Understanding, and then overcoming, employees’ emotional resistance to change is key to HRO success.
By Cynthia DeFidelto
We define employee engagement as employees’ willingness and ability to help their companies succeed, largely by freely and consistently delivering discretionary effort on the job on a sustained basis. The difference in contribution between an engaged and disengaged employee, even those with identical ability and experience, can be significant.
One analysis from Towers Perrin’s global normative database examined data from 50 global companies, correlating engagement scores for their employees (more than 664,000 globally) with company financial results during a 12-month period. Highlights among the findings include:
- Operating income among companies with high levels of employee engagement improved 19 percent, but among companies with low employee engagement, it declined 33 percent during the same period.
- Growth in net income was up almost 14 percent for companies with high employee engagement compared with an almost four percent decrease for companies with low employee engagement.
- Growth in earnings per share rose 28 percent among companies with high employee engagement, but declined 11 percent among those with low employee engagement.
The ROI of employee engagement is clear. Highly engaged workers are more likely to work in value-adding ways to achieve the kind of performance that shareholders demand. Also, they tend to be a more stable workforce, remaining with their organizations longer, thus reducing costs associated with finding and recruiting new talent. Organizations that can increase their employee engagement levels stand to stay ahead of the competitive pack in a big way.
HRO and related restructurings require that employees “let go” and move out of their respective comfort zones. And this change can create a high degree of unpredictability and employee angst, accompanied by a precipitous drop in engagement levels.
While many factors can negatively affect an outsourcing program’s success, people have the greatest influence. Peoples’ aversion to change is a huge force weighing against transformative programs like outsourcing. In dealing with this phenomenon, we identify two distinct types of resistance: rational and emotional resistance.
Rational resistance relates to employees’ natural desire to know the details of proposed changes before they can become comfortable with the changes. This includes having a clear understanding of the business case for the change, the project plan, program schedules, and new jobs and new responsibilities in the reconstituted organization. Answers to these and many other process questions can invariably be found in the outsourcing strategic business plan, and companies generally are quite good about communicating this information to employees on a timely basis.
A well-orchestrated internal communication program—incorporating the best combination of e-mails, web sites, town hall-style meetings, and senior manager presentations—provides great value in diffusing concerns. Transparency is always preferred by employees, but now it’s critical. To build trust, ensure that your workforce has easy access to the knowledge it needs to deal with the current situation.
Emotional resistance, unlike rational resistance, which can be addressed in a very objective manner, is much more subjective. It has to do with how change will impact people at a very personal level—how it will affect their jobs, their competencies, and their futures. Emotional resistance exerts a greater impact on employees’ ability and willingness to change than does rational resistance. And it’s the one that employers find more difficult to deal with.
When it comes to addressing emotional resistance to HRO, management needs to be open and transparent about the proposed changes. To do otherwise would be to invite people to draw the wrong conclusions. Employers need to focus on helping their employees navigate sequentially through a series of “gates.” These steps include:
- Helping employees understand exactly what the changes will be and how they will be impacted;
- Building employees’ ownership of the change by involving them in the change process and giving them a voice in what’s happening; and
- Helping them develop trust in their leadership and confidence in their organization, including trust that leadership is being open and honest about the changes.
Developing a solid change management strategy and vision will help you communicate goals and priorities to employees, who naturally look to leadership in times of change. It will also improve managers’ and employees’ abilities to make the right decisions in their day-to-day work.
While the prospect of outsourcing a number of HR processes may be a seismic change for companies and for their employees, the approach companies use to execute the new deal is really no different than it would be for any other change management initiative. This part of HRO is not magic. Rather, there is a very codified and disciplined approach that successful companies follow. To systematically launch and sustain change, organizations can pull six fundamental levers:
- Measurement; and
A comprehensive change management plan includes many or all of these levers—at different stages of the process. Various levers might get pulled at different times, but they all play a role. For our purposes here, we’ll focus primarily on employee involvement programs.
HRO is a time for openness with all audiences. One successful approach to keeping engagement levels high and overcoming emotional resistance is to invite employees to become actively involved in the change process. Include them on various project management teams and in focus group meetings. Likewise, invite their active participation in user group meetings and with subject matter experts (SMEs). Inform them about the prospective business operations and challenges associated with the move to outsourcing, and show how those factors link to their day-to-day responsibilities.
Empower them by making them part of the solution, not victims of change. Harness their energy, gather their input via personal contact and organizational channels, and acknowledge and appropriately act on their ideas and contributions. Above all, send a clear signal: Your people and their ideas are always valued.
This is also an excellent time and venue to challenge people to cross-train and learn new jobs. Employees can add value—for themselves and for the organization—by acquiring new skills. Those who adapt may fare better during the restructuring and will appreciate the opportunity to expand their skills.
Employee involvement initiatives are not limited to HR and are not limited to rank-and-file employees. They must include the CEO, CFO, and other key business leaders across the organization. The reality is that you can have everything “right” within HR, but if you don’t get alignment and buy-in from a broad group of senior leaders outside of HR, outsourcing success will be severely compromised. And this involves more than just making them aware of and prepared for the changes that HRO will bring. These other business leaders need to be active, visible proponents of the change.
From the outset, senior HR leaders need to group senior leaders from other parts of the organization into one of three categories:
- Those we must have on board;
- Those we’d like to have on board; and
- Those we don’t expect to have on board—but this will not severely damage HRO’s prospects.
The primary focus at this point is on the first two categories of leaders but certainly not at the exclusion of category three. Keep in mind that senior managers are likely to experience the same rational and emotional resistance to HRO as other employees. And they probably have less time to focus on the proposed changes, making them an even more difficult audience to reach and convince.
Much like the approach it takes within its own employee population, HR needs to:
- Uncover senior managers’ specific resistance points;
- Understand the reason(s) why;
- Acknowledge their point of view;
- Engage in constructive dialog—highlighting the likely benefits of HRO that will accrue to other parts of the organization; and
- Work toward a common solution that leaders will not only accept but actively and willingly promote within their respective organizations.
When it comes down to HRO, you’re not really ready until they, the other senior leaders, are ready. And if you cannot make a compelling case for HRO among the other senior leaders within the organization, you have to ask yourself whether you have a case for change at all.
Keep in mind that you can’t rush the process. Transitional change takes time, and the greater the emotional resistance—at the employee level or at the senior leader level—the more deliberate the implementation process will be. Expect it. If the process in managed well, it will be worth your wait.
Cynthia DeFidelto is a principal in Towers Perrin’s HR Function Effectiveness practice. She leads HR transformation engagements for global organizations, and is the leader of Towers Perrin’s regular study of HR outsourcing effectiveness.