Organisational change is a complex process that, if mismanaged, can lead to a range of indirect impacts that extend beyond immediate financial costs.
In my previous blog on this topic, I focused on the financial impacts of mismanaging organisational change. In this ‘sequel’ post, you’ll learn more about the indirect impacts, which can be just as or even more costly.
The impacts can affect various aspects of the organisation, from employee morale to overall productivity. Understanding these indirect consequences is crucial for navigating change effectively and ensuring long-term success.
1. Employee morale and engagement
One of the most significant indirect impacts of mismanaging organisational change is the effect on employee morale and engagement. When changes are not communicated effectively or are perceived as unfair, employees can feel undervalued and insecure about their future. This can lead to decreased motivation, lower job satisfaction, and ultimately higher employee turnover rates. High turnover not only disrupts operations but also leads to additional investments into the recruitment and training of new staff; additional investments which are not only costly but easily preventable.
2. Reputation and employer brand
The way an organisation handles change can significantly impact its reputation. Poorly managed change can lead to negative perceptions both internally and externally, as employees may share their dissatisfaction on social media or review sites, which can deter potential talent from joining the company. Additionally, clients and partners may lose confidence in the organisation’s stability and reliability, potentially leading to lost business opportunities.
The final obvious negative impact is on how those that remain – often called ‘survivors’ – feel. If those exiting were looked after properly, this is likely to have a more calming and stabilising effect on the retained teams.
3. Productivity and efficiency
Disruptions caused by mismanaged change can lead to a decline in productivity, as employees who are uncertain about their roles or the future of the company may become less focused and more prone to errors. Furthermore, the time and resources spent on addressing issues arising from poorly managed change can divert attention from core business activities, reducing overall efficiency.
4. Health and wellbeing
The stress and anxiety associated with organisational change can have a detrimental effect on employees’ health and wellbeing, and increased stress levels can lead to higher absenteeism, burnout, and even long-term health issues. This not only affects the individuals involved, but also places additional strain on the organisation in terms of lost productivity and increased healthcare costs. In recent times, particularly post-pandemic, where there is an increase in home working and hybrid working, what was once absenteeism, may now be presenteeism.
5. Loss of institutional knowledge
When experienced employees leave due to dissatisfaction with how change is managed, the organisation loses valuable institutional knowledge. This knowledge, built up over years, is often critical to maintaining smooth operations and achieving strategic goals, and the loss of such expertise can hinder the organisation’s ability to innovate and adapt to future challenges.
Often decisions are made on a financial basis, and if this is the only decision point, it could rapidly lead to the new lower cost solution unravelling. It may also mean that further cuts are required or that the organisation is no longer stable or scalable.
6. Cultural disruption
Organisational culture is a delicate balance that can be easily disrupted by poorly managed change. Changes that are not aligned with the existing culture or that are implemented without considering the cultural implications can lead to a fragmented and disjointed work environment, which can erode trust and collaboration among employees, making it difficult to achieve cohesive and effective teamwork. This can often lead to a strain in relationships and an increase in employee relations issues, such as disciplinaries and grievances.
7. Talent exodus
An unintended symptom of poorly managed organisational change is the instability that this leads to. In an ideal world, companies would be able to us organisational change to ‘streamline’, as they hold on to the talent in the business whilst losing some of the poorer performers and those in more redundant roles. In reality, though, those that are retained can be disgruntled, feel put upon and overloaded. This feeling can easily spread, as people see their valued colleagues voting with their feet.
Help safeguard your organisation’s future
The indirect impacts of mismanaging organisational change are far-reaching and can have long-lasting effects on an organisation’s health and success. By recognising and addressing these potential consequences, organisations can better navigate the complexities of change. Proactive communication, employee involvement, and strategic planning are key to mitigating these risks and ensuring a smoother transition.
For more insights on managing organisational change effectively, get in touch with our specialists today. Call us on +44 (0)1491 414010.