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How Effective Change Management Drives the Bottom-line

How Effective Change Management Drives the Bottom-line

In an increasingly complex and volatile world, is a company’s financial performance significantly improved if it can communicate with its staff and manage change well?

A recent study of 604 organisations in many parts of the world and multiple industries, Watson Towers, a global business performance services firm found that companies which are highly effective at communication & change management are 2.5 times as likely to significantly out perform their peers that are not – regardless of industry, region or economy.

The key factors were:

  • Clarity: Conveying a consistent story to employees about where the business is headed & how they can contribute
  • Confidence: Creating greater certainty, confidence & engagement with employees
  • Community: Building a shared purpose, a sense that employees & leaders are in it together – sharing the challenges & rewards

In a nutshell: you’ll do much better if you know where you’re going, keep everyone on board, and are ready for constant change

Key findings

I’ve split the key findings into three areas:

  • Relevance & transparency
  • Social media
  • Responsibility & training

Relevance & transparency

  • Nearly two thirds of companies that communicate effectively tend to setup a unique ’employment value proposition’ with their staff. This means that the deal with each (especially key) member of staff needs to be versatile and customised.
  • Firms that are highly effective at change management are more than 8 times as likely to achieve & benefit from those changes as firms who are not. There’s a huge difference in outcomes between those that do it well and those that don’t.
  • Companies that are highly effective at change management use various media to create the sense that employees and leaders are “in it together”, and are 7 times as likely to create a sense of ownership that gets things done.

Social media

  • 69% of respondents plan to increase their use of use social media tools over the next 12 months. But only 15% have the tools in place to measure their cost effectiveness. Of those that do 63% are using social networks, and 58% are using leadership blogs.
  • Social media was found to be most cost-effective for: collaboration, sharing of new ideas, team-building, and sharing feedback with senior management.
  • More than half of companies who are most effective at change use social media already, while less than half of least effective companies do. Companies with highly effective communication are more than 1.5 times as likely to be using social media as those with low effective communication.

Responsibility & training

  • Nearly two-thirds of respondents report that managers are taking on more responsibility when it comes to communication, but only 28% of those managers are evaluated on how effective they are.
  • Overall, only 38% of participants report that their managers are effective at helping employees adapt to change.
  • Although many companies are investing in training for managers to communicate and manage change better, very few find that training to be effective. But the most highly effective companies are getting a better return on their investment in training than less effective firms.
  • Firms that manage change well incorporate the communication function within the change management structure, they are more likely to use a systematic process and dedicated staff. They also tend to involve communicators very early on the decision making process.

The best change and communication guides position their companies to keep employees engaged in the business, retain key talent, provide consistent value to customers and deliver superior financial performance to shareholders.”

Bottom-line findings

Overall the study found that:

  1. Companies that are highly effective at communication are 1.7 times as likely to be high performing than companies that are not highly effective at communication.
  2. Companies that are highly effective at both communication and change management are 2.5 times as likely to be high performing than companies that are not highly effective at either.

Lessons Learned

The key lessons learned were that firms should:

  • Manage change across divisions, departments & location.
  • Listen for results & concerns. Tell people what’s going to happen and what it means for them. Don’t patronise.
  • Setup feedback loops for two-way dialogue.
  • Define, measure & share what success means. The best firms measure objective outcomes including awareness of the change, employee retention, engagement & customer satisfaction – as well as financial measures like cost savings, revenue and customer measures like sales growth. Be honest about whether they’re being met, so course corrections can be made. Highly effective change is more than six times likely to be measuring the success of that change.
  • Encourage & equip managers to become leaders. Training is a start but it’s not enough.

Thoughts on the study

This report put some very useful questions to a wide range of organisations, although I’d like to see some data on the size of those organisations.

I found it odd that leaders and employees are treated as mutually-exclusive! In our hyper-connected economy, we all need to lead in our own ways. So, employees can be leaders, just as leaders may or may not be employees. (I’ve been leading change initiatives as an independent consultant since 2001)

Though the report did refer to both leaders and managers I would add that in the new economy the two roles need to come together. As Peter Drucker wrote of the new economy, “one does not ‘manage’ people,”.

The task is to lead people. And the goal is to make productive the specific strengths and knowledge of every individual.”

My own experience is that large organisations still do not truly value effective change management/leadership, and that the only real career path within large corporations remains within line management rather than change management. This has led in my opinion to the situation where we have far more experts in change management working as consultants rather than as employees of (non-consultancy) organisations.

I really like the idea of the customised Employee Value Proposition. But I’d extend that to the idea of the Results Only Working Environment (ROWE) where an individual is rewarded for results rather than the number of hours worked – whether the individual is an employee, a freelancer or a consultant. That’s the logic of all this.

I agree with the suitability of social media tools like Yammer, MangoApps, Chatter & Jive, if used properly. They can amplify authenticity, accessibility and transparency which are all key to building clarity, confidence & community.


As useful as social media is, there is no substitute for good old-fashioned clear vision, good measurement, and being able to read and deal with human nature. That’s ultimately why this stuff is so hard to teach.

As Charles Darwin observed, it’s not the strongest or the biggest that survive but the most well adapted. This is becoming more relevant with each passing day.

What are your thoughts on the importance to the bottom-line of communication & change management? Please leave a comment below.