The key role of effective change adaptability in crisis management

Transformation can be difficult, but boards need to know how to prevent chaos when it happens.

Managing change is a fundamental task for directors. An ability to implement and adapt to change is becoming ever more crucial in a global landscape of increasing unpredictability and the growing influence of AI. Effective change management brings desired outcomes, satisfies shareholders and fosters a culture of innovation and continuous improvement. Poorly managed change — as Claire Clayton MAICD, founder and managing director of Blue Seed Consulting, notes — can open the door to disaster.

Clayton cites the opening of London’s Heathrow Terminal 5 in 2008 as a prime example of failed change management. The £4.3b terminal was billed by British Airways as “so calm you’ll simply flow through”, but opening day went horribly wrong as more than 36,000 passengers were delayed amid a baggage-handling nightmare.

“It was an unmitigated disaster that ended up being investigated by the House of Commons,” says Clayton. “People were completely unprepared to operate in the new environment... [It] was a national humiliation.”

Clayton says change has evolved significantly. Directors now oversee change aligned to an organisation’s strategic plans, necessitated by a heftier regulatory landscape, driven by technology or in the face of unexpected events such as pandemics and the introduction of global tariffs. This makes an organisation’s “change maturity” — its ability to actually deliver change — crucial.

It’s all about people

“At the heart of change, we’re talking about people,” says Clayton. “Are you giving them the skills to act and do something differently? Are you looking after their wellbeing? Are you asking them to do something beyond their capacity? Are you involving them, helping them to understand why this is important, what the risk of not doing it is?”

Clayton regards change as “a discipline in itself”, noting change is a constant that doesn’t have a finish line. “If we reframe the narrative around being adaptable to change and having high levels of adaptability and agility, it’s not ‘change fatigue’  — change just becomes part of the job.”

David Shortland FAICD, principal of Shortland Consulting, says directors need to reflect deeply when embarking on change, arrive at a collective view and then ensure the people who enact the change are supported with the required learning and development to succeed. The communication element is vital from the outset, framing why the change is occurring and how the organisation will benefit.

Change management

“Then it’s bringing that constructive criticism to bear,” he says. “Asking, do we need more people, better technology, more resources? Have we fallen in love with this and should we just stop? That director mindset around testing and challenging in a constructive, curious way holds true, not only when you’ve decided on something, but throughout its life cycle.”

Change can demand patience and resilience. Shortland recalls working for a large international NGO on a structural governance change, where there was a perceived disconnect between the board and management team implementing the change. A rigorous consultation process with those who would ultimately live with the change took years. “I [was] thinking, ‘Why don’t you understand this?’ I was reminded by a peer that I’d been living with the construct for years. It wasn’t new to me.”

Shortland saw broad change management lessons for boards in the emergency response to the recent Myanmar earthquake, where NGOs had to be agile in an extraordinary environment. “No matter what you’re faced with — a liquidity event, an exciting M&A or a tragedy in another part of the world — you need to ask, are we sufficiently adaptive to be able to deal with this? That goes back to your people. Do they have the right learning and development? Are they being supported? Are they sufficiently resourced and enabled?”

Change Focus Group’s Rob Newman is an organisational psychologist who specialises in boardroom dynamics and culture in organisations. He notes the basic functions of boards are to ensure management sticks to an agreed plan and the company stays within regulatory guidelines — a potentially conservative mindset that can style directors as tools of inertia, not agents of change.

“A lot of governance failures in Australia in recent times have been because the board didn’t pay attention when change was required — they stayed the course when there was a need to take action to change,” he says.

Be clear on values

In driving culture change, Newman believes a board’s first duty is to be clear about the values the organisation stands for and to ask the CEO and executive team to plan how those values can be developed within the culture. Constant checking in is needed because culture is an emerging process. “Changing culture is not a ‘one and done’ thing. Culture fights back.”

Similarly, the delivery of any plan needs to be monitored to ensure it is producing the intended result. “I want metrics and I want the data from them to be ongoing,” he says. “Some form of culture assessment, an engagement survey, feedback loops, complaints mechanisms that allow the board to continuously monitor if the change is having the impact we expected. You have to tinker with change plans as they land. Good organisational change is action research. Plan, implement the first phase, check if it’s working, modify it if it’s not, do the next phase, check again. The monitoring of change during implementation is critical. The flexibility to modify the plan is, too.”

Shortland notes even if directors aren’t change management experts, they must understand all the elements required to successfully bring about change. “Then be prepared to ask the right style of question as you’re implementing it.”

Essential training

Leadership development is essential to effective change management. Newman sees it as “creating little nodes within the organisation of people who have the initiative and skills to adapt to whatever changes manifest at their level”.

Clayton says having people who know how to “show up as a leader” through challenging times is crucial, not least because leaders are also often impacted by the change. “When I think about the most important aspects of building change capability in organisations, change leadership would be number one,” she says. “The second would be having a way of looking at the change across the whole enterprise. Third would be having systems and processes in place to manage change in a standard, repeatable, scalable way.”

When boards can see an organisation’s infrastructure is sound, its culture and leadership are strong and it communicates well with its people, they know it has invested in fundamentals that give it the “muscle” to weather any crisis. “Change capability is all about embedding those skills within the organisation so that when things happen they can pivot much more quickly — they can fluidly respond,” says Clayton.

The same approach guides planned change — doing the work upfront on how customers, shareholders and employees will be impacted.

Failure rate

An alarming 70 per cent of transformation initiatives fail, which McKinsey & Co puts down to a combination of not setting high enough and fact-based aspirations, poor execution, not adequately telling employees the “why” and failure to sustain any initial impact. Newman says the human element can’t be underplayed. “So many fail because they think change in organisations is like changing the motor in a car. When we reduce human beings to cogs in a machine, we think you can just replace the cog. Or just imbue the cog with new capability to handle the change. Human beings and their organisations don’t work like that.”

Shortland is sceptical when he hears people say they love change, knowing that even when we have a degree of confidence about our skills and competencies, change can be quite confronting and lead to resistance. “We need to stay alert to the human dimension of this at all times.”

For boards overseeing change, Newman likes the eight-step change model developed by Harvard Business School professor John Kotter, which breaks change into small chunks and timeframes, and makes those effecting the change feel fully involved. He believes corporate boardrooms would be better at guiding change if they had more diversity of backgrounds to promote more adaptable thinking. “To deal with change better, and the human element, I would see more HR managers and organisational development experts in the boardroom. And more people with startup and tech backgrounds, because they’re used to feedback loops and pivoting to adapt. Because we’re talking about a human process.”

This article first appeared under the headline 'Time for a change' in the October 2025 issue of Company Director magazine.