Managing the Pain and Gain of Radical Change

Change is hard on everyone involved, but to resist change in today's competitive environment is deadly. Here's how to build a successful change management plan that your employees will buy into.

Dev Chopra, director of human resources and financial services at Toronto-based Ontario Hydro, North America's largest fully integrated electric utility, is in the middle of a major financial reengineering effort. In an attempt to lower the cost of financial services — and thus customer utility rates — the company is consolidating the financial functions of 12 autonomous business units. The effort includes major process redesign as well as the implementation of long-overdue new technology. The change, which would be difficult under the best of circumstances, is complicated by the fact that 40 percent of the company's financial staff has been downsized in the last three years.

Getting remaining employees to buy into the need for more drastic change hasn't been easy. In fact, it's taken Chopra more than two years of research, planning and communication to gain employee and management support for the $60 million effort. “Before we ever attempted to make a change, we had to build consensus for it,” Chopra says.

In an era where radical corporate change is a given, Ontario Hydro is an anomaly. Why? Because the company is planning for successful change by anticipating failure and resistance. According to Douglas Smith, author of Taking Charge of Change, four out of five change efforts — such as total quality management, reengineering or the implementation of new technology — ultimately fail, not because companies didn't know what they were doing or why, but because they didn't know how to lead employees through the change. “For change to be successful, people need to change behaviors and develop new skills and relationships,” he says. “As anyone on a diet can tell you, this takes a lot of energy and commitment.”

“Leaders fail because they don't understand how resistant people are to change,” agrees Alan J. Parisse, an organizational consultant based in Boulder, Colo. “Dealing with emotions is not the long suit of most financial professionals.”

This doesn't mean, however, that controllers who are leading change efforts have to become therapists and mothers to their employees. Rather, they must keep in mind the factors that contribute to successful change, including thorough planning, clear-cut goals, proper motivation and top management support.