In the post-covid era, constant change seems to be the new normal for organizations globally. The pandemic has accelerated transformational dynamics that have made change no longer an exceptional event, but a structural and permanent condition that it is essential to learn to navigate.
How effective are the currently existing change management models still in the new context of continuous change in which we are immersed? Can we still rely on them for future organizational change management?
To answer this question, during April we launched a survey targeting HR professionals in our community who have distinguished themselves by their ability to drive change through innovative, high-impact projects.
Here is our experience and the main insights that emerged.
The current state of change management: the HRI Survey
A total of 46 responses were obtained from the survey, with a total of 40 organizations represented, mostly medium- and large-sized structured entities.
The survey consisted of two sections, aimed at investigating respectively:
- The prevailing change management model adopted by responding organizations, through the investigation of some key practices and aspects of organizational change management, such as clarity of expected change, the role of management, people engagement, and behavior measurement and reinforcement activities.
- The type of organizational context within which change management takes place.
Specifically, we distinguished three different types of organizational contexts, describing a maturation trajectory with respect to the leadership model, the prevailing decision-making style, and the ways and means by which change is managed within the organization:
- Leader Centric Context: An organizational context characterized by a strong centralization of decision-making, with a directional style based on well-defined roles and hierarchies. The leadership of the organization is strongly guided by the vision and strategic orientation of the entrepreneur or top management.
- People Centric Context: Organizational context with an established management structure in which decisions are shared among different levels of leadership. Top management has a management focus and promotes the active involvement of managers in the change process.
- Organization Centric Context: Dynamic and flexible organizational context in which choices are also directed through systemic elements (processes, tools, culture). Managers operate within a shared framework, with an active role in creating meaning and directing change.
- With respect to this last point, the survey results show a clear prevalence of organizations that declare themselves Leader Centric (more than half of the sample), while the People Centric context is indicated by about a third of respondents. As is evident, this is a snapshot fully in line with the productive fabric of our country, which is characterized by a long “tradition” of entrepreneurial organizational contexts, which still represent the prevailing model today. On the contrary, the survey responses highlight how the Organization Centric context is very uncommon in our organizational landscape (see Figure 1).
At a general level, the survey shows a clear recognition of the strategic relevance of change management, but this is accompanied by low levels of perceived effectiveness of their change practices.
Specifically, 91 percent of respondents recognize change management as having high strategic relevance, but only 40 percent perceive current models and practices to be truly effective. This gap signals a dissonance between awareness and capacity for planning action, highlighting the need for more effective models suited to the new levels of complexity in the current context of continuous change.
A further insight that emerged concerns the correlation between perceived effectiveness of change management practices, and structured measurement of results. On average, a perception of greater effectiveness of one’s change management practices is accompanied by a more structured and conscious measurement of results, based mainly on operational KPIs (e.g., participation in training and communication initiatives, No. of initiatives completed, etc.). Only a small portion among respondents (13 percent) go so far as to also measure so-called Key Behavioural Indicators, to monitor the actual adoption of the expected behaviours of change.
Finally, comparing the change management models emerging from participants’ responses with the types of organizational contexts stated (Leader, People, Organization Centric), two key points emerge:
- Leader Centric contexts tend to adopt practices and patterns of change that are consistent with their target context to a greater extent than People Centric contexts.
- However, respondents from Leader Centric contexts report a lower perception of the effectiveness of their change practices than the average respondent. In contrast, People Centric contexts report significantly higher levels of perceived effectiveness.
Such a framework of analysis can be understood by calling into question a crisis that is affecting top-down approaches to change management (Leader Centric). The latter, in the current post-pandemic situation, do not seem to be able to respond to the demands for greater active involvement of stakeholders and recipients of change, nor to keep up with the complexity of the transformations to be implemented, thus proving less and less effective in the eyes of organizations.
The evidence therefore indicates that to effectively address continuous change, even business-like organizations will necessarily have to move toward People Centric approaches, capable of activating people as the protagonists of change, valuing active involvement, co-design of solutions and attention to the individual benefits associated with change.
An HRI workshop on the future of change management
To discuss these findings and share our thoughts on the future of organizational change management, we held a sharing workshop on Wednesday, May 21, which proved to be a valuable opportunity for many of the HR participants to discuss a very strategic topic.
Consistent with some of the results that emerged from the survey, several of the participants stressed the importance of avoiding the use of predefined frameworks for change management, instead considering the type of organizational context as a key element in the choice of change model. In particular, it emerged from the discussion that certain factors, including organizational background, including any change of ownership, but also just the presence of different generations in the company, can heavily influence perceptions and ways of relating to change, forcing reflections on the model to be adopted.
Another theme reported by several voices concerns the ability to persuade business leaders of the strategic relevance of applying a structured and consistent change management model, considered by many to be one of the main challenges of the HR function related to organizational change. Also in this vein, accounts of other experiences brought out how creating the desire and drive for change sometimes represents the most important difficulty for the HR function to face, which is also considered more arduous than managing the change process itself.
Finally, again in relation to change, the issue of the culture of error and the relationship with failure was raised, which all too often leads to the search for culprits and perpetrators, instead of encouraging the search for alternative solutions, based on an approach of adaptation and continuous improvement. An attitude, the latter, that is essential according to many of the participants in order to identify the model of change management that is most functional for the context of reference.
Behavioural Economics in change management: an alternative approach to change management
Following this valuable exchange of organizational experiences on the topic of change management, we have provided an initial response to the question that animated our research, pointing out the difficulty of existing models of change management in the face of continuous change, and proposing the basic elements of an alternative approach to change management that grafts elements of Behavioural Economics into existing models.
At a general level, behavioral economics offers valuable tools for understanding how elements often overlooked by traditional models, such as bias, social dynamics and the relevant organizational context, influence people’s response to change. Introducing these tools into change management processes enables the design of change initiatives that are more closely aligned with organizational reality.
For reasons of complexity, we focused mainly on interventions based on the concept of “gentle nudge” or “nudge” during the workshop. It is worth pointing out, however, how they represent only a small part of the spectrum of tools under study in Behavioural Economics, which also includes normative and motivational methodologies and levers to influence behavior in a systemic way and progressively approach a scientific approach to change management.
Specifically, our approach starts with a consideration that is as simple as it is generative: in an effort to facilitate change, organizations currently focus exclusively on emphasizing the consequences (positive and beneficial) of such change, without bothering to create the environmental and contextual conditions to foster the effective adoption of desired behaviors.
On the contrary, grafting the conceptual tools of Behavioural Economics within change management models makes it possible to crate, through a choice architecture, precisely those contextual conditions that are useful for fostering certain types of behaviours, without necessarily going through the creation of individual or collective motivation for change.
In summary, our approach involves integrating 4 key elements into the change model used by the organization:
1.An understanding of the context of reference, through analytical tools from both the field of Behavioural Economics and traditional consulting practice
- The clear definition of the target behaviors you want to achieve from the change
- The design of choice architecture, i.e., the creation of the most appropriate situations and contexts for people to be most likely to behave according to desired patterns, facilitating their adoption over the long term.
4.The definition of Key Behavioural Indicators (what types of behaviours need to change, in what ways and when) to evaluate the effectiveness of one’s change management initiative
In other words, in the face of the obvious difficulties manifested by existing models in managing continuous change, our proposal is intended to be a radical paradigm shift in change management: instead of acting solely at the level of awareness of the need for change and the associated sense of urgency, we can act on the organizational context to facilitate the adoption of desired behaviors.
Conclusions: a powerful lever for organizational change
Our proposal triggered several valuable reflections among the workshop participants, who confirmed to us that there are important spaces for action in applying behavioral economics in organizational settings to support change management.
In particular, a number of those present emphasized the possibility offered by this approach to achieve greater timely control over the progress of the change initiative, essentially through the design of the choice architecture. In addition, its versatility of application for different types of change management processes was mentioned, including the absolutely strategically important area of digital adoption.
Ultimately, the words of the participants confirm that the time has come to rethink deeply the way we approach change. The increasing complexity of organizational contexts and the very speed of change require approaches that are more dynamic, flexible and centered on the real levers that drive human behavior. With this in mind, Integrating Behavioural Economics into change management is not just a methodological evolution, but a choice for the future: it means wisely building environments and contexts in which people are naturally inclined to adopt behaviours that are functional to change, choosing a more “human” and systemic approach that can make the difference between adherence and resistance to change, value generation and failure.
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