Managing Change Balancing Business and People Side of Change

Faiez Hassan Seyal | Presented at “National Conference on Business Administration and Economics 96”organized by Institute of Business Administration, University of Karachi held at Karachi, Pakistan from July 20 – , 1996

Introduction

Change comes these days whether we want it or not, sweeping through our lives and organizations like a fast train on a straight track. Till most recently, Pakistani industry was quite reluctant to admit the pressure of, and a need for Change. But somehow, increasing international competition, increased labor costs (which used to be our competitive advantage), increased employees expectations, ever increasing cost of productions, inflationary pressures, shrinking markets, declining profits, and a number of other Changes has pushed Pakistani businesses to Change the ways they used to manage their businesses. This forced Change is taking a number of different shapes including (a) ISO 9000 initiatives (b) Total Quality (c) Leadership Development (d) Organizational restructuring (e) Management training (f) Staff empowerment, etc.

With this increased pressure for Change, the need for Right consultants to assist local business houses, to manage these Changes, is also increasing. Having extensively worked in the field of Managing Change in Pakistan and abroad, we find that a number of Change Initiatives either has fallen apart, or put in the cold storage or has been abandoned. More than Ninety-five (95) percent of the failures are due to the strong opposition form the organizational people – the single most important but unfortunately, the most neglected resource. It is a widely known fact, that most of the successful organizations of the world have done it through their people – by the involvement, ownership and commitment of their People to Change.

As Change Catalysts, we’re not only on board, but are traveling in the front of the train as “Manager of Change”. We believe that Change is manageable. But it is possible only if we could balance the people side of the equation. In times of Change, the future belongs to those people who learn – people who can balance both the business and people side of Change. People who could not only find the right path today, but know how to find the new right path tomorrow, and the next day, and the next. Furthermore, to stay ahead of the pack, an organization must know how to Change faster than the rate of Change in its environment.

This paper is based on my approach to managing change, which draws heavily on ODR, Inc. a USA based consulting company specializing in Change Management. The paper is meant to discuss the people side of Change. The purpose of the paper is not to explore the morphology of Change but to focus on its effects on the biggest asset of any organization; people. At end, few tips are provided to handle change more effectively.

What is Change?

For centuries philosophers have struggled with definitions of “Change,” and have been quoting that “nothing endures but Change.” But are they talking of the deliberate or intentional Change, or of the Change that is a consequence of the inherent potential for development associated with every entity. The former sort of a Change is closer to what the organizations refer to as dynamic Change and the psychologists as self -actualization.

We define Change as “a continuous process by which people, organizations and societies strive to search for better ways to be, as they cope with their personal and business lives and seek to realize their full potential”. Our definition of Change includes the change in the behaviors and attitudes of people, which is vital for any sustained Change. It is very crucial to understand the difference between “change” and “Change”. Throughout this article, we refer to Change, with the capital “C”.

change without a change in character, attitude and behavior, is change
a sustained change including a change in people behavioral pattern is Change

Why Change?

My experience suggests that the most common reasons for Change include:

clients demanding services increasingly customized to their needs
client’s satisfaction standards which are increasingly established by global competition
reduction in international trade barriers increased the international competition
client’s pressure for higher quality and lower cost
pressure of change from international joint-venture partners
increased employees’ expectations
technology which is rapidly changing and easily transferable
increased overheads and other costs in terms of infrastructure, salaries and technology leading to decreased profitability
ever increasing importance of continuous improvement of products and services
growing population and issues associated with it
increasing interdependence on others (clients/customers, suppliers, employees, stakeholders, associates, etc.)
limited resources
constant transition of power

Common Myths about Change[1]

Common myths about Change are:

It is impossible to understand that why people accept or resist Change
Bureaucracies cannot really be Changed
What leaders say about Change should never be confused with reality
Change will always be either mismanaged or misused for some ulterior motives
Organizational efficiency and effectiveness inevitably decrease when Changes are attempted
Those who help implement the Changes are heroes, and those who resist are either villains or victims of Change
Top management is inherently insensitive to human problems (physical, emotional psychological, etc.) caused during the Management of Change
Employees will always resist any Change that is good for the organization

This kind of unconscious belief is so widespread that most people think it is natural for the Change to be poorly handled and fail. To the contrary, our experience indicates that badly handled Change effort is not the inevitable outcome of flawed human nature. It is merely the result of deeply ingrained habits, and these habits – even when present in one generation after another – can be modified. One can therefore conclude that to resist Change is not a negative attribute of human values or behavior, but an inherent characteristic.

Speed of Change[2]

Light travels through space at a constant 186,281 miles per second. The laws of universe dictate this speed with no deviation. People travel through life without the benefit of a fixed velocity. We move at a variable rate that fluctuates according to our capacity for assimilating new information and influences. How well we absorb the implications of Change dramatically affects the rate at which we successfully manage the challenges we face, both individually and collectively.

Each of us is designed by nature to move through life most effectively and efficiently at a unique pace that will allow us to absorb the major Changes we face. This is our speed of Change. When we assimilate less Change than our optimum speed would allow, we fail to live up to our potential. When we attempt to assimilate more than our optimum speed permits, we get into trouble. The fastest speed of Change is that of an individual progressing through transition. Organizations tend to move more slowly, and the human race as a whole evolves at the slowest rate. From what has been said in this paragraph one can construct a basic axiom under which all of us operate regardless of whether or not we are conscious of it: Our lives are the most effective when we are moving at a speed that allows us to appropriately assimilate the Changes we face.

People’s Response to Ineffective Change[3]

Let’s now focus on what happens when people are overwhelmed by more Changes than they can absorb or when their rate of absorbing Change is well below that of the people and events around them. The outcome of both of these situations is emotional distress and most of the people start exhibiting some of the following dysfunctional behavior symptoms:

Brief irritation, which may be distracting
Poor communication and reduced trust
Defensive and blameful behavior
Reduced propensity for risk taking
Increased conflicts
Poor decision making
Inappropriate outbursts at the work place
Venting job frustration at home

As the seriousness of the dysfunctional behavior progresses, additional psychological and physiological symptoms may manifest within the individual, including:

Feeling of victimization and un-empowerment
Lower morale
Headaches
Abdominal cramps
Chronic absenteeism
Feelings of resignation

An extremely high degree of dysfunctional behavior may result in sever reactions, such as:

Malicious compliance
Overt blocking of tasks or procedures
Covert undermining of leadership
Actively promoting a negative attitude in others
Strike
Sabotage
Substance abuse or other addictive behavior
Physical or psychological breakdown
Family abuse
Chronic Fatigue Syndrome (CFS)[4]
Chronic depression[5]
Suicide

This is not intended as a complete list of all the dysfunctional behaviors caused by Change. It merely indicates some of the symptoms seen today in families, businesses, and societies.

How Change is Perceived?

Research on human behavior demonstrates that people seem to have a preference regarding what they would like to control. The whole universe would be nice, but most of us will settle for at least controlling the events that affect us personally – and if not these events, then the people involved in these events. Three important implications stem from this research:

Change is considered major when it is perceived to be so by those affected
Major Change is the result of significant disruption in established expectations
Major Change occurs when people believe they have lost control over some important aspect of their lives or their environment

Assimilation and Assimilation Capacity[6]

Assimilation is the process we use to adjust to the positive or negative implications of a major shift in our expectations, i.e. whenever there is a major expectation mismatch. Assimilating or absorbing such mismatches in expectations is not easy and the usual price is paid in the form of reduced intellectual energy, increased psychological stress, and diminished physical stamina and health.

Every person, group, and organization has a certain number of assimilation points available. These points represent our capacity to absorb Change. Like scarce resources, these points are not unlimited. Resilient people learn quickly to increase the number of their assimilation points and find it easier to stay within the limits of their personal assimilation budget. This notion of assimilation is clarified by the following example.

Suppose you have to deliver a presentation to your director in marketing department. You arrive in the morning to find out that director Finance is also waiting for your presentation, it may cost you an assimilation point or two, but it won’t be a significant drain. Much more expensive in terms of assimilation points would be coming into find out that the whole corporate board and the chairman are waiting for you.

The Cost of Disruption[7]

Disruptive Changes always exacts an assimilation fee. We spend assimilation points whether we accept or reject Changes that come our way. The widespread introduction of personal computers has dramatically altered our expectations of work performance. When a boss provides one of his staff with a PC, one implication may be that he now expects the person to produce ten times the volume of financial analysis previously possible.

Also, instead of sitting around a table sharing information and talking with peers, the staff person is now confined to a small cubicle and the glare of what he perceives to be an impersonal piece of hardware. The worker’s expectations for a typical workday have undergone a major Change. The worker is likely to curse the new computer. So the company spends money for more computer training or buys the worker an expanded system. Yet the worker remains in the same cubicle with the same perceived problems as before. The true problem lies underneath the surface of hardware and software complaints. What lurks below are the real issues of “peopleware”, like:

May be this person has been a master of synthesizing many people’s inputs into something greater than sum of its parts. Now he is reduced to boring, repetitive number crunching, which was never his strength
May be this person is suffering from the cutoff of social interactions
May be he never learnt to type in the school and suddenly the brilliant guy around the office is embarrassed when his peers watch his clumsy hunt-and-peck typing

The Paradox[8]

Another key aspect to the nature of Change is how we use up our assimilation points. The demands on our assimilation capacity come from more than one direction:

Personal Changes affect us, our spouse, family, or close friends and associates

Corporate Changes occur not just at work but with any institution that affects our lives, or our associates, clients/customers, employees, suppliers, shareholders, etc.

Social or Macro Changes affect us as part of a larger constituency

Personal Change is when “I” must Change; Corporate Change is when “We” must Change; and Social or Macro Change is when “Everyone” must Change.

Paradoxically, even though the term social or macro Change sounds big, it actually has the least effect on an individual’s day to day behavior. Only when Changes affect us personally do we begin to sit up and take notice.

Suppose you have a routine that includes listening to the news every morning while dressing for work. As you listen you take in all kinds of information about political, economic, and environmental turmoil. You hear, for example, that two thousand people have been killed in Rwanda in the tribal fights or an analysis on whether accidental killing of 100 Lebanese civilians will cost Peres the election or not or will it stall the peace progress? Despite the large scale importance of these news accounts, you are through thinking about them by the time you finish getting ready for work. It’s not that you didn’t pay attention, but the issues are so big and seem so far away. Unconsciously, you say to yourself, “I am just one person, what am I going to do about these things? I can’t make a difference.” Not many assimilation points are used here.

But suppose you have a loved one who lives in Rwanda or a village in the Southern Lebanon, a place called Qana, you will immediately start panicking and a whole lot of assimilation points are required to maintain some sort of resilience in this case.

Or you catch yourself humming when you arrive at work only to find out that your boss has decided to install a new organizational structure that is going to completely destroy the power base you have been building for the past ten years; this grabs your attention, causing you to expend a lot of assimilation points. You go home that night to find that your eldest kid is a drug addict, or one of your parents had have Angina pain. These events present you with even more serious assimilation problems and a severe drain on your remaining assimilation points. Thus, micro Changes demand first priority.

Until people see a personal connection between their own behavior and resolution of the organizational or macro issues, the problem is simply an intellectual exercise and not personally relevant.

Increasing Management’s Resilience[9]

One of the major reasons for management’s non-willingness to initiate the Change process is the fear of failure. Without getting into the anatomy of Change process, following are certain measures which can enhance the management’s resilience. These measures are of primary importance and must be addressed by the Change Agents before initiating the Change Process.

Approach Change as an unfolding process rather than an event: The management should be willing to initiate the Change with the assumption that it is a process not an event. A number of Change initiatives were put in the cold storage during the earlier diagnostic phase because the magnitude of Change was under-estimated.

Believe the status quo is far more expensive than the cost of transition: The resilience can also be increased if the cost of “no-change” is calculated, both in terms of current losses and also in terms of expected savings. The higher the cost of status quo, the lower the cost of transition and higher the resilience towards Change.

Accept the discomfort of ambiguity as a natural reaction to transition: By preparing the management in advance, to accept the discomfort and uncertainty, the resilience can be increased. It should be treated as a natural phenomenon during the Change.

Attract to remedies they see as accessible: The Change Agents should treat those remedies first which are seen by the management as accessible and easily applicable.

Present Changes in a manner that takes into account their frame of reference: We all know that individuals have different personalities, temperaments, experiences, backgrounds, fear, etc. leading to different Frame of Reference. Just like the tip of the iceberg, they have different needs and wants. The Change Agents should take individual’s frame of reference into account, while presenting various Change Strategies and Initiatives.

Tips for Managing Change

We need to manage change using our heads and our hearts, both. We need to know that our capacity to intellectually observe, form and opinion, decide, and act is greater than our capacity to move through the same sequence emotionally. Therefore, as we participate in organizational change we often make an intellectual commitment that far exceeds our emotional one. As a manager of organizational change, we must learn to deal with both the intellectual and emotional cycles of commitment, taking into consideration the differences between the two as you develop your implementation plans. The following are few of the critical guidelines which can enhance the success probability of any change initiative.

If the change targets (including managers, supervisors, union leaders and other key people involved in the organization) see that the change is the only way of survival, are fully committed and sold to the idea of change. They must have the ownership of the program of planned change and must accept it as their own, not one devised or given by someone else (foreign principal, buyer, etc.)

The way in which the change is introduced must not be haphazard. It should be a careful planned and design effort

If the change program has the whole-hearted support from the top people (all the directors and the key management people)

If the targets in the Change project can see the change as reducing rather than increasing their current burdens, responsibilities and work load by becoming more efficient and effective or through the introduction of Information Technology

If the Change does not expect to alter the religious cultural or social values and ideals which have long been acknowledged by the participants

If the Change initiative promises to offer new work experiences either through the introduction of new systems or personal development and training opportunities, that interests participants

If participants have been ensured that the Change is ultimately going to enhance the Quality of their Lives and does not threaten their autonomy, independence and security

If the Change Process provides the participants opportunities to join and contribute in the diagnostic efforts leading them to agree on what the basic problem is and to feel its importance

If they are assured that only those recommendations will be adopted which has consensus of all. The consensus should follow the group discussion and must be free of vested interests

If the participants are assured that all the parties involved will be able to see both sides of the question and recognize valid objections and take steps to relieve unnecessary fears

If it is recognized that innovations and new initiatives are likely to be misunderstood and misinterpreted. In this case, the Change effort must provide a process for feedback of views on the project and any further clarification, if required

If participants are extensively trained in behavioral skills and can begin to develop acceptance of each other. Extensive training should also be provided in the interpersonal skills including conflict management to win support, trust and confidence in their relations with one another

If the Change initiative is kept open to revision and reconsideration if experience indicates that the desired results are not achieved and there is a need for change in direction

A Word of Caution

The lack of commitment to Change is one of the prime reasons that winners are so rare. Building trust and commitment to change is not easy, and the process is something for which many people are not prepared. Resilient organizations do not take people’s commitment for granted. They approach the development of trust and commitment through extensive communication to and involvement of the employees. Following are few guidelines for the management:

People respond to change at different intellectual and emotional rates. As we adjust to organizational change, we develop our opinion toward the change and make a decision to support or resist change.

Do not forget that commitment is expensive. Winning organizational commitment is both complex and costly. Most managers want full support for the changes that they hope to make, but they have little understanding of the effort and expense involved in acquiring it. Those days are gone when managers could say. “I don’t need to tell my employees anything or listen to them”. In today’s sophisticated and complex corporate environments, you will find many people who will kneel down in obedience, then bury your project when you turn around.

Don’t assume commitment will be won without planning for it. Managers often devote considerable resources to making the right decision about what should be changed, and then fail to build the commitment necessary to execute that decision. A well planned strategy will increase the probability that targets will commit to such an imperative change. Strategies for building commitment should not be limited to a few people. The programs should be initiated for each and every level of employees. The long-range commitment can only be achieved if there is an alignment of individual and organizational values.

The building commitment is a process not an activity. Forcing compliance to change may assure the technical implementation of a change in the short-run but the long-range cost of recurring resistance will be too high.

There is no other choice. Either build commitment or prepare for the consequences. A change project’s importance to the organization and the degree of disruption it causes should determine the level of commitment required for success. The greater its significance and attendant disruption, the greater the amount of commitment required. There will be situations in which high levels of commitment are preferred, but its cost is too high. When full commitment is not feasible, your only choice is to prepare for resistance. Quite often, management decides not to invest in building target commitment, and then they are surprised by the resistance.

Sometimes it is better to slow down. Sometimes it appears that the fastest way to implement change is to force it. But this approach only appears quick because most people do not calculate the cost of long-term, covert resistance. On other hand, by slowing down, sometimes, it is possible to have the time for opening communication, involving employees, fostering empowerment, and developing good working relationships. Remember, the commitment is time consuming and expensive to attain. But once its infrastructure develops, the speed of assimilation can accelerate.

Conclusions

Each situation and each individual tend to be unique and hence it is difficult to predict how a particular Change will be regarded by those affected. In any case, it would be wrong to suppose that human beings will always resist Change, despite the deep-seated and universal nature of the fears. Indeed, as Peter Drucker has asserted, there is no being in heaven or earth greedier for new things:

But there has to be conditions for man’s psychological readiness to Change. The Change must appear rational to him; man always presents to himself as rational even his most irrational, most erratic Changes. It must appear as an improvement. And it must not be so rapid or so great as to obliterate the psychological landmarks which make a man feel at home: his understanding of his work, his relation to his fellow-workers, his concepts of skill, prestige and social standing in certain jobs[10].

Footnotes

[1] This section is heavily based on Daryl R. Conner, Managing at the Speed of Change, ODR Resources, Inc. 1992

[2] Same as 1.

[3] Same as 1.

[4] CFS is a disorder characterized by generalized weakness, malaise, loss of appetite and energy, ashen looks, chronic low back ache, chronic sore throat, chronic muscle aches, disturbed sleep patterns, blurring of mind and a host of other psychological and physiological manifestations. It is recognized as number one non-pathological cause of decrease in work effectiveness and efficiency during the prime years of life. The current body of scientific evidence argues against the possibility that CFS is caused by an infectious agent, known or unknown.

[5] Chronic Depression (which in this case should be treated as Neurotic as opposed to Psychotic Chronic Depression) shares quite a number of symptoms with CFS but, here the sufferer is usually aware of the causes leading towards the depressive state whereas, in CFS the patient usually have presenting complaints which on the surface point towards an organic cause.

[6] Same as 1.

[7] Same as 1.

[8] Same as 1.

[9] Same as 1.

[10] Quoted by Arnold Judson in his A Manager’s Guide to Making Changes.

Bibliography

Arnold Judson, “A Manager’s Guide to Making Changes”, Willey, London, (1966)
Daryl R Conner, “Managing At The Speed of Change”, ODR Resources, Inc. (1992)
Don Bryant, “The Psychology of Resistance to Change”, Management Services, (March 1979) pp. 9-10
Rosabeth Moss Kanter, Barry A Stein and Todd D Jick, “The Challenge of Organization Change”, Free Press, NY, (1992)
Roy Mclennan, “Managing Organizational Change” Prentice Hall, NJ, (1989)