Change seems almost inevitable these days. Research from the Arlington-based corporate consultancy CEB shows that in the last three years the average organization has undergone five major changes. While many of those disruptions are company- or industry-dependent, one that nearly every organization will face is a change in leadership – and the transition that comes with it.
The effects of a leader’s exit can trickle down throughout the organization and create an environment of uncertainty. Take for example the administration transition that will come as a result of November’s general election. Besides having a new president, most federal employees will also have a new department or agency head. And it’s not just a new boss that they’ll need to get used to – a new administration also means a different set of policies and strategies for the federal workforce to implement.
To deal with the uncertainty, employees often adopt a transactional mindset. Strategic initiatives are pushed to the side and the focus becomes solely about getting only necessary work done. Employees don’t want to waste limited resources on projects and initiatives that could be swept off the table by the new leader. As much as this instinct to save resources makes sense, not taking action can have its own negative consequences as well.
It is this kind of struggle around organizational change that can cause employee performance to decline up to five percent, according to CEB research. In government, this decline in performance translates to a potential loss of nearly $27 million in productive work hours for the average agency in a nine-month transition period.
Whether the gap between two senior leaders is weeks- or months-long, how can organizations mitigate the productivity loss that often comes with it? Enter the three Cs—capability, capacity and context.
Traditionally, organizations focus on preventing performance declines during periods of change by building employee commitment to the change. However, our research shows that employees do not have to actually like the change, rather, they have to understand it. In order for leadership transitions to be successful, organizations must shift their focus from achieving employee commitment to change to building employee capability – the information, skills and direction needed to get work done – to manage through the change.
At the outset, organizations must realize that different people have different capabilities for success during transition times. Identifying those individuals with greater capability for success can significantly help to catalyze capabilities across the broader workforce. From there, managers can focus on building employee capability by distributing the information employees need to rebuild disrupted knowledge and networks during the transition. Employees need to have an understanding of what’s being asked of them and their teams throughout the transition.
Without a leader’s strategic direction, employee effort towards work and their alignment to the organization’s mission can drop significantly. The question becomes, how can we prioritize activity, when we do not yet know the priorities of the new leadership?
During the transition, when strategic alignment is absent, remaining leaders should empower managers to identify where legacy alignments are harming their team’s ability to execute work and realign their team’s behaviors accordingly. In fact, a manager’s help in allocating their team’s time and energy during change has the greatest chance of improving employee performance (31 percent) – more than manager buy-in and understanding.
There are plenty of books and trainings that identify new approaches to transitions. While these tools provide leaders with plenty of content on transitions, that information must be applied in the context of their organization. Our research has found that a new leader’s direct reports and employees at the next level down have a considerable influence on the leader’s success. When bringing on new people at the top, the best organizations look to existing networks to support the new leader and provide context that can help influence their strategic decision-making.
The pay-off of effective transition management is significant. Done right, it can help executives reach their full productivity nine months earlier. The benefits of leader productivity also extend to the broader organization, as teams led by high-performing transitioning leaders are 13 percent less likely to leave their organization.
Whether it’s the commander in chief or the chief executive, the transition of top-level leadership presents organizations with numerous challenges. To sustain productivity during a large-scale leadership change, remaining executives and managers should actively consider the transition within the context of the entire organization – focusing on challenges at both the workforce and managerial level.
Talent Matters is an occasional column from CEB, a Rosslyn-based corporate research and advisory firm. Jean Martin is CEB’s talent solutions architect. Liz Joyce is principal executive advisor.