In an expansionary period, the change that leaders bring about and subsequently manage are, by and large, positive changes. There are, of course, negative aspects at the macro level for example, of new systems to implement or mergers to bed down. At the micro level individuals may experience the psychological impact of change such as learning new skills or changing location.
However, in a downturn, most of the change is seen as negative. People lose jobs, not because of a merger or acquisition based on growth with cost savings being sought in addition, but to clearly cut costs. Sales generally decline across the broad market and activity declines across whole supporting industries, including government. Changes are made to survive for a better tomorrow, not to create a tangible, actionable better today.
The general mood of the population is gloomier, exacerbated by the media industry’s need to create a bigger headline than their rivals about market movements and economists’ predictions.
The future is generally not clear at the macro or micro level. What leaders want the organisation to change “from” and “to” is difficult to make clear.
In this difficult environment, there are three elements of change that, if addressed well, lead generally to better outcomes than if left to their own devices.
Strategy elements of change
Successfully negotiating a downturn requires well thought out strategy and tactics. A leader communicating the strategy and tactics forms the bedrock of managing the human change successfully.
There are three elements to devising successful strategy and tactics.
Long term focus: Managing for the short term without a long term focus usually results in chaos. Different sections of the organisation focus on their own short term outcomes. This means that some sections, in most organisations, will unconsciously execute different strategies. Leaders must think about what they want the organisation to look like on the other side of the downturn.
Purpose: Given that the long term focus is known, the purpose of each section of the organisation towards that long term focus must be reappraised. In good times it is easy to take on activities which do not fit the purpose of the section and do not contribute substantially to the long term focus. When reconsidering the purpose of a section it’s instructive to consider the following in sequence and independently of each other:
- Who are our customers, external and internal?
- What tasks do they need us to do to meet our long term focus:
- What KPIs will our customers accept as a measure of our success?
- What competencies do we require to execute well enough to meet our KPI requirements?
- What infrastructure do we need?
- What information do we need?
- What do we do or have that is not necessary for our purpose?
- What do we not have that is necessary for our purpose?
- How do we close the gaps and divest ourselves of the excess?
- What do we own that is necessary but that is freely available on the market and adds little advantage in terms of intellectual property or cost that we could procure or partner
Short term goals: Once we know the long term focus and our purpose is clarified, short term goals and the activities required to achieve them generally become very clear. Communicating those short term goals in the context of a long term view and a sense of purpose is much easier to do as a leader and to believe as a listener.
Transactional elements of change
In a downturn, the most common transactional elements that must be addressed well are:
Rosters, work hours and overtime: Money becomes much more important in a downturn. Sharing available work hours in what is seen to be an equitable fashion becomes even more important. These are classic Hertzberg de-motivators that if addressed poorly creates undesired tensions in the workforce.
Redundancies and severances: The way in which the people who leave the employment of the organisation is perceived to be treated quickly becomes the expectation of how the remaining employees will be treated. The expectation of fairness is set by how and when people are told, how it is decided who can access a redundancy and whose employment is severed. The expectation of fairness quickly impacts the level of trust employees have for their leaders. The level of trust extends from, “How might I be treated in the future if there are more layoffs?” to, “Can I believe what they say?”
Communicating important announcements: Communicating change has a transactional and a psychological component. The transactional component which has a large impact on the psychological component is the medium chosen. Face-to-face meeting becomes very important. Road shows, workshops, presentations and even one-on-ones should take precedence over lower cost options of conference calls, webinars, email blasts and poster board announcements. Employees desire to be able to read whether the leader’s tone and pace of voice and body language is matching the words spoken. Trust is king and employees need to see the whites of your eyes to know whether they can trust you and your team.
Contingency Planning: Developing contingency plans assumes that a plan has been built. If you are not planning for change in a downturn then you clearly risk the downturn driving your agenda. In that environment action is taken months after it was essential for the health of the organisation. Contingency planning is necessary in a downturn simply because no one has a fully functioning crystal ball. Leaders must not only plan for what they think will happen but what they would do at the optimistic and pessimistic ends of the range of what they think will happen. Further, leaders need to determine how they will know if things are better or worse than predicted to know when to enact the contingency plan.
Psychological elements of change
People assessment firm, Talent Q, has revealed the results of a major survey of employers. Talent Q examined the key personality characteristics sought currently by a wide range of employers for the UK’s most heavily recruited roles.
The top five attributes are as follows:
- Flexible (65%)
- Methodical (62%)
- Socially-confident (60%)
- Relaxed (59%)
- Communicative (54%)
Ironic though it is, these very attributes, needed even more so in a downturn, are the ones which can be eroded quickly in a downturn.
Leaders must help employees manage what is usually a transition from high levels of empowerment to higher levels of control. The elements of strategy and planning mentioned already become the important base in helping employees manage the transition. With acknowledgement of William Bridges work in transition management, there are three psychological transitions to manage.
Ending, Losing, Letting Go: Old habits die hard. This first phase of transition is an ending, and the time when leaders need to help people to deal with their losses. In a downturn there is not a lot of time to allow people to let go of the old ways. It is appropriate in many cases to use a kind of shock therapy. The best shock therapy is the truth about how bad things could become and how bad you expect them to become. Hiding the truth and making last minute announcements about change only confuses people and develops a lack of trust. Allow people as much time as possible to let go by being up front as early as possible. Perhaps do something symbolic as well such as hold a wake to the good times. At least everyone is more likely to feel that the transition is shared by all and not imposed on them alone. It would also define the end of the old habits and usher in new habits to be developed.
The Neutral Zone: Going through an in-between time when the old is gone but the new isn’t fully operational. This is when the critical psychological realignments take place. In a downturn this is difficult as no one is really sure about what the new will eventually look like. Strategy and planning will help. However, the most important element is communication in terms of method as mentioned above and content and delivery. Content must be fact based and contain options for a decision being made with a rationale on why a certain decision was made. People need to know there are options. The idea of options gives people hope that they have somewhere to turn. Content must be positive about what we ARE doing not what we COULD do if only things were not against us. Delivery must be congruent in word, tone and pace of voice and body language. People will look for any incongruence as a sign to not trust what is being said.
The New Beginning: Coming out of the transition and making a new beginning. This is when people develop the new identity, experience the new energy and discover the new sense of purpose that makes the change begin to work. This is not when we overcome the downturn. This is when we start to work well during a downturn. It is when we work well with uncertainty and achieve despite the setbacks rather than fail because of them. In this period people need praise for their attitude and efforts and encouragement to experiment. They need to feel that the level of empowerment they once had is returning as they adapt to thrive in the new uncertain environment.