Reorgs, layoffs, RIFs, corporate restructuring, mergers and acquisitions, business transformation.
These terms have become the vernacular of business today - but what do they really mean? What are the implications of making these changes? And most importantly, how can we do them right?
At its core, corporate change stems from a realization: the current path isn’t working. A new direction is needed. This applies to both big businesses and small businesses - no organization is immune.
Companies pursue change for many reasons:
- They see an opportunity in which they feel if they don’t act now, they will miss it.
- Profitability is declining and a change needs to be made.
- Acquiring another company for their clients or technology opens a door to taking over a new market.
- Expenses pile up and implementing a new technology will have a major impact on their bottom line.
These are all valid reasons for making a change. If these changes aren’t made, companies run the risk of going out of business or becoming obsolete.
There is also the human side of change. This includes people getting moved around into different departments, people learning new technologies and adjusting the way they work, people getting fired, and those who are left having to pick up the slack for those who vacated.
Without clarity, the natural result of this is fear. Employees fear:
- Will new technology replace my job?
- Will these new tariffs impact the economy to cause the company to lose sales/profitability and force layoffs?
- Will my increased workload lead to burnout?
- Will the merger/acquisition create a scenario where I’m competing with someone for a single position?
- Will this new, experimental/unproven business unit fail and risk my job security?
Fear creates disengagement and reduced productivity. Instead of people focusing on their jobs, they begin to focus on beefing up their resumes. They’ll start wondering if they are going to be fired next, and making personal/life/family plans in a stressed-out manner because they are uncertain of their livelihoods.
To implement change successfully - where the team can innovate, profits rise, and confidence can grow - organizations need to build a CLEAR vision that drives execution.
Clear is the most critical word in this statement because that is where most companies drop the ball.
Clear means that people:
- Understand why a decision was made
- Know why they are left to do the work they are doing
- Sees the company’s plans for growth
- Know what their success metrics are
- Know what success will lead to
- Understands that more change will follow if metrics aren’t hit
A litmus test for knowing whether or not your organization did a good job of implementing change is if every employee at the company can go home to their family and say “The company has made some positive changes to the organization and I am excited about my role in this organization moving forward.”
Not just say it to their boss. Say it—and mean it—to their family.
What are common pitfalls companies pursue when trying to create a clear vision that drives execution?
- Toxic positivity - A leader who avoids hard truths erodes trust. Employees can handle the truth, because the mythical worst case scenario employees make up in their minds is oftentimes far worse than the actual worst case scenario. But if corporate leadership can’t be honest about the state of the business, employees will make up their own story as to why the changes are happening.
- Transparency without context - Being open with financials or goals is helpful—but transparency alone isn't enough. Not every employee understands the implications of “two down quarters.” For some businesses, this means no holiday bonuses. For others, it means layoffs. As leaders, we must connect the dots.
- Making abrupt decisions - Some companies are aware of the impending big decisions they will have to make and treat them like a game of “chicken” to see if the business turns around in time. Some companies are not aware of a major economic/business shakeup and they make decisions abruptly. Either way, making abrupt decisions is difficult on every employee impacted by the change.
- Not getting stakeholder buy-in - Many companies think that just because the C-suite team understands a decision then all of the employees will fall in line and understand as well. For better or worse, objectivity diminishes the higher anyone goes in any organizational hierarchy. This means that people will tell their boss whatever they want to hear to save their jobs. Employees won’t challenge decisions they don’t understand—they’ll quietly disengage instead.
So how do we build a clear vision that drives execution?
- Be transparent - Yes, some employees may leave when faced with uncomfortable truths. That’s okay. Often, they’re the most risk-averse or easily disengaged. Transparency builds trust with those who stay—and they’ll work harder for a company they believe is honest.
- Provide context - Don’t just share the “what” - share the “why”. Define your success metrics and the timeline for evaluating the change. Share also the ramifications that success/failure will have on the business and everyone involved. This will build trust from the employees and motivate them to do their best to execute the new plan.
- Give a timeline for change - Use a pilot team to test the changes and use case studies and results to bolster the reason for change. But also give people a timeline in which they can make an adjustment. Some people are laggards while others have legitimate concerns about the change. Hear out the concerns and allow the laggards to adjust to the change on the timeline you laid out for them.
- Have the team repeat back to leadership why the change is being made - Ask teams to repeat back the “why” behind the change. Let middle managers explain it in their own words to leadership. This equips them to handle pushback from their teams—and prevents the dreaded line: "I don’t know why we’re doing this, but it’s the new way now."
If upper managers, middle managers, and individual contributors can all communicate why a change decision was made, the company is much more likely to pass the litmus test of every employee going back to their families and saying “The company has made some positive changes to the organization and I am excited about my role in this organization moving forward.” If an organization does these 4 things, they will be well on their way to building a clear vision that drives execution.