Change Management and Compensation

Managing Organisational Change

Kotter's 8-Step model is one of the most commonly used models in change management. The model provides eight useful guidelines which can be applied to change management within the context of human resource management (HRM). This paper explores the applicability of the model to a change initiative aimed at shifting from job-based compensation to knowledge-based compensation at Dataversity. Dataversity provides digital educational and publishing services to business and information technology (IT) professionals concerned with data utilisation and management. The paper specifically demonstrates how each step of Kotter's model can be applied to the identified change situation.

The first step in the model is to create a sense of urgency (Kotter & Schlesinger, 2008). This essentially entails demonstrating to members of the organisation why the change is important as well as what could happen if the change is not implemented. The management and employees of Dataversity must understand why it is necessary to shift from job-based compensation to knowledge-based compensation. A sense of urgency can be created by initiating dialogues with staff members through meetings and other formal channels of communication (Cummings & Worley, 2013). The conversations should centre on facts, statistics, and evidence, clearly demonstrating why the status quo can no longer be tolerated. At least three quarters of the managers should be convinced that abandoning job-based compensation in favour of knowledge-based compensation is necessary.

The second step of the model entails developing a powerful guiding coalition (Kotter & Schlesinger, 2008). This involves assembling a team of capable and influential individuals to lead the change initiative. Forming a change management team ensures clarity in responsibility and accountability (Hayes, 2014). For Dataversity to successfully shift to knowledge-based compensation, a guiding team will be important. The team should have representation from diverse levels and functions within the organisation. Its members should be drawn from senior and middle-level management, and across different departments including HRM, finance and accounting, sales and marketing, as well as IT. The role of the team would be to build further support for the change initiative, develop strategies for implementing the change initiative, and coordinate the entire process (Cummings & Worley, 2013).

An important role of the guiding team is to create a vision for the change. This constitutes the third step of the model (Kotter & Schlesinger, 2008). Creating a vision encompasses defining the direction where the organisation desires to go. The vision should be clear, understandable, realistic, and achievable (Anderson & Anderson, 2010). As a resource for data professionals, Dataversity aspires to be the number one choice. Changing the way, the organisation compensates its employees is crucial for achieving this vision. Since knowledge-based compensation rewards employees for their skills and knowledge, quality and productivity are likely to increase, placing the organisation at a better competitive advantage. Furthermore, knowledge-based compensation can result in a more flexible workforce as well as reduced labour costs. This will further boost the organisation's competitive position.

Once the vision is created, it should be clearly and thoroughly communicated to everyone in the organisation (Kotter & Schlesinger, 2008). Without clear communication of the vision, the change initiative is likely to fail. Effective communication ensures buy-in from all levels of the organisation (Anderson & Anderson, 2010). For Dataversity, the vision should be communicated using every vehicle possible -- internal memos, staff meetings, workshops, performance reviews, team building activities, and so on. Relying on multiple channels of communication will ensure that the vision stays fresh in everyone's mind. Whereas it is important for the vision to be communicated regularly, it is also vital for the management to play a front line -- it should "walk the talk." Indeed, the management should serve as a role model as far as the change initiative is concerned.

The fifth step of the model entails removing obstacles (Kotter & Schlesinger, 2008). Generally, change initiatives tend to be hindered by barriers such as human resistance as well as organisational structures, processes, and activities (Hayes, 2014). These barriers must be removed if the change initiative is to be implemented successfully. At Dataversity, some individuals may be uncomfortable with the proposed system of compensation due to concerns such as possible lay-offs or relocations as well as conflicts between colleagues. They may also be unwilling to invest more time and effort in gaining new skills and knowledge, which is an important aspect of knowledge-based compensation. It will be crucial to address these concerns by clearly explaining to everyone how the new compensation system will affect them. In addition, critical processes such as recruitment, job design, performance measurement, and training and development should be aligned with the new compensation system.

Removing obstacles to change is followed by the creation of short-term wins (Kotter & Schlesinger, 2008). This essentially involves breaking the overall, long-term goal into short-term targets. Short-term goals are important for motivating staff members and maintaining commitment to the overall goal (Hayes, 2014). The overall goal of the new compensation system is to enhance Dataversity's competitive advantage in the long-term. In one-year, however, the organisation should target to enhance the skills and knowledge of its employees. This can be achieved by providing education benefits, workshops, seminars, and other opportunities for training and development. The organisation will recognise and reward employees that will be involved in these activities. This will be crucial for keeping staff members motivated. After the year one, the organisation can as well measure aspects such as employee satisfaction, employee morale, and job commitment to gauge the effectiveness of the new compensation system.

The last two steps of the model involve building on the change and institutionalising the change into the organisation's culture (Kotter & Schlesinger, 2008). Building on the change is a particularly important step as real change takes several years, not one year or a few months (Anderson & Anderson, 2010). Based on the successes or failures of the short-term targets, further improvements should be made. In this case, for instance, if it turns out that the new compensation system improved employee satisfaction and job morale after one year, the organisation can create another short-term win and make further investment in training and development initiatives. The organisation can allocate more resources to workshops, seminars, and education benefits in order to encourage employees to remain committed in improving their skills and knowledge. The importance of building on the change stems from the notion of continuous improvement.