How Effective Change Management Drives Business Success

Kathy (host):  

Well, hello there, and welcome to another episode of “Help! My Business is Growing,” a podcast where we explore how to grow and build a business that is healthy and sustainable. I’m your host, Kathy Svetina, a fractional CFO and the founder of New Leaf Finance, a company where we believe that everything that you do in your business is eventually going to end up in your finances, and to get to healthy finances is to have a healthy business. The question here is, how in the world can you get there? Well, this is where this podcast comes into help. You know, when I was in the corporate world, one of my first managers told me that the only constant in life is change. And I believe that this is true for life, and in business as well, because change is inevitable in business, whether you’re leading a small company, or maybe you’re even a part of a large corporation. And what’s also inevitable is that there will be resistance to these changes. And as they surface, they can create major hurdles in your path forward and in your business. So getting change management right is crucial because if not, it could negatively impact your business. Actually, not just could, it definitely will negatively impact your business. So how do you manage this change effectively? And what are the key steps to make sure that there is a smooth implementation of change, while as smooth as possible? And how can you convince your team to join you in embracing this change, so your business stays financially healthy and sustainable? As a quick reminder, all of the episodes on this podcast, including this one, come with timestamps for topics that we discussed, and each one has its own blog post. You can find all the links and the detailed topics in this episode’s show notes. My guest today that is going to be talking about change management is Ursula Jorch. She is a business coach, speaker, and the founder of Work Alchemy. She helps women leaders transform their businesses into profitable agents for change, create global impact, and become recognized as a powerful force for good. She works at the intersection of consciousness and capitalism, so clients can make strategic business decisions and achieve financial goals while nurturing team and personal development. Join us.

Kathy (host): 

Hello, Ursula, and thank you so much for being on the show today.

Ursula (guest):

It’s my pleasure, Kathy. And I’m looking forward to our conversation.  

Kathy (host):

Yeah, me too. You know, we’ve had quite a few episodes on the podcast talking about change management. There’s a good reason for it, because as we all know, this podcast is targeted towards growing businesses. And when you’re growing, there’s a lot of change. You’re going to have change in operations, in the way how you manage people, what you need to expect from them, how they need to interact with the world outside of your company. And if this change isn’t managed well, it can be really painful. You know, just like growing pains – you are growing, and sometimes it’s painful. That’s absolutely true. But, you know, we talk a lot about change management. And this is a word that it’s very familiar to people who come from a corporate background, because that is just something that we talk about there. But before we go any further on this episode, I always like to define the word that we’re going to be discussing. Can you define for us, what exactly is change management?

Ursula (guest):

The way that I look at change management is it’s a process of guiding organizational change through successful preparation and implementation so that you get, at the end, the desired change. So that’s, in essence, what change management is.

Kathy (host): 

Why do you think that so many businesses struggle with this, especially businesses in the corporate world struggle with this, but especially hard in businesses that are small?

Ursula (guest):

Yeah, I agree. I’ve worked in both settings. And I think there’s one thread that’s common across the board, and that is, change is something that people often struggle with. It’s not something people necessarily embrace and go, “Yeah, that process I just spent two months learning is now going to shift. Yeah!” So you’re going to get resistance, that’s an integral part of change. And it’s part of the challenge of managing change in your organization.

Ursula (guest):

So I think also for smaller companies, and especially where the founder is still involved, there’s a sense of real ownership of the company. And the evolution of it has depended so much on the founder. And it requires the founder to change, and really, the kind of person you are when you first start a company, there’s a startup situation, you’re all excited about getting things rolling. And as the company gets more settled and starts to grow, it requires a different kind of leadership. And that requires leadership growth on the part of the founder or the person running the company. And that can take some time. I’m actually working with a client right now who is going through that very thing, where the company has done really well up to a certain point. But in order for him to make the shift and allow for scaling and growth, and therefore increase revenue, he has to shift, he has to let go of some things and be able to delegate and set up the systems for effective delegation. So that’s one example of a scenario that every founder faces, and it’s certainly something that is part of the process of running a company.

Kathy (host):  

When you are growing as a leader, what are some of the struggles, for example, your client, the ones that you were talking about? What are some of the struggles that they are facing on a day-to-day basis when they are operating within the company? Is it maybe that they’re not the type of leader that they need to be? Or maybe people are resistant to change? What is the day-to-day looking like for them to really understand that, “I need,” so that the light bulb comes in, “Hey, I need to call someone to figure this out with me. And how do we manage this change in the business?”

Ursula (guest):

I think it depends on the person to some degree, but there are some things that crop up fairly regularly. One is just a reluctance to let go of control over a certain part of the business. So you may have delegated some things, but not maybe this part. And so you have to now look at, “Okay, how can I start to hand this over to somebody else so that I’m not a bottleneck, or that I’m not having to be involved in this so that I can spend time on business development or other scaling activities?” So that delegation aspect is one where it can be hard psychologically to let go and feel confident that the business isn’t going to suddenly crash and burn because you’ve handed it off to someone else. So part of the change management process is really working incrementally to release that. And also some coaching as well to work through the fears that come up of, “You know, what’s going to happen to my company when this change is taking place?”

Kathy (host): 

You know, it’s interesting, I had a conversation with someone who works in operations, and one thing we talked about was that a lot of times, owners or founders are so attached to their companies that they have this psychological need to feel needed. So the company is there and it’s their baby. And they don’t want to let it go because they don’t have to – they might even have the right people in place that they can take over. But they feel guilty, because it’s like, “If I’m not running the day-to-day stuff, what am I going to be doing then?”

Ursula (guest):

Yeah, I think that’s a question to be asked and to deal with, where you start to question your own validity in the company, “What am I doing that’s contributing something here?” And I think that’s largely a situation where you’re dealing with an unknown. You’ve been working in a certain way, you’ve been doing certain things, and now you’re looking at moving up a level and taking on a more strategic attitude towards the company, so that you’re guiding from a strategic perspective, rather than a nuts-and-bolts day-to-day operational perspective. And that’s a shift for a lot of owners, where they’ve had their hands in, they’ve been really busy in the day-to-day tasks, and they need to step back and be able to look at it from really a visioning point of view, “What is it that I want my company to become?” And that process of visioning can be, it’s an important part of the change management process, to have a vision and then look at a plan for implementing it. And that’s the role that the owner or founder can play.

Kathy (host):

If we’re trying to make that jump of being an operational owner to actually being an owner that has people under you and you’re delegating, setting up a vision is one of the tools that you can use. Can we talk about, like, what are some of the other things that you can do to get yourself to be more of this owner versus an owner-operator? Is there like a step process that you have? Like, what exactly do you do to help them to figure this out? Because I figure you know, this is kind of a muddy situation, and a lot of it can be mindset, some can be the people are not in the right places. There’s a lot of stuff happening, probably.

Ursula (guest):  

Absolutely. And where we come in is really to put some clarity on an often cloudy situation where you know that change is necessary, but it’s unclear necessarily how to go about it. And even the change itself may be somewhat unclear in parts. So the steps that we go through.

Ursula (guest):

The first is really preparing people – everyone in the company needs to know this is happening, it’s going to happen, and what are the reasons why it’s happening. And this is where communication is so important. And I always emphasize over-communicate. If you think you’re talking about it too much, you’re probably not talking about it quite enough, because people tend to make stuff up. It’s human nature, if we don’t have information, we kind of fill in the gaps through extrapolating where we think the meaning of things are. And there’s that really powerful informal communication network. I mean, you’ve got, if you have folks working for you, you’ve got the line authority, and you’ve got kind of layers of management. But that’s only one aspect of communication in your company. The aspect that’s probably even more important is this informal communication going on in the background.

Ursula (guest):

So that’s one step. The second step really is to create a clear vision and communicate it. And out of that vision, create a step-by-step plan with KPIs, key performance indicators, that clarify who the stakeholders are, what exactly is the scope of the individual step, and really be clear about that and communicate that to people, and especially to your management team if you have that layer in your company. Bringing managers along in the process is really important because they need to buy in, they need to be an example of acceptance of the change. And that really helps people along.

Ursula (guest):

The third step is really empowering the team. So implementation, empowering the team, and managers in particular, help identify and remove any roadblocks that they have to implementing the change.  

Ursula (guest):

The fourth area really to look at is embedding the change in the company’s culture and practices. So what kinds of things support the change that you’re looking for? It can be the structure of the company, or it can be in a reward system, it can be in various controls that you have in place to keep things running smoothly. So that embedding in the culture is really important. There’s a very famous management consultant named Peter Drucker, who said, “Culture eats strategy for breakfast.” And what that means is that if the culture has not caught up to the change, you’re still going to struggle. And even if the strategy is really clear.

Ursula (guest):

And then the last aspect is really to look at progress as you go. Are goals being met? If they are being met, how can you replicate how that process went for other goals? And take a look at what’s going wrong, what’s not up to either the timeline or the goal. What is it that you could learn from that, and then apply it? And look at the results, see what happens. And we recommend really doing that at a regular interval, including things like celebrating successes, and making sure that people know that progress is being made, it’s meaningful, and they’re part of it.

Kathy (host):

That’s really good. And that’s a very good step-by-step. As you were talking about this, I jotted down a couple notes, because I want to jump back into the first step, because when you were talking about over-communicating, and there was the difference between those informal and formal communication. Can we talk a little bit about that? How does that look like? What’s the difference between formal and informal? And how does that look like in practicality?

Ursula (guest):

Well, when I say formal communication, that is anything provided to managers and employees about the change. So it can be email, it can be an all-company meeting, whatever forms of that you choose to communicate in an official kind of way. That’s the formal channel. And then the informal channel is the kinds of conversations people have when they stop at somebody else’s desk, and they go, “Oh, my goodness, like this! I don’t know how we’re going to do this. This is really hard. And why are we changing this anyway? Because it was working just fine before.” So that kind of thing really erodes not only people’s morale and energy, although that may seem like a fairly innocuous kind of comment. A lot of that starts to erode the change process and really prevents people from just stepping into, rather than saying, “I don’t know how this is going to work,” or “I hate this thing,” stepping into, “Okay, I can see how this could be helpful. So what can we do to start to help make that happen in a way that’s going to make it easier for everybody?”

Kathy (host):

What is it that you can do as an owner, and how can you empower the managers who are closer to these employees that are stopping by each other’s desks and saying, “Ugh, I really don’t want to do that. Why are we doing this?” Is there anything that you can do to influence those conversations?

Ursula (guest):

Absolutely. We’ve already touched on one important aspect, and that is over-communication – share continually and repeatedly about important things that are happening, and successes, as well as conversations about, “Well, that didn’t really work. Well, what can we do differently?” So there’s the frequency and volume of communication, but there’s also the quality of communication. So letting people know that your door is open for feedback of all kinds. And this is where companies that haven’t put a lot of energy into developing the culture can run into some pitfalls, because what may happen is, then you’ll get a deluge of negativity, and “Why this doesn’t work.” So you need to create a framework around it, of, “I’m happy to hear any concerns that you have, and come to me with your suggestion for what we can do about that.” Because that is empowering and helps put the onus back on people in the company. It’s not all up to the senior manager, the founder or the owner to make that all happen. It’s got to be a group effort. So helping people feel part of things by keeping them in the loop and being a part of that process – all of that is really important.

Kathy (host):

And I’ve experienced that personally myself when I was in the corporate world, and we had a lot of change happening. One of my first managers, you’ve got to laugh at this, but one of his sayings was, “Everything in life changes, but there’s only one constant, and that is change.”

Ursula (guest):

Yeah, that’s a great quote.

Kathy (host):

So now that we are communicating that to the employees and to people, and hopefully we’re getting to a place where those informal conversations are positive, or at least neutral, if not positive. And now we’re defining the vision and we have the step-by-step plan. What are the KPIs that you have seen in other companies that can actually track this change? That’s helpful for people that I can say, “Okay, now I have a set of KPIs.” And hopefully there’s, you know, one to a max of five of them, not 20 KPIs. What are some of the KPIs that people can use in their business that you’ve seen are successful in other businesses?

Ursula (guest):

And I’m happy to answer that. And I just want to, after that, let’s circle back to something you said about aiming for communication to be positive or neutral, as opposed to negative, because I think that’s an important point to make. 

Ursula (guest):

So in answer to your question about the KPIs, it varies so much from company to company. So one of the things that you want to be looking at, on a very broad level, is the process specifics and breaking that down. Having a KPI around the key processes, or more than one KPI, is important. Making the cultural shift, that’s a valuable KPI to break down in some way, because to just call a KPI “culture,” it doesn’t really tell you anything, it’s not measurable in a broad term. But you know, you can take a look at indicators like, “Are people coming forward with suggestions on how to make things work, as opposed to not? Are they adopting the process?” So you can start to break it down into measurable things that managers can look at.

Ursula (guest):

A third KPI, I think, is really dependent on individual companies. So I’m trying to come up with something not too specific, because that will be company-dependent, but something that’s helpful.

Kathy (host):

Or maybe what we could do is, if you can, of course, and if you feel comfortable, talk about a company that you worked with, and we can talk about, like, what industry they’re in, and what the specific KPIs were that they had about that change management? For one company, it’s usually a lot easier to talk about with one company in mind versus trying to generalize it.

Ursula (guest):  

That’s a good idea. Well, one of the clients that I worked with was going through a major shift in the partnership. So the original partnership had an agreed and shared vision, and over time that shifted, and it was leading to friction between the partners and a lack of clarity about how the company was going to move forward because it was no longer a shared vision. 

Ursula (guest):

So the KPIs that we looked at in that scenario were, interestingly, one was sales, because because of the confusion, sales had started tailing off. And there was a process debate between the partners about who was handling what in the sales process, and it was creating confusion for folks internally, and it was confusing for people on the outside as well. So we looked at sales as a major KPI indicator. And by going through that process and clarifying what it was, who was responsible for what, and also looking at the internal processes, they actually had their best sales period ever after we worked with them. So that was really effective for them.

Ursula (guest):

Another KPI for that particular client was the vision for the company. And that was something the two of them had, as I mentioned, previously shared, and then they realized by going through this process of looking at the vision that they no longer shared it, and that they had very different perspectives on how they wanted it to move forward. And one of the partners actually ended up leaving the company over a year later. So through that conversation, it actually resolved, and the process we went through of working with both of them individually and together, it really helped resolve the friction that they were having. They realized it was kind of a sigh of relief that they told me they had, of, “You know, I just was starting to get so aggravated with her. And this clarification has really helped, not only me contribute to the company in a meaningful way while I’m here, but in one case, clarity about what they wanted to do next, which was to go out on their own.” So that kind of clarity really helped them move forward.

Kathy (host):

And you know, I really liked that you put that example of that change was affecting sales, because, you know, a lot of times when we think about change management, when we talk about this, there’s these esoteric type of terms. It’s like, “Yeah, I understand it.” But I don’t really know how that affects my company on a level, except that, you know, people are not talking in nice terms. But there is a real indicator of changes happening – people are not happy, it affects sales, it’s going to affect your financial performance. And one of the taglines for this podcast is, “Everything that you do in your business is going to end up in your finances.” Of course, how you handle sales is going to affect it in a real way. And one of those is going to be sales.

Kathy (host):

And I really want to point, like, I want to bring this example up a little bit more, like, what was happening in the sales organization while this change was going on that was really affecting them? And then what did you do? What were you able to do there that the sales, you know, came out good at the end? Like, what happened there? Can you walk us through it?

Ursula (guest):

I mean, in that realm, really the lack of clarity about who was doing what was kind of an initial area that we started looking into, and there was a path for how clients were moving through the sales process that had been working previously. But because of some of these changes that were going on in the company, it wasn’t working as well anymore. So we looked at, “What process change do we need to make, and who needs to be accountable for which aspects in order to make sure this happens effectively, and we get business closing?” So that was definitely one aspect.

Kathy (host):

The other was, one of the partners had changed her focus from being partially involved in the sales process to going completely operational. And what had ended up happening was there were a couple of gaps that were created as a result of that. And they had a bit of separation of responsibility. And by working through, “Oh yeah, there were gaps here,” they could then move in to fill them with their internal folks. So those are a couple of the things that happened in that process.

Kathy (host):

Thank you for that. I mean, that really brings color to this, that, you know, whatever you do, it’s going to affect your finances. So just be, you know, you have to be mindful of that. And I did not forget that we talked about the informal communication – neutral versus positive. So let’s go back to that.

Ursula (guest):

I think it’s sometimes a hope or a wish of owners and founders that you don’t hear a lot of negatives. And I want to set the stage for setting some realistic expectations around that – some people will not be happy with the process and how things are changing. So you want to keep the door open for communication. It doesn’t mean that you’re going to necessarily get neutral communication. That’s a very corporate way of doing things, where the expectation is you expect your folks to remove emotion from being involved, and I don’t think that’s necessarily healthy for companies or for people. 

Ursula (guest):

And I think it’s important that people get a chance to talk about their concerns appropriately. And depending on the type of business, people may or may not have a lot of professional background or experience, so they don’t necessarily know how to conduct themselves in that kind of situation. And you know, so much of it is, “What kind of family scenario did you grow up in? And how did you learn to cope with change? How did you express your opinions?” And there may need to be some training around this. And this can be managers working with individuals, or you can create something that sets up the expectation right from the beginning about how to communicate the concerns that you have in a way that’s constructive, and not just a negative bashing.

Ursula (guest):

It’s not healthy for anyone to just be sitting in that soup. And people don’t want to be at the receiving end of it. So how do we make sure people are still allowed their humanness, and at the same time, in a way to make it a constructive, healthy environment for people to work in? So that’s not necessarily something everybody finds easy to do. It’s not necessarily something that you’ve thought is part of your role in business. But in terms of building a healthy culture, it’s a really important aspect. And it will help make your change process much more smooth if you can create that kind of environment.

Kathy (host):

Yeah, and I think this is really important, especially if it’s a small business where people have worked in small businesses, like if you have employees in there that have not had that big business experience where there’s a certain level. I mean, there’s professionalizing your workforce. So as you’re growing, you’re professionalizing your operations. And by that, I mean that the way how people behave in the business is going to be, it’s not as emotional and reactive. There’s a level where they know what’s appropriate, and what isn’t. And as you’ve said, you know, some people just don’t know that, unfortunately. What can you do if you are an owner that has issues with people in the business that are very reactive? They’re very emotional, sometimes people yell, I mean, I’ve seen that too. They can even belittle their employees and their managers. I mean, it’s like, I’ve seen all that stuff out there. And it’s, you know, coming from someone from the corporate world, that’s just not how you conduct yourself in business. But that’s the reality sometimes we have in a small business. Like, what can you do in that example? Anything?

Ursula (guest):

And I think the big thing is establishing expectations. So that has to come from the top. So being clear about how you expect people to behave, and that respect for other people is an important aspect. And here is what respect looks like. Respect does not look like screaming at people, it looks like this kind of scenario. And I think providing that clarity upfront is really important. It should be part of the onboarding process when you bring new folks on board, and your selection of managers has to include that element of how well they are prepared to be able to handle people’s reactions to things and giving them some coaching and some support in being able to do that effectively. I think sometimes people get tossed into the arena, and they don’t always get the level of support that they deserve. And not only in the normal day-to-day operation of the business that’s humming along, but also in the change management process. Managers really need to be supported as well to be able to be effective. And that’s an important aspect of it.

Kathy (host):

One of the things that I’ve seen that works particularly well too, as you’ve said, you know, having that onboarding process very clear on what’s expected. It’s not just having a code of conduct that you have written down, but people understand what it means. And it can be, you know, things that are very obvious to some. We do not yell, we do not belittle, we do not do these things. I have that for myself in my own business, because that has been very important to me. And you know, how do we deal with mistakes, for example, things like this? Because as you’re growing the business, you know, there’s a chance you might hire some people that are just not going to be a fit. And having that written code of conduct, it’s a good reminder for you. It’s like, “Hey, I am building a certain culture in this business. And this person clearly does not reflect that culture.” And you only need one bad apple, and it poisons the rest of them, unfortunately.

Ursula (guest):

Exactly, yeah. And you have to be prepared to let people know and be in an environment that suits them better. And being clear yourself upfront about what kind of person you would like to have involved in your company is important because then you can make those difficult choices. But I agree that dealing with that has to be an important part of day-to-day business because it can really affect other things deploying your company if you don’t deal with a difficult scenario quickly.

Kathy (host):

So let’s say now you have gone through all the steps and you have implemented the change. What are some of the signs that you can see in the business that this was, that people have embraced this change, versus they’re just going through the motions because you’ve told them to, to start off with?

Ursula (guest):

The less measurable, and I think there’s a certain ease that you start to feel as things are being adopted, and people get more comfortable with it. The quality of the conversations may shift a little bit to, “Okay, I can see how this is really helpful,” and there’s less concern about it. And there’s more just, “This is just what we do now.” And that attitude is something that you’ll notice, as things start to fall into place. It’s also really helpful to look at, you know, the measurables that you have, and really be clear. It’s always, this is human nature, it’s a surprise if you don’t attach a measurable to it, then it’s all a bit nebulous in terms of, “Are we accomplishing this or not?” But when you can actually look at hard data and have specific measures that you’re following and see progress, then that’s obviously a really clear indicator that the KPIs and goals that you chose are coming to fruition that you’ve been able to accomplish them.

Kathy (host):

Great. So first of all, I always ask this question, every single guest that comes on the podcast, and you know, we talk about 34 minutes about this change management and how to manage change. But if someone is going through the change right now, and they’re feeling the pain, you know, their employees are very unhappy about this. Like, what is the one thing that they can do, hopefully, something actionable in the next few weeks to ease that pain?

Ursula (guest):

Well, there’s really two things if I can, can I say two things? Sure. I think one that’s key is to get support yourself. Because to be going through this alone, is a very difficult thing. And it’s hard to get perspective, it’s hard to pull back, you don’t necessarily see the progress that’s being made. And there will be areas that are more difficult for you. And if you’ve got a sounding board or a coach to help you through working through those aspects, it’ll make things a lot easier. And the other thing that interestingly is going to really help is to communicate with people, talk to people in your company, do some walk-arounds, like go up to people and say, “How’s this going for you? I know you’ve been affected by this change.” Try to be specific and say, “I know this process has really been affecting you and out. How’s that going for you? And what can we do to help make this go better?” Those kinds of one-on-one communications are really valuable. And it’ll help you feel more in touch with what people’s concerns are and how it’s being implemented in the day-to-day, and it really lets your folks know that you care what they think.

Kathy (host):

That’s great. Thank you for that. So let me ask, where can people find you if they want to work with you, if they want to see what, if they want to have a conversation with you?

Ursula (guest):

You’re welcome to reach out to our website. It’s premiervalueassociates.com, PVA for short. But our website is the long name, so premiervalueassociates.com. And you can reach out to us there and let us know what you’re dealing with. And we’d be happy to have a consultation with you and just let you know whether we can help or not.

Kathy (host):

Thank you so much, Ursula. And we’re going to put all of those links into the show notes. So if you didn’t catch that, go ahead and look at the show notes. Thanks so much.

Ursula (guest):

Thank you. It’s been a pleasure.