
The self-improvement industry rests on the proposition that with concerted effort you can become a better version of yourself and enact real change in your life. The cynic responds, "Oh come on, people don't change! Go to your high school reunion -- nobody's changed."
Both views are right. In some ways, a person will never change. Assholes at age 12 are usually assholes at age 30. Personality and core behavioral traits are largely heritable.
But in other important respects

Biology accounts for 80% or more of human behavior. Environment doesn't play a huge part in who people are. Twin studies have shown that even when separated from birth, being raised in two completely different environments, the twins would have nearly identical life experiences at the same times in their lives being apart. Seeing people change their lives around after being on drugs is not environmental, it's biological as the drugs are changing chemical balances in the body. But try to teach someone to not be scared of public speaking... it won't happen.

As someone who is pretty much completely different from who she was a year-and-a-half ago, I believe people can change. It's hard but it's possible.
The important distinction is that we cannot change people, nor should we hang about waiting for them to change.

I love the bottom line part. If you believe people can't change, then all you are doing is settling. You're settling for where you are in life, for where you live, how much money you make etc. etc. It's definitely a simple way to live life, but as far as I'm concerned its taking the easy way out.
The way I look at it is, you start as a shell, and the experiences you have, the people you meet and the places you visit allow you to continuously change to become the person you are today.

People change once they satisfy the WIIFM (what's in it for me) criteria.

Tell an asshole what you think, tactfully, without fear of retribution. Try sendahole.com.

Oddly enough, I just finished reading First, Break All the Rules which makes a similar point. (Just reviewed on my blog.)
I think the distinction needs to be in what can change about people. You can learn new things, and gain new skills, and perhaps learn some basic skills in your innately weak areas. However, if you're completely inept in one area, all the training in the world isn't going to make you a master.
I think in many cases, a lot of change is actually people discovering their innate talents and strengths, and working towards those. If you're not in that area, it can not only affect you there, but in lots of other facets of your life as well.
So can people change? Yes. However, if someone has been given every opportunity to change and nothing is happening, then don't hold your breath. Likewise, if you've been working at something and you just can't cut it, either find a different way to get the same result that works for you, or re-evaluate why you're trying to get that result.

No, people don't change. Instead they become more of who they already are over time. I got that one from Marcus Buckingham.

The idea of people being satic and our behavior and lifes already determined is a frieghtenting meta-phyical concern.
If we believe people are not able to change how can we truly hold them responsible for their actions? Additionally if we believe people are "fated" to be who they are and they could never choose to be otherwise, why do we even bother with prisons, NA, AA, etc...
As a society (that is not meaningless) we must must aceept and assume that we have a free will. And the ability to choose otherwise or change is possible.
Your boss cannot change?
Your work never changes?

@michael cardus - I think this is the difference between will and change. While we are more likely to behave certain ways because of who we are, we do have the will to change our habits even though we may be more prone to behaving a different way. There's a difference between committing a crime and being a criminal - do you know what I mean? Drugs are a different story. Drugs, because they affect a person biologically really can change a person. If you've known drug addicts, you know that they were not always like who they are when they're addicted. It takes those with strong will and the want to stop using... but have they changed? No. They're born with the trait to be addicts. That's why addicts will say they're always addicts even if they haven't used for twenty years. But to the comment about boss and work never changing... agreed. I've never "learned" to love a job. I've had jobs that are just plain wrong for me and it doesn't matter how much you try, it wasn't for me. To hire a person that has potential and drive is one thing... to hire someone with skills and experience but hates the work... hire the first one.