A unique take on people-centric change

Change is unavoidable in the ever-shifting terrain of modern business and commerce. Whether through a merger, restructuring or adoption of new technologies, organizations are continuously evolving to remain relevant and competitive.

That said, it is no less true that business owners and executives far too often fail to manage change effectively, which tends to sink the organization into inefficiencies and reduced revenues at best, chaos and instability at worst. Resistance from employees, uncertainty and anxiety can derail initiatives that are necessary for a company’s growth, a reminder that businesses must first equip themselves with the tools and strategies needed to navigate change successfully.

Enter Cedrela’s unique people-centric approach to change management. Managing Partner David Lugo, who champions HR centricity on multiple other fronts, says it is particularly critical in this one, arguing that many executives and managers ignore the psychological aspects of implementing measures that profoundly change the role of employees in a business organization.

Measures to transform a business are often taken in response to competitive challenges such as advances in technology, or to economic and logistical challenges presented by emergencies such as the Covid-19 epidemic and natural disasters like hurricanes in Puerto Rico.

Others include changes in an organization’s leadership, shifts in the team structure, the adoption of new business models, and a merger-acquisition.

Lugo stressed that to ensure a smooth transition, it is important to plan an organizational change-management process that can be applied across various types of change. According to the literature, change management is the process of guiding organizational change to a successful resolution, and it typically includes three major phases: preparation, implementation and follow-through.

“When there is a big change, anxiety is created, and therefore, it is important to explain to people, in a methodical way, the steps, the phases [of the changes]. Not everyone thinks like a project,” he said. “When changes occur, there are people who drown, run away [because] they don’t have the tools [to deal with the changes]. What these methodologies seek to do is to explain to organizations and people how to face that anxiety.”

Lugo said that business owners and executives often fail to successfully complete the transformations needed at their companies because they don’t understand the psychology of their employees, who often put up resistance for logical as well as illogical reasons. Leaders charged with implementing changes should listen and address the concerns of employees.

“You must be very humble. What must not occur, because it often leads to the failure of many initiatives, is to ignore employees’ complaints. These may not necessarily have originated in the project. The company may have had a culture of mistreatment, a culture of injustice,” the consultant explained, adding that the person brought in to make changes may have “optimal values, a real desire to help these people, but they see that person with trepidation.”

To address such fears, organizations must “generate trust by including them in the process from the start, listening to them,” said Lugo, adding that successful business transformation requires the right change management models, tools and theories to overcome people’s natural resistance to change.

Change management involves many different disciplines, from behavioral and social sciences to information technology and business processes. The goal is to shift employees’ focus to the new corporate goals and encourage them to make aligned decisions.

The consultant points to the Kübler-Ross Curve, originally proposed by psychiatrist Elisabeth Kübler-Ross to manage personal grief and loss. In a business landscape, it has become one of the most used methodologies to help employees navigate change, because it helps address an employee’s multi-stage emotional journey during times of change.

“You must have empathy; you must be human. That does not mean you don’t have to be firm, but you have to give people the chance to go through the Kübler-Ross Curve. You must recognize that they are human beings and that they have been doing the same thing, in some cases for many years.”

One of the most difficult cases of change management faced by the Cedrela team involved a bank that set the goal of reducing the accounting closing process from three months to five days. The process involved setting intermediate goals of 30 days and 15 days, a plan initially encountered with hostility by the bank’s employees.

“The first thing they tell you is that it is impossible. Sometimes they attack you personally. They say that you don’t know what you are talking about. This has to do with the Kübler-Ross cycle,” he said, noting that a major part of the problem is often a poor distribution of tasks among employees, leading to situations in which two workers do the same thing.

“It is negation that change is necessary. They try to resist. Then comes negotiation. People realize change is inevitable, and they either accept it or leave. If most people accept the change, that will indirectly shut down the critics.”

Cedrela often combines Kubler-Ross with other proven models, including the one developed by Harvard Professor John Kotter, who wrote a book on the subject in 1996 called “Leading Change” in which he outlines a multi-step process for organizational change:

As tough economic times may be on the horizon today, businesses are facing the pressure to drastically adjust their finances. Some executives decide to go it alone, with uncertain or uneven results.

Needed transformations in a business are easier to make under normal conditions, but “when things are in freefall or close to bankruptcy,” says Lugo, “it’s usually too late to make changes.”

While a visionary leader could manage change better than one who is less gifted, overreliance on such a leader poses other risks. Exhaustion often kicks in, and an extended absence or exit from the company may mean the end of the change project.

Therefore, an organization should hire talent with knowledge and certifications in project management and organizational development to establish a culture of continuous improvement that makes change management much easier.

“The key to change management is education to deal with fear. Fear holds up projects. Fear creates resistance. The worst thing a project can have is passive resistance, and passive resistance becomes worse when it comes from key project resources.”