Leadership's Fear of Change; The Impact of COVID-19 on the workplace.
I was reading a NY Times article about how Covid-19 is changing every aspect of our lives. It's changing how we work, socialize, commute and even sleep. Despite living with COVID-19 for over 22 months now, some companies, managers, and leadership are still trying to go back to pre-covid workflow and staffing levels. In this case, I am not talking about any political affiliation but more of an unwillingness to accept a changing work environment.
When covid hit, most mitigation measures were temporary and thus reactionary. However, as lockdowns, social distancing, remote work, learning, and vaccines became part of life, resistance to change became a prevalent theme both in the political world and in the work/life world. But why are workplaces so resistant to change, especially in education? Metathesiophobia is the psychological definition of fear of changing circumstances, routines, or objects. People can fear change on many different levels. A person might fear a shift in cup color at their favorite coffee shop on a micro-level. A person might fear a change of job, relationship, or world outcome on a macro level. Some of the symptoms of methathesiophobia are
Heart palpitations
Rapid breathing,
shaking/trembling
Sweating
Nausea or gastrointestinal distress
inability to form words
dry mouth
thoughts of death
Choking
Feeling of dread.
But can an entire organization have Methathesiophobia? Why would an organization fear change? Is the fear of change healthy or unhealthy for an organization?
Why would an organization fear change? Is the fear of change healthy or unhealthy for an organization?
Let's first answer the question, can an entire organization fear change. The answer is yes. An organizational-wide fear of change comes from leadership and the culture the leaders instill. There is a saying that an organization promotes leaders to the level of their incompetence. This statement is a bit harsh, but it is accurate to state that some leaders are not qualified. Why do some leaders get put in these positions, and other forward thinkers are left behind? The answer is that it is harder to change than it is to keep the status quo.
But the status quo is comfortable because every person in the organization knows what to expect. The monotony is comforting. However, everything changes. Nature is not monotonous and forces itself to change. Evolution is the ever-changing response to the environment. The status quo doesn't respond or adapt to a changing climate; it spends more energy resisting it. Spending more money and energy resisting change is unhealthy for an organization.
The status quo is unhealthy for an organization as it forces it not to respond to a changing environment or marketplace. The leadership's personality and decision-making contribute to an organization's fear of change. If the leadership is risk-averse in its decision-making, growth will also be stagnant. Organizations are either growing or shrinking on a continuum. The rate of growth or shrink might slow down, but there is never a point where the rate is right in the middle. That intermediate state is so finite that a small decision from anyone in the organization would tip the balance one way or the other on the continuum.
But what is the role of leadership? The role of leadership is to make decisions in response to current or forecasted changes within the environment and marketplace to continue the organization's long-term growth. The organization might move up and down the growth rate continuum. Still, leadership's overall directive is to keep the organization moving towards overall long-term growth.
What drives decision-making?
Decision-making is the process of weighing the risk-reward benefit of a choice. Sometimes the options carry more reward than risk, in which the decision-making process would be easy on which to choose. However, often the margin between risk and reward is much smaller. Thus the person making the decision must utilize other outside factors when deciding on a choice. These external factors add more weight to the risk or reward benefit analysis. Examples of outside factors might be input from other people, experience with similar decisions, review of the mission statement or strategic plan, or directive from a higher authority. Good decision-makers tend to make decisions with outcomes that have the favorable benefit to whichever entity they represent (themselves or their organizations).
Fear in Decision Making
Fear comes into play in decision-making because it forces a person to focus more on the risks rather than the reward of choice. Fear is an evolutionary survival mechanism, such as when our ancestors feared a saber tooth tiger. The issue is when fear is inconsistent with the amount of risk. Joe Pierre says that this often happens when the stakes are unknown. When the risks are unknown, our brains have to fill in the gaps. Fear leads to an overestimation of risk. Fear leads us to overestimate the odds of an improbable outcome.
So how do we mitigate fear in decision-making? Jocko Wilnik often states that one has to detach from their emotions to make a clear decision; this would also include fear. Detaching is good in concept, but people often find it hard to detach, especially when a situation has many emotions. But what we can do is gather as many resources as possible to do a risk and reward assessment. The circumstances of the situation dictate the speed of the evaluation. Let's take a small example of a coffee shop changing the color of its paper cups.
A CEO might initially say no to the color change, fearing that customers might not like the cup. The CEO then thinks that those customers might take their business to a competitor, and thus the sales numbers might go down for 1-2 quarters. Stocks would drop, and finally, the board of trustees would remove them as CEO. The fear of change led the CEO to outweigh the risks and negate the rewards of a cosmetic change to their cups. But what about those customers who are bored with the same cup? The CEO needs more information to make an informed decision. The CEO surveys the executive council asking formal and informal options. The CEO then asks the marketing department to analyze and conduct focus groups to gauge public opinion on the change. The CEO then does a financial analysis to see if the cup color will affect the profit margin due to increased or decreased production costs. This choice doesn't require a lot of speed in the decision-making process, and thus the CEO has time to gather more information. Once the CEO collects the data, they can assess the risk vs. reward with the emotion of fear mitigated by more data. Once they make the assessment, the leader must then align the decision with the company's mission and value statements.
An Organization's Mission
Jack Welsh said a mission statement is the driving force of all a company's decision-making and policy. Let us ask this question: how many CEOs, managers, and supervisors know their company's mission statement? What drives the decision-making if the upper administration has no sense of the mission statement? Is it the strategic plan? Is it individual agendas? Budgets? Stock performance? A Board of Trustees? Fear is a human emotion. Leaders cannot take emotions out of the decision-making process unless you release the decision-making to a computer algorithm. So how do we deal with and mitigate fear in decision-making to have the best outcome possible?
Leadership often misses the mark when decision-making fails to observe the organization's mission statement. Leadership might also fear referring to the mission statement because it might require an organization to reevaluate its decision-making process. For example, if a mission statement said that the organization was to "help contribute to a global society," then every decision made within the organization must be in alignment with that goal. There might be less cash flow in this made-up scenario if the company saw reduced profits this year. It has been customary for the company to invest extra cash flow in philanthropy efforts and develop other freeware for the global community. However, with limited profits this year, the company might not meet its philanthropic endeavors' complete or partial needs and thus might have to reduce the contribution. The CEO delivered this news at the annual company golf at the end of the fiscal year. What would the correct decision be in this case? To continue the company golf outing or redirect those funds to the mission statement? Why would the CEO choose not to cancel the golf outing? For fear of employee retribution? Fear of change and not doing the company tradition?
COVID's Example Case.
Let's think about the initial cost of change. Let's tackle a big one, working from home. Before the pandemic, a company might have spent, let's say, 1 million a year for office space. They might have locked in a seven or 10-year lease, which is 7-10 million dollars in future budgets. Most employees were forced or elected to work from home with the pandemic. Studies suggest that employees are more productive when working from home. This increase in productivity is due to several reasons:
Shorter commute
Less separation of work and home life
More contact time with work projects or clients
However, CEOs might see empty buildings as a waste of sunk cost, thus might push for in-person work. How often have you read that companies want to see cars in the parking lot?
So to get the building compliant with CDC recommendations, the company will dip into available cash to alter the space. They will spread desks 6 feet apart, install plexiglass partitions, air filtration, and UV lights. These efforts might cost the business 1-2 million dollars, depending on the company's size. Then, to return to work, your staff has to be vaccinated or show a negative covid test, increasing the COB by installing a screening system for those who are vaxed and unvaxed. Increases in insurance costs and paid time off are just more parts of the pandemic's cost. So, why are we trying to accommodate us going back into the office when the company would avoid all of these extra costs with a change of work model? If the company, at the start of a lease, owes 6 million on a seven-year lease, the cost to install and remove the covid measures might be 3 million (taking an approximate number). Over the life of the lease, they will spend about 10 million (7 years plus the 3 million in renovations) to continue to work from an office space. However, if you break the lease, you might forfeit one or two years' worth of rent. You would be only out 2-3 million in costs over the seven-year lease versus the 10 for rent and renovations, giving you a net savings of 7 million.
Maybe a better question is, why does some leadership want to bring everybody back? What's the driving factor behind the drive for full offices again? Some leadership experts say it's ego, as the administration wants to be seen in their corner offices. Ego drives a lot of business interactions. Look at how many meetings we have to attend that could have been the proverbial email. Suppose the CEO puts ego and emotion aside. What is the reason for bringing people back into the offices when productivity might be more productive in work from the home model? An organizational fear of change?
Many organizations take a "wait and see" approach, delaying decision-making until more data is available. I often hear from leaders that "we don't know how things will change next month" or "we could be right back to where we started next year." So, the natural tendency is to "survive" this next one month or next quarter or next year until we get back to normal. If we are surviving, we are not thriving in this environment. We need to adapt. The model needs to change.
What can we do?
I often get asked, "what can we do when we don't know what to expect?" and my answer is always "plan for both scenarios, and then find a third plan to mitigate both." In the case of working from home, you can't just tell people to come back tomorrow. People have to negotiate child care, transportation, and technology upgrades, to name only a few problems of workplace re-entry. Let's also not forget that we are going through a global trauma, and mental health is vital. Your employees might not feel comfortable returning to work due to a mix of vaccinated and unvaccinated mingling. It would help if you gave people time to get their affairs for a complete workplace reallocation. From what I have experienced, 3-4 months have been the most successful workplace re-entry. Also, ask if those employees need to be in the office to do their job, or can we keep them remote? How about a hybrid flex model?
Also, ask yourself why your employees do not want to come back? What is the incentive for returning to an office environment? The free donuts in the employee lounge are no longer a fringe benefit or incentive. However, free vaccinations, child care, and paid sick time are. As leaders, we need to reevaluate our purpose and reflect on our mission statement. Is it vital to have students cram a 200 seat lecture hall when the teacher reads out of a textbook? Take the money you would spend on building safety and improvements and put it into your employees. Give them new tools to be innovative with their teaching methods or spreadsheets. Offer your employees improvement workshops, free behavioral health, further skills training, and invest in their education.
Dr. Mike Testa
