Organizational Change

How people can impact change and how to deal with them.

Change is often cited as the only constant. We live with change in all aspects of our lives. Some change is under our control, often it is not. In the work environment change can be a very upsetting and unsettling experience. The cost of change needs to be considered in human terms... the easiest way to compromise significant investment is to forget the human element.

In this Knol, I address some of the issues that should be considered by management contemplating significant organisational change, especially where new technology is involved.

It is based on a document that I prepared fro an Insurance client some years ago. The points raised are in no way intended purely for an Insurance audience. I hope that you find this useful.

Communication

Communication of intentions, setting expectations and getting buy-in are all important aspects of handling change and reducing resistance to change.

Communication does not mean ‘tell everybody everything’. It means ‘tell people as much as they need to know to an appropriate level, don’t hide what will affect their immediate future and allow them to feed back comments in a blame-free environment’.

Many companies have fallen foul of the belief that ‘open management’ means that all staff have to be told everything at all levels up to strategic information. Cursory consideration of the “What’s in it for me?” aspects will show that some of the medium to long term plans can be interpreted inappropriately by lower level staff. This can, for example, cause fear of mass redundancies where there is little or no foundation. Without interpretation strategic statements can often be misunderstood.

Another problem, especially with long term strategic statements is that they change. The constant re-statement of strategy can give the impression of indecision and lack of confidence. This can be extremely demotivating for staff and lead to severe damage to the credibility of the senior management team.

Senior management will be aware and indeed should be mindful of strategic direction at all times. The higher up an organization the manager is, then the further ahead he should be looking and the more aware of external factors.

Middle to low level management must be aware of operational considerations and targets in detail and also have some high level understanding of strategic and external matters.

Administrative and supervisory staff need to understand procedural detail, have an awareness of operational considerations and a very high level insight into strategic matters (often just a vision statement).

The key is that the communication should be appropriate to the individual.

All of those to be affected by change should feel involved in the decision-making process as much as possible. This co-ownership or ‘buy-in’ is essential in the pursuit of acceptance of change and although it could be regarded by some as an overhead because of the additional time required, it is worthwhile in the medium to long term.

The establishment of focus groups to discuss the implications of change both for those immediately affected and their ‘customers’ is a recommended route to this buy-in. Where brainstorming or discussion requires it, an independent facilitator is recommended. Mike Forte has facilitated at these types of discussions.

As change must be regarded as a constant, these groups can usefully discuss options for improvements ongoing. The involvement of peers will encourage trust in the workforce. Without trust, it will be difficult to mobilize their co-operation for change.

The Communication Plan should be clear, specific and comprehensible and address ‘the Four Ps’: Purpose, Process, Progress and Problems. Remembering that communication should be appropriate to the audience, these four aspects can be elaborated as follows:

Ÿ Purpose Why is the Company undertaking this change? To compete in an increasingly crowded marketplace? To enhance service to the customer? To improve the working environment? To ensure the Company’s survival? This must be communicated in terms that are accessible and meaningful to the different constituency audiences.

Ÿ Process Without going into a tedious and confusing level of detail - How are the changes going to be implemented? A high level project plan should be shared with all. It is important to share the outline of the approach and give everybody a framework for ensuing events.

Ÿ Progress Progress in areas where the changes are being implemented should be fed back through to the organisation. Designs and implementation schedules can be shared. Keeping everybody informed of progress is vital for the maintenance of momentum.

Ÿ Problems Relentless upbeat and positive messages being fed back from an area undergoing change do not ring true. This only feeds the cynics and engenders an air of insecurity - ‘What are they trying to hide?’.

The admission of hiccups and errors creates a bond of trust between speaker and listener - the admission of fallibility purchases great credibility. Admit mistakes, show that lessons have been learned and move on. If mistakes are admitted openly, then claims of success will be more believable.

Categorization of Staff in relation to Change

Amongst the staff affected there are likely to be advocates and supporters of change, those who are open to the idea of change and those who are not willing to accept change.

As is shown in the figure above, the distribution of staff within the three categories is unlikely to be even. The main body of staff will be those who are open to the ideas proposed but will be uncertain about some aspects, especially those specifically relating to themselves. Two smaller groups will make up the remainder.

The advocates for change are the people who are already on board. They have accepted and are keen to support change, but may need their expectations to be guided and have their natural enthusiasm channelled into activities aimed at bringing the remainder of their colleagues with them.

The third group consists of those who, for whatever reason, are unlikely to be able to accept change. An inordinate amount of effort and resource can be expended on trying to convert them but, in the long run, there will have to be an acceptance of failure to persuade a small number. These people will have to be counselled and found alternative positions, either within the organisation or elsewhere.

The handling of this third group is especially important because any insensitive actions will negatively impact those who are accepting change. Remember that after ‘What’s in it for me?’ the next question tends to be ‘... oh and what about my colleagues?’.

Each of the three groups need to be handled differently. Even though the information being passed to them will be essentially the same, their different interpretations will make a substantial difference to the message communicated.

Reaction to Change

Reaction to change can vary considerably between individuals. The full spectrum is depicted in the diagram below.

In handling the resistance to change, the key challenges to consider are:

Ÿ Skills Fear that the skills acquired over the years may be rendered completely useless will be lurking in the minds of all of the staff from the moment that change is announced. In planning for change, the manager must include allowance for training and acquisition of new skills and knowledge transfer.

This is especially true if the working processes and environment are going to be significantly modified or more complex because of the change.

If the appropriate cross-training and skills transfer can be seen to have been considered and planned on an individual basis then this will go a long way to quashing these fears.

Ÿ Comfort As previously discussed, the main reason for discomfort is the lack of knowledge about what is to be expected from the change and also the suspicion that it might not be better than today’s status quo (however bad that might be). This can be countered through appropriate communication and information.

The belief must be fostered that the new world has advantages on a personal level over the present world. Disadvantages and difficulties with the current situation can be contrasted with the perceived benefits of the changed environment. The answer to the “What’s in it for me?” question must be given to the staff.

Ÿ Appraisal The evaluation of staff is based on certain well-defined criteria. Are these criteria relevant in the new world? If these changed (or now irrelevant) criteria have been perceived as the yardstick for performance measurement and promotion then new and equally valid criteria must be established.

Again, the involvement of staff in the establishment of these criteria will help to calm concerns. As this will also be at the centre of peer and self-assessment, it is vital that this aspect of change be handled with the utmost sensitivity.

Ÿ Pride Personal pride is another key element in the reaction to change. Everybody likes to think that they are part of a well-running operation. The implication in any change initiative is that there is some deal of dissatisfaction with the ‘way things are’.

This apparent attack on personal pride can be neutralised if the staff can be encouraged to take ownership of the new process and feel the attendant pride in the association with something that is perceived as strategically beneficial to the company.

There is nothing so flattering as being regarded as an expert in your field so the involvement of staff and the soliciting of their opinions will go a long way to gaining their ‘buy-in’.

Of course, if you are seeking their expert opinion, you must be seen to consider it carefully and adopt valid points or have very good reasons for not adopting them. The inclusion of ideas from all levels into a change programme will enormously enhance its credibility and acceptance.

Ÿ Power This is a very difficult category to quantify and, potentially, the most difficult to handle sensitively. The problem is that power can take many forms. Power is in the eye of the beholder (or the holder?).

Explicit power will be manifested in the form of authority and responsibility. These are fairly easy to identify, but the third category, influence, is not always so obvious. Influence-brokers in any organisation are not necessarily the people in positions of authority. Careful consideration is required to identify these people (who may be outside the area under scrutiny) and their drivers must be identified and built into any equation for change management.

Even if power is only perceived, it is advisable to seek the counsel of all who may have reasonable input. This will allow changes to be implemented with the buy-in of the broadest possible spectrum of voices. The action of seeking these people’s opinions will act to minimise dissent afterwards.

Handling Resistance

It is widely believed and frequently seen that those who are converted to change are its most fervent advocates. This should be borne in mind when handling those resisting change. The key methods for dealing with resistance to change are summarised in the figure below:

Approach

Situation

Advantages

Drawbacks

Education & Communication

Where there is a lack of information or inaccurate information and analysis

Once persuaded, people will often help with the change

Can be very time-consuming if lots of people are involved

Participation & Involvement

Where the initiators do not have all the information that they need to design the change and where others have considerable power to resist

People who participate will be committed to the change and any relevant information they have can be integrated into the plan

Can be very time-consuming if participants design an inappropriate change

Facilitation & Support

Where people are resisting because of adjustment problems

No other approach works as well with adjustment problems

Can be time-consuming, expensive and still fail

Negotiation & Agreement

Where someone or some group will clearly lose out in a change and has considerable power

Sometimes it is a relatively easy way to avoid major resistance

Can be too expensive in many cases if it alerts others to negotiate for compliance

Manipulation & Co-optation

Where other tactics will not work or are too expensive

It can be a relatively quick and inexpensive solution to resistance problems

Can lead to future problems if people feel manipulated

Explicit & Implicit Coercion

Where speed is essential and the change initiators possess enough power

It is speedy and can overcome any kind of resistance

Can be risky if it leaves people resentful with the manipulators

Fig 5

Ÿ Education and Communication One of the most common and effective ways of dealing with resistance to change is to educate people about it beforehand. Communication of ideas helps people to see the need and logic for change.

An education and communication program can be ideal when resistance is based on inadequate or inaccurate information and analysis, especially if the initiators need the resistors’ help in implementing the change. There is a considerable amount of time and effort required for this approach.

Ÿ Participation and Involvement If the initiators involve the potential resistors in some aspects of the design and implementation of the change, they can often forestall resistance.

When change initiators believe they do not have all the information they need to design and implement a change, or when they need the wholehearted commitment of others to do so, involving others makes very good sense. Considerable research has shown that, in general, participation leads to commitment, not merely compliance. This approach can lead to a poor solution if not carefully managed and can simply take too long.

Ÿ Facilitation and Support Facilitation and support are most helpful when fear and anxiety lie at the heart of resistance. Managers often overlook or ignore this kind of resistance as well as the effectiveness of facilitation as a means of dealing with it.

If time, money and patience are not available, then using supportive methods is impractical.

Ÿ Negotiation and Agreement Incentives can be offered to active or potential resistors. Negotiation is particularly appropriate when it is clear that someone is going to lose out as a result of a change and yet has significant power to resist.

Negotiated agreements can be a relatively easy way to avoid major resistance, though they may become expensive. Once a manager has displayed a willingness to negotiate it can open the floodgates for pre-conditions.

Ÿ Manipulation and Co-optation Sometimes covert methods are employed. This can involve the selective use of information and the conscious structuring of events. One of the means of manipulation is co-optation. This usually involves giving a resistor a desirable role in the design or implementation of the change. This is different to participation in that the contribution of the resistor is not really wanted, merely their endorsement.

The key disadvantage is that if the resistor is made to feel manipulated, then they may well become even more resistant to the change.

Ÿ Explicit and Implicit Co-ercion Resistance can often be reacted to by co-ercion. Managers can force people to accept a change by explicitly of implicitly threatening them (with loss of jobs, promotion prospects etc..) or actually firing or transferring them. This is a very risky process as people resent co-ercion aimed at themselves or their colleagues and it may damage trust beyond repair.

The important thing to remember here is that no single approach will be effective in all situations so a variety can be employed as appropriate as part of a clearly considered strategy.

Overcoming Resistance - A Summary

· Consider how the change may interfere with or have repercussions for work in other areas.

· Get the support of key opinion leaders whose attitudes could make or break the initiative.

· Identify people likely to resist change and the reasons for their resistance.

· Make sure that potential resistors understand the benefits of the change.

· Let resistors know how their opposition would affect the people expected to benefit from the change.

· Don’t disguise disappointment - let the resistors feel uncomfortable about it.

· Seek areas of agreement with resistors.

· Remain open to any unforeseen drawbacks in the change.

· Invite resistors to contribute to the change by suggesting modifications

· Show genuine willingness to make justifiable modifications in line with their suggestions.

Career Anchors

“We don’t get paid for overtime do we?”

“Nope!”

“Aah, so this must be a career!”

Within the work sphere, there are a number of patterns that have been identified as ‘Career Anchors’. The idea is that people put down ‘anchors’ to their careers and maintain these as constraints for ongoing career-related decisions. The five main patterns are as follows:

Ÿ Technical / Functional Competence This focuses on the actual content of the person’s work. Someone experienced in Claims Handling might find a job outside of this area challenging but inconsistent with his basic occupational self concept.

Ÿ Managerial Competence This anchor emphasises the importance to the individual of holding and exercising managerial responsibility and authority.

Ÿ Security For some people, a key factor in career decisions is stability. They prefer job or organisational stability to opportunities or challenges.

Ÿ Autonomy The overriding factor for some people in career decisions is to maintain their independence and freedom.

Ÿ Creativity The last group of people are driven by an overarching desire to create something that is entirely of their own making, e.g. New products or projects.

This concept of the ‘Career Anchor’ is useful for its selection and motivational implications. For example it can help to explain why dramatic changes are so difficult for people to make. It also helps to explain why different people may have different reactions to company career structures and organisational changes.

Career Stages

Different stages can be identified in everyone’s working life. These will be affected not only by work-related issues but also major lifestyle changes such as marriage, parenthood and bereavement. As these external events occur they will inevitably impact the work / career aspects of a person’s life. With such events, significant and fundamental shifts in priorities and motivation will occur. The main ‘Career Stages’ are summarized in the table below.

Fig 7

Psychological Contracts

The psychological contract is the most difficult contract to honour, the easiest to break and almost impossible to verbalise.

In every relationship, be it with an employer, a partner or parent, each party has an ‘understanding’ of what is expected from them and also what they can expect. The details of these expectations - the psychological contract - are rarely, if ever, verbalised. Any non-compliance with these unwritten terms and conditions can lead to immense bitterness, conflict and disharmony.

The principal vulnerability of a psychological contract lies in its secrecy. If both parties to a contract are unaware of the other’s expectations then they have not reached an agreement and there can be little hope for the contract’s survival.

Often, when Personnel Department’s become Human Resources oriented, they focus on making these psychological contracts more explicit - or in fact act as a Broker for their negotiation. Many appraisal systems try to verbalise the two sides of the contract so that performance can be measured against these expectations.

A problem still remains. When asked ‘What do you feel is expected from you by the organisation?’ or ‘What do you feel the organisation owes you for your services?’ it is very difficult to give an honest and open answer. Most people will ask themselves ‘What do they want me to say?’.

A less formal (and less specific) way of understanding a group’s attitude towards their psychological contracts is to elicit anonymous answers to the questions:

· What do you give to the organisation?

(e.g. time, duties and responsibilities, goals and targets)

· What do you expect to get from the organisation?

(e.g. money, security, opportunity, training, companionship)

· What is needed to make this ‘contract’ more balanced?

These questions could, alternatively, be discussed in groups - again, the use of an independent facilitator will help to encourage openness in the discussion. It is also recommended that this exercise be carried out for management in the area - we all have psychological contracts that need to be examined!

These groups can be used to elicit suggestions for change and potential barriers to change. Any recording of these interchanges should ensure anonymity. The resulting data can then be analysed, interpreted and fed back into the change process to make it more relevant and robust.

Key Elements for Successful Change

For any organisational change to be successful these key elements must be in place:

Ÿ Vision A picture of what is desired in terms of people, products / services, processes, procedures, culture and customers. Everyone affected must be able to visualise and see what is being aimed for, so that all significant decisions and actions will bring the organisation a little closer to that vision. Without this vision the change process will be confused and unfocused.

Ÿ Skills Without the necessary skills, individuals will become anxious and be unable to perform at the desired level. The skills profile will shift from a high requirement for business skills and knowledge of the existing support systems to a much higher emphasis on Communicative skills as shown in the figure below.

Ÿ Incentives Without incentives, people are slow or unwilling to change - ‘What’s in it for me?’. This ties in with executive accountability and attendant credibility. Any fears that arise should be dealt with immediately.

Ÿ Resources Can include money, people, information, facilities and equipment. Management resource must be committed to the change, as must the best possible resource from the business.

Ÿ Action Plan An action plan for change must be drawn up with activities, responsibilities and timescales for achieving the change. Delivery is always the hard part!

The implications, should any of these elements be missing can be seen in the diagram below:

Conclusion

The focus of all of the above has been on presenting views of the reaction of people to change and some of the reasons behind this. Additionally, ways of handling these different reactions have been presented at a high level.

As can be seen, this is a multi-faceted ‘challenge’ that needs very sensitive consideration. The specific approach adopted in any given organisation will depend very much on the views of the management team which will have to consider cost and effort versus perceived benefit.

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