By Joseph Fuller & Bill Theofilou
A few years ago, we noticed something curious: Successful business transformations were slower, fewer and rarer than we would have expected. Companies were moving toward cloud-based operations, but often without urgency. Few achieved any meaningful progress.
Then the pandemic hit. The circumstances obliged companies to shift gears quickly, legitimizing remote work and making the health and welfare of employees their overarching priority. Companies began to talk of managing “three years of transformation in three months.”
A year in, it’s clear that the pandemic has indeed had a massive impact on how business is done. There now seems to be no going back. But as companies seek to transform themselves for the post-Covid-19 world, they still confront significant challenges.
We know this because we recently surveyed executives in the United States—at companies with at least $1 billion in revenue—about their attitudes toward post-Covid transformation. Surprisingly we discovered that C-suite executives and upper management (managing directors, senior vice presidents, plant managers) often don’t agree on the effects of the pandemic and how to respond to them. In fact, middle management was more consistently aligned with the C-suite’s views than upper management was, despite being farther apart on the organization chart.
Not surprisingly, most executives told us the pandemic was having a negative impact on their companies. Significantly, while more upper managers felt that way than did C-level executives (82percent versus 67 percent) they were also more likely to feel that the impact would be limited to the short term (72 percent versus 51 percent).
Upper managers were also considerably warier of initiating profit-improvement initiatives in both the short term (within three months) and longer term (after six months). The difference was particularly acute when it came to the short term: Forty-five percent of the upper managers we surveyed were comfortable moving forward, whereas 60 percent of the C-suite executives were.
To better understand the differences in mindset between upper and middle managers, we asked two key questions:
1. Did the executives we were surveying lean toward a business-first or people-first approach?
2. Did they show a strong commitment to—or relative disconnection from—the organization?
The answers we got allowed us to identify four distinct mindsets:
Business operators
Business operators represent the single largest segment of managers. They express significant confidence in the company’s leadership and appreciate the growing concern for people during difficult times. At the same time, this group sees the need to make tough decisions to stabilize the business as a priority. Upper and middle management appear with almost identical frequency in this area (42 percent versus 43 percent).
People champions
Managers in this group have often worked at their companies for a long time and have shown a strong focus on employees’ personal needs during the pandemic. They view themselves as playing the role of liaison between the C-suite and the rest of the company. They consider many decisions taken by the C-suite to be trade-offs made between the interests of the company and employees.
Change opponents
This group has “seen it all before,” likely in the 2001 or 2008 recessions. They doubt whether senior leadership will do anything differently this time around to make change more successful—to “make it stick.” Change-resistant managers anticipate that their C-suite leadership will largely revert to the behaviors its members demonstrated before the pandemic. Almost 1 in 5 upper managers are change resistant, as are 14 percent of middle managers. Relying on this group to relay messages from senior leadership to lower levels of the organization would seem a risky approach.
The disaffected
As the name indicates, this is not a happy group. Since the onset of the pandemic, they’ve grown less confident in their senior leadership, and they see little evidence that anything concrete has come of the heightened concern that their leaders have spoken of feeling for their employees. They are reluctant to serve as a bridge between leadership and the rank and file, and are unlikely to help improve morale or trust. The numbers of the disaffected are similar for both upper and middle management: 13 percent and 12 percent.
The results of our research ought to be sobering for C-suite executives. Although a plurality of subordinates are committed business operators who will work to implement the C-suite’s strategy to the best of their ability, they are nonetheless in the minority. Almost a third of the people closest to the C-suite are either resistant to change or disaffected. More than a quarter of upper managers and 30 percent of middle managers react to C-suite transformation initiatives by considering their effects on colleagues rather than the company as a whole.
What CEOs and their teams have to recognize is that the executives working under them cannot be relied upon to fall into line and embrace calls for change based on new and urgent priorities—especially those focused on achieving profit improvement through cost cuts.
Let’s put it this way: Your next transformation will fail if it is merely some better version of what you did in the past. Instead—given the changes unleashed by Covid-19, combined with the variations in mindset that our research has revealed among executives—you’ll need to adopt several new approaches to change:
- Rethink manager and employee mindsets.Don’t assume all employees “get it” or are prepared to “get on with it,” no matter how senior they are. Your reasons for any change program need to be understood throughout the ranks. You’ll meet significant resistance, much of it surreptitious, if you focus on meeting corporate performance targets at the exclusion of other considerations.
- Include all levels of senior management. Your management team is not a homogeneous group, poised to spring into action at the direction of the C-suite. You’ll increase your prospects of success if you can visibly engage different levels of management in the creation of your change program. To do that, you’ll need to understand the various managerial mindsets present across management levels and consider how the program will affect employees.
Customize how the program is positioned and communicated
The traditional top-down approach, with the C-suite relying on other levels of management to articulate and support its goals faithfully, is no longer effective. Any change program must be tailored to reflect the presence of groups of managers in your company that place emphasis on different goals. The process of communicating a program’s intent and progress must reflect that.
Joseph Fuller is a professor of management practice and a co-chair of the Project on Managing the Future of Work at Harvard Business School. Bill Theofilou is a senior managing director at Accenture Strategy.
Image credits: WWW.FREEPIK.COM
Read full article on BusinessMirror