There are currently more than five hundred businesses who have filed for bankruptcy in 2020 alone according to this Forbes article. Now, filing for bankruptcy isn’t a death sentence but these companies illustrate that being able to manage and react to change has become more crucial than ever before.
Luckily, a lot of companies have realized that they must be able to manage change, usually employing change management processes, which is a great step. But many organizations have not considered how using change management really affects their employees.
Applying change management affects employees by making them feel considered and respected, which supports them while coping with change and resistance. This requires change management practitioners to understand, relate and mitigate potential stress and fears arising in an employee.
This is the short answer to how change management and especially change affects employees. To understand how change management can help employees in dealing with change, or why employees even resist change in the first place is crucial in building a change management strategy.
Which is why I have laid out the most crucial and impactful points below.
Change management helps employees to deal with change
Let’s start with an example. A new CEO comes in and puts forth a statement that the company must change in order to survive. Said CEO puts forth a plan where the company needs to be in X years, and how the employees should perform their work from now on.
No communication why this change is necessary for the business or, how not following the changes will impact the employees or the business has been sent out. The only thing the employees notice is that several positions have been cut or “repurposed”.
This makes the employees of the company feel insecure, unvalued, and frankly scared that their contract might be terminated soon as well. Resulting in a lack of motivation, project delays and quite likely, a loss of the companies high-performing employees.
This simplified example fits to a few companies such as Kodak or Blockbuster. Now the reason many change initiatives fail might have something to do with their change management strategy.
The core idea of change management is to focus on the human side of any change initiative, which means that by following the change management process, the organization will reduce the risk of failing the change initiative.
One common change management process consists of three steps and is originally developed by Prosci:
1. Preparing for change (where readiness assessments help guide the formulation of a strategy)
2. Managing change (where five change management plans integrate into the project plan)
3. Reinforcing change (where compliance audits and mechanisms deploy to solidify the change)
The purpose of change management is to make any kind of change for an employee as stress free as possible. This is achieved by for example being completely transparent about the change, but also being willing to listen to concerns from employees and such.
When change management is applied effectively it affects the employees in several positive ways:
- It reduces the stress level of an employee
- It helps in keeping uncertainty in check and gives employees a clear idea on how the future looks like
- The amount of resistance from an individual towards a change initiative is reduced
This is how employing and following a change management process affects employees. To be better prepared for the next change initiative let’s have a quick look at how change is affecting people in general.
How is change affecting employees?
Employees are usually feeling stressed when faced with unaccounted change. After the initial feeling of stress an employee feels some form of resistance to the proposed change, until the change has been understood and hopefully accepted.
Fifty-five percent of people who mentioned that they experience organizational change at work feel chronic stress.
In comparison only 22 percent of people felt chronic stress at work where no organizational change was being pursued. These are results from a study by the American Psychological Association conducted in 2017 which you can find here.
What this tells us is that change is having a significant impact on the wellbeing and stress level of our employees or even more broader on an individual.
The reason we feel so stressed is because whenever an unaccounted change occurs, or whenever our normal way of doing things is disrupted, our human psych is associating this with the felling of losing something. This could be anything, but here are a couple of examples triggering a feeling of losing:
- losing the feeling of safety and security
- loss of control
- loosing mastery of a task which an employee has for example been doing for many years
- losing self-esteem
- feeling helpless
- feeling powerless
I swear this was the closest we got in terms of psychology. But if you’re curious to learn more about this and don’t mind academic research papers then check out this article here.
This fear of losing occurs in individuals and especially employees who are resisting change. Although, every individual will always have some degree of resistance when it comes to change. Simply because change is disruptive, and naturally increases our stress level.
However, there are several reasons for employees to resist change which I’ll outline in the next paragraph. Understanding them can help you in crafting a better change management strategy because you can adjust your communication strategy and understand the potential resistance streams.
Why do employees resist change?
Employees can resist change because it interferes with their own interests, the proposed change isn’t understood correctly, there isn’t enough trust to accept that the change is needed, the tolerance for change is low out of fear, or lastly the employee doesn’t agree with the proposed change.
I mentioned in the previous paragraph how change impacts employees and is causing resistance to change, even if the resistance is just by a small margin. Now, to make this more actionable I’ll go deeper into why change is actually resisted. This comes down to four different perspectives:
- Narrow minded self-interest (parochial self-interest)
- Misunderstanding and lack of trust
- Low tolerance of change
- Different assessment of the situation (aka. different opinion on why or if change is needed)
These are the main reasons for employees to resist change, which you can read more about in academia like manner in this article here.
1. Narrow minded self-interest
Employees resisting change can have a massive self-interest as their hidden agenda. Simply picture a new organizational change where your role is no longer needed or will be combined with another position. The uncertainty and the stress this will cause will make the employee resist to the change initiative quite significantly.
2. Misunderstanding and lack of trust
An employee who fails to understand the situation or the need for the organization to change is quite likely resisting proposed change. This is a communication problem and lies in the hand of the CEO or management to formulate and convey a clear message as to why the change is needed.
If that explanation has been poorly executed or the employee simply is not receiving an adequate amount of information and transparency, then this will certainly trigger an immense amount of resistance.
Which makes sense, if something is changing which is impacting your livelihood and the income source with which you need to feed your family, then you’d want to be kept informed.
The key here is a clear message from upper management and the willingness and commitment to be as transparent as possible.
3. Low tolerance for change
Another reason for employees to resist change lies in their fear of not being able to develop the new skills and behaviors to keep up with expectations. Picture an employee who has been working for years with the same tools and is now expected to change but is worried that he might not be able to use the new tools.
This employee will quite likely resist change because he is worried that he can’t adjust to the latest changes. Especially considering that human beings are limited in their ability to change, although some people can change much more than others.
4. Having a different assessment of the situation
A lot of managers assume that every employee in the organization has the same level of insights into the business as they have.
Which makes them assume that ones they have decided to put forth a change initiative, which simply aims to safe the business from bankruptcy, that every employee will understand the reasoning behind the initiative s well. This unfamiliar perspective based on various levels of information might then cause resistance in the employees.
Another related and quite common factor of resistance is if the employee simply doesn’t agree for the need to change, or the advantages and disadvantages of the change itself. Picture a worker’s council who does not want to allow the organization to install cameras in changing rooms, no matter the benefit.
This reason to resist change is quite difficult to tackle and usually requires a vast number of discussions and compromises on both ends.
What are reasons for employees to welcome change?
Employees are open to change initiatives when said change brings opportunities for personal growth and development, or brings new challenges, makes the job more exciting and less boring, or provides opportunities to participate in shaping the outcome/future of the organization.
Luckily, there aren’t only negative points when it comes to change, or only negative points on how change affects employees. In fact, there are four factors which makes it easier for employees to welcome change and therefore reduce resistance altogether.
These factors can be turned into an opportunity and leveraged when deciding on a change management strategy and the affect the change initiative has on certain employees.
The reasons for employees to welcome change are:
- Opportunities for personal growth and development
- The prospects of a new challenge
- A reduction of boredom at work
- The opportunity to participate and shape the outcome
Let’s discuss these factors in a little more depth so you can make use of them when deciding on your change management strategy.
1. Opportunities for personal growth and development
If presented and communicated properly then a potential change can bring a lot of opportunities and personal growth for employees.
For example, when Microsoft’s new CEO Satya Nadella came in, he completely changed the culture at Microsoft from an elbow/cutthroat sales culture towards are empowering everyone and support everyone culture. In this new culture employees are rewarded to think about how they can support their colleagues or even reuse work from other colleagues.
If your curious about how Microsoft has done it here is a more detailed article about the transition.
This provides enormous growth opportunities for employees since they must learn a diverse set of skills which wasn’t required at first. The important thing is to present this information in a straightforward way and explain why this is an opportunity as well.
2. Prospects of new challenges are engaging
Consider a job which you’ve been doing for a couple of years now and which you’ve mastered to an extent that it is simply no longer as exciting as it once was. You can always move to a different role or even a different organization, but you enjoy working at your current employer.
How existing could it then be if the organization has put forth a change initiative with a whole lot of challenges which need to be sorted out. Suddenly you work on topics or even with a completely new set people to make the change initiative happen.
This way you still have the background and skillset you’ve had previously but are now once again challenged to figure out new ways. This can be especially exciting for younger employees who are still hungry to proof themselves.
3. A reduction of boredom at work
While change is stressful and will always cause resistance, it also can be exciting since it forces the mind to overcome a new obstacle. Therefore, an employee who has been doing a job which simply isn’t the most exciting, might find some form of passion or excitement again due to any kind of change happening in the organization.
4. The opportunity to participate and shape the outcome
Being able to actively take part in change, or even better help shape the outcome can be immensely invigorating. This can keep employees engaged since they see that they take part in the change to happen and are having an impact as well.
The opportunity to participate or even shape the future is especially appealing to the upcoming generation Z workforce. Gen Z and millennials alike share a perspective of working for a purpose and strive for geneating impact.
However, generation Z is even more focused on future outcomes such as the environmental impact on the planet and similar future-oriented causes. Which makes it especially interesting and appealing for them to be involved during change.
In the picture above you see the differences between the millennials and generation Z. It should simply give you another perspective illustrating that change needs to be management with a specific audience and a goal in mind.
What is the impact on employees of poorly managed change?
Poorly managed change will result in higher stress levels, resistance, and uncertainty among the employees. Which will lead to high-performing employees leaving the organization, resulting in extra costs, loss of productivity, and a reduction of the quality at work.
Up until now we’ve talked about how change management and change is affecting employees. But let’s talk about how poorly managed change affects employees, and more specifically the cost and impact not employing change management strategies has on a business.
In this example I’m specifically talking about organizational change, meaning a change which has a direct impact on everyone involved in an organization. This can be for example a change of culture or a merger with another company.
A lot of the information I present in this section has been researched by Prosci, so in case you want the full-blown academia like article about poorly managed change, costs, and risks then click here.
The impact of poorly managed change on an individual goes back to the stress factor which we feel when change occurs. Now if an organization is not employing change management strategies or is doing a poor job in considering the human side of change, this will make an employee feel incredibly insecure and more prune to leave the organization.
From an organizational point of view this is the worst possible outcome. In many cases, the most valued employees are the likeliest and quickest to jump ship because they can work at other companies and competitors are quick in poaching them.
If that happens this will create tremendous costs for the organization since replacing a high-performing employee can cost 1.5 to 2 times the yearly salary of the employee who has left.
I have written another article about the cost of an employee leaving and more specifically how to retain your high-performing employees. The article illustrates several ways to motivate employees in staying at your company, and shines light on the reason why money isn’t the only factor which encourages an employee to stay. If you’re curious feel free to check it out by clicking here.
Losing the high-performing employees will result in a loss of productivity across the organization, which will be deep and go on over an extended period.
At the same time, the quality of work will be reduced since employees are constantly worried about the change but also how they should hold the fort with all the previously mentioned challenges going on.
The graphic below illustrates what the effect of poorly managed change over time has on an employee. The illustration also shows specifically how badly the fear and resistance level changes over time.
I can say from personal experience that poorly managed change has a major effect on an employee. The employee will feel constantly stressed, uncertain, worried, and if the change continues to be poorly managed, said employee will start looking for alternative options.
To summarize
I hope this article helped you to better understand the impact of change management on an employee and how change affects every individual in general.
With this knowledge you are hopefully given another perspective on how to manage change, especially since you now know that there are positive factors reducing the resistance level of employees towards change as well.