The term organizational change often triggers fear in corporate hierarchies. In addition to dealing with the administrative issues and uncertainties that inevitably arise in corporate change, management also must make sure employees are fully on-board with the change. In many cases change provokes resistance. The reasons for this include a fondness for routine and predictability, and therefore a suspicion of anything that would upset them. Another reason could be job security, in which the uncertainty during a restructuring can have a demoralising effect on employees. So what is the best way to effect a change in employee mind-set?
The economic landscape today has had a big impact on the way companies operate. Challenging economic factors, as well as the fast pace of technological development, have led to a continuous need to adapt. This can range from simply upgrading an IT system, to corporate restructuring, or a merger and/or acquisition (M&A). Regardless of how the change occurs, the loss of status, certainty or control means that it will be met with resistance by employees. M&As in particular elicit the most concern by employees, especially regarding fears over how they will fit into the new organization.
There are many methods organizations can employ to best manage change with respect to employees. One methodology is outlined by Aon Hewitt, which includes a five-step process. Firstly, they recommend defining the type of change the organization is undertaking. Different changes will require a different approach. For instance, an M&A will require employees to adopt the new organizational culture, as well as business processes. Measuring employee engagement throughout the change is recommended, as well as tailoring interventions that meet those engagement needs. An action plan should then be put in place for each organizational unit, with appropriate accountabilities. Once the plans are in action, reinforcement ensures that the process does not lose steam.
An instructive case study on employee engagement on corporate change comes from Dutch electronics firm Philips. In 1990 the company faced a growing crisis and record losses, with rival firms such as Sony rapidly making inroads into its market dominance of the electronics industry. Although the competitive landscape had changed, the company and its employees had not. Resistance to change was embedded in the corporate culture. The solution was a shock treatment initiated by Jan Timmer under “Operation Centurion”. The issues with Philips were outlined in stark terms. Workshops and training programs encouraged employees to talk about the consequences and objectives of change, with Timmer engaging in “town meetings” to address concerns. As a result of the restructuring, Philips’s financial performance rose sharply, with a company survey in 1994 showing that morale and feelings of empowerment had soared among employees.
Corporate change is a necessity in the current fast paced economic climate. Therefore, companies should take as a given the need to have a strategy to address how best to change the mind-set of its employees to make sure they are on-board with the change. The details of those strategies will depend on the type of change being undertaken, but the overall approach is relatively uniform across all types, with one such approach outlined above. Employee engagement and preparation, as well as reinforcement after the change is implemented, is vital to ensuring the success of the company after the change.
Adam Watson
Sources:
https://www.jstor.org/stable/2488552?seq=1#page_scan_tab_contents
http://journals.sagepub.com/doi/abs/10.1177/0021886305281902
http://www.aon.com/attachments/human-capital-consulting/2013_Managing_Engagement_During_Times_of_Change_White_Paper.pdf
http://ecampus.nmit.ac.nz/moodle/file.php/4599/Talent/HBR%20-%20Strebel,%20Why%20do%20Employees%20Resist%20Change,%201996.pdf