Best Practices in Managing Large-scale Organisational Change

December 6, 201612:05 pm1437 views
Best Practices in Managing Large-scale Organisational Change
When it comes to employees averse to change, companies need to look at resistance through radically different lenses. HRM Asia looks at some best practices in managing large-scale organisational change.

Earlier this year, a large fast-moving consumer goods (FMCG) firm in China was forced to integrate with a US-based company, which had acquired its operations.

A new leadership team had to be created while the two sets of support functions needed to be consolidated, among other large-scale changes that affected almost all of its 6,000 employees in Asia.

Perhaps unsurprisingly, the company’s Chinese employees showed significant resistance and the firm enlisted the help of change management consultancy Ketchum Change.

“The employees felt the acquiring company was not showing enough sensitivity to the way things were done in China,” says Gretchen Huestis, Regional Director of Asia-Pacific at Ketchum Change.

“They thought that ‘western’ approaches were being forced on them and were concerned those approaches would not work in China,” she adds. As a result, the staff were initially slow to step into the new operating model and adapt to the new ways of working.

The Chinese firm is not alone among organisations facing the uphill challenge of convincing employees to adapt to new circumstances.

While many may be tempted to force past the resistance by ignoring the employees’ concerns or letting them leave the company, experts urge business leaders, HR and organisation development professionals to take a drastically different approach to the issue of change resistance.

“Organisations and managers need to start seeing resistance as something to be understood rather than something to be overcome,” advises Alex Swarbick, Regional Director for Asia-Pacific at the Roffey Park leadership institute.

Too many managers are content to treat the phenomenon of change resistance as something inherent in the individuals involved, Swarbick points out. That, he says, puts responsibility for resistance in the wrong place.

Two major risks arise from that approach. “First, it’s insulting to the intelligence of the people they regard as simply resistant by nature,” Swarbick says.

“Whatever people are resisting, it isn’t the change per se, but actually the implications that they anticipate, which seem to conflict with something that is important to them.”

The other risk is managers failing to skillfully inquire into the reasons for the resistance, which misses the chance to gather rich data about how the change is being perceived from the ground. This data could potentially help the change be more successful, Swarbick explains.

“So simply dismissing resistance as something about the individual can pose an organisational risk which threatens to undermine the change.”

Communication counts

Neo Chia Reei, Director of Organisation Development and Learning at NTUC Health, stresses that communication, coupled with patience and persistence, is crucial.

“Often, communications need to go through the organisation eight to 10 times before they are accepted,” says Neo, who has extensive experience managing change in large organisations across different sectors.

“Once this happens, the change process will be very fast because everyone in the ‘change trail’ has ownership of it and sometimes may even think they invented the changes!”

Likewise, to manage resistance at the FMCG company in China, Ketchum Change focused on creating clear narratives that explained the reasons for the change, the specific timeline and steps, what was expected from each employee, and the support they could rely on.

Huestis says the consulting firm also ensured messages came from all directions. A regular employee newsletter was introduced, and a series of senior manager blogs on integration topics was also started, among other initiatives.

In reacting to change, under-communicating is often a big misstep, she warns. “This happens because of the sensitivity of the decisions being made, or because not all answers have been figured out.”

Unfortunately, Huestis says pulling back on communication worsens the situation. “In the vacuum of silence, employees often fill the gap with their own inaccurate assumptions or false rumours,” she adds.

See: Do You Agree Employee Engagement Levels Drop During Organisational Change?

Sentiments on the ground

Another avoidable blunder is to implement a change before making sure it is actually doable. “If you announce something but suddenly backtrack a few days later, you’ll be seen as a very flippant leader, and people will lose trust in your capabilities,” warns Eddy Putra, Operations Director at secretarial service provider Ottavia.

“Always start with understanding the situation and getting the ground sentiment first, so you can make sure a change will be practicable,” he says.

Moreover, convincing employees to adopt an initiative should go further than merely explaining the benefits. Putra says that above all, staff need to first know and trust the change leader sufficiently. “That means you need to build up the right reputation for your work ethic before you can gain their trust and implement change.”

Challenges in getting buy-in from the ground can also come from language differences.

The ongoing cultural transformation following a 2014 rebranding and reorganisation at energy services company Penspen was initially met with strong reactions in some Asian countries.

Senior management made several presentations regarding the market situation and the urgency behind the changes, but employees did not embrace the new situation easily.

“We realised it would have had a stronger impact if we had communicated more in the local language,” says Anna Zavirukhina, Head of HR for Asia-Pacific. “A lot of information was given, but unfortunately some employees were not fluent in English, and many were also not very interested in paying attention to the financial data.”

As a result, Penspen has now appointed a regional leadership team that includes local managers as change agents. Because local employees already trusted these managers, they could start new dialogues and formal discussions to change the subject of hallway conversations, Zavirukhina says.

At times, change calls for the cooperation of not just the employees, but also outside institutions such as labour unions and government agencies.

Bobby Chiew, Head of HR at private bus operator Woodlands Transport, gives the example of a production outfit that planned to halve costs within two years and redeploy hundreds of mature employees into completely different job scopes over an 18-month reorganisation.

“For decades, the workers consistently executed what they were trained to do, and many were over 50 years old,” says Chiew, who was then Head of HR at the Singapore plant.

To start with, the company held rounds of consultation with the union and government agencies. They worked together to anticipate questions and resistance to the changes, and came up with solutions where possible.

Later, talks were given to explain the new situation to the employees, but the real challenge came when assigning them to new roles. Complaints about the disruption were rife. Some requested the machines to be slowed down, while others resisted typing computer entries because they preferred pen and paper.

To respond to those grievances, Chiew engaged staff via both top-down and bottom-up approaches. He also redeployed them in different roles until there was a good fit, while retraining them each time.

Eventually, employees worked closely with the management, and the company achieved a 47-percent cost reduction by the end of two years. Communicating clearly the urgent need for change helped to foster trust, Chiew explains.

Roping in champions

Identifying individuals to influence others to join the change journey is also a favoured strategy of change managers.

An aviation client of Ketchum Change’s was going through a company-wide restructuring, but employees had a high level of distrust which was worsened by the many rumours circulating.

“When we measured which communication channels were the most trusted for information, we realised the grapevine topped the list, well above formal channnels like the CEO newsletters or the intranet page,” Huestis says.

Rather than fight the rumour mill, Ketchum Change used it to its advantage. It convinced the client company to assign a group of change champions to leverage the informal communication networks. “We met them regularly for them to report the big worries circulating on the grapevine, and for us to share the key talking points and facts we wanted to enter the conversation,” Huestis says.

Eventually, these positive messages took root virally, reducing the resistance among the workforce.

Less painful layoffs

Employers can also soften the blow and reduce resistance even when staff are set to lose their jobs.

Neo recounts her experience carrying out a major retrenchment exercise when she was the Regional General Manager for Asia-Pacific at the now-defunct industrial conglomerate General Electric Company (GEC).

Tasked to cull 1,000 staff and exit all businesses in the region, Neo’s approach was more compassionate than usual, and helped avert the bitterness and protests typical of massive layoffs.

Instead of handing employees pink slips on the spot and getting security guards to march them out, Neo first announced the company’s shock closure plan to all employees, counselled them, and gave them two weeks to “mourn”.

“Then, I got them to do financial planning with their family members, and together we prepared an exit plan of six to 12 months,” she says. She also allowed employees to resign anytime they found a new job, and got the UK-based leadership to approve the performance-based bonuses within the exit plans and retrenchment package.

The UK board of directors said it was the first time they had seen a retrenchment exercise carried out calmly, quietly, and with dignity.

All GEC businesses in Asia were successfully sold off, customers’ maintenance contracts were taken care of, and millions’ worth of bad debts were collected, Neo says.

Letting the recalcitrant leave

That being said, it is often not realistic to try to win buy-in from the entire organisation for every change.

Besides being personally unwilling to accept the change, some individuals may also impact the productivity of their teams. “Resistant employees may impede the progress of an organisation, and sometimes also generate negativity which causes disengagement and will slow down the progress of the change,” says Clarence Hoe, Group HR Director at International Enterprise Singapore.

Ketchum Change recommends measuring the change sentiment in an organisation and then shining a spotlight on those who are most supportive.

The consulting firm has a framework that segments employees into “bystanders”, “skeptics”, “enthusiasts” and “ambassadors”, in order of increasing buy-in. The change ambassadors can then be studied to identify what it is about their mindset, capabilities, and work environment that supports their change position.

“HR and managers may then replicate these qualities to create wider change throughout the organisation,” Huestis says.

However, if someone – especially a leader – remains resistant over the long-term, even after active listening, clear messages and patience have been tried and exhausted, then it may be time for them to transition out.

“The shadow of a leader is particularly long during times of change, and role models who are not supportive can have significant negative impact,” Huestis says.

An example can be drawn from when NTUC Health’s Neo was hired as a director of a local business school. Her division was losing money, and student enrolments were at an all-time low. Tasked to turn things around, Neo implemented several new systems and processes.

All her 25 employees appeared amicable and showed no signs of resistance. Weekly meetings were introduced to monitor their progress.

However, one senior manager gave constant excuses for not completing his assignments, which hindered the change process. Despite Neo taking the soft approach of counselling him repeatedly, nothing changed.

As a result, she resorted to the last option of collecting evidence that he was not doing his assigned work.

After his forced exit, new members joined the division, and Neo was able to build a high-performance team through regular communication, mentoring and coaching, and performance-based incentives.

In time, the division brought in profits and student enrolment for all its 10 programmes was at a record high. “A winning team can move mountains,” Neo says.

“Sometimes, to move forward, you need to fire the recalcitrant.”

Change fatigue

Besides resistance, burnout among employees can also impede change.

Huestis says that continuous, accelerating change has become the rule rather than the exception, and is now an urgent matter of business survival.

Last year’s Liquid Change Study by Ketchum Change revealed that 74% of leaders in large corporations had observed “change fatigue” among their staff.

“The employees have hit the limit of their ability to deal productively with change,” Huestis says.

Change fatigue is caused when senior leaders do not recognise the exhausting effect that continuous change and volatility have on staff. Hence, leadership behaviours, corporate cultures, and operating systems must adapt and become more liquid, Huestis says.

Zavirukhina from Penspen is familiar with the phenomenon. “I worked at a company that had changes every year, and after a few times, people just stopped adapting because they knew another change would come the following year,” she says.

“If transformational change – which completely alters the organisation and its processes – happens too often, one day people will no longer believe in it.”

Staying fluid

Dynamic business environments are the new normal. Change management consultant Ketchum Change has identified four attributes key to success in changing environments:

  • Transparency: Communicate in a human way, with clarity and authenticity, across borders
  • Pioneering spirit: Promote curiosity and experimentation, and support risk-taking to break through and innovate
  • Being dialed-in: Create strong connections with internal and external stakeholders, embrace fearless listening, and engage employees in dialogue around changes
  • Agility: Be energised when approaching change, and drive forward with passion and resiliency to act on opportunities in real time

The article first appeared on HRM Asia.


Read also: Impact of Digitalisation on the World of Work: Need for Redesigning Organisational Structure and Evolving Leadership Models

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