15. Understand the Nature of Change and Prepare Your Employees to Embrace It

By and large, organizations have historically displayed an unwillingness to implement necessary and productive changes to the ways they conduct business. Even when some change is introduced, most organizations fail to incorporate the change to the depth and breadth necessary to engage employees. One of the reasons for this unwillingness is old-fashioned human nature. Almost universally, organizations believe that people hate change and resist it under even the most favorable circumstances. However, people do support change (and even become early-adopters of it) under certain conditions. To understand why I have added under certain conditions, this rule shows you how to use people’s natural response to change to your competitive advantage.

To understand people’s reaction to change on a personal basis, you don’t have to look much further than your own computer. When you get that new software upgrade from Microsoft or wherever, isn’t it a pain in the neck to adjust to the change? Or I should say, isn’t it a pain in the neck to be forced to adjust to the change? It seems as though no sooner than you have mastered the old version of the software—where you knew all the shortcuts and commands—some wise guy at the software company decides to change it on you! The software manufacturers believe they are making their product dramatically better, but you complain long and loud that you were more productive with the older version. The truth is, I’d bet you said this same thing when you were forced (depending how old you are!) to go from mainframe “green-screen” to DOS, and from DOS to Windows, and then through each of the various versions of Windows. (The jury is still out on Vista, I know!)

Let me spin out another scenario for you. Do you like golf? Or vacations? I bet you do not have the same aversion to change, to the new and different, when you try a new golf course or a new beach location. Even though it may qualify as a radical change from the pattern of your past behavior, finding the new path to the first tee doesn’t seem to be a pain in the neck. It’s a pleasure! Finding the way to the tiki bar or to the pool doesn’t seem to bug you, does it? That’s because the change isn’t being forced upon you. In that scenario, change is a discovery, and you are open to new experiences, because you have mulled over the choices and see the benefits. Indeed, under those circumstances, you court new experiences; you welcome them.

In a corporate setting, whether change is perceived positively or negatively is often a matter of how change is communicated and experienced. If the reason for and benefits of the change are carefully articulated, and the expected outcome is seen in the light of these benefits, the response to the change can be managed. So, it is essential for organizations to understand change if they are going to implement new policies, practices, or processes. I don’t care whether the policies are new “no smoking” rules, new safety procedures for the forklift, or changes at the highest order of organizational structure. If the change is going to be effective, clear communication of the reasons for change, the expected outcome, and the benefits is essential. And that communication must happen before the change is implemented.

Here’s a domestic example to drive this point home. When your husband or wife says, “Honey, new rule. You have to put the mayonnaise jar back in the fridge immediately after you use it,” that can sound like a direct command from on high. But if the message is conditioned with an explanation, “Darling, I’ve learned that, once opened, mayonnaise will spoil and can make you very ill unless it is kept refrigerated” (the unrefrigerated contents can develop deadly bacteria)...then you are starting to see why there has been a change in household policy. The reason for the change is clear. And the expected outcome is clear as well: Someone wants you to live long enough to pay for that trip to Hawaii. The change is an understandable win-win.

In a corporate environment, the application of human nature doesn’t change much from what it is like at home. An order to change behavior, barked from on high, looks arrogant and dictatorial if the reason for the change and the desired outcome are not explained. Moreover, the expected outcome should show some benefit to everyone, or at least to a broad cross section of your employee base. Go back to my earlier example. If your spouse orders a change in behavior just to preserve his or her own health and not yours, then you have reason to be resentful. Your employees are no different. If in tough times, you order a change in pay policy and cut front line workers’ salaries, while executive pay packages are maintained intact, you can easily guess what the response will be. So it is easy to understand the flare-ups that occur when organizations institute layoffs and plant closings, while paying bonuses to executives for slashing tactics that “save” the business.

However, if the leadership explains (in a authentic and believable way) the need to cut salaries across the board to prepare the company to benefit in the long run, and the leadership steps up to say that they will be the first to feel the pain, then you are allowing the effects of the change to be felt collectively. With that, you can generate some “common cause” around what you have to do.

I recall reading, in dismay, about a local North Carolina company that through a series of mismanagement steps was forced into bankruptcy. The board chose to keep the chairman and the CEO in place (huh?), and when these two execs “helped” the company emerge from Chapter 11, each was paid a “good management” bonus of more than $1 million. How could employees and former employees, investors, and suppliers trust the need for changes that those executives led?

I can think of numerous other examples to illustrate this point about clear communication and the need to articulate the reason for change, but here’s a good one that the sales consultant Chip Bell tells in his presentations. He was at a small hotel one day, and he spotted a handmade sign in the lobby that said the restaurant was going to be short-staffed because of an unexpected death in the family of one of the workers. Moreover, the sign also said that some of the coworkers were also taking the day off to help the family. The sign asked for everyone’s understanding. Well, if the average business traveler had come into that restaurant and been forced to endure a change (a dramatic drop in customer service) with no explanation, they would have been resistant and furious. But Chip Bell said that once the hotel guests saw that sign, they jumped in to help out! Guys were pouring coffee for each other, clearing their own tables, and adding up their own checks. See, the reason for the change was clear—a death in the family. The outcome was clear: It was time to help someone out who was in need. The collective benefits were clear: Let’s help each other out for our mutual benefit. The result? People acted in the most generous fashion imaginable! They bought-in. All of them. That’s the attitude toward change that you need to generate if you want it implemented with enthusiasm and success. Whether you are in a restaurant, your own kitchen, waiting at an airport gate, or in line at the store, change becomes far more tolerable when it is explained and the benefits to all, but particularly to you, are clear.

Take that example back into the corporate environment. If the reason and the outcome are clear, and the hurt (and the ensuing benefits!) are equitably distributed, you’d be amazed how people rise to the occasion. Otherwise, requests for change of nearly any magnitude are unsustainable. Indeed, without the backing of leadership, they are viewed as just half-hearted, flavor-of-the-month attempts to fix problems that just keep reemerging. That said, good corporate policies aimed at engaging employees are never wholly and perfectly formed upon conception. Before implementing a change—whether it is financial transparency, policies that encourage respect, or other policies aimed at engagement—they must be thought through, and the leadership has to be serious and forceful about the process. If you introduce a new policy and it doesn’t look as though the implementation has the sustained backing of leadership, everyone just waits for the “sugar high” to burn off and the organization reverts back to its old ways.

If you are a leader or manager who is implementing change, be forceful. Communicate it; communicate it again. Have a plan in place for dealing with people who are passive-aggressive and recalcitrant. Those types of people will emerge, and if you don’t immediately address their negative behavior, that behavior gives permission to others to act negatively; nonaction is interpreted as an indication that the leadership isn’t really behind the changes being put in place.

A leader or manager must also be prepared to distribute ownership of the change throughout the entire organization. If you have a high-energy leader and that leader is looked to as a visionary, he can’t be the sole bearer of the message of change, not the sole person implementing it. The ownership—and therefore the accountability—for the implementation has to be distributed to every level of the organization, to everyone in the value chain. If the organization makes a commitment to cheerleading, it can’t just be the CEO who sweeps through the halls now and then to scream rah rah. The leadership must insist that cheerleading come from everyone, from line managers to division and regional managers, all the way up to the top of the organization’s chain of command. With a consistent approach to distributing the ownership of a change in policy, the employees must see the value of the change, what’s in it for them, the expected outcome, and that the organization as a whole is not just changing for change’s sake. In that sense, the behavior of the leaders or managers should be exemplary, because that behavior is the model everyone looks to when deciding how to respond to change.

With that road map for implementing change in mind, let me turn to how to decide the magnitude of change that your organization is capable of enduring at any one time. A great many times in my career I have been asked how I implemented such “revolutionary” policy changes, especially in human resources, which is my principal practice area. I always respond that my changes were not revolutionary at all. In fact, effective change is rarely revolutionary. It is, instead, evolutionary. Think of examples elsewhere in the world, in any organizational structure. When a revolutionary government drops itself like a heavy-weight wrestler on a population and demands wholesale and immediate change, there is usually vast upheaval and resistance, even if everyone agrees with the change. However, if a government puts changes in place through an incremental and evolutionary process, where one step builds on another, then the change can be more readily absorbed. That kind of evolutionary change is more lasting and more sustainable because the new policies do not demand immediate acculturation and harsh adjustment, no matter what the benefits. Instead, effective change works within the existing culture to change it.

A noted expert on the topic of change, John Kotter, produced a seminal article, called “Leading Change,” which was published in the Harvard Business Review. In that article, he focused on why employees resist change. His thesis—which will sound familiar to you by now—is that change has to be led by the executives in charge, by the CEO and the executive team. Further, the way to make change effective in an organization is for employees to be engaged by it. But for the engagement to happen, the organization has to create a “triple win” that occurs as a result of that change—that is, the change must be genuinely good for the organization, the change must benefit the employees, and the change must create or build some value for the clients, customers, and the stockholders. Without that kind of integration, the change won’t be enduring, according to Kotter, and I couldn’t agree more.

Let’s take another approach to understanding this. The famous and notorious political philosopher Niccolo Machiavelli stated that there was nothing harder than change and leadership in a new order. (For a minute or two, please put aside your impression of Machiavelli as a cynic and advocate for supreme control and manipulation, because he did say some insightful things about change.)

Here is what he had to say:

And let it be noted that there is no more delicate matter to take in hand, nor more dangerous to conduct, nor more doubtful in its success, than to set up (to be) as a leader in the introduction of changes. For he who innovates will have for his enemies all those who are well off under the existing order of things, and only the lukewarm supporters in those who might be better off under the new. This lukewarm temper arises partly from the fear of adversaries who have the laws on their side and partly from the incredulity of mankind, who will never admit the merit of anything new, until they have seen it proved by the event. (The Prince, Oxford World’s Classics, Oxford University Press)

At the risk of upsetting a few of my history professors, I want to explode one myth here. As I suggested in the opening section of this rule, I don’t believe people naturally resist change. Note that-Machiavelli seems to be referring to change that is implemented forcefully without explanation, or with Draconian intent. As I alluded to earlier, I think people resist being changed. They resist someone dictating change without explanation, without generating buy-in. When people are asked to embrace change and the change is strange to them, then you will have a “Machiavellian response,” so to speak. People tenaciously cling to the present they know rather than the future they don’t know, no matter what the promise of that future. So, at the risk of sounding repetitive, make clear what the change is, articulate why it is necessary—what it’s about, and then develop clear milestones and metrics of success, so the leaders can cheerlead the progress.

Two pieces of advice as you engage this process, especially when you are setting milestones and metrics for success: First, work in small increments. If you want a 15 percent change in one aspect of your business, don’t push for all 15 percent in the first year, or the first six months. You may achieve that, but you may just as quickly fall backward later, because change of that magnitude is nearly impossible to sustain. So, try to move the needle five percent and then another five percent and then another five percent.

Second, don’t assume that everyone understands at the granular level exactly what you are doing and why. Others may not be as competent or as skilled at reading minds and hearts as you are. When someone tells you to “implement a change in X policy,” that phrase has implications to a seasoned manager that it does not have to a line worker or a new manager. The word “implement” can collectively refer to a great deal of action and protocols for you that the summary single word “implement” may not convey to someone else. Think of it this way. If you were taking a golf lesson from Tiger Woods, he might say something as simple as, “Okay, now take your backswing....” The phrase “take your backswing” means something entirely different to Tiger Woods than it does to mere mortals like you and me. His knowledge of the “backswing” is an intimate one and based on years of learning, experience, and acquired skill. Woods act of taking a backswing involves a great deal of all of the above, along with natural talent that he can’t assume others naturally possess. So, explain the “what and why” of what you expect people to do in great detail. Break down your steps into increments to get the best implementation of change, much as Tiger Woods might say, “Okay, wait! Let’s back up and look at this backswing as a series of smaller steps—take away, shoulder turn, hip rotation, wrist cock....”

Courtney Harrison joined the United States Olympic Committee in early 2006, after being recruited there by Peter Ueberroth to serve in the top human resources role. She was soon tapped to also be chief of member and events services as the 2008 Olympics approached. Harrison had a corporate leadership development background with American Express and GlaxoSmithKline, which made her the ideal person to bring leadership development to Ueberroth’s grand plan to revive the enthusiasm for and reputation of the U.S. Olympic movement.

In 2006, with the Beijing Olympics looming large and right around the corner, The United States Olympic Committee needed to align and excite all employees—from executives to the front line food service workers—about a two year strategic plan. Previously, the organization had endured four CEOs in five years, and a number of aborted strategic plans, so the level of cynicism and distrust was running high. To counteract these well deserved emotions, the new CEO and the chief of HR made a decision to create a strategic plan designed by the entire organization. Understanding that the momentum of change is made or broken based on the employee engagement level, they knew they had to do things in a radically different way. It was not too far in the past that the previous senior leadership had attempted to include employees early on in the process, but the problem was that when the ultimate product was released, staffers could not recognize any of their own work. They felt disconnected, which rekindled the cycle of distrust and wasted energy.

The strategic planning process included leaders and staffers from different levels throughout the organization, which was nothing particularly new. But rather than limiting their involvement to kicking off the process with a grand flourish of speeches or memorandums, the CEO and the whole Senior Leadership Team participated and actively performed every single exercise as peers, not as hierarchical leaders. This openness gave license to the other employees in the room to surface ideas and offer constructive criticism that they had long wanted to offer. All it took was a couple brave souls to stand up and speak the truth without fear of challenge from above or reprisal. One could physically see and feel the energy in the room completely change. From that point on, the ideas started flowing like a river.

The planning initiative was then moved downward through the organization to allow the employees to experience the strategic plan and begin adding their ideas and solutions to the organization’s biggest challenges. Rather than email out the new plan, or torture employees by making them sit in a dark room for two hours watching PowerPoint slides about the plan, the USOC divided its hundreds of employees into smaller teams so they could offer ideas about each specific high level aspect of the strategic plan.

For instance, one critical area for the future of the Olympic Movement was to increase “relevancy” in the 18–34 year-old market. Each team was given material that focused on “young adults,” and how companies and institutions marketed to them. The employee teams offered their ideas based on their own knowledge and experiences, supplemented by the material provided. In the end, the management and staff of the USOC had learned about each aspect of the plan and they’d had a chance to contribute to it. Not only had they learned about the plan first hand but they were excited, and more importantly took ownership, and became engaged in wanting to be a part of a successful outcome.

What started out as a huge change and a management challenge, had turned into a positive process that provided momentum for an organization that desperately needed it to be successful in Beijing and beyond. In a three month period, senior leadership demonstrated that by truly trusting the process of engaging their employees in the challenges of their business, they could change the momentum and commitment of an entire organization.

Was it a successful implementation of change? If you attended or watched the 2008 Summer Olympic Games, you already know the answer. They were a great success for America, as our country and the world were captivated by the performance and behavior of our athletes and their mentors, famous or obscure, professional or amateur, and wealthy or middle class. Because I knew the background of the changes I saw played out on TV and heard about from the media, I believe that the fundamental change in the way the USOC built its strategic plan for the Beijing Games was a major contributor to America’s success, The Duke of Wellington is quoted as saying that “the Battle of Waterloo was won on the playing fields of Eton.” He meant that success comes not only from heroic action, but also from thoughtful and enthusiastic preparation and planning.

Let’s close out this rule with a look at the J Curve, and how to use it to ensure that change is embraced, even by those resistant to it. The J Curve is a concept advanced by Dr. Jerry Jellison, a professor at the University of Southern California, and he claims (rightly so, in my humble opinion) that the usual methods of communication are not enough to deal with resistance to change, if the resistance is from people who are emotionally hanging onto their present situation. Jellison says that people’s emotional response to change can be plotted on a curve that we can visualize as the letter “J,” with the top of the “J” as the launching point of change, and the “hook” of the “J,” as the beginning of the imbedding of the change—that is, the new norm. The J Curve exists in five stages, from resistance through acceptance. The first stage is the starting point, the work-a-day world, which we can visualize as a plateau. As change is introduced, questioned, and looked at suspiciously, there is the second stage: the cliff. I like to call this “the panic-filled bungee-jump moment.” People are in free fall with the change, with all the associated gut wrenching, and productivity drops right along with them. Stage three is when the bungee cord tightens and people bottom out, accept the change as inevitable, and start to believe that maybe they’ll live through the experience. In stage four, performance and productivity return to old levels and then improve, as change takes hold and a new confidence pervades the organization’s culture. With stage five, your organization’s productivity rises far higher than when you started to implement that change. Of course, all this assumes the various elements I introduced earlier in this rule: communication, buy-in, distributed ownership, a great plan, and the transparently clear triple win. Are you ready to step up and embrace change? Your most aggressive competitor is, so why not try it.