Managing Organizational Change By Putting People First

Most companies say their most important assets are their people, but few behave as if this were true. Many, if not most, important organizational endeavors today devote the majority of their budgets to technology and processes, not staff development. There is a general bias that focusing on tangible assets will impact the bottom line more than the intangible assets, which primarily involve people. Ask organizational leadership what they are spending on their human assets and what return are they getting and you will likely receive a blank look in response. In the evolving world where knowledgable human assets will be increasingly at the center of any organization's competitive abilities, failing to recognize the need to place human considerations first in all strategic, operational and cultural thinking will result in dire consequences.

Evidence suggests that staff management issues have a direct effect on the bottom line. According to a Watson Wyatt study, three-year total returns to shareholders are three times higher at companies where employees understand corporate objectives and the ways in which their jobs contribute to achieving them. In a study of change management strategies by McKinsey, the 11 most successful companies gained an average of 143% of the returns they expected. In these, effective change management clicked at every level: Senior and middle managers and front-line employees were all involved, responsibilities were clear, and the reasons for the change were understood throughout the organization. Conversely, companies that had problems at all three levels captured, on average, only 35% of the value they expected.

As in any business endeavor, consistent quality leadership and communications are essential. Recognizing change as a continuous process means change management is an ongoing feature of a leader’s job. A frequently overlooked component, however, is the integration of the realities of change and its impact on humans. People management is commonly regarded as an administrative concern, rather than strategic, and is rarely involved in any change project’s leadership thinking. Yet offering the right incentives to link corporate goals to individual career objectives is a critical success factor. What motivates people is an individual matter and needs to be addressed at this level.

A recent survey by training specialists Discovery Learning shows that people react differently to change, and can be classified in four broad categories. Originators welcome dramatic change; conservers prefer gradual change; pragmatists are most enthusiastic about change that will address current problems; and resisters dislike all change. Americans are typically attracted to innovation, so we believe being an originator is best. But it takes all of these personality types to build a successful business. Conservers at Enron tried to warn of problems, but the leadership culture was apparently skewed so much toward originators charged with ‘reinventing business’ that conservers were viewed as resisters and were either silenced or ignored.

The way people learn new things is also individualistic. Training programs that require speedy results need to be designed to accommodate the human need for context and relevance. The usual approach to rapid training, taking employees off-site for intensive training, is in fact misguided. Such courses tend to work against human nature, since they are typically an attempt to impart all the knowledge needed to all staff in one fell swoop, with little attempt to tailor it to a specific individual’s job or learning style. Further to this point, most jobs are rarely as technically demanding as the technicians who develop the course content assume. A person may need to learn 10 new things to do the job effectively, but may only encounter five in a normal work day, three over the next year, and two in exceptional circumstances, by which time the training will have been forgotten. On-the-job training coupled with self-paced e-learning and online help to deliver personalized assistance as required is in fact a more effective way of ensuring staff get training that is relevant to their jobs.

When integrated with proper incentives and performance criteria, effective training can be a powerful driver for change. Work-force flexibility, developing multifunctional workers who can adapt to a range of job requirements, is the centerpiece of many businesses that are trying to transform themselves to survive in the real economy. Few business leaders are daunted by the idea of changing their organization’s technology or processes, but many wring their hands in despair at the prospect of changing their people’s behavior. But changing human behavior is in fact more science than art. An increasing body of evidence shows that the process of organizational change has defined parameters that suggest what works and what doesn’t.

The overall process may be defined, but the elements needed to motivate a specific person are variable. A one-size-fits-all solution won’t work when the fundamental issue to be addressed is that people have individual needs, wants and concerns. Human behavior can be pushed and pulled in the right direction with an effective combination of incentives and disincentives – if the desire for change is created in the individual. Constant upheavals in the business environment mean that leaders must learn to master the process of implementing change, just as their employees must learn to accommodate change.