Even after reading all of the greatest hits in the change management literature, I somehow missed the punchline: people experience change as loss.
There is already a model for understanding this, the Kübler-Ross model, and several papers have already been written on this topic. A blog post from Entrepreneurial Insights really does an excellent job of summarizing this model and it’s application to change management. They use an excellent example of a dead car battery. We’ve all experienced this process before. You go out to your car, already running late, the battery is dead. What happens next? Shock and denial. A few minutes later, acceptance and calling AAA.
In the case of car batteries, we pass through these stages pretty quickly. In the event of the ultimate loss, death, the process can take years. Change in business is usually somewhere in between but it often feels like the loss of a loved one, not just a dead car battery. Trying to understand why change feels like such a loss would be a fascinating study.
We’ve all heard of the ranking for stressful individual life events. That’s called the Holmes and Rahe Stress Scale. What most people don’t know is that the original purpose of this scale was to predict the likelihood of getting physically ill from these stressful life events. There is some debate about how accurate the scale is, but there is no doubt about the link between stress and physical health. In theory, a company should be able to create a predictive model that forecasts illness or ‘unplanned PTO’ based on the impact of a change to the organization. In other words, there is a cost to organizational changes regarding productivity and healthcare expenses.
There are some wild estimates out there about the financial impact of stress in the American workplace. It’s big. An article in the Atlantic provides some perspective, “health problems associated with job-related anxiety account for more deaths each year than Alzheimer’s disease or diabetes.” Feel free to read that again.
“We find that more than 120,000 deaths per year and approximately 5–8% of annual healthcare costs are associated with and may be attributable to how U.S. companies manage their workforce.” — Joel Goh, Jeffrey Pfeffer, and Stefanos A. Zenios
Negative impacts to employee health or increased costs are rarely mentioned in the change management literature. The most popular models are specifically about how to establish buy-in and a sense of urgency to accelerate change. It’s true that those changes are often needed to remain competitive in an ever-changing marketplace.
In the Forbes article, Why Half of All M&A Deals Fail, and What You Can Do About It, the author asks, “Why is M&A success such a crap shoot?” Forbes finds five key components: management capacity, culture fit, strategic alignment, adequate financial resources, and best possible solution. I wonder if another variable is healthcare costs, unplanned PTO, and widespread absenteeism?
The impact of a company going out of business, being acquired or merged is stressful, but I haven’t seen any calculations on the implications. It would be interesting to study the financial impact of corporate change initiatives on employee health.