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Organizational Change Management Principles and Practices

                                                  Ronald Kirk Kandt

                      Jet Propulsion Laboratory, 4800 Oak Grove D   r.,Pasadena, CA 91 109, USA
                                             ronald. k.

       Abstract. This paper identifies essential principles and practices that help an organization to accept
       change. These practices identify how to establish, execute, monitor, and measure a change effort that
       will benefit software development organizations and their customers. In addition, the practices are
       classified into two groups corresponding to those practices that must be successful and those that should
       be successful. In some cases, specific methods are described for successfully performing a practice.

1 Introduction

Currently, the software industry has adopted many software process standards, requirements, and
guidelines, such as the CMM [I], CMMI [2], and I S 0 [3], [4]. Each of these standards advises
organizations what they should do, but they do not tell organizations how they should specifically do them.
Furthermore, they address process improvement simply as a technical problem, although the social aspect
is probably the primary factor of every change effort. Simply stated, cultural barriers can significantly
hinder a software process improvement program or prevent it from succeeding. Consequently, the primary
purpose of this paper is to identify principles and practices hndamental to changing the way an
organization manages change. An organization can use these principles and practices to train change teams
and evaluate the organization's ability to adopt change.

2 Principles

There are four key principles underlying organizational change best practices.
  Principle 1: Business processes must support business needs. Every process should increase
organizational value by supporting the business vision and supporting strategies. To do otherwise would
lower the utility of a change effort and would place it at risk because it probably would not gain the
necessary organizational support to make it successful.
   Principle 2: Stag an organization with people that can successfully support and execute the business
processes. The support of management personnel at multiple levels of an organization is critical to the
success of a change effort. This is because their positions give them the ability to motivate others to adopt
change, through various mechanisms, and lead their staff in accepting change. In addition, personnel most
directly affected by change must exhibit several traits and skills that permit them to effectively adopt
change. Such traits include intelligence and integrity, among many others.
    Principle 3: Plan change efforts to maximize retum on investment and minimize risk. Successhl change
is the direct result of planning. The planning process must identify the effects of a change, the benefits of a
change, the barriers to change, and alternatives for inhsing change within an organization.
   Principle 4: Measure process and product qual@. The measurement of process and product quality
permits an organization to determine its rate of change, which it can use to evaluate the success of a change
effort. It also permits an organization to compare the rate of actual change against its planned change, and
to allocate resources based on the gaps between actual and expected progress.
3 Practices

Twenty-four organizational change management practices support these four principles. These practices
fall into four primary groups: those that help to establish a change effort, those that affect the execution of a
change effort, those that assist the monitoring of a change effort, and several other general practices.

3.1 Establishment Practices

Six key practices support the successhl establishment of organizational change.
   Practice I : Align the goals of a change efort with organizational strategy. An organization's strategic
plan identifies the products and services it delivers and the core business and key supporting processes that
help deliver these products and services. It also identifies the organization's special competencies and how
they enhance the core and key supporting organizational processes. If the goals of the change effort do not
support the organizational strategy then the change effort will not yield significant value to the
organization. Therefore, by aligning the goals of a change effort with the business strategy of an
organization, the change effort will have a greater chance of succeeding because the change effort will
receive greater executive commitment than if the goals were not aligned. In sum, the commitment of
executive level management (see Practice 2) validates this practice.
   Practice 2: Acquire and maintain executive commitment. Great leadership is required for change to
occur, especially if the change requires significant cultural changes. Thus, corporate leaders must provide
this leadership by committing to change, communicating the corporate vision to others, and empowering
people to act consistently with the behaviors of the change. To accomplish this, the organization must
clearly define its structures, management systems, and guiding principles, policies, and procedures.
Furthermore, executives must take the time to communicate the vision to all of the organization's
employees in small groups of ten or so people. If management shows this kind of commitment, then the
employees will know that it is serious about the change.
   Contrast this to most communication efforts that occur once 6-om management to practitioners. Instead,
a continuous, iterative dialog between management and practitioners should occur. For example, most
executives generally write a one-page description of the required change and express support for it. As a
result, the message that these executives send to employees is clear - the change is worth fifleen minutes of
my time and no more. Contrast that to what the CEO of IBM did when he wanted IBM to produce personal
computers. He spent six months communicating and justifymg his vision to small focus groups within the
company [ 5 ] . Thus, executive commitment will influence the behavior of the entire organization and make
it more willing to adopt change. An auditor can identify whether executives are committed to a change
effort by verifjmg that executives continually meet with practitioners in small groups.
   Practice 3: Create and maintain a superior change team. To create a superior change team an
organization must first define a charter that identifies a task that is narrower in scope than the
organization's strategy statement and states the expectations of management in terms of goals and metrics.
These goals and their descriptions must not change during the change effort, and there should only be a few
of them. The change team must control the goals, which must be measurable and meaninghl.
   The change team must also define its purpose, the methods and procedures it will use, what is acceptable
team behavior, and how it will resolve conflict and define team roles. The change team must derive
milestones 6-om project goals that represent intermediate states that it must achieve. The change team must
control the number of milestones so that each one occurs at usehl intervals. When defining milestones, the
change team should ignore the activities that it must perform to achieve them. Later, it will specify how it
will achieve its goals.
   Creating a superior change team requires more than good planning; it also requires good people. To
enact change, change team members should be experts and stakeholders, have positions of authority,
possess good management and communication skills, and have the ability to focus on the change vision and
objectives. Change team members should also be analytical, creative, insightful, and open-minded.
   In closing, a superior change team will effectively create a plan for change, identi@processes to change,
and acquire support for the change effort kom an organization, at all levels. Unfortunately, there are no
practical verification methods for this practice, other than to subjectively decide that change team members
have the desired characteristics. Thus, the quality of such verification is highly suspect.
   Practice 4: Evaluate the willingness of the organization to change. The readiness of an organization to
change is dependent on several variables, including the strength of the corporate culture and the number of
prior change efforts. In stronger cultures, adoption of change will be more difficult. If there have been
several recent change efforts, acceptance of change will also be more difficult. If recent change efforts
have largely failed, the next change effort will be extremely challenging. Consequently, if any of these
situations exist in an organization, change will take much longer and will require much more effort on the
part of an organization, its leaders, and change team.
   To achieve a successful change, a change plan must rigorously identify the objectives and milestones of
the change, the impact of change on the workforce, the cultural climate, the barriers to change, methods for
overcoming them, the probability of overcoming them, the communications approach, and the required
training needs. If an organization does not clearly identify these organization aspects and the change
approach, the change effort will probably fail because the organization has not adequately planned how it
will introduce the change into the organization and how the organization will sustain the change. In sum,
planning for change will maximize return on investment and minimize risk.
   Verification of this practice is largely subjective. People can evaluate documents written by upper level
management, evaluate their behaviors relative to the change effort, evaluate the success of past change
efforts by interviewing software engineers employed by the organization, and evaluate the emotional
readiness of the staff towards new change efforts similar in nature to the one the organization is proposing.
   Practice 5: Change teams must be the instruments o     f change. Process owners should be sponsors of
change teams to insure their full commitment to change efforts. Senior line managers, such as division
heads, should be sponsors of change efforts and the main points of continuity. In addition, highly respected
members from various business functions of an organization should be members of change teams to
encourage cross-functional changes, which have the greatest payoff, and help establish buy-in among the
workforce. The commitment of process owners and senior line management will initiate a successfid
change effort and the full representation of the various business hnctions by members of the change team
will help sustain it. The change team, however, has the greatest chance of sustaining a change if it
periodically communicates with those affected by a change.
   Practice 6: Plan for continuous improvement. Continual process improvement will cause an
organization to produce better products more reliably and efficiently and enhance customer satisfaction and
value. To achieve continuous improvement, an organization must use good performance measures and
management must monitor them and respond to them, as necessary. In addition, auditors should verify that
the selected metrics are accurate measures of business goals.

3.2 Execution Practices

Seven key practices support the successful execution of organizational change.
    Practice 7: Articulate an extremely compelling need for change. when an organization decides it wants
to change, it should assess its current state and clearly identify its desired state. Afterwards, it should
identify the differences between the two states and estimate the difficulty and required effort of moving
fi-om the current state to the desired one. The greater the gap between the two, the more important the
identification of a compelling need. An extremely compelling need for change will encourage others to
embrace the change and increase the odds of a successfid change effort. Since compelling needs usually
must support business needs, auditors should verify that the documented needs support the business goals
and that they are compelling.
    One way to establish a compelling need is for organizational leaders to change first and then continue to
adhere to the desired behaviors. One way to make a case for a compelling need is to compare an
organization against its competitors and other best-of-breed organizations. Often, the survival of an
organization is the compelling need for change [ 5 ] .
   Practice 8: Select processes to change based on those having the greatest expected return on investment
and the lowest expected risk. There are four kinds of processes of strategic importance. The most
important type of process is an identity process, which defines the basic purpose of an organization. For
example, the identity process for Jet Propulsion Laboratory is to explore space. For a commercial software
vendor, it might be to develop a software infrastructure to support business enterprise computing. The next
most important kind of process is a priority process, which directly and significantly affects everyday
performance. For JPL, priority processes are to develop spacecraft, data analysis software, and robotic
vehicles. For a commercial software vendor, it might be to enhance its database product, develop
middleware products, and develop application solution fkameworks. Still lower in importance are
background processes, which are necessary for an organization to survive in the long term. Typical
background processes are human resource and institutional computing h c t i o n s . Finally, the least
important processes are mandated processes, which an organization must perform because of government
or other regulations. When an organization seeks to change itself, it should change those processes most
vital to it. Selecting processes based on this scheme yields the greatest value to an organization. Auditors
should verify that change teams perform riskheward trades by inspecting artifacts that document them.
   Practice 9: Change at most three processes during a change esfort. When an organization attempts to
change more than three processes, the change team often becomes confused about the goals and objectives
of the effort. If the change leaders have difficulty grasping such dramatic change, consider the problems
that the organization's personnel will have understanding it. The change team should document the
processes it proposes to change in a change plan, which auditors can later validate.
   By adopting a strategy of gradual change characterized by several minor changes, an organization's
personnel can better cope with the change effort. In addition, adoption of this practice by an organization
has the added benefit that its personnel will learn to live with change, which helps it to continually learn
and improve. Such change will maximize return on investment and minimize risk.
   Practice IO: Create a visionfor each process to be changed. The organization must develop a vision for
each process it expects to change. The process vision must describe the new capabilities of the process and
the expected performance improvements. Further, it must identify how the organization will support the
strategy, respond to customer needs, and respond to competition. The new vision must include measurable
objectives for each new process that illustrate dramatic improvement, and fact-based analysis must drive
the vision. The change team should document the vision for each change process, which auditors can later
   By creating a vision for each process undergoing change, the change team can provide the members of
an organization with a sense of how they will perform work in the future. This will lower resistance to
change by allaying fears that arise when people are uncertain about their futures. This will help to increase
return on investment and lower risk.
   Practice 11: Develop an "as-is" understanding of the processes to be changed. A change team must
understand existing processes to identify areas of improvement, to estimate how much an organization can
improve, and to measure improvement. It must obtain a detailed understanding of the processes chosen for
change so that it can communicate the required organizational and behavior changes to affected personnel.
Getting a realistic view of the "as-is" state allows the team to identify important activities, involved people,
required resource levels, and existing controls. This understanding helps the change team create a
migration plan and a performance baseline. Later, auditors can verify this practice by examining the
migration plan. Adhering to this practice increases the probability of success by lowering risk.
   Practice 12: Understand the risks and develop contingency plans. There are two types of risk involved
when changing an organization: technical and organizational. One technical risk is that an organization
will change a process and it will not work as intended. Another technical risk is that while an organization
is implementing a change process, it will disrupt ongoing business to such an extent that it may harm its
relationships with important customers. Regardless, the greatest risk to a successful change effort is a
cultural reaction against the change. One way to fight the negative reaction against change is to have the
change team thoroughly, effectively, and truthfully communicate the change effort to the members of the
organization. Retraining is one way to prepare the organization for such a change, as well as to help align
its infrastructure. Probably the best way to mitigate risk is to implement change through pilot efforts that
demonstrate success. By identifymg risks and planning to overcome them, an organization will have more
success. Lastly, auditors can examine the risk management plan of a change effort to determine whether an
organization has made contingency plans based on a sufficient understanding of the risks.
   Practice 13: Follow software assessments and project postmortems with planned process improvement
programs that eliminate or minimize noted problems. Following software assessments and project
postmortems with process improvement has two benefits. First, it reinforces management'scommitment to
improvement, which helps overall organizational commitment. Second, it helps to improve product quality
and personnel productivity, which results in higher staff morale and increased customer satisfaction. Thus,
action plans should follow software assessments and project postmortems, which auditors can later validate
and evaluate for effectiveness.

3.3 Monitoring Practices

Five key practices support the successhl monitoring of organizational change.
   Practice 14: Select and use appropriate metrics. Metrics should measure the desired characteristics of a
change effort. This often means that an organization must discard old metrics and replace them with newer
ones. If an organization continues to use old metrics that do not accurately reflect the goals of the desired
state, the organization will have difficulty transitioning to the desired state.
   The benefit of using appropriate metrics is that they will measure how the performance of an
organization compares to the desired state. Such measures, therefore, should indicate the progress of a
change effort towards the desired change goals. The change team should document the metrics in a change
plan, which auditors can later examine for appropriateness.
   Practice 15: Perform annual process assessments ana` benchmarks. Annual process assessments help to
identify areas for process improvement, whereas benchmarks help to identify where an organization stands
relative to an industry. Each assessment and benchmark provides a snapshot of an organization's
capabilities, which should be the basis for determining whether it needs to change and the value of such
change. Auditors can easily determine whether an organization performs assessments and benchmarks by
verifying the existence of reports documenting their execution.
   Practice 16: Continually measure the productivity of personnel and the quality o  f software artgacts.
Continual productivity and quality measurements help to identify organizational problems, whether they
are process, cultural, or motivational in nature. By performing these measurements, an organization can
identify where and when a failure in process or people occur, which allows an organization to analyze the
failure in a focused manner and rapidly take corrective action. Auditors can easily verify that metrics are
collected and that they measure product quality and personnel productivity.
  Practice 17: Analyze an organization's sofrware portfolio, which is the total number o
                                                                                       f applications it
owns. A portfolio analysis should include counting the number of copies of each application, examining
the status of each application in terms of defect levels, and identifymg the overall importance of each
application. The highest level of importance indicates that an application is critical to the success of the
enterprise's missions. In addition, an organization should know the role each application plays in the fbture
of the enterprise.
   By understanding the software tools that an organization uses and their degree of use, an organization
can identify those areas that have the greatest need for tool support, as well as where it can derive the
greatest benefit kom tool use or change. Such understanding should also influence the training activities of
an organization.
   Practice 18: Conduct postmortems of sofmare projects. Project postmortems are internal assessments
of a project performed by project personnel at the end of a project. Consequently, they tend to lead to the
adoption of new practices or processes that enhance product quality or personnel productivity. The purpose
of such meetings is to analyze the strengths and weaknesses of the defined software processes.
    Auditors can verify that an organization performs project postmortems by examining documentation,
such as meeting minutes. They can also verify that an organization takes action based on an assessment of
these reports.
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