Jirimiko Oranen Nov 14, 2022 1:09:11 PM

Why does change communication end up destroying shareholder value – and how to avoid the pitfalls?

Business literature indicates that more than 50% of corporate M&A cases fail. A merger doesn't increase shareholder value but destroys it. How does it feel when your shares lose value due to sub-standard change management?

Reasons for failed transactions include:

  • Unwarranted optimism at the planning stage.
  • Unrealistic view of the organisational mindset.
  • Lack of engagement in the execution of the change process.

The same issues plague other change programmes. Whether we're dealing with a restructuring, a culture shift, or a large-scale system implementation, the risk of failure is real.

Failure is easier than success. Failure does not necessarily involve hard work, but success does.

How to drive change successfully? The recipe isn't complicated.

Charting the course together

The first step is to engage people in the process. Employees need to understand why change is inevitable. Leadership needs to converse with staff, ask them questions, and listen earnestly to what they say. There are myriad ways to do this – from surveys to town halls.

We want to design the listening process in advance, but we will only see if our plan is adequate during the actual work. We shouldn't stop listening before we're sure that staff feel they have had a genuine opportunity to participate in change design.

Listening is a crucial part of communicating change. You want to design the engagement to result in a broad buy-in for change.

Faulty execution in the first phase does not bode well for the following stages. Lazy preparation is like setting banknotes on fire and throwing them out the window.

We shouldn't set a change plan in stone before the end of the listening phase. People are intelligent and tend to have good ideas. Their input may greatly enrich the program.

After the first stage, however, the plan needs to be communicated effectively.

North Star is there now

We turn the organisation's head in a new direction in the second phase. We do this through narrative and explanation. By justifying the case. Endlessly. We should accept that no one understands anything at first hearing.

We need to prepare to talk things through repeatedly and thoroughly, over a long time, in leadership all-hands, change guidebooks and explanation videos to strategy jigsaw puzzles.

A solid change narrative is a formidable structure, an unconquerable fortress. It talks to the individual on both emotional and intellectual levels and needs empowerment from top leadership. CEO should prepare for floor-level chats.

Champions of change never tire to explain

The third stage outlines the new joint direction and agreement on individual objectives. We need to engage all individuals in the organisation in a discussion about what successful change means in their job. This dialogue must always be tied to the greater change narrative.

Around 20 years ago, the previous paragraph might have read, 'All employees need to be told what we expect of them to drive change.'

But those days are gone. A future-proof enterprise knows that the days of hectoring managers have passed. In today's knowledge-based organisations, dictates are a surefire way to get rid of talent.

At Netprofile, we have a plethora of future-looking enterprises as our clients. They comprise a fantastic set of companies that develop and leverage innovative technologies. Innovative people are imaginative and quick to find a new job if they don't dig the vibe. Top-notch experts and their ideas are valuable.

Execution determines success

After a three-stage change roll-out, it's time to move on to follow-up and monitoring. You'll need meters. We might, for instance, have a bit in the employee survey that checks on how deeply the larger change narrative has become ingrained in the organisation – but please steer clear of repulsive corporate propaganda in the formulations.

Metrics will tell us if we need to highlight or complement some parts of the change narrative as we move on. And then we'll need to discuss things again – even for years. It's a great deal of work for managers, but that's what leadership is all about. 

To wrap things up, here is a dire warning. Beware of the Conditional Syndrome. It transmits efficiently and spreads wide.

" I think it would be clear to everybody…"

No. If people don't understand, you haven't discussed it.

Try not to see the world as you wish it were but as it is. Accept the mood in the organisation as is and chart a realistic way forward.

When we acknowledge the facts, we can tie the broader change narrative around them and lead the organisation into a better future, meaningful work, and success.

Towards increased shareholder value.

The writer is Partner and Strategy Director at Netprofile. He has received numerous accolades for his work in change and strategy initiatives. In 2021, The Finnish Comms Awards granted him the Communications Consultant of the Year honours.

If you want to discuss value-creating change communications, click on the button below, or give Jiri a ring at +358 40 75 66 655.