Organizational Transformation: 10 Steps for Success

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Organizational transformation is on the minds of many business leaders. Smart managers are always looking for opportunities to increase their organizational effectiveness and strengthen their company culture. This effort is especially critical in times of change like we have experienced as a result of the pandemic. It’s also where organizational transformation becomes the factor for longevity.

At the juncture between organizational stagnation and sustainability, organizational transformation strategies can provide continuity and opportunity to your business.

Any type of transformation affects, first and foremost, your employees. That’s why HR has an imperative role in the process.

Find out how exactly HR can contribute to the organizational transformation success!

Contents
What is organizational transformation?
Why should organizational transformation be a priority?
Organizational transformation process
Role of corporate leaders and HR in the organizational transformation process

What is organizational transformation?

What does organizational transformation mean in a business context? ORG defines it well: “Organizational Transformation is a strategic method of getting your organization from where you are now to where you will need to be in the future.” In many cases, this transformation is required to address a problem or change that’s long overdue.

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Organizational transformation aligns with business goals and can aim at multiple things such as:

  • Changing organizational processes and workflows to make them more agile, adaptable, and effective
  • Transforming the company culture
  • Digital transformation

For example, digital transformation includes keeping up with and being at the forefront of technological developments. Implementing and using the right technology can offer any organization a competitive advantage by reducing the time and costs of performing tasks.

Transforming an organization requires the ability to be agile and responsive to industry, tech, and workforce trends and pivot when necessary. The organizational culture must be adaptable to get everyone from point-A to point-B while embracing core values that make it unique.

For example, an organization may find that it has developed a reputation for high employee turnover due to unmanageable work demands. Instead of allowing this pattern to continue, the leadership team and human resources team decide to initiate an organizational transformation process that includes a complete overhaul of all job roles and new technology to streamline tasks. The combined effort transforms the business into a more effective and productive place where employees thrive.

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Other triggers for organizational transformation include loss of an important client, or declining profits.

Why should organizational transformation be a priority?

Organizational transformation is critical for a number of reasons. It’s inextricably tied to business outcomes and thus, to organizational success.

As every business goes through cycles of growth and change, this is an opportunity to analyze how the organization is doing and prepare a strategic plan for its future.

A few key areas that organizational transformation impacts include: 

Performance improvement

How well is your company performing with outdated hierarchies and processes? This is often the area of business that needs transformation the most so that the company can live up to its potential. According to research from Deloitte, “53% of leaders say that switching to team-based working has brought about significant performance improvement.”

Company culture

Is your company culture an accurate reflection of the experience that your employees, customers, vendors, and the community have? If not, what can you do to transform your culture and align it with your core company values?

A cultural transformation can also help solve problem areas like high employee turnover, low engagement, and dwindling quality of work — areas that human resources can identify through tracking relevant HR metrics.

Market impact

An organization that wants to thrive even in uncertain times needs to focus on making a transformative impact on the market it serves. This can include setting the bar high in terms of how the company embraces its social responsibility and develops employees to take on a better future. 

Competitive advantage

Every organization can look at transformation as contributing towards its competitive advantage. Companies with strong brands, effective employee management, and ethical ways of doing things will stand out in their industry. Regular evaluations can provide insight into what needs to change and when. 

Organizational change management

How is change managed in your organization? Human resources is in a unique position to guide others through organizational changes because it comes with the territory. Use this knowledge to help employees overcome their resistance to change as you change the organizational design to a new organizational model. 

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Organizational transformation process

What does organizational transformation require to be successful?

The classic Change Management Model introduced by German-American psychologist Kurt Lewin outlines three stages of organizational transformation that support success. The stages are outlined below: 

Stage 1 – Unfreezing

In this stage, leadership creates the perception that a change is needed in order to improve the organization.

This occurs in two ways: (1) Recognising the need for change, and (2) Encouraging new behaviors to replace old ways of doing things.

At this point, human resources is pivotal for identifying and sharing data indicators of transformational need. For example, low employee satisfaction and high turnover might signify a need for culture transformation.

When supported by management, this drives change based on profitability and productivity. 

Stage 2 – Changing

At this long stage, the organization moves past any objections towards transformation. New desired behaviors replace old undesired behaviors.

Hierarchies are broken down and organizations often undergo leadership changes and departmental shifts. A specific change action takes place with role models, experts, and mentors present to show employees the way. Training for new ideas and technology often happens in this stage, encouraging everyone to learn new concepts and step into the future.

Human resources has a significant role in maintaining clarity, communicating change, and managing any resistance. 

Stage 3 – Refreezing 

Once the changes have stabilized and are accepted as the norm, the organizational transformation process is complete. All leaders and employees integrate changes in behavior with a new set of values and expectations.

Managers and human resources work together to coach employees if they have any difficulties. The future looks bright for the new organization. 

A simplified organzational transformation model based on Lewis’s change management model moves organizations from the current state through transformation to the desired future state.

Role of corporate leaders and HR in the organizational transformation process

How can leaders and human resource professionals support the process of organizational transformation? Research indicates that leaders and (senior) HR have a major role to play in creating lasting change. 80% of HR professionals believe that successful organizational change involves top or senior management.

Human resource professionals, as well as other organizational leaders, help promote a positive transformation.

Here’s how:

1. Having a clear vision and goals

It’s essential to understand the reasons for the transformation, what you want it to lead to and how it will impact the business outcomes, and when you will consider it successful. According to BCG, “the rate of transformation success rises by more than 80% if a clear purpose is defined.”

Formulating and sharing a comprehensible purpose, vision, and goals helps the employees and leaders understand the “why” of the transformation. It also makes it easier to get them to support the transformation.

For example, ConsumerCo, an international brand, assigned new leadership to develop and communicate a new vision and goals for the company, leading to successful stock growth.

2. Holistic management of change

Transformation doesn’t happen in a silo. Instead, to be successful, it must be a holistic approach that addresses multiple areas of the business.

For example, if your goal is to transform your processes and make them more agile and collaborative, you need to consider how it will impact your organizational structure, the technology you’re using, and if there is a potential talent gap arising.

Genuity used this method when going through organizational change; honoring the work done, the reason why the work is done, and its meaning for every individual. 

3. Creating a strategy and a plan

Prepare the steps you need to take to transform the organization. Start with the end-results in mind, and work back through all areas of the organization. A plan with a timeline makes the transformation process more tangible and helps keep the focus.

Let’s say you want to stop using outdated workplace tools and switch to more modern, efficient platforms to improve your employee experience, performance, and productivity by X%. Your timelined plan would include preliminary research of tools, submitting RFPs, having demos with vendors, selecting and buying the right tool, implementing it, and onboarding your employees to use it.

4. Prioritization

It’s impossible to change everything at once. Instead, prioritize the matters that you want to tackle first, for example, implementing three new workplace tools one after another, not all of them at once.

It is also possible that the transformation plan will change in the process. In that case, reevaluate things, modify the plan, and don’t be afraid to reprioritize.

5. Involving leadership and stakeholders

Engaging the key stakeholders in the process is essential for success. Identify who these are at the very beginning of the process and reiterate why the transformation is taking place and what their role in it is. After all, “(e)ffectively defining roles and responsibilities can result in a 70% increase in transformation success.”

6. Communicating the benefits of the transformation

Be transparent with the change process. Not only to the key stakeholders but across the organization. It will be easier to overcome any resistance that comes with the change.

Develop a written communication plan and make sure it addresses all concerns, including what the new business will look like. Make sure that the communication is two-way, a dialogue, and provide employees with opportunities to ask questions and share their concerns. For example, you can organize a town hall meeting or even short 1-on-1s.

7. Consistent leadership alignment

Full agreement with all executives on the purpose and scope of change to happen is crucial. If disagreement happens, get it out on the table, work it through, and modify the plan as needed. Just don’t wait until after the change has happened. 

8. Being employee-centric in the transformation process

Employees are at the center of your organization. Throughout the transformation process, focus on their needs and keep them informed on the progress. This can also mean stripping away old ineffective hierarchies that get in the way of progress and reorganizing teams, much like Accenture did with one of their clients.

Being employee-centric throughout organizational transformation and beyond will help you get employee buy-in and increase the probability of success.

9. Measuring progress

It will help you understand how much work you’ve already done, what is still ahead of you, and if you need to pivot.

Use data, gather feedback from employees and customers, and keep an eye on how this lasting change is working. The metrics you use to measure your progress depend on your goals.

If you’re working on changing your workplace tools from our example above, you can measure software adoption in a specific timeframe, as well as changes in employee experience, performance, and productivity.

10. Creating a high-performance culture

In the case of apparel company VF, their primary goal was to transform the market by developing a high-performance management team. More than 200 managers participated in training, which increased the performance of every brand and region. This is part of their high-performance culture now.

Over to you

If done right, organizational transformation leads to better performance and improved company culture. However, the organizational transformation process can be long and complex. That’s why businesses need to break it down into smaller increments, set goals, and have a clear vision and strategy to succeed while also focusing on their employees.

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