People & Leadership

Small business guide to change management

Change is good for business but people react differently; some thrive, others get nervous. We cover 5 steps of change management with useful models.

Change is good. It acts as a catalyst to your business, causing you to do things differently.

Being open to change helps you maintain a competitive edge, stay relevant, and attract the best people. Change fosters innovation, skills development, and staff development.

But while change is good for business, people react differently to change. Some thrive; others get nervous and uncomfortable.

As a business owner, you are responsible for managing different emotions and responses towards change and leading your team through times of uncertainty. This is why change management is crucial, whether you’re shifting into a new market, overhauling your organisational structure, or adopting new technology.

Five steps to change

Let’s say you want to switch from an on-premise payroll and HR solution to cloud-based specialist software that supports employee self-service and provides powerful insights into your people function.

First off, you’re not alone. The recent payroll and HR in SA: Rising to the challenges of change research from Sage found that 70% of HR and payroll professionals at small and medium-sized businesses in South Africa intend to make the switch in the next year.

Here’s an example of a change management plan that you could implement.

  1. Create a communication plan

Clear, consistent communication is vital throughout the change process. People need to know what to expect, what’s expected of them, and the impact of change on operations and culture.

There are three distinct phases during a change management project – before, during, and after – and each stage has important communication objectives.

What to communicate before change:

People need to know why you’re changing HR and payroll systems and why it’s important.

For businesses, the beneifts of switching to cloud-based HR and payroll systems are obvious. In fact, 86% of respondents to the Sage research link the increased use of cloud technology to their organisations’ ability to operate in a remote or hybrid environment. Other benefits cited include increased productivity (62%), the ability to access information anywhere, any time (61%), and the ability to integrate HR, payroll, and accounting software (56%).

For your people, however, the benefits might not be this obvious.

Getting buy-in from your team at the start is essential to the success of any change management project. It ensures that people carry out their responsibilities correctly and makes them more likely to tolerate hiccups.

During this phase, aim for clarity, transparency, and empathy. Explain the benefits the new software will bring (such as self-service leave requests or a shift from manual to digital expense capturing). Also, discuss the potential downsides (such as the potential for integration issues with legacy systems and the inevitable learning curve everyone will need to complete).

Tip: Always frame the downsides positively. Yes, there’s a learning element, but, in the long run, the new software will save time and eliminate repetitive, mundane work.

Answer questions such as:

  • What changes are coming?
  • How long will it last?
  • Who is impacted?
  • Is my job safe?
  • Will I have to do more work or learn new skills?
  • Will I have to work with new people from another office?

What to communicate during change:

Regular, consistent communication throughout the change project is crucial – even if there’s nothing new to report. Knowing that everything is going well and is on track can put people’s minds at ease to focus on the important stuff.

When implementing new software, you could share progress and feedback from colleagues already using the system. Address issues as they arise and be transparent in how you’re handling them.

Decide how often you’ll communicate (e.g. once a week) and what channels you’ll use (e.g. email, Zoom meetings, or Slack) and stick to a schedule (e.g. Tuesdays, 3pm). Any communication platform you use should make it easy for your team to provide feedback, ask questions, and suggest new ways of doing things. They need to know that you value and consider their perspectives and feedback.

Continue to emphasise the benefits that will result from seeing the change through.

What to communicate after change:

Wrap up the change project with a final message to your teams, thanking them for their support and role in the project’s success. After all, you would not have been able to do this without their cooperation.

Share the results you achieved and highlight the benefits your team should already be experiencing and what’s still to come. You could also share interesting insights produced by the software.

  1. Create a plan

To ensure the success of your change project, you must first understand the people and financial resources that will be required.

  • Assign roles and responsibilities.
  • Outline the change framework and steps.
  • Use specific metrics and dates when setting milestones, but build in flexibility to accommodate the unexpected.
  • Decide how you will manage setbacks so that everyone knows what to do and can act immediately (more on this later).
  1. Appoint a project manager

The project manager ensures that the change project stays within scope, deadline, and budget. As the ultimate project champion, this person must be an ambassador for change.

Their responsibilities could include:

  • Developing goals and milestones
  • Establishing and measuring KPIs
  • Assigning duties and responsibilities
  • Managing conflict and resistance
  • Leading, inspiring, and motivating your people

Notably, the project manager acts as a go-between, facilitating feedback from the team and adjusting the plan as a result of the feedback.

  1. Prioritise training

Training is required at many levels to ensure the success of your change project, but teaching people how to use a new system is only part of it.

  • Soft skills: Managers must be able to communicate the vision to their teams confidently. They’ll need to show consistent leadership to inspire and motivate people and overcome any apprehension.
  • Hard skills: Managers must understand the software deployment plan and how to use any training manuals, tutorials, FAQs, and informational slide decks, in case they get questions from their teams.
  1. Implement change

Once your people know what to expect and have received the tools and training to help them through the transition, you’re ready to kick off.

Let your team take ownership of their specific duties while your project manager ensures everyone follows the framework and processes. Track progress, keep everyone updated, evaluate the results, and make necessary changes.

Managing resistance to change

No matter how well you communicate the benefits of change, there will always be resistance. And despite your best efforts, implementing large-scale changes in your company may not always go as planned.

That’s because change can cause upheaval, which is stressful for some people, particularly long-time employees. When confronted with change, they may resist by returning to the “old ways” of doing things and hoping that the change goes away.

Accept that there will be times when you will need to solve a problem caused by the change or make decisions based solely on the change activity – this is normal. Anticipating roadblocks can help you avoid them before they become significant issues in implementing change at the workplace.

Embrace setbacks as teaching moments and learn from them. If necessary, hire a change management consultant to assist you, especially on large projects.

Examples of change management models

There’s no right or wrong way to implement change, but there are plenty of change management models to guide you.

Here are four examples.

McKinsey 7-S Framework

The McKinsey 7-S Framework, developed in the 1970s, depicts a network of interconnected factors influencing a company’s ability to change. Because there is no hierarchy among these factors, making significant progress in one area of the organisation without addressing the others will be difficult.

According to this model, seven internal elements of an organisation need to align for change to be successful. These are:

  • Strategy: How you plan to build and maintain a competitive advantage over competitors.
  • Structure: How your business is organised (e.g., how departments and teams are structured, reporting lines, and organisational charts).
  • Systems: The activities and procedures performed daily by employees to complete their jobs. This includes formal processes and IT systems.
  • Shared values: What are your core values, and how do they reflect in the general work ethic? Shared values are central to the development of all the other critical elements.
  • Style: Referring to leadership style.
  • Staff: Your people and their capabilities.
  • Skills: Internal skills and competencies.

You can use the McKinsey 7-S Framework to manage change by ensuring that all elements are in harmony.

Kotter’s 8-step process for leading change

The Kotter change management methodology outlines eight steps for leading change:

  • Step 1: Create a sense of urgency – Identify the reasons for change and communicate these in a way that’s memorable and easy to understand.
  • Step 2: Build a guiding coalition – Build a team to champion for and implement change.
  • Step 3: Form a strategic vision and initiatives – Define how things will work in future, i.e. what is your new philosophy?
  • Step 4: Enlist a volunteer army – Share your vision, explain why change is necessary, and get them excited.
  • Step 5: Enable action by removing barriers – Encourage people to act by giving them good reasons to change.
  • Step 6: Generate short-term goals – Quick wins keep people motivated.
  • Step 7: Sustain acceleration – Track progress, measure and evaluate the impact of change
  • Step 8: Institute change – Make it part of your culture.

The Prosci ADKAR change management model

The Prosci ADKAR Model puts employees at the centre of change management by supporting them through the change process.

ADKAR is an acronym for the five outcomes an individual needs to achieve for change to be successful:

  • Awareness of the need for change
  • Desire to be part of the change
  • Knowledge on how to change
  • Ability to implement desired skills and behaviours
  • Reinforcement to sustain the change

The 7 Rs of Change Management

This model is generally applied in IT when businesses need to change their infrastructure or service management. Still, it’s a helpful model for any change project.

The 7 Rs of Change Management is a checklist of important points to consider when submitting a change request. These are:

  1. The REASON behind the change. Answer this question to avoid making changes that increase risk without providing any business benefits.
  1. The RISKS involved. There is always a degree of risk associated with any type of change. The real question is: how much risk are you willing to take? It is possible to mitigate some risks, but not all of them. If the worst happens, have a plan in place to deal with it. Also, consider the consequences of not making a change.
  1. RESOURCES required to deliver the change. What skills and IT assets are needed to enable the change, and are they available? If people and assets are reassigned to address this change, what will the impact be on other projects currently underway?
  1. Who RAISED the change request? All changes must be approved. You can address authorisation by creating a system for recording all changes in one place. This single “system of record” is extremely helpful during audits.
  1. What RETURN is required from the change? Before implementing any changes, it is critical to understand the return on investment in order to prioritise activities.
  1. Who is RESPONSIBLE for creating, testing, and implementing the change? Responsibilities for each of these three functions must be clearly defined, particularly in light of compliance and auditing requirements.
  1. RELATIONSHIP between suggested change and other changes. Are there other change projects underway? If so, how will they impact each other across functional boundaries?

Change takes time

Remember, change is a process. Move at a sustainable pace and take small steps – it’s better to do it right than do it fast.

Have a plan, communicate it, assign responsibilities, and be prepared to address any challenges or objections that will inevitably arise.

Read our other small business guides:

  1. Small business guide to succession planning
  2. Small business guide to business continuity planning
  3. Small business guide to crisis communications
  4. Small business guide to cloud migration
  5. Small business guide to budgeting and goal setting
  6. Guide to creating a business plan