches do not consider these factors in a systematic and holistic way. The factors are: MOTIVATION ORIENTATION CONGRUENCE
5 KEY RESULTS 5 Motivation People s motivation has the strongest influence on the success of large-scale change initiatives. This comes to no surprise. However, in practice hardly any conclusion is drawn from this insight. If people s motivation to change is low the probability of failure for the change project is high. The more eager people are to make the change happen, the higher the success rate. The study results are alarming with regard to the distribution of motivation among the employees: almost half of the employees have withdrawn from changes and the requirements change puts on them, thus tending to be hinderers of change. This group of the non-involved outweighs the group of employees actively driving the change by 100%. If you compare the distribution of motivation to its significance for successful change, it becomes evident that professional change management will have to pay a lot more attention to this matter in the future! Moreover, contrary to conventional perception communicating is an important but by no means sufficient measure to create motivation. Orientation The factor «orientation» is equally important. Orientation has so far been significantly underestimated. In upheaval situations, managers and employees alike require a clear perspective providing safety. People must be enabled to comprehend the rationale for change. They must be reached on a rational as well as an emotional level. Very few managers only assume this important leadership responsibility. The survey shows that executives inability to convey objectives and visions of the change in particular becomes an obstacle to the success of the entire change initiative. The commitment and the unity of the top-management team as well as support from the line management have clearly proven to be the key determinants of change success. The executives experience in dealing with fears and concerns of those employees affected by change are important as well. Congruence «Congruence» refers to the matching of change objectives across various areas of management. So far, little attention has been given to this aspect. The organization s success rests upon the alignment of each of the relevant components (organization, systems, communication, people, and culture). This means that for example not only processes and structures are to be aligned with the change goals but that, depending on the situation, also selection criteria for promotions or new hires, internal communications, or even the entire corporate culture need to be aligned. This is just a selective example for illustration. The usual approach of dealing with those areas of management only, that are considered to be immediately relevant, is insufficient for sustainable change success. Although this insight is evident, it is hardly considered in conventional change approaches.
6 6 KEY RESULTS Organization Structures and Processes Systems Reporting and Controlling Systems Roles and Responsibilities Management Systems IT Systems Culture Values and Norms Corporate Culture Communication People Aligning Communications Decision and Reconciliation Mechanisms Selection Criteria Incentives Selective corporate components that need to be aligned to the change initiative The study results are obvious: soft factors, which in practice are often neglected, are as important as hard factors for the success of large-scale change initiatives. Nevertheless, the hard factors are regularly in the center of the attention. Decisive project management, sufficient financial funds and human resources alone do not guarantee the success of the implementation. These components need to be supplemented by the soft factors (communication, people, culture). The relationship of hard and soft factors in a congruent system of objectives sets the framework for successful change. 2. What are the key reasons for failure? This study provides, for the first time, a representative analysis of the reasons for failure in change initiatives. A closer look reveals a key aspect: the inconsistency of change objectives. Whenever the objectives of change contradict each other the success rate drops significantly.
7 KEY RESULTS 7 The ten key reasons for the failure of large-scale change in German enterprises: Insufficient commitment of the top leadership team 61 % Unclear objectives and visions of the change process 56 % Lack of leaders competence in professionally dealing with people s fears and concerns 56 % Disunity on the top leadership level (no one-voice approach) 56 % Lack of support from the line management 52 % Incomplete or delayed information to the employees 50 % Insufficient support in coping with fears and resistance 46 % Neglect of psychological factors during project planning 43 % Insufficient human resources Lack of trust in communication between employees and management 37 % 36 % Very relevant or essential Influencing factors in order of relevance to success This underlines the importance of psychological factors. 3. How important are large-scale change processes for enterprises overall? The study results show that large-scale change processes are not only relevant in crisis scenarios. They are equally important in times of success. The survey could prove a clear interdependence between economic success and successful management of change. It has been stated repeatedly that changes significantly contribute to the success of a company. However, this study proves: the more successfully large-scale change initiatives are managed in a company, the better the economic performance of this company.
8 8 KEY RESULTS How many change initiatives are successful? The rates of success or failure in change initiatives quoted so far were based on highly selective experiences. This study, on the other hand, analyses for the first time the success rate of change initiatives in Germany based on a representative set of data. Although the rates of success differ among the enterprises surveyed, one aspect becomes evident: for the majority of German companies a fully successful change initiative is the exception: the probability for full success of change is below 20 %. More than one third of all change initiatives are considered a failure or are perceived as hardly successful! This fact poses a high entrepreneurial risk, which little attention was paid to so far. Even more important, it created little consequences in the way of dealing with change. This makes the thorough analysis of factors leading to success or failure even more important. This analysis and the development of effective approaches for change are provided by this survey.
9 PUBLISHERS PROFILE 9 C4 CONSULTING C4 Consulting GmbH was founded in 1997 as the spin-off of a large international consulting firm. The company is located in Duesseldorf. C4 Consulting specializes in combining hard and soft management factors for the entrepreneurial success of its clients. It focuses on the management of change, for example organizational realignments, restructurings, or strategic reorientations, cultural change, and post-merger integrations. C4 consultants work in small, high-caliber teams only. They closely cooperate with the client to develop and implement effective solutions. For quality assurance C4 Consulting works with experienced senior experts only. They command top-management consulting know-how as well as practical experience from line management. The majority of C4 Consulting s work is advisory to the top management of international corporations. Moreover, the consulting firm works for institutions from politics and culture, non-profit organizations as well as major medium-sized companies. C4 Consulting is a member and co-founder of the Global Change Alliance. The members of the Global Change Alliance collaborate on joint principles and approaches. They are located in various countries and are specializing in change management advisory to the top leadership team. The Global Change Alliance is currently represented in China, France, Germany, Great Britain, and the US. (www.globalchangealliance.com) C4 Consulting cooperates with the Chair of Sociology at the Technical University of Munich. This study was enabled through this research cooperation.
10 10 PUBLISHERS PROFILE CHAIR OF SOCIOLOGY TECHNICAL UNIVERSITY OF MUNICH The Chair of Sociology is part of the Department of Economics and Business Administration at the Technical University of Munich (www.wi.tum.de). The department is one of the leading institutions for economics and business administration in Germany (2005 ranking of the CHE Zentrum für Hochschulentwicklung). The department focuses on technology and management in research and education. Innovations result mainly from the interfaces of the academic disciplines. This is where new chances and consequently potential for development and success for enterprises and society develop. The team of the chair conducts its research at the interface of economic and social sciences. A particular focus is on human resources development and organizational development. Innovation is no longer a merely technical process. It is a complex social process which is determined by economic interests, social and entrepreneurial interdependencies, cultural norms, values, and additionally so called soft factors. The chair s research focuses on the influence of soft factors on innovation in enterprises as well as the interrelation of economic and social expertise. Over the past years the Chair of Sociology has conducted empirical research on work schedule models, innovative qualification initiatives, and recent developments in co-determination. Research is conducted in close cooperation with enterprises and institutions of employee representation. An additional focus of the chair is on management sociology, reorganization, and socio-scientific rationalization and technology research. The chair conducts the module Organizational Communication and Change as part of the Executive MBA Communication and Leadership at the Department for Economics and Business Administration (www.communicate-programm.de).
11 11 C4 Consulting GmbH Koenigsallee Duesseldorf Germany Phone: +49 (0) Fax: +49 (0) Content: Carsten Frigge Anabel Houben Chair of Sociology Technical University of Munich Lothstraße Munich Germany Phone: +49 (0) Content: Prof. Dr. Rainer Trinczek Dr. habil. Hans Pongratz C4 Consulting GmbH All rights reserved. Distribution: Price: 950,- EUR plus mailing expenses
In-Depth Report 2014 Requirements Management a Core Competency for Project And Program Success INTRODUCTION When counting the number of causes of project failure, you need more than one hand. But the leading
CSR impact Practitioners Handbook From CSR to CIAM: Corporate Impact Assessment and Management An Illustrative Guide for Executives, Managers and Enterprise Stakeholders Seeking to Enhance the Positive
ACE PARTNERS IN CZECH REPUBLIC, FRANCE, GERMANY, ITALY, POLAND, SPAIN, SWEDEN, SWITZERLAND, THE NETHERLANDS AND UNITED KINGDOM AUTONOMOUS TEAMS WATCH OUR MOVIE 2015 ABOUT ACE ACE Allied Consultants Europe
ADVISORY The Business Codes of the Fortune Global 200 What the largest companies in the world say and do 2 The Business Codes of the Fortune Global 200 The Business Codes of the Fortune Global 200 3 Table
Benchmarking VoIP Performance Management March 2008 Page 2 Executive Summary Aberdeen surveyed 159 organizations to identify best practices for managing Voice over Internet Protocol (VoIP). This report
ADVISORY SERVICES Transforming Internal Audit: A Model from Data Analytics to Assurance kpmg.com Contents Executive summary 1 Making the journey 2 The value of identifying maturity levels 4 Internal audit
All available Global Online MBA routes have a set of core modules required to be completed in order to achieve an MBA. Those modules are: Management and Organizational Change (P.4) Leading Strategic Decision
Consulting Performance Improvement European Corporate Performance Management Survey How do you manage your business? pwc Consulting Performance Improvement European Corporate Performance Management Survey
2014-2015 MASTER Master of Science in Business and Management (MBM) Master of Business Administration (MBA) International Business School From my own experience... I am a fourth year s student of International
Working Papers Firms and Region No. R2/2012 Henning Kroll Esther Schricke Thomas Stahlecker Developing new roles for higher education institutions in structurally-fragmented regional innovation systems
CONTRIBUTIONS AND BARRIERS TO KNOWLEDGE TRANSFER The experience of returning experts Katie Kuschminder, Georgina Sturge and Nora Ragab Maastricht Graduate School of Governance CIM Paper Series No. 7 November
The International Journal of Digital Accounting Research Vol. 7, N. 13-14, 2007, pp. 71-120 ISSN: 1577-8517 Exploring Information Technology Governance (ITG) in Developing Countries: An Empirical Study
Compliance in motion A closer look at the Corporate Sector Deloitte Risk Services March 2015 2 Contents Preface 5 Management summary 6 The compliance culture 7 Compliance priorities for the next five years
Local Government Information Technology Capacity: An Exploratory Theory Hyun Joon Kim Research Associate, Center for Technology and Information Policy, Maxwell School of Citizenship and Public Affairs,
Organizational Dynamics, Vol. 30, No. 2, pp. 100 120, 2001 ISSN 0090-2616/01/$ see frontmatter 2001 Elsevier Science, Inc. PII S0090-2616(01)00046-8 www.organizational-dynamics.com Knowing What We Know:
Research report January 2010 CREATING AN ENGAGED WORKFORCE CREATING AN ENGAGED WORKFORCE FINDINGS FROM THE KINGSTON EMPLOYEE ENGAGEMENT CONSORTIUM PROJECT This report has been written by: Kerstin Alfes,
MINISTRY OF EDUCATION & TRAINING VIETNAM INSTITUITION OF SCIENCE & EDUCATION ----------------------o0o-------------------------- LE THANH TAM SCIENTIFIC BASIS ON MANAGING UNIVERSITIES UNDER THE MINISTRY
Climate Surveys: Useful Tools to Help Colleges and Universities in Their Efforts to Reduce and Prevent Sexual Assault Why are we releasing information about climate surveys? Sexual assault is a significant
Please quote as: Ebel, P.; Bretschneider, U. & Leimeister, J.-M. (Hrsg.) (2013): The Lead User Method for SME - a Guidebook for Practitioners and Facilitators. Erscheinungsjahr/Year: 2013. Verlag/Publisher:
Human Capital Management Trends 2013 It s a Brave New World January 2013 Mollie Lombardi and Madeline Laurano Page 2 Executive Summary Human capital management is a key business initiative. Without insight
european cultural foundation www.eurocult.org Why we need European cultural policies by Nina Obuljen the impact of EU enlargement on cultural policies in transition countries Why we need European cultural
Build a Ladder to the Stars Report from the University of Oslo s Strategic Advisory Board 2012 14 Contents 04 Preamble: The International Strategic Advisory Board (SAB) 11 Part 3: Profile Dimension Analysis
THE CHILD AT THE CENTRE SELF-EVALUATION IN THE EARLY YEARS THE CHILD AT THE CENTRE SELF-EVALUATION IN THE EARLY YEARS Crown copyright 2007 ISBN: 978-0-7053-1109-0 HM Inspectorate of Education Denholm House
TRANSFORMATION IN HUMAN RESOURCES MANAGEMENT THE CASE STUDY OF NOKIA SIEMENS NETWORKS Master Thesis Business Administrations Track: International Management School of Management and Governance University
Evaluation and Program Planning 26 (2003) 185 192 www.elsevier.com/locate/evalprogplan E-learning policies, practices and challenges in two Norwegian organizations Anne Welle-Strand*, Taran Thune Department
Central European Corporate R&D Report 2015 Partner s Foreword Investments in research and development are an indisputable driving force behind long-term economic growth. Empirical analyses show that when