LEADERSHIP: THE KEY ELEMENT IN ORGANIZATIONAL CHANGE

Management leadership--especially top management--is probably the most critical element in a major organizational change effort. This leadership role cannot be delegated, for example, to a consultant. Two recent change efforts dramatically illustrate this point. When International Harvester was transformed into what is now Navistar International Corporation, top management relied very little on external consultants. In 1983, CEO Don Lennox, along with other top managers, assessed the firm's management practices, concluding that improvements were needed. After studying change efforts at other companies, they decided the top officers should become the change agents in their own units. Team-building was used extensively. The resulting Continuous Improvement Teams (CITs) were led not by human resource or organization development specialists but by middle-level line managers. Along with other management-led interventions, CITs have changed the company from a sluggish, unprofitable bureaucracy into a streamlined, world-class manufacturer with a solid reputation as an innovator.The second example of management leading the change effort occurred at a major rust-belt bank that needed to become more competitive. The president decided at first that training employees and first-line supervisors was the best way to reach this objective. However, the assessment of the need for training, in which a consultant interviewed those to be trained, revealed that the bank's problems were far deeper than the president had realized. More than just a training program was needed. As a result, the bank began an OD program, the overriding intent of which was to produce a highly competitive organization that treated its employees with dignity.

A key point in this OD program was that top management should lead by example in managing the change effort. First, the chairman began the effort by promising job security for those who met job expectations. Second, he designed a new organization chart with customers at the top and him at the bottom; the message was that the company served its customers and supported its lower-level management. Third, changes were implemented gradually so managers would have time to learn their new managerial skills. Fourth, OD activities such as team-building and process consultation were designed and led by line managers, who received training in the use of these techniques. The thinking here was that employees would respond better to line managers than they would to external consultants; the latter would not be as familiar as the managers with the problems the employees faced on the job.

As these two examples illustrate, it's quite important that top management be involved in leading the change effort. However, it is doubtful that just a small group of top executives can lead the effort alone. David Nadler and Michael Tushman (1990) suggest that this leadership responsibility should be institutionalized throughout the management system. The senior management team could share the responsibility of creating and articulating the new vision for the organization. The senior team could even be broadened to include individual managers with special expertise or those from positions one or two levels down the hierarchy.

The Nature of the Leadership Required

At this point, readers might wonder if a certain type of leadership is required. Are there specific things management can do to set the stage for successful change? The answer is yes: some rather specific leader behaviors are critical in organizational change programs. Jerry Porras and Susan Hoffer (1986) found that communicating openly (sharing intentions, listening) and collaborating (making decisions in teams) were most related to success in OD efforts. Teresa Covin and Ralph Kilmann (1990), in their survey of 1,005 individuals, including managers, consultants, and researchers, found similar results. In addition to communication and widespread participation, they noted two other key leadership behaviors. First, top management needs to demonstrate visible and consistent support for change. Modeling expected behaviors is important; if the change effort calls for team-building, then top management should be the first group to try to build teams. The other important leadership behavior noted by Covin and Kilmann is tying the change program to business needs. Management needs to show how the change will improve outcome measures such as profits, productivity, or quality of work life.

Larry Smeltzer (1991) further highlighted the importance of communication and collaboration in his study of change in 43 organizations. The most commonly cited reason for the failure of a change effort was the presence of inaccurate and negative rumors, often caused by management's neglecting to provide timely and accurate information. The second biggest reason for failure was that of employees learning of the change from outsiders--again, because management did not communicate. Many employees, especially those affected by the change, expressed extreme resentment about this situation. The final cause of failure Smeltzer noted was management's reliance on a "lean" channel of communication, such as a memo instead of a face-to-face meeting.