In order to reach your business goals, you must keep pace with change across your processes, products, and people. In some cases, more substantial change is necessary — especially when companies become misaligned with their goals.
When this occurs, the fallout can be significant, with implications for everything from your bottom line to employee morale. Correcting courses can be difficult, especially without a systematic approach to navigating the way forward.
Enter: organizational transformation.
Here, we’ll take a closer look at what organizational transformation is, why it matters, and how to know if it’s right for your business. You’ll also learn five steps for guiding your organization through a successful organizational transformation.
What Is an Organizational Transformation?
From external factors like changing market conditions and emerging technologies, to internal factors like new leadership and acquisitions, many drivers fuel business change.
While the specific causes may be different, the takeaway remains the same: Businesses and their employees must be agile enough to adjust to meeting these challenges.
Unfortunately, this isn’t always the case. In fact, many businesses resist change. In doing so, they’re setting themselves up to fall behind.
That’s where organizational transformation comes in.
Organizational transformation is a business strategy for taking an organization from where it is now to where you want it to be in the future. It “enables an organization to operate differently in support of their business strategy,” according to Deloitte.
2 Types of Organizational Change
The two types of organizational change are adaptive and transformational.
Adaptive changes are small and incremental in nature; more focused on fine-tuning. Transformational changes, however, are fundamental. They involve shifts in:
Organizational transformation asks (and answers) one overarching question: How can you align your organizational structure, talent, leadership, and culture with your business strategy to deliver true transformation and sustain it over time?
While many aspects factor into organizational transformation, workplace culture is at the heart of the effort for one simple reason: If employees aren’t open or engaged enough to embrace change, organizational transformation won’t happen.
Effective people leaders are one way to ensure everyone in the organization is fully on board and accepting of changes. Learn how we can help source and hire a people leader.
How Do You Know if an Organizational Transformation Is Needed?
All businesses face challenges that require them to change. But how do you know if you need a comprehensive organizational transformation, or if adaptive changes will suffice?
These seven signs indicate that an organizational transformation may be in order.
Low Productivity or Performance
When productivity and other aspects of performance take a turn for the worse with no clear-cut cause or fix, it’s a sign that organizational transformation is in order. This is especially true when you consider the likelihood that the downturn will continue without adequate intervention.
A return to high performance is likely to take more than tinkering and may require substantial change efforts.
Difficulty Retaining and Attracting Top Talent
Engagement is everything in today’s workforce. After all, people want to work where they feel supported and satisfied. In fact, 33% of C-level executives say they’d happily take a pay cut to work somewhere that better aligns with their core values.
If you’re having trouble recruiting and retaining high-quality talent, this may be a sign that a shift is in order.
Other indicators of disengagement include:
- Low participation rates among current employees
- A deficit of innovative ideas
- Negative employee feedback
Explore how Hunt Club can help you find and hire high-quality talent for the long haul.
Poor Communication and Collaboration
Communication and collaboration are crucial to organizational success.
Communication builds teamwork by ensuring that everyone is on the same page. It helps to minimize misunderstandings (and the frustrations and low morale they often lead to) while building teamwork.
Communication also facilitates collaboration, a critical aspect of innovation. More collaboration means diverse ideas and approaches are being brought to the table. This, in turn, leads to better outcomes. On the other hand, when employees don’t communicate and collaborate, organizations stagnate.
Difficulty Adapting to New Technology and Trends
Success in the evolving business world often involves a willingness to change.
While it’s human nature to lean toward practices that feel familiar and comfortable, this can put you at a great disadvantage in your hiring processes.
When you resist adapting to changing technology and trends, you’re not just lagging behind your competition — you’re not meeting the needs and expectations of your employees (and even customers) as these trends encompass:
- Technological improvements and digital transformation
- Social media use
- Corporate social responsibility
If resistance to new methodologies and approaches is holding back your company, organizational transformation is an excellent opportunity to focus and galvanize your organization to be bold in welcoming progress and change.
Decrease in Customer Satisfaction or Loyalty
Customers are willing to pay a 16% price premium when they feel appreciated. On the other hand, 59% of customers say they’d walk away completely from a company after a few bad experiences — even if it’s one they love.
What’s the takeaway here for brands?
If your customer satisfaction or loyalty is waning, it’s time to change your approach.
Limited Growth and Poor Financial Performance
Is your company experiencing limited growth, performing poorly, or losing market share to your competition?
If so, corrective action is necessary to regain the competitive advantage. And while these things don’t necessarily mean your culture is to blame, a closer look is in order.
Lack of Clear Direction or Vision
While there’s some debate about whether organizational culture is top-down or bottom-up, leaders provide essential direction and vision.
If they don’t prioritize modeling and coaching employees, they’re limiting their potential. This is an impediment to culture change and growth, both individually and company-wide.
Furthermore, without adequately conveyed leadership values aligned with the organization’s mission, team members can feel directionless and without purpose.
Learn how Hunt Club can help you find the best leaders who can spearhead organizational transformation.
Why Organizational Transformation Should be a Priority
Whether it often manifests as falling short of customer expectations or low morale among workers, failure to change can also have a serious and detrimental impact on business outcomes.
The organizational transformation imperative is simple — without it, companies cannot position themselves for sustained success.
Upsides of organizational change include:
- Smoother, more predictable, and less expensive company transitions
- Higher employee satisfaction and morale
- More assurance for stakeholders like investors and prospective employees
Despite the many benefits, successful transformations are a little easier said than done. In fact, after surveying people who participated in organizational transformations within the previous five-year period, McKinsey concluded that fewer than one-third of companies were successful at improving and sustaining performance.
The key to bucking the trend is making the principles of transformation “business as usual.” This starts with having the right leadership team.
How Leadership and Human Resources Guide an Organizational Transformation
Corporate leadership and human resources are pivotal to guiding the organizational change process. Here’s a closer look at the role of each in the process, along with how the two can work together to achieve a successful organizational transformation.
Senior Management and Company Leadership
Company leadership sets the direction and strategic vision for the organizational transformation process. It also establishes a sense of urgency: Why is an organizational transformation necessary, and what does it mean for employees, customers, and the company at large? Proactively and compellingly answering this question is the key to generating organization-wide buy-in.
Just how important is strong leadership to organizational change?
According to Bain & Company findings, a company’s changeability is directly linked to strong leadership. Specifically, CEO approval ratings at companies with high “change power” are 20%-25% higher than for companies with lower changeability.
In addition to having a compelling vision, leading organizational transformation also requires CEOs, CTOs, CIOs, CMOs, COOs, and other leaders to have a broad skill set, including:
- Strong communication
- Advanced emotional intelligence
- Strong organizational skills
- High attention to detail
- Decision-making and problem-solving skills
- Ability to delegate without micromanaging
Organizational transformation directly impacts people. As such, HR is integral to organizational transformation success.
Specifically, HR helps with developing and communicating the change plan while supporting employees throughout the culture transformation.
HR-led responsibilities include:
- Training and development
- Addressing concerns
- Helping employees adapt to new roles and responsibilities
It’s important to note that HR support is useful for employees of all levels. For example, HR ensures that leaders also have access to the training they need to effectively lead change while making sure that all employees have opportunities to gain new skills and contribute to the effort.
How Leadership and HR Work Together
In order to facilitate a smooth and seamless organizational transformation, company leadership and human resources must work together to set clear expectations, monitor and measure progress, and create a culture of change.
5 Steps for Achieving a Successful Organizational Transformation
Adaptive changes to existing business processes, products, and company culture happen every day. Still, organizational transformation is a big-picture endeavor requiring a comprehensive and large-scale approach.
Because of its monumental impact, organizational transformation can seem overwhelming. Breaking it down into the five steps below can help organizations chart the path forward.
1. Define Your Goals and Desired Outcome
In some instances, organizational transformation is driven by the need to address a particular problem or issue. In others, it has a broader purpose. In both cases, defining your goals and desired outcomes is essential. In fact, the rate of transformation success spikes by more than 80% when a clear purpose is defined.
First and foremost, goals should align with your company's vision and values.
It’s also important to be specific. What areas of improvement are in order, and how will you measure progress? This is the time to set measurable objectives that will help you assess whether your transformation efforts are working.
Finally, aim high with financial targets, for the simple reason that people tend to meet high expectations.
2. Develop a Plan and Identify Key Stakeholders
Once you’ve identified your desired goals and outcomes, it’s time to drill deeper to formulate a plan for executing them. This involves:
- Identifying key stakeholders and building your team
- Identifying key messages and communicating them to all stakeholders
- Establishing clear timelines, milestones, and benchmarks
- Developing a detailed roadmap for change
3. Communicate Change Effectively and Involve Employees
We’ve already addressed that people are at the heart of culture transformation — but only if you have their support.
That’s why it’s crucial to make sure that they understand the reasons for the transformation, along with their roles in achieving it.
One-way communication is not enough when it comes to making an organization’s transformation goals tangible for all team members. Face-to-face communication, such as leadership town halls, is also vital.
Regardless of your best transformation efforts, some employees may be resistant to change. In addition to clear and consistent communication, having a forum for employees to voice their concerns can provide reassurance and mitigate resistance.
4. Execute the Plan
Having a plan is one thing. Implementing it is another. Once you’ve defined your goals, developed your plan, and engaged your employees, you’re ready to act.
This begs the question: What exactly does that entail?
Implementing your plan also means doing the following:
- Gathering all necessary data
- Monitoring progress with targeted metrics
- Gleaning actionable insights
- Having regular check-ins with stakeholders
- Identifying and addressing obstacles and challenges that arise along the way
- Celebrating successes
5. Sustain the Transformation and Be Ready To Adapt
Remember, transformation is ultimately about building a culture of change.
Organizational transformation is inherently fluid.
To support sustainability, you should be constantly reevaluating progress in order to modify and reprioritize, if necessary.
Additionally, extreme transparency regarding the direction of the company can help protect and sustain your organization’s culture.
Transform Your Organization and Reach New Heights of Success With Hunt Club
A well-planned and executed organizational transformation improves performance while also enhancing company culture. However, the process is complex and multi-factored.
That’s why breaking it down into smaller increments — all of which keep your vision and goals within sight — can help.
As with many aspects of organizational success, transformation comes down to having the right people in the right place. Hunt Club can help.
A full-service recruiting company, we harness the power of AI to efficiently and effectively connect you with the best talent in order to move forward with your vision and purpose.
If you’re ready to transform your recruiting processes (and your organization), we’re ready to help.