By Trish Smith

The recent activity in the economy has brought to the public’s attention some controversial issues regarding how organizations change (or in this case, how they don’t). The 700 billion dollar bailout (just for a start) of the financial and automotive industries has focused the spotlight on a very specific issue in the arena of organizational change management: externally directed change vs. internally directed change.

Every day, in industries around the world – financial, manufacturing, health, education, IT – change efforts are initiated. One of the most critical factors determining the success or failure of these efforts is whether the change was initiated from outside the organization (government agencies and legislative bodies) or from within (Boards of Directors, departments within an organization, or individuals). Unfortunately, significant change is often initiated from without, despite the fact that experience shows us that change from within is more effective, longer lasting, and more efficiently implemented.

Why drive change from within?

Why are internally driven change efforts more successful than externally driven change efforts? There are several reasons for this. The most important is the fact that nearly every organization, even one in need of major change, has the resources, knowledge, creativity, and drive needed to successfully implement a change effort. Failing to tap into those resources is not only wasteful, but communicates to the members of the organization that their abilities and knowledge are not valued.

Additionally, when change is driven from within by those at the upper levels of the organization, employees feel a connection with the change effort at every level of the organization. Their perception that there is buy-in on the initiative by those at the highest levels will lead to them committing to it more fully. Conversely, if employees feel that the “head honchos” are not fully committed to the effort, they will not fully commit to it themselves, and the initiative will fail.

Finally, for change to be truly persistent, it must be rooted within the culture of the organization. Organizational culture determines how people within the organization do everything from handling customer complaints to celebrating birthdays. The reality is that whether the culture is positive or negative, healthy or unhealthy, it will drive the manner and methods of everything that is done within the organization. Any change that is not connected to the organization’s values, beliefs, and behaviors will not succeed. A significant change initiative must, therefore, be solidly connected and in sync with the culture for it to succeed.

Three reason to initiate change internally?

1. To profit from employees’ skills, creativity, and resources.

2. To ensure a sense of buy-in at every level of the organization, which leads to employee commitment to the change.

3. To connect change on the deepest level with the culture of the organization, helping to ensure the success of the effort.

Successful change must be directed from within. Other factors also impact the effectiveness of a change effort, but without an internally-driven endeavor, such efforts cannot succeed, and valuable time and resources will be wasted. Perhaps this is a lesson that Citibank and GM could bear to learn.

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