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Change Management and Performance Management: how to get the best out of people

1 November 2015


Change Management and Performance Management: how to get the best out of people

Claire Brattey, Associate Director

Resistance to change is normal. The successful management of change is defined by the ability of people to move towards, and accept, the vision for change.

It sounds simple.

The manner in which the terms ‘Performance Management’ and ‘Change Management’ are thrown around the office these days you could be forgiven for thinking that the processes have been so well developed that they are always successfully implemented.

But according to New York Times best selling author John Kotter, 70% of change initiatives in organisations and businesses fail.

Why? In most cases the principal reason for failure, is simply a failure to communicate.

Regardless of whether it is a change management process or a performance management process, bad implementation and execution of any process causes stress within the workplace.

Workplace stress is costing the Australian economy at least $14.81 billion a year – 3.2 days a year, per worker are lost to workplace stress.1

A great deal of time and money has been spent by many research institutions on how to implement effective change management and how to get the most out of employee performance management, yet recent research indicates that neither are being implemented effectively.

According to a public survey by Deloitte, only 8% of companies report that their performance management process drives high levels of value, while 58 percent said it is not an effective use of time.2

What is clear is that the meaning of change management and performance management is different to an employer and an employee.

Unless something is done at the beginning of the process to bring both the employer and the employee closer together, both parties will often travel down different paths and fail to arrive at the same destination.

WHAT DOES ‘CHANGE MANAGEMENT’ MEAN TO EMPLOYEES?

For most employees, their first reaction to change management is ‘Am I going to be made redundant?’ It is rarely received as a good thing. After all, since when has advancement in technology increased the headcount within an organisation?

Change is therefore met with resistance by employees who are often highly suspicious and sceptical of any new process. This resistance quickly develops a life of its own and starts to create its own narrative. Employees can be heard uttering phrases such as, “Change won’t work because it takes far too long to do it the new way,” “it has so many teething problems it will never do what it was supposed to do,” “I don’t like the new system, it is too hard, too difficult, the old way was quicker…” If the resistance is allowed to fester, employees will look to senior management to see whether they truly believe the change is worthwhile.

Unfortunately, if the resistance is not managed at the beginning and it is allowed to build momentum, senior management will be themselves fatigued with the change or simply overwhelmed by the negative feedback and therefore they too believe it will never succeed. It becomes a self fulfilling prophecy.

WHAT DOES ‘CHANGE MANAGEMENT’ MEAN TO EMPLOYERS?

In most cases the need for Change Management means that something within the organisation could be improved, leading to greater efficiencies and increased profits.

Efficiencies may be achieved in a variety of ways, including technological advancement or an automation of process or sometimes a restructuring of the organisation .

Usually, whatever has been scored as ‘room for improvement’ is costing the organisation in lost productivity or loss of revenue. In many cases it does not necessarily mean that the business is losing money, but rather that it could be doing better.

Senior management spend weeks and months identifying the source of the problems within the organisation and come up with a plan to resolve issues or improve current ways of working. Ultimately the goal is to increase profits.

A perfect example of this is Deloitte’s recent overhaul of its performance management process. Deloitte’s had identified that their existing process was not delivering the benefits that it was designed to do. When they started to analyse the data they discovered that when they tallied the number of hours the organisation was spending on performance management, they found that completing the forms, holding the meetings, and creating the ratings consumed close to 2 million hours a year.3

At first glance, the correlation between improving the performance management process and improving profits might not appear obvious. However, the statistics are that if your workforce is engaged, the organisation is likely to enjoy a 26 percent higher revenue per employee.4 Furthermore, it was found that organisations with highly engaged employees earned 13 percent greater total returns to shareholders. The divide between what is motivating management and what motivates employees can be vast.

WHAT DOES ‘PERFORMANCE MANAGEMENT’ MEAN TO EMPLOYERS?

Successfully implemented and managed at an organisational level, this process will assist the organisation to improve productivity and efficiency. This translates to an increase in profits.

The actual process contains many elements covering the life cycle of the employment. It should determine what the initial performance requires, ensure that the performance levels are benchmarked and that those levels are maintained if not improved upon. It should evaluate the organisational needs and ensure that training and development is identified and implemented. This in turn will drive a high performance culture, determining remuneration levels, bonus and promotions. Of course, where those standards are not being met, it will also provide for disciplinary procedures and terminations.

Its purpose is to ensure that employees’ activities and outcomes are congruent with the organisation’s business objectives. Effective Performance Management measures the progress being made towards the achievement of the organisation’s business objectives.

WHAT DOES ‘PERFORMANCE MANAGEMENT’ MEAN TO EMPLOYEES? 

Performance Management is perceived by many employees as a derogatory term. To most employees it means little more than the dreaded annual appraisal. An annual event that will determine their salary, their bonus or indeed whether they still have a job.

In many organisations, managers are promoted on the basis of their technical proficiency and not their staff management skills. They are poorly equipped to either praise staff and encourage high performance or have constructive conversations with staff to set expectations and improve performance.

Poorly prepared managers approach a meeting with staff in a similar manner to a disciplinary meeting – they go in to the meeting armed with examples of when the employee did something wrong and see the appraisal as their opportunity to address the mistake.

Employees are left feeling that they have been blindsided and rather than have an opportunity to have a constructive discussion about their strengths and goals for the future. They feel compelled to defend their existence. As a result, no-one wins, the business does not achieve its organisational goals and employees are left feeling under valued and disengaged.

COMMUNICATION IS KEY

Regardless of whether you are implementing a Change Management process or a Performance Management process, the difference between success and failure comes back to one simple action: ‘Communication.’ Unless senior management takes the time to understand what motivates an employee and their stake in any change, the implementation of the process is highly likely to fail. It is the responsibility of team leaders to manage change in a way that employees can cope with. To achieve that, managers must be equipped with the critical tools to be able to do this.

Change is not just about following process. It is about being able to successfully manage the emotional response that it generates. All too often we see senior managers promoted on the grounds of technical competency but without proper regard to the communication or human management skills required. Faced with managing change, they often find themselves out of their depth. The human race is a complicated species. How people communicate and interact with each other depends on a variety of different elements. There is no written manual to give to managers. Understanding the workforce and responding to their needs will take time.

The first thing senior managers need to learn is to listen to their workforce. Once they understand the needs of the workforce, they can use this data to interpret how best to respond and communicate with their workforce. Communication can take a variety of forms including:

  • formal announcements from the senior leadership team delivered at town hall meetings;
  • announcements on notice boards;
  • using social media to up-date the workforce on a regular basis;
  • weekly up-dates given in person;
  • informal check-ins with employees;
  • organising team building events; and
  • arranging one to one meetings by phone, skype or in person.

Managers need to be able to communicate extremely well. Therefore, they need to be comfortable with the message and the different ways it can be delivered.

KEY BENEFITS 

Equipping senior managers with the tools to interpret emotional intelligence and therefore communicate with the workforce will enable managers to champion the change and respond positively to all employees capabilities and needs. Importantly, they will be seen by their team to lead. As Kotter said, for change to be successful employees must see and feel the benefits, only then will they change. Is it time you reviewed the way you communicate?


1. The cost of workplace stress in Australia – report by EconTech Commission and published by Medibank Private 2008

2. Performance Management is Broken – Deloitte University March 4, 2014

3. Reinventing Performance Management – April 2015 Marcus Buckingham and Ashley Goodhall –published by Harvard Business Review

4. Taleo Research 2009

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