Change Management Models for Workplace Transformation
By Alicia Mandel, Colette Temmink* and Martha O’Mara
From Corporate Real Estate Journal, Volume 3, Number 4, pp. 281-292 © Henry Stewart Publications
Received (in revised form): 26th March, 2014
Colette Temmink
Chief Strategy and Product Officer | Co-Founder
Abstract
The purpose of this paper is to demonstrate how corporate real estate (CRE) leaders can proactively support strategic change efforts across a range of corporate initiatives, including workplace change. The authors demonstrate the effectiveness of applying deliberate change management models — in particular the ‘eight-step process for leading change’ by John Kotter — along with a next-generation model to guide the change process. A staged approach that addresses emotional engagement is shown to be an essential element of the successful implementation of change. This paper combines a literature review, expert knowledge and case study data. To demonstrate the models in action, case studies of change initiatives at Apollo Education Group (Apollo) are examined and further illustrated using six Fortune 100 sized company case studies of CRE high-performance workplace implementation undertaken in 2011 by Corporate Portfolio Analytics. Using both sets of cases under scores the generalisability of the change management models. The findings show how change management processes that proactively incorporate emotional engagement can be effective in CRE initiatives and other corporate change efforts. Supporting or initiating change management programs is an important new domain of the CRE function because many operational and process changes impact the physical workplace. Engaging the emotional and operational elements of a change management effort is essential for success. This study is one of very few that includes actual case data about CRE change management programs. In addition, this is the first paper to test Kotter’s model in the context of CRE practices.
Keywords: corporate real estate, change management, facilities management, alternative workplace, high-performance workplace, employee engagement
Introduction
The pace of change regarding how industries are structured and how companies compete and organize their work processes in response continues to accelerate. To help employees best cope with the operational and emotional challenges of change, many companies actively engage formal programs to help manage the change process. These efforts often require corporate real estate (CRE) executives to play an integral role in leading or supporting change management because these changes often impact the physical workplace. This is a relatively new role for CRE leaders and one that requires develop ing expertise in organizational change management techniques. This paper applies a widely used change management model to examine the change management process at Apollo Education Group, along with examples drawn from other corporations, and demonstrates how a proactive change management process — with a clearly defined sequential process of change — can enhance CRE effectiveness. In particular, it shows how change management processes that proactively incorporate emotional engagement can be effective in CRE initiatives and other corporate change efforts.
The workplace is not only an operational tool, but a symbol of the corporate culture and something that impacts people on an emotional level as well. In particular, changing to ‘high performance’ or alternative workplace practices that integrate technology, mobility and flexibility in how, where and when work is performed often challenges the status quo of ‘one person per desk’. Changing workplace practices and processes involves multiple challenges across the organization, including cultural and emotional impacts, and requires an integrated approach to change management.
In a meta-analysis of change management approaches across a wide range of disciplines and literature, Young (2009) identified and organized them into similarities and patterns.9 The meta-model he proposed included steps to understand the existing pre-change environment, creating awareness and validating the need for change, developing and committing to an action plan, leading change, identifying and measuring results, and monitoring the ‘new normal’. This model reinforces the Kotter model and further validates the need for a change process that addresses emotional engagement.
The Eight Step Kotter Model
The Kotter model may not fit or enable success of every change management effort and may need project specific alterations;11 however, the eight step model, with its emphasis on emotional engagement, can be a useful construct for CRE executives to use to engage more proactively in the successful change process and to partner with and support business driven change initiatives. In fact, according to Appelbaum et al. (2012), in Kotter’s recent book The Heart of Change he acknowledges: ‘the core problems people face while implementing his eight steps are never due to “strategy, structure, culture or systems”’, they are due to individual desires and abilities to change behavior.12 To demonstrate the utility of Kotter’s model to support effective CRE change management, this paper draws from examples based upon several change initiatives at Apollo, as well as examples of workplace change efforts com piled from case studies of high performance workplace implementation at other large corporations.
Step 1: Establish a sense of urgency
According to Kotter (2007), more than 50 per cent of the organizations he studied failed in this first step largely based on the ability of leaders to act as change agents.13 Leaders need to help individuals understand the ‘why’ of a particular need for change and this rationale needs to be clearly linked to business strategy. A sense of urgency also can be prompted by external drivers, such as an expiring lease, a change in business regulations, or a competitor’s actions. At Apollo, the first step of the Renewal model is called ‘truth telling’ — and it is where urgency gets established. Complacency with the status quo cannot and will not drive change. Leaders continually need to ‘tell themselves the truth’ about their industry, their competitive position, what their customers are saying, their results and other future looking indicators. Companies implement multiple small, medium and large projects at any given time across the enterprise. Truth tellers can be found in many places: customers, students, employees or third parties. It is very important for leaders to understand the perspective of these individuals and to recognize the courage it can take to tell the truth. These truth tellers help to create the conditions to listen and adapt the business accordingly. In one example, Apollo noticed that employee turnover in certain positions was higher than expected. As part of the process to identify why that might be, the company examined many avenues — compensation, work conditions, manager support and employees feeling valued — because each has a hand in employee turnover. After listening to many organizational ‘truths’, it was determined that the reward and recognition program currently in place (based on employee tenure instead of employee behavior) was no longer sufficient in making employees feel valued (there were also other findings that involved compensation and the other factors mentioned). Company leaders listened care fully to all of the feedback and ultimately developed a new reward and recognition system specifically designed to value employee behavior. This program, called EPIC, helps employees to identify with the company’s core values and calls out specific behaviors that are aligned to those values. Through this EPIC program, employees are able to recognize and be recognized by their peers as well as their leaders across the entire organization for living the company’s core values every day. This includes appreciating and celebrating the achievements and contributions of individuals by allocating specific ‘points’ that can be collected and redeemed for meaningful rewards.
By creating an environment where truth telling was recognised and encouraged, Apollo leadership was able to see how reward and recognition serves as a key driver in employee turnover and employee engage ment. The company was able to create a sense of urgency — which ultimately justified dedicating the budget to support EPIC — in a tough financial environment to drive a change of this nature.
Clear definition of a problem and its impact on the organization can be supported by metrics. The truth can be in the numbers. One form of ‘truth telling’ most useful for CRE managers is clear occupancy and utilization metrics. Apollo tracks several real estate metrics beyond these two that measure usage patterns, occupancy satisfaction and alignment with strategic objectives. Other companies have made similar efforts. As part of a change management program implementing high performance workplace practices, one company developed an ‘implied vacancy’ metric that used a more efficient space utilization standard based on industry benchmarks. The results showed that only half of the company’s office space was actually required to support operations. As a result, 80 per cent of the existing leases were not renewed and the company back filled mainly into existing owned properties.
Companies and company leaders often find it too difficult to spend time with ‘truth tellers’. They surround themselves with people who ‘tell them what they want to hear’, and therefore find themselves solving the wrong problems.
Step 2: Form a powerful guiding coalition
Sometimes change begins with the efforts of a few individuals and grows as time progresses.14 As the group or coalition grows, it should be led by respected representatives with enough power to take action and own the process from many parts of the organization. Although the guiding coalition must include leaders of the organization, it is also important to create a diverse team of champions made up of various stakeholders who need to be involved in the change process.
Apollo includes a ‘guiding team’ of leaders from different disciplines to run an operational steering committee when implementing large scale projects involving high degrees of change. The operational steering committee must be credible, committed and supported by executive leaders to be successful. This includes buy in to the ‘urgency’ that the executive team communicates. This also needs to be done through an analytical model instead of an emotional one. When the company implemented the EPIC program it identified two guiding teams. The first team was an operational steering committee focused on oversight of the strategic decisions and integration. The second was a cross functional implementation team designed to drive the vision through vendor selection, program development and planning implementation. The high degree of integration and knowledge shared among these two collaborative teams was a critical enabler of successful implementation of the overall program. There have been several examples of situations where key stakeholders were not ‘brought along’ through the process. That mistake led to extra time being expended throughout the process ensuring everyone was on the same page and bought into the change — during the change process.
Successful CRE change efforts actively engage human resources, technology and corporate strategy in the effort. CRE leaders who brought in important players from these disciplines early in the workplace change process had greater success in less time than those companies which saw their effort as simply a real estate costsavings initiative.
Step 3: Create a Vision
The guiding coalition needs to develop a clear picture of what the change will entail — a vision which can be articulated within a five minute discussion.15 This includes ‘what, why and how’ a particular initiative or effort is being implemented. In addition, a vision centers on the exciting, new, innovative future.
In the Renewal model, the steps after truth telling are sacrifice and innovation. Sacrifice is a critical component rarely found in any change management model. It is the discipline that a company must have to look at the ‘new truth’ and ask ‘what is no longer relevant and what should be stopped’. Sometimes these sacrifices come in the form of reorganizations, sometimes consolidations or changes to the workplace. What is more, sometimes a company needs to sacrifice a current mindset or an approach. This tends to be a more emotional piece of the model because many in the company will be emotionally tied to ‘how things have always been done’. Sometimes the request to sacrifice is met with cynicism. Sometimes there is an underlying fear of letting go of old practices because employees are comfortable with them. For example, the reduction in individually assigned space in favor of more collaborative spaces often can feel like a personal sacrifice. Therefore, it is essential to provide a clear vision of how the individual will be better served by the new approach.
Apollo knew it would have to sacrifice the old reward and recognition system in order to develop a better, more relevant approach, even though it felt like a sacrifice to some employees. To address this directly, a vision was developed for the EPIC program from the truth telling data and input that included frequent working sessions with ‘the guiding team’. This enabled the development of a solid vision: a vision for what the program would be, how it would work and the short and longterm program goals. This was then narrowed down to something simple but strong enough from which to make solid decisions. And to do that, it was important that leadership was able to draw the connection between the feedback they heard (‘employees need to feel more valued’) and the lack of ability of the current system to deliver what was required. The new vision in this model is called the innovation. It is what is being used to replace that which was sacrificed. In this example, the EPIC program was the innovation.
When implementing CRE initiatives it is important to provide a clear, concrete vision of any workplace transformation. The vision also must be flexible enough to appeal to each part of the business that is affected. For example, to help develop a clear message of the vision of what a new space design might look like, one company engaged an architect to conduct ‘visioning sessions’ with key managers. This effort also enabled the company to implement the new workplace design more quickly. For CRE programs a common question is: ‘What will the space look like?’ Some companies, including Apollo, use videos, renderings or actual piloted demo spaces to illustrate how the new workplace will operate and how it will look. Branding campaigns such as Apollo’s ‘MyWorkplace’ also can support a greater understanding and recognition of the holistic approach of the new space program.
Step 4: Communicate the Vision
Once the vision has been created, it is important to use multiple strategies to communicate that vision to stakeholders to help build trust and buy in. Listening to stake holder concerns and responding with creative solutions helps to generate trust. The vision must be clear, easy to understand and easily communicated. This includes details of the ‘what, why and how’, as well as using available channels and tools to communicate the new vision across an organization.
When implementing large organizational changes, companies should build their communication strategy around its vision of the future. Time should be spent discussing why there is a need for change and the direction in which the company is going to increase urgency across the company. This should include developing a change plan that specifically addresses key stakeholders. Apollo goes through a process to identify all stakeholders and then figures out how each stakeholder specifically needs to be involved in the change, including how they need to be communicated with and what risks they might perceive as part of the change.
It is also critical to understand that all individuals go through change in different ways and at different paces. Some employees will get through a change rather quickly, while others will resist longer — depending on where they sit in the change process. Here, Apollo applies the change methodology referred to as ‘stages of concern’.16 This method helps leaders to identify where their specific employees are within the actual change process, and what they might be able to do to get them through the change more quickly. These stages of concern tend to be relatively consistent across changes and help to address employees’ specific concerns, allowing leaders to carefully plan for specific outcomes and timing relating to the change itself. Leaders and change champions should focus on communicating creatively, consistently and authentically with a sense of increased organizational transparency. This includes customizing communications for teams and stakeholders to answer their specific questions and address their concerns. For certain large scale changes the company may choose to overcommunicate. For example, for one internal project, Apollo held weekly calls where updates were constantly made, enabling leaders to understand progress against the goals. In addition, for the same project, there were also two director level employee conferences and an internal website for employees that disseminated current information as well as received employee feedback. This allowed leaders to communicate back to the organization with realtime updates and information and employee insights. There was also a team of leaders directly responsible for raising concerns, issues and shorter term wins that were then reported to senior leaders. Finally, this step included establishing ‘champion groups’ consisting of employees at all levels of the organization charged with gaining buy in through their local influence.
A poor communications plan can lead to the failed rollout of a workplace change program. For example, one interviewed company’s guiding coalition did not explain why the company was transitioning to high performance workplace practices. Rather, they just indicated that ‘the CEO wants this’, and moved for change too quickly. This lack of a clearly created vision failed to achieve the level of support required, and employees rejected the new office design. During the next change effort, the company did involve employees as stakeholders in the overall change process and achieved their buy in prior to implementing physical workplace changes.
It is also critical to continue to communicate once a workplace transformation pro gramme has gained traction. Many companies now provide training on how to work and manage in a new work environment. These training sessions, either conducted in person or online, not only facilitate a smooth transition to new work processes, but also help companies re-communicate the original vision to the team. This results in further framing of the new workplace as a change management program that improves work processes, employee engagement and asset utilization, rather than as a real estate cost reduction activity. Such training initiatives also can improve the likelihood that high performance workplace practices will become a fundamental part of the organization and an enabler of competitive advantage.
Step 5: Empower Others to Act on the Vision
Successful change accelerates as more stake holders are engaged and involved. For this to happen, barriers need to be removed and participants need to be engaged in an action plan rather than focusing on negative emotions and how to resist the changes.18 In the Renewal model this is the last phase and is referred to as intentionality. In this context, intentionality means focusing on the original purpose of the change, what is being accomplished by the change and how to move for ward to implement the change. Intentionality also needs to ensure the process does not stop based on certain negative emotional responses to change. After the first three steps (truth telling, sacrifice and innovation) have been done well, employees and the team must ensure that the new way of doing things takes hold within the organization to avoid slipping back into the old way of doing things. For implementation to be successful some key questions must be answered. Which decision makers are responsible for which decisions? How do the teams work together? How is success measured? Without answers to these types of question, the level of ambiguity will make it easy for employees to slip into the old practices.
A large part of successful change implementation is ensuring that all leaders across the organization are aligned on the vision and the purpose for the change, and remain focused on the new behaviors. To this end, at the start of a project it can be beneficial to have a ‘leadership alignment session’ to pro vide leaders not only with the applicable information on the change, but also some tools to help them lead differently through out the change process. Leaders who are asked to drive a change must be given the tools and guidance to understand the broader vision or empowered with the responsibility to make decisions aligned with that vision. This can be seen in the program monitoring data to ensure performance. At Apollo, the initial high performance workplace pilot was adopted successfully by the original test group. As time progressed the unassigned space became desired by many other groups given the increase in collaborative space. As density increased the common space began to be used by many different groups and the ‘intentionality’ of the pilot space changed. Eventually, the small, original, pilot group was relocated to another space.
For CRE program, the guiding coalition should focus on work process improvement and identify functions that could benefit from high performance workplace practices to serve as early adopters to help make the vision a reality. One company suggested that a group of 200–500 employees was a good target population when starting a workplace change management process. Some companies found that referring to early projects as ‘pilots’ undermined the overall message of a permanent change, and instead presented the change as a phased approach.
Certain job functions such as administration support, technology and engineering are well suited for high performance work place practices. For example, one company worked with information technology employees as early adopters. Another company helped to create momentum by engaging its consulting division that was requesting a work from home option. While management was initially concerned about morale and productivity, they gave it a chance due to the significant real estate pressures they were facing due to growth. These employees were able to work from home and retained hoteling space in the office, allow ing the company to avoid increasing its real estate footprint. In both instances, the needs of the employees were aligned with the workplace change. At Apollo, the company conducts a formal assessment process to identify which groups or individuals are suitable for early adoption of new practices. For example, with the company’s alternative workplace program, this included a detailed evaluation of how certain groups use their current physical space, job functions within the group and collaboration needs, and then the implementation was designed into stages to build upon success.
Step 6: Plan for and Create Short-Term Wins
This step in the Kotter model includes planning for short term performance improvements or wins, and then documenting and communicating the benefits achieved by early adopters to help generate excitement and momentum. Kotter (2007) suggested recognizing and rewarding employees involved in the change process at this stage.19 The EPIC program was designed as an ongoing enterprise tool to recognize and reward employees; however, from a project perspective, while the tool has been officially rolled out, the company continues to focus on new pieces of the program, features that will be deployed gradually until fully implemented. This allows the team the opportunity to understand how each phase is being rolled out, learn from it, and move forward again. As with any project plan, it is important to create specific milestones that include ‘near and clear goals’ and realtime progress report ing on the project’s longer term milestones. The goal is to ensure the company does not stop short of the full implementation. The company also can use the low hanging fruit as short term wins. It is not only about short term milestones; ultimately this is what drives longer term, sustainable performance deliverables to which leaders, the project teams and employees themselves will commit and ultimately embrace.
CRE groups have successfully implemented high performance workplace pro grammes by highlighting early wins that bring savings, increased employee productivity and satisfaction. A key to success was hav ing multiple sources of performance measurement — individual, organizational and real estaterelated. Choosing the right groups to showcase a change increases the chance of continued success.
Step 7: Consolidate Improvements and Produce Still More Change
Kotter (2007) warns that business leaders should not be too satisfied by early wins and must continue the change process until it becomes the normal way of doing business and part of the company culture.21 This parallels ‘intentionality’ as described in the Renewal model. In addition, Kotter (2007) suggests that leaders can use the increased credibility and success from short term wins to build momentum for larger system structures or policy changes.22 Leaders must understand that, for the change to be sustain able, they must ‘stay the course’ and not revert back to old practices, even though in some cases that might be easier. Most of the CRE change management efforts profiled in the research were still in the process of rolling out high performance workplace initiatives across their organizations, and applying what they learned to improve future projects. All of them carefully sought ways to continually improve their approach as they expanded their programs. One company noticed that one business unit always asked for more space than they ended up needing. They now buildout less space than is actually requested and incorporate flexible work practices to increase capacity when needed, while wait ing for actual demand to be documented before they add additional space. Another company became concerned that mobile workers were not fully integrated into the culture and is now implementing policies such as requiring employees to come into the office for a certain number of times per week or for certain meetings. Others realized that there were geographical differences in how people used drop in spaces. Another company noticed that different issues arose when transitioning new or existing employees to high performance workplace practices and that different policies were needed to respond to both types of employee. The ability to make adjustments based on feedback fosters continued improvement which helps to advance the overall change goals.
Step 7: Institutionalize New Approaches
During this final step, Kotter (2007) advises leaders to focus on communicating the connections between the new behaviors and corporate success to institutionalize the change.23 Once the EPIC program was rolled out and embraced, it was then time to add new components to the system. For example, the company is now integrating its corporate wellness and corporate social responsibility programs into the EPIC platform. EPIC has become part of the culture of the company and how it does business. Many of the companies profiled by Corporate Portfolio Analytics also identified milestones that indicated that change was becoming standard practice.24 For example, one company considered its high performance workplace strategy to be clearly established when an individual, dedicated workstation became the exception, rather than the norm. Furthermore, the change process is ongoing and can take a considerable amount of time — even years — to realize. Skipping steps or rushing the process often results in failure.25 Several of the CRE case study companies struggled with early workplace projects because they tried to do too much too soon.
Conclusion
A review of various models of the change process has found strong common elements in the need both for emotional engagement and a deliberate, multistage process that enables open discussion and broad outreach. The implementation of new reward systems and workplace practices maps to established models for implementing change. All of the cases examined validated the need for a deliberate change management process that recognizes change is an emotional process as well as an operational one, and successful efforts include both these elements. These case examples demonstrate that change management is an ongoing process which benefits from a thoughtful and deliberate staged approach, even when those stages bring discomfort to the status quo, and require more time devoted to the effort. There is no ‘quick fix’ to achieving substantive change.
At Apollo, the Learning and Organizational Development team continues to pay attention to what works and what does not in terms of implementing large scale change. There is a constant focus on learning from mistakes and leveraging what worked well from previous change efforts. While organizations and individuals within those organizations go through predictable stages when implementing change efforts (as documented by both the Kotter model and the Renewal model), each change is different, drives a different vision and has a different set of stakeholders, therefore, each change needs to be managed as a new and exciting initiative.
As change management becomes an essential component of effective CRE management, these models can serve as a useful guide to longterm successful implementation of various change initiatives, including high performance workplace practices. CRE managers will be well served by becoming familiar with the application of change management models and understanding that workplace change is a complex process. Success requires paying attention to emotional engagement and buy in as much as completing projects on time and on budget.
References
(1) Dylan, B. (1965) ‘It’s alright, ma (I’m only bleeding)’, Warner Bros. Inc. (renewed in 1993 by Special Rider Music).
(2) Collins, J. (2009) ‘How The Mighty Fall: And Why Some Companies Never Give
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(5) Nyström, M. E., Höög, E., Garvare, R., Weinehall, L. and Ivarsson, A. (2013) ‘Change and learning strategies in large scale change programs: Describing the variation of strategies used in a health promotion program’, Journal of Organizational Change Management, Vol. 26, No. 6, pp. 1020–1044 (p. 1023).
(6) Appelbaum, S., Habashy, S., Malo, J. L. and Shafiq, H. (2012) ‘Back to the future: Revisiting Kotter’s 1996 change model’, Journal of Management Development, Vol. 31, No. 8, pp. 764–782.
(7) Kotter, J. P. and Cohen, D. S. (2002) ‘The Heart of Change: Real Life Stories of How People Change Their Organizations’, Harvard Business School Press, Boston, MA, p. 10.
(8) Ibid.
(9) Young, M. (2009) ‘A meta model of change’, Journal of Organizational Change
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(10) Apollo Education Group (2013) ‘Apollo education group’s global learning platforms’, available at: http://www.apollo. edu/learningplatforms.html.
(11) Appelbaum et al., ref. 6 above.
(12) Ibid., p. 777.
(13) Kotter, J. P. (2007) ‘Leading change: Why transformation efforts fail’, (HBR Classic), Harvard Business Review, Best of HBR, pp. 2–10. (14) Ibid.
(15) Ibid.
(16) Ken Blanchard Companies (2007) ‘Welcome to leading change’, available at: http://www.kenblanchard.com/img/pub/leading_change_handout.pdf
(17) Corporate Portfolio Analytics ‘Alternative workplace implementation as change management’, (2011) available at: http://cpanalytics.com/pdfs/CPA%20 Spring2011%20AWS%20as%20change%20 management.pdf.
(18) Kotter, ref. 13 above.
(19) Ibid.
(20) Andrew WebbPeploe, Achievers. (21) Kotter, ref. 13 above.
(22) Ibid.
(23) Ibid.
(24) Corporate Portfolio Analytics, ref. 17 above.
(25) Kotter, ref. 13 above.
(26) Harold, D. M., Fedor, D. B. and Caldwell, S. D. (2007) ‘Beyond change management: A multilevel investigation of contextual and personal influences on employees’ commitment to change’, Journal of Applied Psychology, Vol. 92, No. 4, pp. 942–951.
