Exploring Organisational Structures for Optimal Enterprise Change Management
Change is an inherent part of every organization’s journey towards growth and adaptability in an ever-evolving business landscape. In the realm of change management, one critical consideration is the structure or organizational design that best facilitates successful enterprise change management. There are plenty of different ways to structure change management practices. Like any type of organisational structures for organisations overall, there is not one way that is the most effective. It depends on the circumstances of the company in concern.
Understanding Change Management Structures
Centralized Change Management Structure
Centralized change management structures consolidate the authority, decision-making, and oversight of change initiatives within a single, dedicated team or department. In such a structure, the change management team sometimes reports directly to either Strategy or Office of the CEO. This approach provides the change practice significant influence due to its direct linkage with strategy.
Reporting Lines: HR, IT, Strategy, and More
In addition to the choice between centralized and federated structures, change management specialists (and the senior leaders that they report to) often grapple with determining the optimal reporting lines for their change teams. Several departments within an organization are typically considered for hosting the change management function:
1. Human Resources (HR or People & Culture)
Reporting to HR aligns change management with employee/organisational development and engagement. This can be particularly effective when change initiatives heavily impact the workforce, as HR possesses expertise in people-related matters.
2. Information Technology (IT)
With the increasing digitalization of business processes, reporting to IT can ensure that complex technology-driven changes are well led and managed across the enterprise. The remit for change practices reporting to IT can range from including just technology changes, to all strategic and funded initiatives, through to all of change management as a function.
3. Strategy or Transformation Office
Reporting to the strategy or transformation office closely ties change management to the organization’s overarching strategic goals. This alignment ensures that change initiatives are directly linked to long-term vision and objectives.
4. Operations
For a lot of organisations, the Operations function can determine a lot about how the organisation is run. This can include the change management function as well. The advantage of having the change practice reporting to Operation can mean that the operating rhythm of the organisation can be designed with the right change management approaches. The way employees are engaged, how they’re involved, and how BAU processes are run, measured, and reported can be designed with change management interventions.
Key benefits of a centralized structure include:
Consistency: Centralized control ensures consistent change management practices across the organization, reducing confusion and increasing effectiveness in terms of setting a common level of practice. Consistency in terms of language and concepts mean that it is easier for the business to adopt change management principles and practices.
Resource Allocation: Easier resource allocation, as the centralized team can prioritize and allocate resources based on organizational priorities. With better economy of scale for a larger centralised team, the change group has the opportunity to resource initiatives using different levels of involvement, from sessional, part-time to full-time.
Alignment: Enhanced alignment with the organization’s strategic objectives, as the change management team directly interfaces with top leadership. This means that effort and focus areas as more likely to be on that which is most strategic and can impact the organisation the most.
Change maturity. The change practice has the opportunity to focus on building organisation-wide change maturity due to its ability to interface and influence across the organisation. While other change management structures may also have the ability to focus on building business change maturity, a centralised function has the advantage of having a greater impact level due to its scale.
In contrast, federated change management structures distribute change management responsibilities throughout various business units or departments. Each business unit maintains its own change management team, and these teams collaborate to execute change initiatives. Typically, these teams report to their respective department heads. This means that there is no formal enterprise change management function.
The advantages of a federated structure include:
Local Expertise: Greater understanding of department-specific needs and challenges, leading to tailored change strategies and therefore better change outcomes. Different business units can have very different cultures and different business needs. Having change professionals who understand the various intricacies of the business unit means that they’re able to design change approaches that will better meet business requirements.
Ownership and relationship: There may be increased ownership and commitment among departmental staff, as the change teams sits in the same business unit and are ‘one of them’ versus someone sent from a centralised team. Others in the business unit may be more conducive to advice and support from a colleague in the same broader business unit. It is also easier to establish a closer working relationship if the change practitioner is always working with the same teams.
Flexibility: Greater adaptability to changes in individual departments, as they can independently address unique issues. Without any direction from a central team, the business-dedicated team can better flex their service offering to meet the business unit’s particular focus areas. Whilst, a central team may de-prioritise departmental-level initiatives to be less critical, for a departmental team it is much easier to flex toward their priorities.
Impact on Business Results
The choice of change management structure and reporting lines can significantly impact an organization’s overall business results. Here’s how different structures can yield varying outcomes:
Centralized Structure Outcomes
Efficiency: Centralized structures can excel in efficiency of delivery due to its scale of economy. Whereas small departmental change teams may structure to flex and resource projects efficiently, larger change practices can avoid this by leveraging its range of practitioners with different levels of skill sets and availability.
Consistency: They ensure a consistent approach to change management, reducing confusion among business stakeholders and employees. The consistency of standards also mean that there is less risk that initiatives may experienced a change intervention that is less effective due to the centralised capability standards reinforced.
Top-Down Control: Change initiatives are closely aligned with strategic objectives set by top leadership. This means that any ‘pet projects’ or less prioritised divisional initiatives may not be as likely to be granted change management support. This does not necessarily mean that those departments won’t focus on those initiatives, it just means that change management resources are more prioritised toward what top leadership deems to be most critical.
Federated Structure Outcomes
Local Engagement: Federated structures promote local ownership and engagement, fostering a sense of responsibility among departmental staff. Department-specific change practitioners will be more familiar with ‘what works’ at the department level. They are better able to leverage the right engagement channels and have the ability to access management and leadership roles at the department to garner support and drive overall initiative focus and success.
Adaptability: They allow for greater adaptability to unique departmental needs, which can be crucial in complex organizations. For example, the types of change management approaches and interventions that work for Sales organisations will be very different compared to that for call centres or processing centres. The ability for the change practitioner to adapt locally can make or break an initiative’s success.
Innovation: Different units can experiment with various change approaches, leading to innovative solutions. This can be done without the confines of what is the overarching ‘standards and guidelines’ from the centralised change team.
Choosing the Right Structure
The decision regarding the optimal change management structure should be rooted in the organization’s specific context, culture, and the nature of the changes it is undergoing. Experienced change management specialists understand that a “one-size-fits-all” approach does not exist. Instead, they carefully consider the organization’s goals, resources, and capacity for change.
Also, it may not need to be either centralised or federated model. It can be a combination of both. For examples:
A federated model by reporting lines, however with a strong community of practice that is centralised and that promotes sharing of practices, standards, and even resources. This ensures that the overall group is connected to each other and new innovative approaches can be shared and proliferated
A centralised model by reporting lines, however with dedicated business-specific change partners that are focused on particular business units so that they are delivering business-focused change solutions. At the same time, the team still maintains a lot of the advantages of a centralised team.
The organisational structure and reporting lines for a change practice may influence various aspects of its work, however, this may not be the most critical part of how it creates value for the organisation. Other aspects in which a change practice should focus on in its development include:
Resourcing model. How to fund change management resources and the service delivery model to support a range of different projects with different needs for seniority, skill set, and even organisational tenure
Change methodology/framework. Organisations should work on at least a change management framework to set a minimum standard for change delivery. Using a generic off-the-shelf methodology may be OK, however they may not cater for the particular language and business needs of the organisation.
Change capability and leadership. Outside of project change delivery, the team should also work on gradually building change capability within the organisation to enhance the ability to drive and support change. This may not need to be in the form of training, it can also be done through structured development through real change projects.
Change portfolio/Enterprise change management. Beyond individual change delivery, the change team should also focus on how to deliver and land multiple initiatives at the same time. Most organisations need to drive change at a faster speed than previously and there is no luxury to only focus on one change at a time. How the team measures, tracks, and ‘traffic controls’ the multiple initiatives is crucial for its success.
To read more about managing a change portfolio visit our Change Portfolio Management section for a range of articles.
Change management structures and reporting lines are not just administrative choices; they can, in some ways, have a profound impact on an organization’s ability to achieve successful change outcomes. Experienced change management specialists must weigh the benefits and drawbacks of centralized and federated structures and align them with the specific needs of their organization. By doing so, they can maximize their ability to navigate the complexities of change and drive the organization toward a more agile, resilient, and adaptive future.
Measuring change is no longer a nice to have. It’s a must-have for a lot of organisations. A lot of stakeholders are now demanding to see and understand what is happening in the world of change. With the enhanced volume of change and therefore the increased investment made by the organisations, it’s no wonder.
Why are stakeholders demanding to see change data?
When we look across the room amongst the various disciplines, data forms an integral part of any function. Finance – tick. HR – tick, yes pretty much all aspects of people are tracked and reported. Operations – tick, as we have all types of performance KPIs and efficiency indicators. Technology – tick, since every part of technology can easily be measured and reported. Marketing – tick, as marketing outcomes are tied to revenue and customer sentiments.
With Covid it is even more the case that data is integral. We can no longer ‘walk the factory’ to sense what is happening. To see what is happening and what is going to happen stakeholders revert to data. In our virtual working environment, stakeholders require a constant dashboard of data to track how things are progressing.
Why is measuring change not an activity?
In the past it used to be that measuring change is only something you do in a project when you want to see if stakeholders are ready for the change. No more. Most organisations have a multitude of changes running concurrently. There is no choice to select 1 or 2 changes to roll out. With significant business challenges, most organisations are finding that running with multiple changes is the norm.
With multiple changes, increased stakeholder demands and appetite, measuring change is no longer just an activity. Measuring change takes a set of structured routines. It requires effective governance design. It takes experience and analytical expertise. Most of all, it is not a once-off event, it is a continual building of organisational muscle and capability. We are heading into the world of change analytics capability.
What is change analytics capability and how do I attain this?
Here are 7 core components of building and maturing change analytics capability:
1. Establishing change data management procedures and practices
This is about setting up the right steps in place so that change data can be identified, collected, and documented. This includes identifying the types of change data you would like to collect and how to go about collecting them. It will be easier to start with the core set of data required and then build from these as needed. This will reduce the risk of overwhelming your stakeholders.
After the right metrics and collection channels have been identified then it’s about building the regular routines to collect and document the metrics.
2. Sponsorship and leadership of change analytics
To really reap the value of change analytics you will need to gain the blessing and sponsorship of your leaders. Well, at least in time. In the beginning, you may need some time to come up with compelling data that tell the story that you want them to before you show your leaders. Eventually, without strong leadership buy-in, change data will not be effectively leveraged to make business decisions.
Getting your leaders’ blessing isn’t just a verbal exercise. It means that they are signing-up to regularly review, discuss and utilise change data to realise business value.
3. Build talent and organisation to support change analytics
Think about the various stakeholders and what you need them to understand in terms of change data. The way you educate stakeholders will be different to how you educate operations managers or the PMO. Plot out how you plan to help them get familiar with change data. Do you need particular roles to support data analysis? Is it a Change Analyst who is focused on the regular upkeep and consolidation of change data? What roles do you need other team members to play?
4. Insight generation
With a full set of change data infront of you, it’s now time to dive into them to generate insights. What is the data telling you? How do they support other data sources to form a clear picture of what is happening in the workforce? Is the data accurate and updated? Generating insights from the data takes skills and experience. It takes the ability to integrate different sources of data outside of change data themselves.
5. Insight application
This is about setting up the right routines and processes so that any insights generated may be discussed and applied. It could be through various governance forums, leadership or planning meetings that insights are shared and socialised. An integral part of this step is applying the insight by making business decisions. For example, do we delay the initiative roll out or invest more to support leaders? Are there reasons for us to speed up roll out to support the workforce?
6. Change analytics capability development
Change analytics is a capability.
With good change data emerging, you also need to have the right people with the right skills to collect, process and interpret the data. You may also want to think about which teams need what analytical skills. Do you have people in the team who are sufficiently analytical and data-oriented? Do they know how to interpret the data to form trends and predictions?
You may want to think about organising capability sessions or training to strengthen data analysis skills. Are there members in the different governance bodies that need support to be more confident in using change data?
7. Realising business value through change analytics
The last part of the equation is realising business value through change analytics. This is about tracking and documenting the value realised through using change analytics. It could include incidents where the business decision made has lead to significant risk reduction or operations protection. It could be enhanced leadership confidence mitigating risks in negative customer experience. Tracking value generated is critical to make clear to stakeholders the value of the overall investment.
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In the rapidly evolving landscape of today’s organizations, adaptability and agility have become more than just buzzwords; they are essential for survival and growth. The traditional approach of executing projects on an ad hoc basis is giving way to a strategic imperative—building change management maturity. This shift is not merely a choice but a compelling competitive advantage.
Recent statistics underscore the urgency of this change. According to a survey by Gitnux, more than 80% of businesses face increasing pressure to adapt to market forces, including technological advancements and evolving customer expectations. In this environment, mature organizations can respond swiftly to market dynamics and implement strategic initiatives with unparalleled precision and speed.
Two prominent models have emerged as guiding beacons in this transformative journey: the Change Management Institute (CMI) Change Maturity Model and Prosci’s Change Management Maturity Model. Both models are deeply entrenched in the concept of organizational competency levels, offering a structured framework comprising five progressive maturity levels.
In this article, we will embark on an enlightening journey, exploring the foundations of these two prominent change management maturity models, uncovering their intricacies, and paving the way for a more holistic approach to change management. Additionally, we will delve into the critical role of various organizational functions, shedding light on how they can actively contribute to the organization’s change maturity.
CMI Change Maturity Model
The Change Management Institute (CMI) Change Maturity Model is a comprehensive framework that takes a holistic approach to enhancing an organization’s change management maturity. It’s divided into three core functional domains, each playing a vital role in the overall journey toward maturity: Project Change Management, Business Change Readiness, and Strategic Change Leadership. These domains serve as the foundation for achieving higher levels of maturity within the organization.
Within each of these domains, the CMI model outlines a structured path, consisting of five distinct maturity levels. These levels represent a continuum, starting at Level 1, which serves as the foundational stage, and progressing all the way to Level 5, the zenith of maturity and effectiveness. This multi-tiered approach offers organizations a clear roadmap for growth and development, ensuring that they have the tools and insights necessary to navigate the complexities of change management.
The distinguishing feature of the CMI model is its emphasis on the idea that true change maturity extends beyond the realm of project execution. While executing individual projects is undoubtedly important, the CMI model advocates for a broader perspective. It recognizes that sustainable change maturity relies on the cultivation of readiness for change across the entire organization. This involves preparing teams, leaders, and employees to adapt to and embrace change seamlessly, making it an integral part of the organizational culture.
Furthermore, the CMI model underscores the indispensable role of change leadership and governance in nurturing change maturity. Effective leadership is the driving force behind successful change initiatives, and it’s the cornerstone of achieving higher levels of maturity. Governance structures ensure that change management practices are not just theoretical concepts but are woven into the fabric of how the organization operates on a day-to-day basis. Governance provides the necessary framework for sustaining change maturity in the long run.
Prosci Change Maturity Model
In contrast to the more specific functional domains emphasized by the CMI model, the Prosci Change Maturity Model takes a broader perspective, focusing on the development of overall organizational change management competency. Rather than zeroing in on individual functions, it provides a generic framework that covers key areas integral to building change maturity. These areas include:
Project Execution: The model places a strong emphasis on effective project execution as a cornerstone of change management maturity. It recognizes that the successful implementation of change initiatives hinges on well-executed projects, including detailed planning and efficient execution.
Business Capability and Readiness: Understanding the readiness and capability of the organization is another critical component. The Prosci model highlights the significance of assessing an organization’s readiness to undergo change, including the ability to adapt to new strategies, technologies, and processes.
Senior Change Leadership: Leadership is vital in steering the organization toward maturity. The model underlines the importance of senior change leadership, emphasizing that leaders play a pivotal role in setting the tone for change, championing initiatives, and fostering a culture of adaptability.
Formalized Practices and Organizational Awareness
One of the key drivers for elevating maturity, according to the Prosci model, is the establishment of formalized change management practices. This includes developing and implementing standardized methodologies to ensure consistent change management approaches across the organization. Furthermore, the model advocates for creating widespread organizational awareness about the significance of change management and its role in achieving successful outcomes.
The Role of Change Management Training
A cornerstone of the Prosci model’s approach to maturity is the incorporation of comprehensive change management training. This training equips individuals within the organization with the knowledge and skills needed to effectively manage change initiatives. It emphasizes the importance of investing in the development of internal change management expertise.
While both the CMI and Prosci models address the critical areas of project, business, and change leadership in driving change maturity, they diverge in their approaches. The CMI model offers a broader perspective, highlighting the importance of agility and continuous improvement as essential components of maturity. It places a strong emphasis on crafting the right cadence, establishing efficient business processes, and implementing robust governance practices. In contrast, the Prosci model, while equally comprehensive, provides less specific guidance on embedding change practices within the organization’s fabric and processes. Instead, it places a strong focus on the effective implementation of change initiatives.
What’s Missing in Current Change Maturity Models?
The lacuna in existing change maturity models becomes evident when we consider the need to genuinely embed change management principles and practices within an organization’s DNA. True integration transcends the mere execution of initiatives and building change capabilities among leaders and employees. It calls for collaboration across multifarious functions, including Risk Management, Marketing, Strategy, and Human Resources, to engrain change principles and practices. The focus is on holistic change capability, encompassing different functional areas. This approach fosters a culture where practices, capabilities, and supporting structures converge to enable continuous change.
In the following sections, we’ll explore examples of how change management principles and practices can be applied across seven key functions: Risk Management, Strategy and Planning, Operations, Project Management, Human Resources, Technology, and Marketing.
1. Risk Management
Change management principles and practices can enhance risk management by offering valuable insights into change-related risks. Risk professionals can leverage change management analytics to assess data-based risk factors, such as business readiness indicators and the potential impact of changes on the organization and its customers. Armed with this data, risk professionals can make informed assessments, helping the organization better understand risk profiles and make well-informed decisions.
2. Strategy and Planning
Strategic planning should not only focus on industry trends and financial data but also incorporate change capability assessments. Considerations should include the availability of change leadership talent, the organization’s capacity for executing change, and the historical performance related to change volume and velocity. The strategic roadmap should integrate historical data on change impact volumes and execution, enabling effective planning. Supporting structures and processes, including governance, reporting, and communities of practice, should be designed to ensure successful change execution.
3. Operations
Operations is a core domain for change management. This function offers numerous opportunities for applying change best practices. It involves building change management capabilities in employees and managers, enhancing employee engagement channels, and facilitating effective learning and development. With the right change data and analytics, Operations can strategically plan business delivery by making predictive assessments of performance based on projected change impacts. The key lies in systematically integrating analysis and decision-making processes within the operating cadence.
4. Project Management
This is the most familiar territory for change management. Many organizations have dedicated change managers responsible for project delivery. The conventional practices of change management, including capability building, change methodologies, portfolio management, and project delivery, are all part of the project management function.
5. Human Resources
Human Resources often plays a central role in supporting the people side of change. The function includes building change management capabilities as part of learning and development efforts. However, there’s substantial value in managing restructuring initiatives as change projects, and adhering to structured change management practices. This structured approach ensures that affected stakeholders are appropriately engaged, and processes, systems, and supporting structures impacted by change are meticulously mapped.
6. Technology
Change management is not limited to large projects; it extends to technology changes that impact stakeholders and users. Even smaller technology initiatives can benefit from the application of change management principles. Change management analytics can facilitate better technology releases and deployments. By considering change impact data, organizations can plan technical releases more effectively, taking into account organizational impacts.
7. Marketing and Customer Experience
Change management practices can play a pivotal role in marketing and customer experience functions. Customer change impacts, such as external positioning and alignment with customer needs, should be integral to marketing campaigns, product launches, and communications. These practices, including impact assessment, change analytics, and change planning, enable organizations to deliver what they promise to customers.
In closing, the true value of change maturity emerges when it becomes a part of various organizational functions. It’s not just about developing isolated methodologies or supporting initiative delivery; it’s about becoming an organization where change is seamlessly integrated into every facet.
Ready to Elevate Your Change Maturity?
The journey to achieving a higher level of change maturity begins with holistic integration within your organization. If you’re interested in exploring how The Change Compass can help you in this transformative process, we invite you to book a weekly demo with us.
