One certainty in business transformation is its inherent riskiness. In 1995, John Kotter, Professor of Leadership at the Harvard, found that 70% of business transformations fail. Fast-forward to the current – May 2023 – and the narrative remains consistent: A recent HBR study found that 67% of leaders have experienced at least one underperforming transformation in the last five years. Recent research by McKinsey further emphasizes this point; not only are transformations difficult, but in fact, a majority of them fail.
Transformation risk is real, and transformation costs make the risks even more perilous. Recent studies have suggested an average cost of US$27.5 million, with IDC predicting that spending on transformation initiatives will reach $3.4 trillion by 2026. So after decades of high transformation failure rates, it’s become increasingly clear that a paradigm shift is required to increase the success rate of transformations.
Business transformation-induced workforce trauma
Business transformations can be traumatic for employees and are often among the most stressful and emotional work-related experiences an employee will encounter. We define workforce trauma as the challenging emotional consequences one experiences when living through a distressing event in the workplace. Regardless of the investment made into planning, reporting, and change management strategies, transformation projects can overwhelm employees with fear, anxiety and stress, especially among those whose roles, responsibilities, relationships, or sense of purpose are impacted. When left to fester, workforce trauma can turn into anger and erosion of trust across the company. And without trust, productive transformation is simply not possible.
Transformations break cultures’ status quo
Company culture has been likened to a flywheel that maintains organizational inertia but also creates resistance to change. Business transformations exert a profound impact on the culture flywheel; they break and ultimately reset culture by disrupting established norms, behaviors, and expectations. Employees are expected to adapt to these changes and realign their attitudes and behaviors to the new organizational direction.
The resulting upheavals to employees’ established roles and routines, and uncertainties about job security and expectations often induce anxiety and stress. The emotional toll of witnessing colleagues' departures and adapting to unfamiliar processes can lead to fear and anger. Transformation can have an overwhelming impact on employee well-being and morale that impacts their intrinsic motivation, their productivity, the quality of their work, and their willingness to participate. Maintaining a mentally and emotionally healthy workforce is critical to delivering a successful transformation outcome, as is understanding where workforce trauma is occurring so that it can be understood and addressed.
Traditional transformation metrics may be blind to workforce trauma
Traditionally, transformations are monitored with metrics that provide insights into the effectiveness, progress, and impact of the changes being implemented, but information about the impact on employees is extremely limited: Engagement surveys are typically used, but they provide little-to-no insight into the realities of transformation-induced workforce trauma. Survey responses reflect only what employees are willing to share, and it would be naïve to expect employees to be candid about their feelings when they’re balancing transformation-induced stress and anxiety, as well as uncertainty about job security.
Transformations also typically involve a progression of changes over time. From a physiological perspective, as stress and anxiety gradually accumulate in response to a series of changes to routines or expectations, employees are unlikely to recognize the cumulative impact on their mental and emotional well-being, making it challenging, if not impossible, to accurately self-assess changes to their own emotional or psychological wellbeing.
Further exacerbating the problem, transformations typically involve a rapid succession of changes, and the time required to capture, process, and analyze any employee feedback means that survey-based insights are typically out-of-sync and no longer relevant to the current stage of the transformation.
Managing workforce trauma to drive transformation success
As transformation success and long-term business viability depend on a heathy workforce, organizations must actively monitor for workforce trauma so that the issues that are causing it can be rectified. By understanding how, where, and when trauma manifests, organizations can address the root cause, and fine-tune their transformation strategies to maintain the healthy and productive workforce that’s required for transformation success.
By using, passive, non-invasive, aggregated, and anonymized language analysis techniques that uncover the psychosocial signals associated with trauma, organizations can identify in real-time where workforce trauma is being inflicted, and what the likely implications will be. Language-derived signals of elevated cognitive load can be indicative of uncertainty or unsustainable pressure. Increasing levels of anger and fear as evidenced in language can signal resistance to change, inadequate communication, or ineffective change management. Cohesion can also be identified from language, and a reduction in cohesion within or across teams can signal ineffective collaboration and potential breakdowns in communication. By understanding the psychosocial impact, organizations can prevent negative downstream consequences.
Organizations that access accurate and timely insights into workforce trauma and wellbeing will not only increase the productivity, creativity, and collaboration of their workforce, but they also enhance their ability to proactively anticipate and address transformation-related challenges before they become systemic problems. While business transformations often introduce workforce trauma, organizations that are able to recognize trauma and address its source will significantly increase the likelihood of a successful transformation outcome.