#506  from Innovative Leader Volume 9, Number 12          December 2000

The Biggest Mistakes in Managing Change
by Carol Kinsey Goman, Ph.D.

Dr. Goman is president of Kinsey Consulting Services, Berkeley, CA, specializing in developing "change-adept" organizations and individuals. She is author of eight business books, including This Isn't the Company I Joined and The Human Side of High-Tech: Lessons from the Technology Frontier (John Wiley & Sons, New York, NY, 1998, 2000).  Phone 510-526-1727; cogoman@ckg.com; www.ckg.com.

From working with executives and managers, I’ve seen how management of change impacts a work force.  Here are the biggest mistakes in managing change -- and the lessons learned.

Mistake #1

Not understanding the importance of people. 60-75 percent of all restructuring failed -- not because of strategy, but because of the "human dimension." Michael Hammer, author of Reengineering the Corporation said, "I wasn't smart enough about people. I was reflecting my engineering background and was insufficiently appreciate of the human dimension. I've learned that's critical."

Lesson learned: Organizations don't change. People do -- or they don't. If staff don't trust leadership, don't share the organization's vision, don't buy into the reason for change, and aren't included in the planning -- there will be no successful change -- regardless of how brilliant the strategy.

Mistake #2

Not appreciating that people throughout the organization have different reactions to change.
Lesson learned: Some people are naturally more "change-adept." We need to spot and encourage the early adaptors -- and we need to develop change-adept employee profiles to better understand how to develop these qualities throughout the organization. Change-adept people are naturally happier in their work because they have come to terms with a world that never stays the same. They move with today's chaotic workplace, rather than fighting it. They are energized by, and actually thrive on, change. The change-adept are not necessarily more competent than their co-workers, but they have distinct advantages in the attitudes they hold and the strategies they adopt. Change-adept professionals build greater resilience and not only survive, but flourish in changing times. There are five factors that determine which individuals deal successfully with change.

1. Confidence. Confident people are self-motivated, have high self-esteem, and are willing to take risks. Quite simply, they know how good they are.

2. Challenge. With any change, the danger of possible reversals coexists with incredible opportunities for personal and professional success. Leaders need employees to be excited by the opportunities in change. When change-adept people are asked for verbal images they associate with change, they acknowledge the stress, uncertainty, pressure, and disruption, but they also emphasize the benefits -- the opportunity, growth, adventure, excitement and challenge.

3.  Coping. Some people are naturally more flexible and better at coping with, and adapting to, a complex, fast-paced reality than others. These individuals take charge of change by accepting responsibility and assuming control. To be successful in chaotic times, the trick is not to brace yourself for change, but to loosen up and learn how to roll with it. In your organization, strategies will be planned, announced, implemented, and then-- right in the middle of execution -- they will all too often have to be altered or aborted because of external changes. What leaders need from employees is the ability to commit to a course of action and, at the same time, to stay flexible enough to quickly alter behavior and attitude.

4. Counterbalance. Those who are most resilient not only have a job -- they have a life. Change-adept individuals compensate for the demands and pressures of business by developing counterbalancing activities in other areas of their lives. They engage in exercise programs and healthful eating habits, they cultivate interests outside of business -- sports, hobbies, art, music, etc. -- which are personally fulfilling, and they have sources of emotional support. Because employees with counterbalance have a life that includes both work and recreation, they handle stress better and are more effective on the job.

5. Creativity. Buckminster Fuller once said, "Everyone is born a genius. Society de-geniuses them." Change-adept professionals have survived the de-geniusing of society to remain curious, creative, and innovative. You can easily spot creative people in organizations. They are the employees who are constantly seeking ways to improve products, services, or themselves. Typically, they question rules and regulations, and contribute ideas beyond the limits of their job descriptions -- to other functions, to other departments, and to the organization as a whole. These creative employees solicit diverse opinions that generate new thoughts, and they value any business experience that exposes them to new knowledge and skills.

Mistake #3

Treating transformation as an event, rather than a mental, physical and emotional process. Lacking "emotional literacy" we disregarded the wrenching emotional process of large-scale change -- and when we began to address the emotional component, we underestimated its depth.

Lesson learned: Large-scale organizational change usually triggers emotional reactions -- denial, negativity, choice, tentative acceptance, commitment. Leadership can either facilitate this emotional process or ignore it -- at the peril of the transformation effort.

Mistake #4

Being less than candid. Under the rationale of "protecting" people, we presented change with a too positive "spin." And the more we "sugar-coated" the truth, the wider the trust gap grew between management and the work force.

Lesson learned: Communicate openly and honestly. Today's employees are demanding it. Not everyone will thank you for your candor, but they will never forgive you for anything less. Open and honest communication goes beyond simply telling the truth when it's advantageous. You need a proactive, even aggressive, sharing of everything -- the opportunities, the risks, the mistakes, the potentials, the failures -- and then inviting people in to work on these challenges together.

Mistake #5

Not appropriately "setting the stage" for change. All too often, change was announced in an environmental vacuum, with little reason or rationale for what the organization was trying to accomplish and how this change fits into the corporate vision.

Lesson learned: To prepare employees for success, we must give them pertinent information about demographic, global, economic, technological, competitive, and industry trends. People need to know the vision, goals, and strategy of the company. They need to understand the financial reality of the business and how their actions impact that reality.

Mistake #6

Trying to manage transformation with the same strategies used for incremental change.

Lesson learned: Incremental change -- continuous improvement, etc. – is linear, predictable, logical, and based on a progressive acceleration of past performance. Transformation is none of these things. Transformation is a redefinition of who we are and what we do. It's often unpredictable (responding to unforeseen circumstance, challenges and opportunities), illogical (demanding people and organizations change when they are the most successful), and most importantly, in a transformative change, our past success is not a valid indicator of future success. In fact, our past success may be our greatest obstacle.

Mistake #7

Forgetting to negotiate the new "compact" between employers and employees. The result was that people knew what they were losing, but didn't have a clear picture of what to expect in its place.

Lesson learned: A new kind of relationship, grounded in mutual trust and respect, is emerging between employers and employees. This new compact is developed out of realistic expectations on both sides. It attempts to align the interests of the organization with those of its employees, to share both the risks and rewards of doing business. As leaner companies rely on fewer employees to shoulder more of the work, the developing relationship between company and worker is changing from paternalism to partnership. Companies owe it to their work force to aggressively pursue new ideas, products, services, markets, and customers. Employees expect to be treated and compensated fairly, to develop professionally, and to have meaningful, challenging work. In return, employees owe the organization their willingness to participate in personal growth, idea development, customer service, and organizational transformation. Balancing the employee-employer compact is not a matter of adding more items to one side of the balance sheet or eliminating some from the other side. Increasingly, it is a matter of finding items that are of value to both the employer and the employee.

Mistake #8

Believing that change-communication was what employees heard or read from corporate headquarters. So we focused our attention on speeches, newsletters, videos, and email -- only to find out that, from an employee's perspective, the kind of communication that impacts behavior is 10 percent "traditional" vehicles, 45 percent organizational structure (whatever punishes or rewards) and 45 percent management behavior.

Lesson learned: A communication strategy that is not congruent with organizational systems and the actions of leadership is useless. Corporate leaders are beginning to learn the importance of behavior-based communication as a requirement for leading discontinuous change. Organizations send two concurrent sets of messages about change. One set of messages goes through formal channels of communications -- speeches, newsletters, corporate videos, values statements, and so forth. The other set of messages is "delivered" informally through a combination of "off the record" remarks and daily activities. For today's skeptical employee audience, rhetoric without action quickly disintegrates into empty slogans and company propaganda. In the words of Sue Swenson, CEO of Cricket Communications, "What you do in the hallway is more powerful than anything you say in the meeting room."

Mistake #9

Underestimating human potential. And when we underestimated potential, we wasted it.  This was our worst mistake.

Lesson learned: Trust in the innate intelligence, capability, and creativity of your employees -- and people will astound you. In the Industrial Age, companies squandered immense amounts of human potential on mindless, repetitive tasks and meaningless paper work. It never occurred to leaders in those days that their assembly-line workers had the know-how to go home and rebuild entire car engines, that their "lowly cashiers" easily negotiated complicated bank loans for their families, or that their "pretty little stenographers" were perfectly capable of chairing PTA meetings, managing household budgets, organizing charity drives, sitting on hospital committees or running complex volunteer organizations in their spare time. Today, in the post-industrial Information Age no company can afford to waste human capital so rashly. Every talent, every idea, every skill is needed urgently if companies are to survive. The potential of the work force really is the company's greatest asset.