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The psychology of organisational change


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Mind the psychology of change!

Workers will resist technological change if they do not understand in advance how it will affect them. Find out more by reading this article.

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The psychology of organisational change

  1. 1. W hen a new telephone system was installed at professional services firm Deloitte early last year, staff were given new handsets that connected to their PCs. Most young employees quickly worked out what they could do with the devices and were really excited. But according to Tony Maurice, head of Deloitte’s change practice, not all of Deloitte’s staff took to the new system so effortlessly. “When the system went live, I was with a partner who couldn’t use the new handset and couldn’t get his old phone to connect,,” Mr Maurice recalls. “We ended up having a conference call with a client on a mobile handset.” If a change as simple as a new phone system can cause this kind of problem, it is little wonder that more complex innovations often fail to deliver the anticipated benefits. One reason for this, Mr Maurice says, is that organisations often focus primarily on the technology and fail to address the psychological impact of the change it introduces. “People need their hearts and minds engaged too.” What is more, the methods that businesses typically use to prepare employees for technology-driven change are woefully inadequate. They hang posters announcing the change around the office, for example, or release balloons on the “go-live” day. But these tactics do not achieve culture change any more than issuing mouse mats and mugs to mark the event, Mr Maurice says. It is not uncommon, he adds, for multinational organisations to spend a whole year implementing a new system, only to find that employees are still using their old software – or even pen and paper. “This happens because they haven’t invested in finding out what the human impact of the system will be and preparing people.” Ideally, for any significant transformation, the human aspects of new technology should be addressed as much as a year in advance, Mr Maurice advises. This includes evaluating any organisational and structural impact, such as staff relocation, new lines of reporting, retraining, recruitment and redundancy. Cultural upheaval Technology-driven change can cause huge cultural upheaval within an organisation, as it often disrupts the working relationships that employees are used to. Employees can either be left behind or have to do a lot of learning to catch up, says David Percival, global head of innovation at another professional adviser, PwC. “Both create angst, resistance and negative reactions.” Relationships between workers and management can break down completely, because neither side understands the other’s function, says Mr Percival, who often mediates in such situations. MrMauriceagreesthattoimplementtechnologicalchangesuccessfully, organisations must ensure that their employees understand how their roles will be affected as early as possible. Organisationsoftengetthiswrongbecausetheirsystemsaredeveloped by “experts” operating at a distance. This frequently results in users complaining that the systems don’t work in the real world. According to Mr Percival, one way to ensure that employees understand and support technology-driven change programmes is to involve them in the design and planning phase. Most employees know ways in which their job could be done better, he says, or what annoys them, or how costs could be reduced. Harnessing these ideas improves business efficiency while also helping to drive change. Suggestion boxes are the traditional approach, but Internet-enabled systems can provide enterprise-wide forums, or “idea jams” for staff to discuss and develop their thoughts. Businesses can capture all this creativity, says Mr Percival. “Meanwhile, people feel listened to, involved and supported by the business.” Similarly, “agile” development, in which users are involved in the Mind the psychology of change Workers will resist technological change if they do not understand in advance how it will affect them Written by The Economist Intelligence Unit Sponsored by:
  2. 2. design and deployment of the systems they will eventually use, can reduce the chance of user rejection. “There used to be a process of design, build and deploy, but the borders between the phases are blurring,” says Mr Maurice. Keep moving Change needs to be a continuous process, rather than periodic root- and-branch reform. Incremental change helps reduce fear, says Mittu Sridhara, chief information officer of TUI Travel, an international leisure travel company. It should also make life simpler. “Ensuring new technology is easy, even intuitive to use helps achieve change by avoiding the need for constant retraining,” Mr Sridhara says. Anticipating the human impact of technology change seems so obvious that one might wonder why companies do not do it more effectively. One problem is that following the financial crisis, many business leaders have been chosen for their ability to cut costs, while corporate innovators have been let go, passed over or redirected. Leaders at all levels are now disproportionately cost-cutters, says Mr Percival. With major technology programmes, people management is often seen as a “nice to have” that can be cut from the budget without too much impact. This is the wrong way to manage technological change, says Mr Maurice. In fact, he says, at least 10% of the cost of any IT project should be budgeted for people management. Securing that level of investment for the “softer” side of technology change will require strong leadership, but the litany of failed IT projects shows why it is essential.