In a world where uncertainty lies around every corner, the only constant in our lives has been transformation. Laura Flynn and Katie Flood explain.
Business transformations have driven organisational change amid continued disruption to help deliver efficiencies and growth. For transformation programmes to be successful, there is a need to pay close attention to the human aspects. Human emotion – of both leaders and employees – determines and impacts the success or failure of business transformation.
EY research, conducted with the University of Oxford’s Saïd Business School, suggests that 85 percent of senior leaders have been involved in two or more significant transformations over the last five years. And 67 percent of those senior leaders have experienced at least one underperforming transformation during this time.
The impact of transformation failure can lead to negative emotions, burnout, and stress for the employees impacted by the change. Research has shown that the emotional strain on the workforce increases by more than 130 percent during an underperforming transformation, with subsequent impacts on motivation, productivity, and employee engagement.
What drives transformation success?
There is no one straight route to the success of an organisation’s transformation. It is a systematic change with its share of twists and turns. The key is to create a culture of experimentation, accept its non-linearity, and use technology to realise the transformation vision.
The predictive model of the EY study identified six key drivers which can increase the success rates of business transformations.
Lead
In the survey, employees ranked leadership as the top driver regardless of the success or failure of the transformation. Similarly, leaders identified its leadership as the number one driver in successful transformations—but underestimated the role that leadership had to play when a transformation underperformed. Those who are leading transformations need to be completely honest about their fears and self-doubt, as well as being open to ideas from others.
Inspire
The vision for the transformation needs to come from the top.
Nearly half (48 percent) of survey respondents said the transformation they were a part of succeeded partly because leadership clearly articulated why the organisation needed to change. In comparison, only 25 percent of respondents in low-performing transformations said the same. There needs to be clear communication on why the change is necessary—not just what needs to be done.
It is essential to have clear measures of success identified earlier, and KPIs tracked throughout the programme will give confidence that those targets and outcomes will be met. So, it is not just about measuring the results but the indicators of success as well.
Care
To keep transformations on track, leaders need to keep employees motivated and engaged by creating a space where people can express their views. Processes must be put in place to manage concerns, look for solutions, mitigations and clear actions to help the programme move forward, with people’s needs at the centre.
Organisations must be prepared for transformations, and leaders must harness the right emotions by keeping anxiety and burnout at bay. EY’s predictive model indicates that providing the required emotional support improved the average likelihood of transformation success by 17 percent.
Collaborate
For transformations to be successful, leaders need to provide a safe space where new digital and agile ways of working can help nurture innovation and employee engagement.
According to the study, 44 percent of respondents in high-performing transformations said that their organisation’s culture encouraged new ways of working, compared to 28 percent in low-performing transformations.
It is important to create interdependencies across teams to foster meaningful change management consciously.
Empower
Transformations are not linear; there are likely to be ups and downs and stops and starts.
Therefore, leaders must provide the required structure to take a transformation programme forward while leaving room for creative freedom.
Autonomy to execute is also a critical factor. In the study, 52 precent of respondents in high-performing transformations said that employees were assigned clear roles and responsibilities. Leaders need to instil the “fail fast” mindset and foster a culture of experimentation to help realise opportunities.
During and following a transformation, leaders should empower employees to be part of the change and involve them in the process. Leaders must be accountable and emphasise a ‘we, not me’ approach by fostering collaboration, driving consensus, and creating two-way communication.
Build
Encouraging a digital-first mindset is a step towards seamless transformation. Using the right technology is critical to facilitating the transformation process.
Respondents to the survey ranked effective use of technology as the number two driver of success and ineffective use of technology as the number two driver of underperformance.
Organisations should instil an innovative culture where employees can share their ideas and are encouraged to bring them to management. This requires a safe space where new digital and agile ways of working can help nurture innovation and employee engagement.
Laura Flynn is Partner and Head of People Consulting at EY Ireland
Katie Flood is Head of Transformation Execution and Business Consulting at EY Ireland