There’s a distinct correlation between companies that communicate effectively with their customers and investors, and those that navigate – even catalyze – change. Communication drives positive change outcomes.
Businesses face two types of change: proactive and reactive. Proactive implies anticipation of changes – external and/or internal – that will affect the organization. Reactive is adaptive to change that has already occurred or is underway.
The coordination of people, processes and technologies are a major challenge for companies undergoing change. With proper planning they can be achieved successful. The people part of change is the most difficult, since individuals have their own thoughts, desires, motives, etc. And while change is a constant, its occurrence – whether unexpected or planned – raises feelings of loss/lack of control. The resulting anxiety may cause a natural resistance to change.
Communication is the key to mindset…
However, neither change nor resistance to change is a problem. Instead, communication – or lack thereof – is. Everyone understands that change happens. Some changes we embrace, some we resist.
Step #1 in this process is to have leadership explain the changing circumstances that are causing the need to be proactive or reactive. Through a combination of data analytics and human expertise, it can be determined whether the company is correctly reading change and prepared for it.
Getting employee input provides an opportunity to plan for change more thoroughly, beyond the cost/benefit analysis. It also helps management overcome objections. This is facilitated in a culture where leadership fosters trust through transparency and honest two-way communication – both internally and externally.
Once the causes and the reasons for undertaking change are understood, management can then focus on developing a plan. This is where the “what”, “why”, “who”, “when” and “how” factors come into play. The analysis includes answers to questions such as:
- What are we going to do?
- Why are we doing it?
- How are we going about it?
- Who is responsible for which processes, procedures and people?
- When are we doing it, and by when do we want to be done?
Step #2 in the process is articulating the reasoning behind the change, how/why/when it is being undertaken, how it is likely to affect groups/people and what the expected outcome is. And once articulated, management should ask all employees for their help in implementation.
The plans to effect change are part of the strategy process. While it is imperative for strategic plans to have defined time lines for execution, the pace of change is usually not going to be smooth or linear. To ensure success, planned changes must not only be consistent with company strategy, they must also be consistent with culture as well.
…and communication is the key to execution
Once an action plan has been established, it is incumbent on company management to explain the changes than are being initiated to employees, shareholders and partners. Leaders must actively identify and involve the key personnel who will be impacted most by the change as well as its implementation. Such levels of participation give people a sense of belonging. In turn, it cultivates ownership deep into the organization.
It is also incumbent on management to understanding why subordinates may resist change. While some resistance is always a given, if management effectively and consistently communicates the change and implores line managers to do so at the individual level, employee concerns and apprehensions can be allayed. This also makes employees feel like valued members and contributors.
Direct outreach to shareholders and analysts by the CEO, CFO and investor relations person should follow internal communications. Proper messaging will ensure a clear understanding by the investment community as to the reasons and possible impacts of change. By doing so, company leadership can get feedback from shareholders – the company’s owners – and manage the impact of change on market valuation and stock volatility.
Investors favor predictability as opposed to surprises. The biggest stock price declines often occur because management fails to effectively communicate the impact change will have on the company. And they should be aware that analysts and shareholders talk to employees. If the sense is that change is not communicated effective internally, the stock could fall further as confidence erodes.
Better Outcomes
However, not everyone will agree with the change or whether it is even needed. People will tend to see change not from the perspective of whether it is good for the organization, but rather how it directly affects them. If they feel like it’s being sold to them, their feelings of resistance could fester and grow. The same is true for investors.
It’s in the individual’s mindset to either adapt or embrace the change. If they do, the outcome may or may not be better for their own situation. But they will have made a more informed decision. They can then decide whether to remain in the situation to move to another one – either within the company or elsewhere. Again, same for the shareholders.
If they do not adapt or embrace the change, then they are still making a conscious decision about how they will perform. If their productivity and attitude is good, then they remain part of the team. If their performance deteriorates, then their manager should circle back on the explanations.
If performance remains weak, a warning can be issued. And if that fails to lift performance, the person will face another involuntary change. This performance evaluation cycle should not take more than six months from when the change was initiated.
Once the change is underway, management at all levels must maintain the sense of urgency throughout the project so as not to lose momentum and the expected benefits. One way to keep momentum is to break down the plan into smaller, shorter-term milestones. As each milestone is achieved, communicate that success back to all parties. Recognition for these smaller successes lifts morale while keeping employees engaged and focused on next steps.
Ongoing communication, particularly of successes, draws more employees in to speak about the changes and expected outcomes in positive terms. And as this ball picks up speed, success begets more success as more employees take interest in being part of and contributing to a positive outcome.
In turn, a series of positive outcomes will draw favorable perception on Wall Street. The result will be improved valuation, reduced volatility and well-earned respect within the investment community. And few things lift employee satisfaction as a management that communicates effectively and a higher market valuation for the company.
