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Change management in SMEs

Communication skills in small and medium sized businesses are essential to navigate turbulent environments, according to a new study from a Cambridge Judge academic.

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Mark Esposito

Professor Mark Esposito

Managing change in an SME is no small undertaking – but it’s one that (in contrast to big corporations) a small business owner is likely to be doing on his or her own, with no specialists, no dedicated departments, and no budget for outside consultants.

Of course, SMEs often manage to navigate stormy waters with skill and imagination, but that does place an emphasis on great communication – at all levels of the organisation – as a major key to success, as shown by new research from Mark Esposito, a Fellow at Cambridge Judge’s Circular Economy Centre.

“In our initial study in 2014 we found that organisations which were able to adopt a more dialogue-based model achieved change quicker than those who simply informed employees of what needed to be done, and weren’t engaging with them on a more personalised level.”

So Mark decided to take the research a step further. “We decided to contextualise it to SMEs, and particularly those that do business in a turbulent environment. We wanted to look at countries where there’s a lot of volatility or the market is very sensitive to external changes. We were asking this question: ‘Does communication still have such an impact on change when the contexts are much more variable and volatile?'”

The co-author of the most recent paper, Dr Badih Arnaout, is based at the American University of Technology in Lebanon, and the research drew upon his experience with local companies. Two small furniture firms in Tripoli, northern Lebanon, were chosen as case studies. The authors examined company documents, performed observational analysis, and conducted interviews with employees at all levels in the firms’ hierarchy.

Both firms had undergone extensive change as they attempted to expand beyond their local markets, both domestically and internationally. Their efforts had taken place in times of great turbulence: a major war took place in 2006, and Tripoli subsequently experienced factional conflict and deadly terrorist attacks.

Nevertheless, the study reconfirmed the findings of Mark’s earlier work, suggesting a “strong connection between communication and successful implementation of change initiatives” – and that “if you fail in your communication attempts, your change implementation will fail”.

Again, it was the nature of the communication that was the determiner of success, with real dialogue a strong indicator of success. Mark says: “Rather than asking people to do something, it’s asking them, ‘How can we do this?’ – shifting the employees from a passive recipient to an active participant role.

“It’s a way to decrease resistance to change. If employees feel they are driving the process and pioneering something that they think is important to do, they have to some extent already embraced the change.”

It’s a sentiment shared by the managing director of one of the featured firms – a second-generation family company that employs 15 full-time employees and a further 50 part-timers, and generates sales of around £12m per year. “Effective communication was essential in our ability as an organisation to manage change,” he says. “We understood from the beginning that people rather than processes should be the central focus, and that we needed to create a powerful vision for change using communication as the main vehicle.

“Employees were active participants in the change process. We listened and incorporated what we heard as feedback, wherever that was feasible. We encouraged our employees to speak their minds, not to be afraid to criticise our plan, and to be involved in the decision making.”

And while the conflict in Lebanon was very disruptive, Mark believes that the study provides pointers for companies seeking to effect change in other situations of uncertainty – such as Britain during the Brexit negotiations.

“The first step is to define a strategy for communications,” says Mark. “You need to do due diligence and ask whether you’re truly careful about communication: do you do it as a process that’s shared throughout the organisation, or is it really just about passing on information?”

Above all, success means altering attitudes to change throughout the organisation. He says: “You need to shift change from the internal dimension – the boss, CEO or manager who wants to drive the change – to the fact that change is inevitable and driven from outside. The best way for change to happen is for it not to be perceived as disruptive, but as stable.

“There’s a lot of management literature that says you have to create a sense of urgency for change, then the organisation will react to it. I think we are now in a space where we simply have to say urgency is the new norm. And if communication can help in pacifying the natural angst against change, you’ll reach a satisfactory result in the organisation.”