Years ago, I was working at a large insurance company and we were implementing some organizational change with the help of experienced consultants. To be honest, I can’t even remember what the project was meant to tackle, but I do remember one distinctive piece that had me convinced those consultants were robbing us blind—change management. That’s right, “change management” was the final line item at the foot of the proposal, indicating all of the ways these consultants were going to manage our change—to the tune of a probably five- or six-figure price tag.
This line item made no sense to me. Tell us what to do and we’ll do it, I thought. How hard is it to embrace change?
Pretty hard, it turns out. Those consultants were exactly right, and the change management line item was well worth the expense. You see, when creating a new future state, one of the fastest routes to failure, resistance or pushback is to develop that perfect future state in a secret back room, and then grandly emerge with the announcement: “Here you go, now do this!” This way of doing things simply doesn’t work. Instead, respectfully working together with stakeholders to cultivate support, excitement and advocacy is needed. Enter change management.
“Change” in our actuarial world can involve improved technology and methodology; new processes, products and training; resource planning and redirection; revised talent strategies and reporting structures; updated goals, analysis and reporting; or even new logistics (e.g., working from home as the result of COVID-19). Creating any or all of these changes within a team, department, company or industry can be challenging. But with the right people framework in place, it’s possible to not only adopt new technology, circumstances or opportunities, but to embrace them. By understanding how change impacts others at different levels and in different roles—and by respecting and honoring these others—we can optimize our likelihood and success.
The strategies described in this article are effective for both large-scale (organizational) and small-scale (team or limited individual) change. Armed with these perspectives, you can successfully create and implement the bright new future state you seek.
Thinking Beyond a Well-Focused Strategy
When most of us think about creating change, we tend to think strategically. Thinking strategically means that we thoughtfully create goals with rational, measured care. We methodically design the appropriate tasks required to carry out some particular outcome or advantage. We meticulously and purposefully analyze problems and opportunities. We carefully consider our work with an eye to maximum efficiency and effectiveness. A well-focused, strategic mindset is the backbone of our excellent work. Essentially, we think about what we need to accomplish, and we accomplish it.
But we need to be careful that we don’t focus so intently on the strategy that we become unintentionally blind to all else. You see, a directed focus from only the strategic point of view ignores a critical aspect of change—it will only succeed if others embrace it.
Decades ago, organizational theorists Michael Tushman and David Nadler suggested that optimal workplace performance occurs when ideal dynamics exist among certain organizational elements like strategy, culture and power. The areas Tushman and Nadler identified—strategy, culture and power—are also useful for understanding how we can most effectively promote and create support for change within teams, departments, organizations and industries.
At its most straightforward and basic level, people naturally tend to support—or resist—change based on how it will affect their own current positioning. Current positioning includes how people typically do their work (culture) and how much control they believe they have over their own work and decisions, and within their organization (power).
So, when you think about the bright, efficient, better future you’re strategically creating, you should also consider others’ positioning within this future state. Managing that positioning is, at its heart, change management.
Work Habits and Company Culture
Work behaviors and habits are sometimes referred to as company culture. In this context, we’re not talking about culture as it relates to nations, races, ethnicities, religions or family customs. Instead, we’re reflecting on the culture of the organization itself, or how people work. Just like ethnic cultures, work cultures are a way of life. They are the ingrained ways that we generally behave at work or within our organizations, including our daily habits. The strength of organizational culture cannot be underestimated.
For example, maybe team meetings happen every Monday, every day or not at all in your office. Maybe you have flex time, or maybe everybody punches the clock at exactly 9 a.m. and 5 p.m. Maybe your office has run the same programs for the past 50 years—sure, another way might be faster, but you like it the way you’ve always done it. These are all examples of norms that are habitual, ingrained and expected.
For many people, consistency in work habits is a comforting routine. It gives people a break from constant decision-making, staves off the potential fear of the unknown and diminishes the need to direct brain cells to an activity that perhaps can be completed on autopilot. Consistency creates order in a world that can sometimes feel chaotic. That’s why for some, change can be scary, difficult, cumbersome or labor intensive. Change can be wholly undesirable even if it would lead to some positive, beneficial and strategically improved future.
Therefore, it’s important to consciously consider how your proposed future state will impact current culture. Consider the impact from others’ points of view—not just your own. You can’t automatically assume that everyone else will embrace this future state simply because you embrace it. If you find that the planned future state aligns with at least some of the typical habits that others currently enjoy or offers more favorable norms, then celebrate and clearly articulate this alignment. “This new initiative supports the following existing processes, so it will be easy to understand and adopt.”
What if you expect that the new future state may or will negatively impact current culture or current habits? As an example, shortly after the 2008 financial crisis, U.S. federal regulators labeled some insurance companies as systemically important financial institutions (SIFIs). Considered “too big to fail,” oversight of SIFIs suddenly required extensive model governance and other large-scale requirements that massively impacted many actuarial teams. Teams that once enjoyed time to thoroughly analyze results, find creative solutions to mitigating risk or develop new products were now buried under new required processes. How do we best embrace a change like this?
First, consider if alternative solutions that are similarly effective but less disruptive exist. For example, many SIFIs created and hired new teams to handle model governance centrally. While still burdensome to the individual actuarial departments, this solution didn’t require all actuaries to fully redirect. Second, clearly articulating the thoughtful consideration of the potential impacts and possible alternatives helps alleviate some of the dissatisfaction about the change, and hopefully helps most of those affected support the new future. “We recognize that the new requirements will disrupt aspects of our existing culture, so we’ve implemented the following solutions to minimize those disruptions.”
Another strategy is to include some affected team members in the brainstorming of solutions. Not only can these individuals potentially generate useful options for dealing with negative change, but welcoming their input means they are less likely to feel bulldozed into compliance. Instead, the included members become early advocates for the success of the new strategies. “We recognize that the new requirements will disrupt aspects of our existing culture, but we have worked together with members of your team to find solutions to best minimize the disruptions.”
Overall, if disruption to current norms is unavoidable—and sometimes disruption is necessary for the health of the organization—then empathetically and honestly discuss the situation with those affected. Be respectful. Despite a deterioration in positioning, you may be able to create support through honest communication and respect. “The new requirements will unavoidably disrupt aspects of our existing culture, and we know that will be challenging. We’re sorry about that. We are implementing this change for these reasons [X, Y and Z], and we hope that makes sense, even though this is difficult. We respect you and your great work, and we’re sorry that you may need to bear a burden of this.” While no words may be completely ideal, saying something empathetic and respectful is better than radio silence.
Let’s now consider the second aspect of positioning, which involves the new future state’s impact on the amount of control other people have (or believe they have) over work, decisions and outcomes.
Power and Control
Let’s face it: Many people in the workplace are self-focused, and for good reason—thoughtfully directing our own work in a positive way provides us personal and financial success and satisfaction. It’s human nature to want to maintain control over our own decisions and directions. Therefore, most people don’t see things from the angle of, “What is the most rational and effective strategy for the organization?” Instead, the more common perspective is: “What’s in it for me? How does that initiative affect me and affect the control and authority I have over my work and team? How does it affect my level of influence and power within the organization? How does it affect my ability to drive my own positive outcomes?”
People generally view an increase of their own responsibility, influence or authority as a positive. Therefore, if the change you propose allows others to maintain or increase control, or improves their success or satisfaction, then they will likely support and embrace it. In this case, articulate how the future state is preferable to the current state. “Here’s how you and your team [department, organization] will benefit from this change.”
Conversely, people generally will view an erosion of their own responsibility, influence or authority as a negative. Therefore, if the change you propose takes control away, or if they perceive a deterioration in their own ability to drive personal success or satisfaction, then you’ll need to thoughtfully manage the disruption. Can you find another equally effective future state that allows for continuity of authority? If not, then can you think about how to empathetically and honestly communicate the change? “Here’s how you and your team will be impacted by this. Let’s work together to figure this out.”
Note that these strategies are like those suggested for managing changes that affect company culture. We could revisit the SIFI oversight example to understand how personally imposing it may feel to have our own actuarial models investigated, scrutinized and regulated. The change takes away my power, and that can feel uncomfortable.
Again, try not to bulldoze affected people into compliance. Resist emerging from that secret back room with the new directive, “Now do this!” Instead, include the stakeholders in the solutioning. Treat people with dignity and respect. Even if others are made worse off by the change, it may be possible to turn a potential adversary into an advocate through honesty and integrity.
Let’s park for a moment on that word “stakeholder.” As you reflect on any planned change’s impact on people’s perceived levels of influence, authority and power, consider all stakeholders:
- If approvals are required, make sure you go as far up and across the line as necessary to ensure that others don’t put up roadblocks later simply because they weren’t consulted. Sometimes people view “lack of consult” as “taking away my power.” A simple check-in and common courtesy go a long way.
- If the planned change impacts other departments or groups, make sure to inform them upfront, so it’s not perceived that this is a planned diabolical imposition on their “turf.” Again, a simple check-in and common courtesy go a long way.
Overall, don’t underestimate the strong feelings people have about their perceived control. People will often feel more positive about the new future state if we consider and articulate thoughtfulness about their positioning. Often, people don’t like to feel bulldozed into accepting something over which they had absolutely no control, input or influence.
(That’s “too long; didn’t read” for my fellow Generation Xers. Said differently, here’s the summary!)
The next time you strategically plan a bright, efficient and better future that involves change of resources, technology, process, products, training, talent, goals, analysis, reporting, logistics or anything else, consciously consider the change impact on people. Think about the current and future positioning of all stakeholders—at any level or in any role or function—who may be affected. Consider how the future state will impact typical behaviors and expected norms. Consider how it will impact others’ perceived levels of control and personal decision-making.
Then, thoughtfully articulate the value of the future change. Clearly share and celebrate alignment where it exists. If a deterioration of positioning is identified, then allow those affected to be a part of the solutioning. Respect others’ positions and treat them with integrity and respect. Be honest and empathetic. It is possible to create a coalition of advocates who will embrace your change.
Successfully reaching that beautiful, planned and highly strategic future state will be well worth the price tag.
More detailed information and strategies for not only creating change but also creating great value for yourself, your team, department or organization can be found in Winning Conditions: How To Achieve the Professional Success You Deserve by Managing the Details That Matter (Christine Hofbeck, 2020, Simon & Schuster). Available everywhere books are sold.
Copyright © 2021 by the Society of Actuaries, Schaumburg, Illinois.