The importance of stakeholders support

One of the most important thing, and quite often underestimated, when it comes to making changes is the support of the stakeholders. The stakeholders in question are not just the ones who make the decisions but also the ones to carry out the changes. More often than not, the people that make it work are the group that is more likely to be left behind in any discussions.

An interesting case study that happened to me a few years back emphasises this particular issue. In 2001, I joined a company, which is a member of an organisation of around 20,000 employees, that is involved in the property management business. We managed around 16 buildings in JB and in KL and almost all of the buildings are either owned by our parent company or companies within the group. Let just called this company Co A.

In 2004, a major restructuring of Co A resulted in the formation of two additional companies, Co B and Co C. I left Co A to join the newly formed Co B along with some 70 other employees. Things were relatively going well, though as expected of a new company there will be hiccups, and most of the staff can be said are proud to be part of the new company.

However, it was deemed not good enough by the management. One of the reasons was, the management felt that organic growth was ‘too slow’ and we have to find ways to make the company grow on a much faster rate. Furthermore, with the clientele almost exclusively made up of companies within the same organisation and contracts from external parties not forthcoming, a strategy was drawn up to make Co B be bigger quicker.

A few months thereafter, along comes a company that was up for sale and was desperately looking for a buyer, let us called it Co D, and after a few months of discussion a deal was struck and Co D was acquired. Unlike Co B, Co D was a privately owned company that has experience in securing contracts from the Government and Private sector. When the two groups of employees, of Co B and Co D, became one, everything that could go wrong, went wrong (initially).

In hindsight, I would have to say that the intention was good and noble. I, for one, would congratulate the management for having the vision to carry out what was deemed the best for Co B. I mean what is the point of starting a business if there is no growth.

Yet somehow along the way, the change process was not properly planned and the changes lead to massive dissatisfaction among the employees, especially those who are originally from Co B. In less than a year, a few of the managers and executives left the company to work elsewhere and I was among one of them. To be honest, at that point of time, I just could not figure out what actually went wrong?

Reflecting on the issues that were raised, especially after having the benefit of studying change, there are a few things that the management could do to avoid such problems cropping up during the initial part of the exercise. Mind you, Co D is doing well at the moment yet if the appropriate actions were taken, a lot of the initial confusion, heartaches, misunderstanding and conflicts can be avoided.

The first, I believe, is the timing of the acquisition. The merger of Co B and Co D took place a little more than a year after the restructuring of Co A. In other words, the changes happened too quickly. To apply the sigmoid curve reference, Point A started too soon for most of the employees of Co B. Considering the transformational changes that they have went through, a period of stability and adaptability is surely most welcome. Yet, talks with regards to the acquisition started around eight months after the formation of Co B and this has created a sense of insecurity among the employees.

The most important factor in creating a lot of dissatisfaction, however, is the failure to get the support of one of the most important stakeholders namely the employees themselves. It was felt that the exercise was forced upon them without any detail explanation and discussion. The management concentrated a lot of efforts in trying convince the powers that be and to get the approval for the takeover, until it reach a point the employees felt left out and being left in the dark.

Brief explanation sessions were actually conducted but it was deemed insufficient and a lot of the questions remained unanswered. At times, it felt like getting into a planned marriage without actually knowing who your spouse will be.

I believe if the management sat down and properly discussed it with the employees, and maybe applied the Change Equation tool (Beckhard & Harris), at least some of the employees could have been won over. As it was, some of the employees did not even get to the exploration phase of change, let alone the commitment phase, before they left the company. As I have stated above, I believe it is not much the intention of the exercise that is being resisted but the feeling of insecurity and that they (the employees) will gain nothing for the exercise that have caused the dissatisfaction.

Referring to Kotter’s Eight Steps of Change, practically the first five steps were being overlooked and it was a straight jump to step no. 6. No effort was made to create a climate of change neither was there any effort on engaging the whole organisation. I guess what happened proves the importance of having a proper action plan.

Alas, much credit has to be given to the management in stabilising the company albeit after the initial problems and significant losses on the human resources front. The current staff especially the lower and middle management employees are practically unrecognisable from the staff that first started in the company.

In conclusion, I would just like to say that spending time to talk and convince the stakeholders would not only help to avoid a lot of the initial resistance towards change but will also make the change process a much more pleasant experience.