Change Management and Digital Transformation
The Role of Human Resources Management
The field of Human resources management (HRM) was well recognized in the mid-1980s in the UK and USA. The subject has been under scientific research for almost 3 decades, and the significance of managing human resources in an organization is theoretically well established in the present literature.
In a successful organization, HRM is considered the backbone of the business, it is the healthy spinal cord of the organization. HRM is a scientific discipline including strategic methodologies to ensure efficient management of people in an organization aiming to add value, gain a competitive advantage, and meet long term business objectives. Nevertheless, the scientific approaches and methodologies adopted by HRM practitioners are believed to be not fully adequate in meeting ultimate business objectives and addressing the existing gaps in the process.
Looking at recent events, the impact of Covid-19 pandemic has introduced alternative working measures across organizations all over the world. The massive business transformation and the shift towards digital working methods have raised several challenges to the HR departments in organizations, mainly in dealing with change and resistance against introduced initiatives.
In a further research conducted by PWC and WFPMA, it was found that 48% of worldwide organizations struggle with managing change and claimed change management as their main challenge.
The Change Management Gap
Change management is an essential part of any organization in all sectors, all sizes, and is included in all aspects of projects. The process of managing change is often correlated to dealing with the resistance towards new initiatives. It is defined as the approach taken to shift the business operations from one state to another. Change enables organizations to adopt new behaviors and get familiar to new trends. However, resisting change is an ongoing challenge and leads to failure in meeting business objectives and losing the competitive advantage.
The gap between proposing the change and accepting it is significant, and organizations are continuously under the pressure of searching for solutions to close this gap to achieve organizational success. Change management is a focal point for managing human resources, therefore, it is essential to propose new scientific approaches aiming to bridge the change management gap, the gap that is particularly associated with the success or failure of the organization.
The Effect of Digital Transformation:
In today’s world, business transformation and technological advancements are accelerating exponentially, while organizations are absorbing such advancements and changes in a sub-linear manner. Therefore, there is a significant gap between the new business trends and the current change management methodologies adopted in organizations.
The rapid changes in business and the introduction of new trends have made businesses around the world in red ocean, hence adapting to the current business transformation is essential for organizations to survive competition and to remain proactive to new market trends. The rapid transformation has introduced the concept of “New Normal”. According to McKinsey & Company, international companies have quadrupled the speed of digital transformation initiatives due to the current pandemic. So, initiatives planned for 2025 are taking place in 2021. Therefore, the new normal is a continuous change, and the business transformation is here to stay.
Despite the fact that change management is presented as a mature discipline, more than 50% of organizations around the world fail to meet business objectives through an efficient change management approach. 59% of organizational change initiatives failed to meet their objectives. Organizations with a successful change management initiative are 6 times more likely to meet business objectives than organizations with no or poor change management. Successful organizations typically allocate 23% of project budget to ensure an excellent implementation of change management.
Managing change in organizations is 2 times more likely to fail due to employee resistance rather than operational issues. Despite the fact that employee’s resistance to change is considered normal and reasonable, practitioners argue that the ability to overcome resistance is crucial for daily operations, times of crisis, and achieving long term objectives.
Effective communication and transformational leadership are key factors contributing towards the successful implementation of change management. Communicating change initiatives between management and employees as well as people involvement are essential to address resistance against new initiatives, and leaders are required to inspire a transformational mindset to adopt new practices and achieve business objectives.