The impact of organisational change on performance management

The impact of organisation change on performance management

Human beings are creatures of habit who appreciate a degree of certainty, stability and routine. We all remember the feeling of dread and fear when we started a new school or moved to a new place, experiencing something totally unfamiliar and unknown. Change in our lives, whatever the size or nature, provokes an emotional response. This often overtakes any rational thoughts, so it’s important to acknowledge and understand this.

Why can organisational change be difficult?

Organisational change in the workplace creates the same feelings of nervousness and anxiety to change in our personal lives. While it is vital for any business to embrace change to keep pace with market trends, take advantage of new technologies or keep up with competitors, it doesn’t make it easy. It is something that needs to be carefully and sensitively managed in a way that recognises the stresses it can cause and understands the potential consequences.

Why can organisational change affect performance?

The drivers for organisational change can be external - for example, market conditions, government legislation or advances in technology - or internal - for example a new CEO arrives, staff turnover or new product launches.  

One factor that has affected every business over the last two years is Covid-19. No one was prepared for the enormous impact of the global pandemic on how businesses operate and every organisation was forced to reassess their plans very quickly to find a way to keep operating and survive. For many, this led to organisational restructuring, particularly around where and how employees work, that they are still working through now.

Whatever the reason behind the organisational change, employees mostly view them initially with negativity and suspicion. For them, organisational change is synonymous with re-structures and redundancies. For example, 31% of UK employees fear they will lose their jobs if their employer becomes more inclusive and diverse. Whatever the change is and for whatever reason, there will always be a fear from some employees that their jobs will be under threat. With this uncertainty and anxiety, it is no wonder that there is an impact on their performance.

So how do employers reassure their employees about any organisational change, ensure their performance is not impacted negatively and ensure strategic alignment across people and business goals? Here are five vital elements to consider.

Devise a clear strategy

Every business needs to embrace change, but that change needs to be carefully thought through. Any change in an organisation, be it large or small, will have an impact, so it’s important that nothing is rushed and all the possible consequences are considered. Failure to plan properly and include all stakeholders in that process can mean that teams or departments become misaligned leading to tension and fiction. Employers need to consider if employees' objectives will be affected by the change. If that is the case, it’s vital that these are adjusted so that employees are working towards the correct aims and their efforts are not wasted.

Be transparent

The bad news is always hard to deliver. It is never easy to tell people what they don’t want to hear but it is important that employers are open and honest about any organisational change, whether it will have a positive or negative impact on employees. Researchers have found that uncertainty, not knowing what will happen next, is actually more stressful than any bad news. If employees are experiencing heightened levels of stress this will make them detached and unfocused, hampering their ability to perform to the best of their ability.

Clear communication is vital

The most important thing about any organisational change is to communicate it effectively. Everyone it affects must be clear about what is happening, why it is happening and how it impacts them personally. This is not a once and done exercise. From the outset to the completion of the project, every step needs to be explained. Employees need to understand the timeframes and how and when they will be involved. If this is not done effectively, it can be easy for employees to be disillusioned and unmotivated.

Don’t just talk, listen

As well as talking, it is also crucial that you give employees a chance to have their say and show them that their feedback is appreciated and taken note of.  If employees are going to trust and embrace the organisational change, they must feel a part of it and that they are included in the process.

Acknowledge change can be emotional

The reactions people have to change are often not rational. It’s important that organisations recognise that emotions will be involved and show empathy and understanding.  By giving employees a chance to express their opinions and time to adjust, the change is much more likely to be embraced.

Adjusting performance management during organisational change

Any change, either large or small, in an organisation is likely to affect employees’ goals. To ensure they still perform to their full potential, stay aligned with the latest business objectives and continue to grow and progress, it’s vital that these goals are reviewed and adjusted accordingly. 

From our experience of working with many clients going through organisational change, we suggest you take the following steps to your approach to performance management to help embed that change within the business and make it a success:

• Change your corporate goals to reflect the new situation. For example, if your goal was to increase sales by 50% and this is no longer realistic, it's OK to put this goal on hold and explain the reason why. Set new short-term goals, perhaps focused on customer retention or smooth running of standard procedures. Set goals that ensure nothing vital slips through the cracks while employees are adjusting to the change. 
• Put your in-depth and formal year-end review process and ratings to the side. Now is the time for small, frequent check-ins focused on workload and wellbeing. 
• Use your reviews and check-ins to see how employees are coping, to answer any questions and update them with the latest information. These can be invaluable tools to keep the dialogue flowing and to support your communication strategy.
  

Adjusting performance management once an organisational change is complete

Once the organisation has gone through the change process, it's time to address the new situation in a positive way. Now is the time to build an effective performance management culture to reflect the current situation and to help everyone move forward. Think about the following:

• Define the aims of the business and how employees fit into it, giving them a renewed sense of purpose. Clear direction and employee goals which are aligned to higher-level strategy objectives create that purpose, demonstrating the contributions each employee makes to the overall success of the business.
• Restate your commitment to employee development and growth as a worthwhile investment. Budgets may be reduced, but managers will be tasked with listening to and discussing issues and aspirations with empathy and goodwill.
• State that the business requires everyone to pull together. Emphasise the importance of employees taking care of themselves and each other, and the need to focus on work and supporting customers.
• While managers should take extra time to recognise their team members' achievements, there will be things that employees have done that go unseen, times when they go the extra mile without anyone noticing. Think about how you can thank them for investing in the change and making it work.
  

Tips for supporting organisational change through performance management

From a practical perspective, the following adjustments to your approach to performance management could help you re-energise your managers and employees to focus on the future and drive the business forward:

• Get rid of ratings and grading from performance reviews and cut out any unnecessary approval workflows or questions. Place the emphasis on helping employees to perform to the best of their ability and help them see how they can progress within your organisation.
• Switch to regular, frequent check-ins plus a career conversation every six or 12 months. This will help establish a positive dialogue between line managers and employees and ensure everyone stays aligned and focused.
• Encourage and enable more continuous feedback to develop a culture where employees are regularly recognised for their efforts and know what they are doing well and what they could improve. 
• Move away from annual objectives and adopt a quarterly cadence, perhaps using a framework like OKRs. At the very least, set SMART objectives with milestones or action points tied to clear corporate goals.
• Adapt the tone of voice in templates and forms to be less formal, more pragmatic and human. Show employees performance management is not about judging them or finding fault but is genuinely about helping them to be the best they can be.
  

How performance management can make organisational change a success

Getting your approach to performance management right after an organisational change can have enormous benefits. Following a merger, our clients, business travel specialists, Clarity, took the opportunity to reassess their approach, talk to their employees and create a new framework based on their feedback and the revised needs of the business. This process helped to bring employees from the different businesses together, and united them in a common approach that was new to everyone. It was reflective of the goals of Clarity going forward, putting a line under the experiences of the past and creating a foundation for the new company to build from. 

“We recognised that we needed to find a unified approach. Introducing a review system that was completely new to both organisations seemed an ideal way to bring everyone together on a shared project. It made it possible to incorporate ideas from across every part of the business to create an approach that everyone could buy into.” <div class="author">Neil Wainwright-Farrar, Head of Learning and Development, Clarity</div>