When I begin a speaking engagement with a new audience, normally I don’t have a quick hook in the introduction. On change management this is different. I always start by asking who in the audience is familiar with change management and then follow it up by asking who considers themselves to be change managers. Nearly no one ever raises their hand. I then tell them that by the end of the session, I will consider it a success if every person in the room can view themselves as a change manager, and a larger success if they have a single takeaway or tool we spoke about and apply it to help with their business tool kit. I would ask that same of anyone reading this article.
Change is inevitable — it is the only thing which is a certain constant (creating a paradox of sorts). In business and in life. In the history of the accounting profession, the last 25 years have seen some of the largest compliance and reporting changes with revenue recognition, Sarbanes-Oxley, leases, IFRS and US GAAP convergence (failed), and the codification, just to name a few. In life, the past five years have seen a pandemic, the Great Resignation, the rise of AI, blockchain, banking crises, focuses on marketing within social media, supply chain constraints, globalization, and the rise of digital assets. All of these changes on top of personal change have impacted nearly the entirety of a civilization.
The stress response curve and how anxiety and stress can impact performance have been studied for years. Known as the Yerkes-Dodson Law to academics and researchers, this correlation of performance and stress has been tested and retested. Generally, you operate under a certain level of stress that is at the higher end of your tolerance level. Determining where your specific “peak” tolerance is where you need to exercise self-awareness of how much stress you can endure (and for how long).
The largest stressors can also be the largest changes within your lifetime, both at work and at home. Some of the most common ones include job changes, retirement, births, deaths of loved ones, divorce, marriage, moving, promotions, injuries, illnesses, or changes in the business. Recent changes in our large global environment on top of personal changes have made controlling stress a priority.
Change management as a practice is the methodology or process through which leaders guide their organizations through changes to completion. I would venture to expand that definition to note that Change management is also the methodology or process that an individual implements to navigate changes within their team, organization, or personal life. According to a recent study by Gartner, approximately 50% of organization and business-related change management initiatives fail. Other studies put that number closer to 75%, depending on how you define it. Think about that for a moment — over half of all changes fail. Why? And how do we decrease that number?
One thing to keep in mind is the difference between a growth mindset and a fixed mindset. For change management this can also be interpreted as your level of natural resistance to change. Everyone has things in their lives they are trying to force to remain the same, but many people have a natural aversion to change — they just dig in their heels and want to maintain the same processes.
A fixed mindset is defined as someone who pushes back on challenges or opportunities for growth and tends to stay in their own comfort zone and processes. They tend to have a difficult time failing or making mistakes, and they tend to be threatened when others around them succeed.
Mistakes are how you learn. Even if you are perfect and talented at something, failing is how you improve. Everything, to a certain extent, is a continuous improvement process where you build on the initial design and improve it for efficiency and functionality.
A growth mindset is defined as a natural tendency to embrace and explore changes and opportunities, as well as a lifelong learning mindset of curiosity. Individuals with a growth mindset step out of their comfort zones willingly and take failure as a growth opportunity for the next chance.
I personally always start with the WHY of the change. Why do we want this accomplished? Why is the change needed? Why are we embracing this change? Why does this impact the stakeholders? And then move to the what and the how of where we are going to implement this change. What do we need to address, who do we need to involve? And then I take a step back and play devil’s advocate with the change and ask how this aligns with the vision and strategy of the organization. Does this change align with the values and needs? Is it relevant?
Change fatigue is a term that has become more prevalent within the last few years. This term is defined by too much change in too little time, and results in people and organizations burning out on change initiatives.
Let’s be honest — most employees and organizations are currently experiencing a high level of change fatigue after the massive impact of the pandemic and the macro environmental changes over the past few years. Change fatigue is running rampant. One relevant study from Gartner completed in 2022 indicated that from 2018–2022, there was a 36% decrease in the average employee’s support of organizational change of any type, from 74% support in 2018 to only 28% support in 2022.
To address change fatigue and attempt to better integrate successful change into an organization’s structure, an “open source” change model is often offered as a solution. In open source, you don’t just get buy-in from management, but also include the impacted and key stakeholders to the lowest level in the change plan. This change approach addresses change fatigue by taking a bottom-up approach to change initiatives instead of the normal top-down instructional method. While the ultimate decision making still sits with senior management, the planning and success of the model is heavily driven by the key end users and stakeholders — the employees through middle management drive the change. By having them identify and involve themselves within the problems and potential solutions that these changes seek to address, you give them the accountability for the success and help them understand they hold a stake in the success of the initiative. This creates a cyclical model of discussion and communication that is less siloed within an organization, along both hierarchical lines and within departments impacted.
My favorite model within change management is Kotter’s eight steps. The model focuses on communication and front-end training to bring along as many adopters as possible early on to drive successful change.
The eight steps in Kotter’s model do overlap, but are generally linear in the way that they must be approached:
There are many other models and tools you can utilize and consult when implementing change.
Lewin’s three-stage model of change envisions a very high-level change cycle that demonstrates change as a continuous cycle of “freeze,” “unfreeze,” and then “refreeze,” in which the change is made in the “unfreeze” stage.
McKinsey’s 8-S (or 7-S dependent on which version you subscribe to) model of change addresses and focuses on the connections between the eight impacted areas of change: strategy, style, structure, systems, staff, skills, shared values, and (not interconnected internally) social relations. The first three are the “soft” S’s (think soft skill development and impact), with the second three being the hard S’s (more technical in training and impact).
Utilize project management tools wherever possible to further assess risk and determine where risks of failure may occur within the change initiative. Identifying any points of heavy stress on resources, hours, timing, or potentially costs up front can help proactively assess the risks.
Keep in mind that the “change adopter” is a bell-curve. There will be early adopters and innovators on the front end — generally composed of growth-mindset individuals — and then there will be a late majority and laggards who will drag their heels. Integrating some of those late adopters on the front end of the planning stage may help with containing any negative spread or risk of failure.
I ask of everyone to address what area they would likely lie in on this curve as a change adopter — and these may differ from change to change! During the pandemic were you like me, and took six months to stop wearing suit pants to sit at your desk in your home office? Or were you like me in assessing and driving the early understanding of ASC 606 through communication, support and trainings across organizations? Two different types of changes, two different responses.
I’ve seen extremely successful change initiatives, been a part of some very poorly ones, and also been part of many change failures. Unfortunately, not every change will be successful. Learn from the failures and build on it within your tool set and prepare for the next inevitable change.
Once again, now that you’ve reached the end of the article, I ask of you: Do you consider yourself to be a manager of change?
Genevieve Hancock, CPA, owns and operates a finance and accounting advisory firm, G Hancock Advisory, LLC, out of Daytona Beach, Fla. Genevieve began her career in internal audit and public accounting, and moved into technical accounting specializing in accounting policy and compliance. She is a speaks on a variety of strategic topics including change management. She is currently on the VSCPA Young Professionals Advisory Council and the Center for Innovation Advisory Council.
t.genevieve.hancock@gmail.com
