Friday, February 6, 2009

Slumping Economy Leads to Change Management

More than half of U.S. business leaders are responding to the economic downturn by increasing spending on change programs, according to recent research by Celerant Consulting. 

The research, which was conducted with the Economist Intelligence Unit, surveyed more than 600 senior executives in Europe and the United States and revealed that 56 percent of U.S. business leaders say their planned change programs are a direct response to the sluggish economy. The findings didn't necessarily surprise Bill Hendrickson, executive vice president at Celerant. Rather, the results echoed what he says he been hearing lately in his conversations with C-level executives. 

"It validated what I see every day with clients; there's a real nervousness about this economy in general, regardless of the industry sector,” Hendrickson says. "People are absolutely responsive to the slowdown in the economy, it has motivated business leaders to initiate and launch change programs. A slowdown always puts the question of ‘how do we respond?' on the table—and frequently, the answer becomes ‘we need to change.' ”

Much of that change is focused on achieving operation efficiencies within their organizations. Some 59 percent of senior executives identified it as the top issue on their agenda. "Operational efficiency is where they are focused, but they don't just want to cut costs this time,” Hendrickson says. "What they really want is advice around streamlining the entire operation. Executives are looking for solutions that are a little more sustainable; they don't want to always be reacting to changes in the economy.”

An indication of that, Hendrickson says, is the fact that 37 percent of U.S. leaders say they plan to increase their spending on change initiatives over the next 12 months, while just 16 percent plan to spend less. And that's good news for Celerant. 

"I was a little surprised that number was so high, but I think it speaks to how critical this is right now,” Hendrickson says. "Most of the CEOs I talk to have some idea of what they think should change, but that's about as far as it goes. We work with them to define their goals better, and analyze potential solutions.”

Typically, Celerant does a four-week analysis and then goes back to a CEO with a plan. Then, the typical change management engagement is about 40 weeks, although lately Hendrickson says Celerant can produce results for a client in as few as eight weeks.
"These days, we're implementing change more rapidly,” he says. "Many CEOs can't afford to wait. They need results up front and more quickly than they have in the past.”

What's the biggest key to a successful change management program? Effective leadership and good communication, Hendrickson says. "Winning the hearts and minds of your people and getting them motivationally engaged at all levels is so important,” he says. "Otherwise the program is doomed to fail. It may seem like common sense, but you'd be surprised how many leaders don't get that point.”