Discover how HR impacts organizational transformation. Learn how to drive change and enhance engagement while keeping people at the heart of it all
In the 1990s and early 2000s, Finnish brand Nokia was the leader in the mobile phone market. When smartphone technology led by Apple and Google began to emerge as a threat, Nokia attempted to adapt to these changes. But due to a failed reorganization, internal conflicts, and poor communication, Nokia lost its dominance in the mobile phone market. It ended up selling the business to Microsoft in 2014.
Could Nokia’s HR leadership have been more proactive in managing change better?
In this article, we’ll cover organizational transformation, what it entails, and how HR leaders can ensure its success.
Organizational transformation is the process of changing existing policies, practices, or behavior to achieve better outcomes. Some events that could jumpstart organizational transformation include:
Another way of defining organizational transformation is:
A good example of organizational transformation is the UK government’s partnership with businesses in hiring former offenders. This represents a shift in hiring practices, leading to a more inclusive workplace.
There could be internal or external factors that push organizations towards this process. Here are some of them:
What comes to mind is AI and how it has been changing the way teams work. Strategies to integrate the use of AI is a factor leading to organizational transformation.
Keeping up with the competition is a major driving force in organizational transformation. Companies need to keep their competitive advantage; to do that, they need to innovate and introduce new products, systems, and delivery methods.
In the past few years, we’ve seen changes in how we work (onsite vs. remote), how we disconnect (increased focus on work-life balance), and how we communicate (sync vs. async). To some degree, these have led to changes in the organization.
Many companies have set goals linked to the UN’s Sustainability Development Goals or targets to reach net zero by a certain year. Meeting these goals calls for a shift in company culture.
Here are some companies that went through successful transformations. As you will see, some of these are long-term projects delivered in phases. Let’s look at these inspiring examples:
This Swedish furniture retailer was founded in 1943 and has gone through several organizational transformations. It started out in mail-order sales, then opened its first warehouse-type store 15 years later. In 2018, Ikea embarked on a digital transformation, tapping into online channels to make their products available worldwide.
Ikea also uses augmented reality technology in its apps. This allows customers to visualize how Ikea products would look like in their home spaces even before making a purchase.
Did you know that Netflix started out as a DVD rental service? When they launched in 1997, they rented out DVDs via mail. But with streaming becoming more popular, they had to find ways to stay relevant among the viewing public. They launched a streaming service in 2007, beating their competitor, Blockbuster (remember them?).
Today, Netflix is one of the world’s top streaming services with a market value of $149 billion.
The UK’s largest retailer has made sustainability part of its corporate goals since 2009. That year, they set a zero-carbon goal – making Tesco one of the first businesses in the world to do so.
Tesco has also set the goal to become carbon neutral by 2035. An innovative step they took is to use rail to transport goods to help reduce emissions:
For more insights on organizational transformations, here’s an HR leader’s first-hand account of lessons learned at Novartis.
HR leaders have an important role to play in leadership development and change management.
According to McLean & Company’s HR Trends report, one of the top HR priorities for 2025 is developing leaders.
The report also highlighted HR’s growing strategic partnership from 2020 to 2024. This was no coincidence; HR played a pivotal role in navigating remote work, workforce restructuring, and evolving employee priorities during the pandemic.
These two points – developing leaders and building strategic partnerships within the organization – are key ways that HR can lead organizational transformations.
This is one of the most important roles HR can have in organizational transformation. Having leaders who are resilient, agile, and inspiring can make or break successful change initiatives.
As one HR executive puts it, developing line leaders should be a priority. Having capable people leaders results in a more successful delivery of programs and policies.
HR teams should be seen as stakeholders in the transformation process. This means, among other things, engaging department heads in identifying and training potential leaders across the organization. These emerging leaders can take the role of change agents or champions throughout the transformation process.
Employees should be at the center of any cultural transformation, so keeping them informed at every stage of the process is crucial.
Change can be an emotional process, especially where job security is involved. Being open and honest with employees can help them handle changes at work better.
Get employees involved by inviting them to:
According to a 2021 survey by McKinsey & Company, successful transformation involved face-to-face meetings with employees such as briefings and town hall sessions.
Fill employees in on the transformation process at every step. Let them know what’s about to take place and how the project is progressing. Give them the chance to share feedback and questions. Take the opportunity to address any concerns or fears.
Change is scary, so giving employees the chance to be heard helps address whatever fears they have.
Employees who are engaged and enthusiastic contribute to the success of any change initiative. It’s important to foster this engagement throughout the process. Here are some steps you can take to sustain that energy:
Nothing makes employees feel more important than knowing they had a hand in making positive changes at work. Set up committees or advisory groups that employees can join to make them feel more involved. Get them to participate in any focus groups or beta testing.
Give them the opportunity to share their views. If you’re introducing a new system that’s bound to impact customers, talk to your frontliners. Get their input on these changes.
Accepting change isn’t always easy, so be on the lookout for employees who are making an effort to try new things. If they’re putting in extra work during challenging transitions, validate that! A short message or thank you note from the leadership team will give a big morale boost.
If you’re in the market for employee recognition software, take a look at our 5-star HR software and technology providers.
When your company is going through what could be a challenging transition, the last thing leaders and managers would want to hear is criticism. Yet this is where constructive feedback has the most value.
Open and honest feedback is the antidote to groupthink, so welcome differing opinions and views. And most importantly, reward the brave souls who speak up.
Find out more about employee feedback in driving organizational change in this article.
This is a good strategy to secure buy-in from employees: align outcomes with employee values. For a company undergoing digital transformation, here are a few ways to highlight how this can benefit employees:
Finding a connection with values makes the organizational transformation more personal. This makes employees more invested in the success of the project.
Introducing change is a huge undertaking, and not everyone will welcome that at first. Here are some common issues that come with any transformation project and what HR can do to address them:
First off, it’s important to accept that this is part of any change process. HR leaders and project leads need not fear this resistance from employees; it is perfectly normal.
Be clear on the vision and goals. What does the organization hope to achieve? What will work look like at the end of the process? Employees need to know why this has to be done, and what the potential rewards are.
Change stirs up a range of emotions in employees, mostly fear. Will they lose their jobs? What will these changes mean? There’s also a great deal of discomfort in being pulled away from the routinary and familiar.
A good strategy in dealing with this resistance is to:
Face these issues head on, with both courage and compassion. Be honest when addressing the fears of employees – no sugarcoating. As researcher and speaker Brene Brown says, “Clear is kind. Unclear is unkind.”
Leaders are expected to be on board with every phase of the organizational transformation. Otherwise, employees will sense the disconnect, and securing buy-in will be a challenge.
This is where leadership training will be especially valuable. Established and emerging leaders could benefit from coaching, training, and taking part in strategic planning sessions.
Too many changes can be overwhelming, especially in the case of long-term organizational transformation projects. HR can assess how employees are doing throughout all this via quick pulse checks and surveys.
Any adjustments can be done in phases, giving employees time to adjust to the process before introducing any other changes.
This can cause the most frustration and confusion among employees. Make sure that goals, timelines, and expected outcomes are shared in a timely manner. Be prepared to have difficult conversations.
People are at the heart of every organizational transformation – whether that involves adopting new technology, introducing a new work culture, or restructuring teams. The success of organizational change depends largely on employee buy-in, alongside strong leadership and effective change management.
Changes in technology, competition, and market influences happen at any given time. Organizations that don’t adapt get left behind. HR leaders have an important role to play in making sure that the workforce is resilient and ready.
Do you have a favorite case study in organizational transformation? Tell us about it in the comments below
