Leadership & Management

What Is the Best Path to Realizing Organizational Change?

Research shows that getting senior leaders on board in advance is the most effective way introduce change to an organization.

July 01, 2010

| by Stanford GSB Staff

Getting all the senior leaders on board in advance is the most effective way to be successful in introducing change to an organization, according to research co-authored by Stanford Graduate School of Business Professor Charles O’Reilly.

The research found that when leaders across levels of an organization consistently support a particular change, the organization is likely to realize the performance benefits of the change more quickly and more completely than if less consistency exists. “Effective change in organizations is illusive — most organizations fail to achieve the performance outcomes to which they aspired within an anticipated time frame, if ever,” says Professor Jennifer Chatman one of the co-authors, from the Haas School of Business at UC Berkeley.

“Our research shows that effective change is less about the mechanics of the change — what new technology should be put in place, what procedures should be followed — and more about how committed leaders across all levels are to the change. We concluded that this suggests that CEO’s would be wise to spend time ensuring that their leaders down the ranks are fully informed and committed before embarking on major change efforts.”

The paper, “How Leadership Matters: The effects of leaders’ alignment on strategy implementation,” is written by three organizational behavior professors including O’Reilly, Chatman, and Professor David Caldwell, Santa Clara University. Additional co-authors include William Self, a Haas PhD candidate, and Margaret Lapiz, vice-president of strategy and implementation, The Permanente Medical Group.

Researchers studied strategy implementation at Kaiser Permanente, a large health care organization with more than one million members, 3000 physicians, and 19 medical centers or clinics. Faced with increased competition, the organization established a new strategy focused on quality and service, rather than cost.

The plan involved offering tangible resources such as a new scheduling system and redesigned call centers. A second phase sought to improve the physician-patient relationship and communication. The overall measurement of success: improved patient satisfaction.

The study used data from both physician and patient satisfaction surveys to measure how well the new strategy worked. The strategy included improvements in staffing and appointment services to enable physicians to be more responsive to patient needs. It measured the strategy’s effectiveness by assessing the leaders’ ability to communicate to employees why patient satisfaction was critical to the organization’s success — because it had not been a top priority in the past.

The results indicated that the more effective both the CEO and head of a department are perceived to be, the more physicians supported the change in strategy. Effectiveness was measured by how clearly the leader articulated a clear strategy, set a vision, provided measurable objectives, rewarded progress in the change effort, dealt with resistance, and motivated people to change.

Moreover, the data showed that leaders are more likely to be effective in getting employees to achieve organizational objectives — such as patient satisfaction — when they see leaders united in supporting the strategy, such as allocating resources, addressing any opposition or resistance, and convincing employees that the new initiative is important and in their best interest. “When there was disagreement about the strategy, or leaders were seen as ineffective, performance was lower,” wrote the authors.

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