Change Management is Risk ManagementPosted: May 10, 2011
One of the most mis-understood concepts in business is change management. All too often “change management” is considered a “touchy-feelly” luxury concerned with making people “feel good” about change. Consequently, change management is often given low priority in terms of resources, assets, and leadership attention. In other cases, a narrow definition of change management — that it is primarily concerned with how people feel and react to a change — usually means that an incomplete set of tools and skills are brought to the table. For example, a definition of change management that is heavily weighted to the communication of change or the reaction of people to change tends to focus the tools and skills to those of traditional organizational communication tactics, communication plans, facilitation tools and resources, etc.
Instead, a definition of change management as risk management tends to get organizations thinking more broadly and effectively.
When change occurs, latent and active risks take many forms. These include:
- Changes in processes, policies, and procedures
- Changes in roles, expectations, and what is rewarded
- Changes in assumed knowledge and competencies
These changes manifest themselves in several ways:
- New or increased rates of service or product defect rates as people, equipment, or systems struggle with new processes
- Increased cycle time as things take longer to do or require re-work due to errors and confusion
- Increased costs as material, energy, people and other resources are drawn into fire-fighting, recovery and compensation of customers.
When viewed in this light, all change introduces risk. It is merely a question of the degree and nature of those risks. The elements of dealing with risk, therefore, are the essential elements of the management of change (which is to say, the management of risk). As a result, traditional tools of change management (such as stakeholder analysis) take on a new meaning, and tools not often thought of as change management tools are also added to the mix.
- Stakeholder analysis: this traditional change management tool not only addresses issues of how various actors will view and respond to a given change, but also can serve as starting-point for identifying changes in roles, responsibilities, competencies, rewards etc.
- Process mapping: many changes have direct or indirect process implications. Explicitly mapping the before and to-be process can help identify and mitigate process risks.
- FMEA (Failure Mode and Effects Analysis): when combined with tools such as process mapping, FMEA provides a format for the identification, prioritization, and mitigation of all the “stuff that can go wrong.”
By thinking of change management as the identification, characterization, prioritization, and mitigation of risks, as well the timely and effective containment and/or recovery from the failure modes that do occur, organizations are in a better position to provide the adequate resources, skill-levels, and leadership priority to change management efforts.