One of the highest trending search topics for Australians at the moment (and - as it happens Slovenians, French, Swiss and Slovakians), is the search for real estate and the latest information on interest rates.
The realities of our domestic economy impact on business. We know this instinctively from personal experience. If money is tight at home, we alter our spending and saving patterns to accomodate, we might also alter our relationship to debt and credit. We might postpone larger purchases like holidays or trading in a motor vehicle.
When we participate in a competitive market to make a purchase, like real estate, we're not just buying a house, we're also fuelling the behaviour of the market itself. A buoyant housing market with insufficient stock drives people to think about selling their house. Once they've sold their house, they will have decisions to make about what to do with the sale proceeds, including potentially entering the market as a buyer.
Micro changes in consumer spending aggregate to form market behaviour. And shifts in market behaviour drive the need for businesses to respond.
We previously wrote about the contract rates for Change Managers, and how cost-cutting through reducing the change function can be tempting, but a false economy: Market Corrections in a Flexible Industry: Fine-Tuning Change Management.
How is the state of the economy related to change management? How are interest rates, real estate markets and daily contractor rates relevant to organisational change agendas? Today we take a broader look at how the state of economic performance significantly influences the change management industry.
Drivers of Change
Micro changes in household earning and spending patterns drive markets, and changes to markets result in economic transformation. This remains a driver of organisational change as there will be both challenges and opportunities resulting from economic shifts. Market changes are a key driver that prompt organisations throughout the economy to adapt and evolve.
Uncertainty in the economic landscape is a top concern for professionals. If businesses fall more into the 'challenged' column (rather than the 'opportunity' column) following market changes, they may face limited growth and productivity challenges. Depending on market adjustments and government policy, key drivers of business performance may be adjusted. Wages may stagnate, resulting in other flow-on effects like the movement of skilled labour out of the sector. In turn, labour shortages create another market response, and so it goes.
Organisations must build resilience to navigate economic fluctuations and the downstream impacts that can occur.
Agility and Adaptability
Successfully responding to economic change requires agility. Organisations must be prepared to pivot swiftly, as seen during the Covid-19 pandemic. Being able to pivot first necessitates a thorough understanding of the current business, the current and future business opportunities; and it involves a thorough understanding of how to implement change throughout the organisation.
Naturally, industry changes and organisational agility are recognised as key drivers of change by business leaders. However, business leaders working together with change management professionals can be doing far more to enhance organisational agility.
A well-prepared change management function enables organisations to turn around operating model changes more rapidly.
Digital Transformation
Digital technologies play a crucial role in driving economic change. Uneven participation across economies creates new opportunities and challenges. Where niches and pockets of excellence occur, these can be leveraged to open new market opportunities and improve overall market and economic participation.
Digital technologies have lowered many barriers to entry and forced social changes unthought of just years prior. As digital transformation continues to couple with social agendas, economies, markets, organisations and professionals must be ready to pivot to a more democratic competitor, customer and consumer landscape. A move towards a more even playing field will again drive alterations in household earning and spending, aggregated market behaviour, and organisational challenges and opportunities.
Organisations must be ready to pivot to a more democratic competitor, customer and consumer landscape.
How is the State of the Economy related to the Change Management Industry?
In summary, economic performance shapes the changes that drive the change management agenda, influencing organisational strategies, agility, and resilience. Change Management Professionals play a vital role in helping businesses adapt to dynamic economic circumstances.
To examine your organisational change management needs, book a consultation with Agencia Change, free of charge, to discuss.
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