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Organisational change vs. transformation

Georg Hirschi & Charles de Sabran-Pontevès Article 3 mins

The challenge

Digital disruption is only one of the factors that is driving increased transformation across industries and geographies – other influences include tougher competition, globalisation and shifting market demands. In a recent LHH survey taken across 432 individuals, 85% of respondents mentioned that they expect increased transformation activities in the coming years.

The issue is that most transformation projects are not yielding the expected outcomes and are unsuccessful both short and long-term. McKinsey’s global survey across 1,946 individuals support this as few executives say their companies’ transformations succeed. 

The survey results reveal that only 26% of respondents say the transformations have been successful at both improving performance and equipping the organisation to sustain improvements over time. 

Balancing the pain and gain for successful transformation

In order for sustainable change to occur in today’s complex business environment, clear decisions need to be made on how the desired future state is achieved (GAIN) while working on the turnaround (PAIN). The GAIN includes the delivery of a reinvigorated simplified organisation, focused on growth markets while the PAIN’s focus is on performance improvement, efficiency and cost reduction all involving tough decisions. 

In our experience the major reason leading to poor transformation outcomes lies in the fact that organisations don’t take a rigorous approach to integrating all the initiatives required at an organisational and people level to coherently
implement lasting change.

pain gain curve

Instead many organisations tackle business challenges with short term restructuring projects that focus on the pain points, instead of also investing in the people needed to transform and develop a reinvigorated company – the gain.

Re-structure, re-engineer and re-organise steal priority over re-imagine, re-invent and re-engage. As a result companies get stuck in a rut. Ever changing. Never transforming.

In order to achieve the desired transformation results, interactive change needs to take place where all actions and services supporting either GAIN or PAIN initiatives are integrated to deliver a shared vision and new organisation. If this balance is achieved you’re “in the box” which leads to transformation success.

Seven transformation principles

With the experience of supporting organisations through transformation all over the world, LHH has developed seven principles for successful transformation:

1. Know where you are heading and why: without a landing strip you’re just another plane in the sky

  • How clear is the picture of where you’re going to be when you get there?
  • Is that clarity held across the organisation in the mindsets of individuals in the

2. All change is personal

  • Organisational transformation is going to have an individual impact
  • As a consequence you need engagement at the individual, personal level

3. At the heart of every organisational transformation lies the fact that people need to do things differently by either stopping old behaviour, starting new behaviour or a combination of both

  • We tend to change structures, processes and systems to make ourselves believe we are transforming and changing 
  • People will need to use these structures, processes and systems in a meaningful way to get an outcome – if that doesn’t happen, we haven’t transformed, we are still the same

4. Transformation takes energy – it requires more effort to transform than to stay the same, more than 7 things pushes our limits

  • 7 initiatives is the limit of our working memory
  • It’s about making choices, being focussed and getting the most value out of what you do 
  • The brain ignores most things – we turn off what’s not important 
  • Influencing and engaging people requires time and energy

5. You cannot achieve an organisational transformation with a business as usual mentality

  • “Inside the box” – when interactive change takes place, is not business as usual
  • You need to make very distinctive and differentiated choices on how you are going to manage the business during this period

6. Not all people who start the journey will be there at the end: it’s about critical mass

  • Everyone must get on a bus. There are 2 buses and they are not going to the same place 
  • How do we make sure most people get on the right bus and how do we manage those who are never going to make it? 

7. The biggest contributor to the success of a transformation is not process but mindset

  • What are the mindsets that prevail in an organisation? And what are the mindsets that hold people back? 
  • The behaviour will flow from the mindset when you have accord between what you think and what you do 
  • Without mindset shifts, there is no behaviour change - without behaviour change, nothing changes

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