Why managing the human cost of organizational change is make or break

The pace of change is accelerating as the 21st century moves into its second quarter. Artificial intelligence, big data and constant connectivity are combining with geopolitics to shift the tectonic plates at every level in human society. New industries emerge as others decline. Businesses must be adept at keeping their footing on ever shifting sands. And as people, what we do, where we do it and how we work have all been transformed in a generation and the only certainty is that further change is on the way.

Some people thrive on change but most find it unsettling or even threatening. Change has been identified as one of the key drivers for work related stress by the UK Health & Safety Executive and a detailed review commissioned by the European Union has demonstrated the potential adverse impact of organizational change on physical and mental health.

Major corporate or organizational change programmes are often associated with increases in absenteeism, presenteeism and accident rates, while job satisfaction, commitment and performance decline. This human aspect is a common cause of failure in the 70% of reorganizations that fail to deliver, yet it has often been neglected.

Managing change in a healthy way has thus become an imperative for businesses that want to prosper in an increasingly competitive market.

The psychological and emotional effects of organizational change are predictable and can be broken down into stages of anticipation, execution and consolidation.

Anticipation is characterized by uncertainty about what the change will mean, which translates into insecurity and anxiety. During the execution phase workload and the speed required for results often increases, leading to a risk of burnout. As changes bed in during consolidation, people experience uncertainty and ambiguity about how new arrangements will operate, resulting in self-doubt and a higher risk of depression.

These human responses are experienced from the C-suite to the shop floor – the difference is one of timing. Change cascades through an organization so leaders may be far advanced in execution by the time those at the base of the hierarchy are entering the anticipation phase. That can result in a psychological and emotional disconnect in which the workforce feels that the leadership is uncaring while those in the boardroom, who have worked through their own feelings some time previously, perceive those below them to be unreasonably resistant to change.

The potential harm to people and businesses from organizational change can be mitigated by adherence to straightforward principles. As ever, it starts at the top. Leaders need to be able to articulate a compelling vision for the proposed change and demonstrate authenticity and empathy in their leadership style. Role modelling includes looking after themselves at times of intense pressure – paying attention to the basics of nutrition, exercise and sleep together with activating their own support network and carving out some downtime.

Using an established change management methodology will provide structure to the reorganization and reduce risk. The model of choice for a particular organization will depend on multiple factors – but the critical point is to have one. Change management frameworks tend to be strong on process but may underplay the psychological and emotional aspects that can be critical to avoiding harm to mental health.

Organizational justice is central to securing buy-in for change and avoiding harm. Individuals within the business need to feel that what is happening is fair and the three elements driving that perception are distributive, procedural and interactional justice.

Distributive justice relates to securing equitable outcomes for employees, such as a good balance between effort and reward. If compromised, distributive justice impacts adversely on health. Procedural justice requires consistency and lack of bias in the way that outcomes are determined so that, even if people don’t like the result, they will be satisfied with the way in which it was arrived at. Interactional justice requires clear and open communication delivered respectfully and with the opportunity for feedback; commercial considerations can be a complication but, in general, try to tell people as much as you can as early as you can.

Middle managers are critical in delivering successful, healthy organizational change. They have been described as a buffer to chaos; their role is to implement instructions from above, often against resistance from below. Middle managers have frequently risen to their level of seniority by virtue of their skills in navigating the “status quo” and changes to that may therefore be perceived as a personal threat. That is particularly true when change involves the adoption of new technology which they may find harder to adapt to than younger juniors and which may, of itself, devalue much of the experience they have gained over many years. Investing time and energy into making the case for change to middle managers, highlighting the benefits it may bring them and assuaging their fears is invaluable.

Support for people during times of organizational change has often been interpreted primarily as dealing with those who lose their jobs as a result. Such action is worthy and worthwhile but it is also essential to support the people the business will require for the future. In any period of uncertainty the greatest flight risk is for the company’s best (and therefore most marketable) people – identifying them and making them feel valued is therefore business critical.

More widely, Layoff Survivor Syndrome is a risk for those remaining after any reorganization. A complex mix of guilt, insecurity and demoralization can cause significant impairment to engagement, productivity and mental health. Paying attention to the principles of healthy change and engaging the workforce in the development of the future state will minimise these risks.

Charles Darwin’s thoughts on evolution have been paraphrased as “it is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change”. Businesses that embrace healthy change in these uncertain times are those most likely to thrive and prosper.