In this modern day and age, even the CEO has to earn the right. Sometimes a CEO finds this out the hard way. Just writing about change in the annual report simply isn’t enough. Nowadays, every CEO talks about adapting to changing demographics, climate, politics, technology, customer behaviour and much more. Also in the financial industry. But "change" is easier said than done.
Surely, we understand the sense of urgency since over the past 100 years the average life span of S&P500 companies plummeted from 67 to 15 years and only 1 in 3 transformations eventually succeed. One of the key reasons found by scientists: companies disregard human nature!
We see and hear from executives in the financial industry that achieving a successful transformation is difficult and sometimes frustrating.
Many invest a lot of their time and effort explaining the need for change to their employees through town hall meetings, internal CEO blogs etc. assuming that a rational explanation of what is about to happen automatically leads to engaged employees. Often asking employees to join the change movement and develop new skills. An approach that doesn’t appeal to their people’s hearts and minds. Why? Because people want to be heard first.
A crucial step towards realising change is that people need to show up at the start of the change process. Not only physically, but even more so, mentally. To do so, a CEO should make it its priority to involve employees from the very beginning. Listening to them, before anything else. Giving the opportunity to submit ideas. Overall, there are 3 key factors that can stop people from being involved from the start:
- A person's confidence in his or her ability to deal with the challenges change brings, like having to perform new tasks and develop new skills.
- Belief in the end goal or strategic route and understanding the impact of the strategic route on their own situation, customers, colleagues and society. When leadership only addresses the impact on the company, engagement to change declines or even evaporates.
- The attitude and behaviour of colleagues. If the attitude is negative and especially if direct colleagues disconnect, it becomes more difficult to engage.
Only once an individual believes in his own ability to cope, understands and relates to the company’s ambition and gets support from his or her direct environment, he or she will mentally show up at the start. And once you have momentum you’ll have to invest in keeping it. Hence, during the journey emerging challenges need to be overcome continuously. There are 3 main drivers of change that the CEO has to actively engage.
- Skill: usually on the radar screen from the start and most managers and executives we talk to address this continuously.
- Motivation: While many think of salary and bonus when thinking of what motivates people, there definitely is more to it.
- Energy: Change can be exhausting, so executives need to keep investing time and effort in giving employees relevant feedback and sufficient autonomy.
Too often executives cling to skill, because energy and motivation seem less tangible. As a result many executives disregard these or give up after briefly trying.
Understanding what could keep your people from mentally showing up at the start, what motivates them and what gives them energy is key to getting the buy-in needed for successful transformation. Executives that do this well are the ones that make a difference.
See you in two weeks!
Vincent Hooplot & Michiel Breeschoten