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8 Reasons Why Change Management Needs to Improve in Manufacturing

July 30, 2019 | By Cheryl Hammer

In the manufacturing industry, executives are faced with the challenge of improving business operations, increasing profitability, and developing a competitive edge in an increasingly tight market — all while balancing customer, employee, and shareholder demands.

 

Fifty years ago, an executive could develop and think about a strategy for a couple of weeks. Those days are gone. Globalization, the ongoing advancement in technology, and the explosion of data have created an environment where organizations must adapt to rapid change. An organization that doesn’t will go extinct losing market share due to inefficient operations and the failure to see new, innovative opportunities.

However, rolling out change is not easy. The most significant barrier to change in an organization is also one of its best assets — its employees.

Without employee support, efforts for change will fail. That’s because employees fear change. They are comfortable with how the organization runs and will resist change every step of the way unless an effective strategy is implemented to put corporate needs above their own.

Getting employees on board and creating an organization ready for change whenever needed is a process known change management. The goal of change management is to create an organization that is dynamic and flexible to adapt to the market and develop a competitive advantage. And here are eights reasons you you should've wait to start improving:

  1. Change management is more essential now than ever
  2. Organizations Are Pressured to Change
  3. Change Drives the Competitive Advantage
  4. Change Management Keeps Operations Running Smoothly
  5. Employees Resist Corporate Change
  6. Change Creates a Sense of Lost Control
  7. Shifting Focus to the Future
  8. The Fear of Uncertainty

#1: Change Management is Essential. Now More than Ever.

In previous decades, the marketplace was static, meaning an organization was only forced to change every five to ten years. Companies would have corporate meetings to strategize three-year or even five-year plans.

However, organizations adopting that strategy today will quickly be left behind. Companies, not only supply chain-driven organizations, are dying younger because they are failing to adapt to increasing complexity.

In 1965, corporations in the S&P 500 Index had an average lifespan of 33 years.

By 2026, the company lifespan is projected to be 14 years.¹

The increasing complexity of business forces organizations to roll out new strategies more frequently. Without an effective strategy for pursuing change management, companies will find themselves being forced out of the market.

#2: Organizations Are Pressured to Change

It doesn’t matter if change is a recognized priority — the market gives organizations no choice. Organizations cannot afford the luxury of complacency and must continue to look for ways to become more efficient and profitable.

Technological innovations have increased the pace and impact of change, making business models and products quickly become obsolete, and driving the need to adapt more rapidly. Businesses that fail to keep pace with change will find themselves in similar situations as Borders bookstores. Defunct as of 2017, the pioneer of the mega-bookstore chain didn’t give in to the rise of eBook sales, unlike its brick-and-mortar competitor Barnes and Noble.²

#3: Change Drives the Competitive Advantage

Too many companies continue to struggle to create effective change in an organization, giving the organization that can adapt faster a significant competitive advantage. Companies have gained and lost substantial market share because of the ability, or lack thereof, to change.

One company in the manufacturing industry that has managed to lead change effectively is General Mills. The company created two new market positions that have allowed them to see an increase in market share and stock price in an overall decreasing market — the cereal market. In the early 2000s, General Mills found themselves losing market share as consumers transitioned to healthy cereal brands and alternatives such as oatmeal. In response, General Mills created a successful organizational change to convert all cereal brands to whole grain products, showing that the organizations which can create change will capture a larger proportion and increase profitability. The cereal brands that failed to convert to whole grain found themselves losing that segment of the market.

(See our previous post: How to Tame the Change Management Dragon Once.

#4: Change Management Keeps Operations Running Smoothly

Change is inevitable. Many companies strategize change, but fewer companies take efforts to manage change. As a result, when process manufacturing companies go through transitions, operations become less efficient. The biggest reason: not all employees will be up for change, and this produces barriers for running operations — both old and new plans — efficiently.

Change management is all about how to allocate resources, moving the company and its employees towards change. These actions ensure continuity and efficiency in an organization’s operations.

Getting employees on board is the single most challenging task, so it helps to understand the reasons why people are afraid of change.

#5: Employees Resist Corporate Change

Change can be hard. No matter the job title, experience, or compensation, mandated change can be difficult. For example, many people would be bothered if part of their work route was closed for an entire month, and no notification was given, leaving employees on their own to find a new way. While this type of change can be a quick adjustment, it provides a parallel for organizational change involving many employees.

Humans are creatures of habit. Whenever a forced change occurs, employees may feel as though they have lost control, lost the past, and potentially lose their jobs.

#6: Change Creates a Sense of Lost Control

Often, when change occurs, employees feel a sense of lost control over their environment and circumstances, causing them to initially reject change, or becoming insubordinate to gain back control.

It is essential to integrate employees into planning to minimize the sense of loss. An organization should ensure their employees feel like they are contributing to the change. Vital to the process is getting employees involved so when it is time to roll out a new initiative, they will already be engaged.

#7: Shifting Focus to the Future

The biggest reason people may refuse change is the preference for things to be the way they were. People tend to focus on the past, resisting change. Old methods have left an imprint often difficult to remove, no matter how much an organization needs the change.

One company that failed to change was Kodak. By failing to see future opportunities, they stuck with their film-based business model, which led them to bankruptcy.

According to a Forbes article, Kodak had ten years before digital photography could become a viable business model. In that time, Kodak did very little to change their business. Instead, they reinforced their belief in film by purchasing a chemical company. They believed that photo paper treated chemically provided them with the ability to run a chemical company.

George Fisher, who left Motorola to join Kodak, said the company viewed digital photography as the enemy, killing off the very business that had provided its sales and profits.

The failure to look forward to the future and onboard their employees for change cost them.³

Employees and companies will cling to the past — all the way to bankruptcy. If an organization wants to implement change, shifting employees’ focus on the future rather than the past is key.

#8: The Fear of Uncertainty

Change can be difficult to manage because of the uncertainty. Organizational change creates a sense of insecurity. Employees wonder any number of thoughts: Will they have their jobs? Get a demotion? Gain a manager they do not like?

The process of change can be spotted in several different ways: employees will refuse to share data and communicate, keep valuable thoughts to themselves, and fear trying out new ideas. The fear of uncertainty can hamper productivity as people speculate about budget cuts and who will be let go, rather than focusing on work. This fear stifles innovation and better processes, as people may turn more cautious, believing their job is on the line.

If an organization is to overcome the fear of uncertainty, there needs to be transparency in the company. They need to talk about the benefits and show the expected outcomes that will accompany the change. Getting employees to see the end result with a transparent process involving simple steps and timetables for change eliminates this type of fear.

No matter how much your company needs to change, getting people on board will be your most challenging task. So how can an organization best implement a change management process?

One of the most successful frameworks for change management was developed by subject matter expert, author, and Harvard professor, John P. Kotter. Read How to Tame the Change Management Dragon with Amazing Results .

Sources:

¹Why Borders Failed While Barnes and Noble Thrived, July 19, 2011, NPR.

²2018 Corporate Longevity Forecast: Creative Destruction is Accelerating, February 2018, Innosight.

³How Kodak Failed, January 12, 2012, Forbes.

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