The dynamics of globally competitive markets have accelerated the pace of organizational change — particularly as the world economy recovers from the financial crisis of 2008. In a global survey of employee attitudes, many employees reported that their organization had been through significant changes over the past year (Figure 1).

Figure 1. Most employees report changes at their organization in past year
Figure 1. Most employees report changes at their organization in past year

Source: Towers Watson 2014 Global Workforce Study1

More than 70% of employees said their employer had made major changes, such as a merger or acquisition, downsizing, restructuring, sale of a business unit or outsourcing of jobs during the past year. In addition, nearly one in three indicated their organization had grown or expanded during that time frame.

This pace of change is likely to continue. Over the next three years, almost 70% of organizations expect to pursue international market expansion, while over half expect to pursue a merger or acquisition, according to a recent employer survey (Figure 2). Despite improving economic conditions, nearly one in four (23%) employers anticipates a workforce reduction during the next three years.

Figure 2. Most organizations expect significant changes ahead
Figure 2. Most organizations expect significant changes ahead

Source: Towers Watson 2014 Global Talent Management and Rewards Study2

While these major changes are fairly common, other more routine but still challenging transformations are ongoing as well, such as the adoption of emerging technologies; changes to reward program design; and job redesigns affecting work hours, reporting relationships and day-to-day business operations. In this rapidly evolving environment, organizations cannot afford to ignore the effects of change on their employees, or the effects of employee attitudes toward change on their own success.

Our research suggests that the impact of change can be consequential and the returns on handling it more effectively are substantial. As shown in Figure 3, the attitudes of employees at organizations going through significant changes tend to be less favorable than those of other employees across all work-related areas — with the largest attitudinal gaps in company image (-14 percentage points) and leadership (-9 percentage points).3

Figure 3. Employee attitudes at organizations going through change lag those at high-performing organizations
Figure 3. Employee attitudes at organizations going through change lag those at high-performing organizations

Note: Shaded bars denote a statistically significant difference (p≥.05).
Source: Towers Watson Norm Database

On the other side of the coin, employees at high-performing organizations tend to have much more favorable opinions than those at organizations undergoing significant changes or than employees overall. The largest gaps between these organizations and high-performing organizations are in the areas of company image (24 percentage points), communication (22 percentage points), leadership (20 percentage points) and competitiveness (19 percentage points).

Revamping the benefit program can also be disruptive. Pension plan changes have broad impact, typically leading to lower satisfaction with the plan and reduced desire to remain with the employer — particularly among less engaged employees who had considered the plan as an important reason to join or remain with the organization. Employees at organizations that have made changes to their pension plans are more likely to reevaluate their own retirement plans and to worry about their financial situation, an important factor in employee engagement and retention.4

Differences in employee attitudes are consistent with another key finding in our research: the prevalence of failed changes. Organizations that manage both change and communication effectively are 3.5 times as likely as other organizations to report that they significantly outperform their peers financially; and yet, while slightly more than half of change projects are initially successful, in the long run, only one in four meets its objectives.5 This same research found that three areas stand out as critical for organizations looking to improve change effectiveness:

  • Focusing on the fundamental levers (leadership, communication, involvement, training/learning and measurement) that are known to drive success
  • Paying careful attention to employees — evaluating the culture, employee readiness for change and, in particular, the impact of changes on people
  • Training managers to be catalysts for change and holding them accountable

Attention to these key areas can help employers succeed as they manage change. One of the weakest areas for many organizations is in evaluating their employees, particularly the impact of employees’ general attitudes toward change. Yet these attitudes will affect both the employer’s chances of successful change and the employee behaviors likely to be affected by change.

How do we measure employee attitudes toward change?

The way employees feel about changes at work may be influenced just as strongly by their own attitudes toward change as by the changes themselves and the way they are managed. We divide employees into three groups, ranging from employees who prefer change (one quarter of employees) to employees who prefer stability (one quarter of employees).

Employees who prefer change:

  • Like new experiences
  • Embrace change
  • Are usually among the first people to try new technologies
  • Are happy to take risks to get the most out of life

Employees who prefer stability generally don’t agree with any of the above statements. The remaining 50% of employees fall somewhere in the middle — tending to like new experiences and embrace change without being early adopters or demonstrating a preference for risk-taking.

These attitudes are reflected in enthusiasm for new technology versus preference for proven technology. Employees in general lean toward trying new technologies versus sticking with proven ones. As shown in Figure 4, employees who prefer stability are also more likely to prefer proven technologies to trying new ones (50% versus 33%). Two in three employees who prefer change also prefer trying new ways of doing things, compared with only 28% of those who prefer traditional ways of doing things. A plurality of employees who prefer stability also prefer doing things the traditional way (45%).

Figure 4. Employees tend to prefer new technologies and ways of doing things
Click Image to Enlarge
Figure 4. Employees tend to prefer new technologies and ways of doing things

Source: Towers Watson 2014 Global Workforce Study

Overall, these preferences reflect a workforce that is generally open to change in the abstract: both to new technology and to changes in the way things are done. Whether these general attitudes persist when it comes to specific changes affecting their own jobs may be a different matter, however.

Employees’ attitudes toward change relate to their attitudes toward their organization and organizational changes

Employees’ attitudes about change strongly relate to their attitudes about their employer and changes at their organization (Figure 5). Most employees who prefer change agree that their organization is changing at the right pace (61%) and that it implements changes well (62%), while only one-quarter of those who prefer stability approve of the pace of change and even fewer agree that the changes are implemented well.

Figure 5. Employees’ attitudes toward organizational change reflect their preferences toward change
Figure 5. Employees’ attitudes toward organizational change reflect their preferences toward change

Source: Towers Watson 2014 Global Workforce Study

Given their attitudes regarding how well their organization handles change and the widespread prevalence of change, it is not surprising that employees who prefer stability tend to be less engaged than employees who prefer change (Figure 6). More than half of all employees who prefer change are also highly engaged — three times the percentage of employees who prefer stability (57% versus 19%).

Figure 6. Employees who prefer change are also more engaged
Figure 6. Employees who prefer change are also more engaged

Source: Towers Watson 2014 Global Workforce Study

The causation can work both ways in this analysis. Highly engaged employees are attached to the organization, receive the support they need to feel enabled and are generally energized at work. As a result, they are also likely to be better equipped to embrace change within the organization when changes do occur and may even prefer change. On the other hand, disengaged employees may suspect the worst from any change or fear they will not get the support they need to successfully navigate these changes and therefore have a preference for stability.

The relationship between preference for change and turnover risk exhibits a different pattern (Figure 7). Normally, there is a strong relationship between engagement and an employee’s preference to remain with the organization. This is borne out by the fact that employees who prefer change are the most likely to be highly engaged and among the most likely to be Stayers. Nevertheless, employees who prefer change are just as likely as those who prefer stability to be Leavers and more likely to be At Risk, despite being three times as likely to be highly engaged. Thus, high levels of engagement do not necessarily translate into unwillingness to leave. Employees who prefer stability are significantly more likely to be Soft Stays than employees who are more open to change — suggesting that their lack of engagement is less likely to lead to turnover. 

Figure 7. Preference for change and turnover risk
Figure 7. Preference for change and turnover risk

Source: Towers Watson 2014 Global Workforce Study

Both groups show a similar pattern in terms of the relationship between perceptions of how well the organization handled change and employee engagement (Figure 8). Only 5% of employees who prefer stability and who thought their organization handled change poorly were highly engaged, while almost two thirds (64%) of those who prefer stability and approved of the way changes were handled were highly engaged. A similar pattern emerges among employees who prefer change (11% versus 86%).  

Figure 8. Perceptions of change effectiveness relate to engagement and turnover risk
Click Image to Enlarge
Figure 8. Perceptions of change effectiveness relate to engagement and turnover risk

Source: Towers Watson 2014 Global Workforce Study

The pattern of turnover risks associated with each group is also interesting. Despite their general reluctance to make changes, one in three employees who prefer stability and who rate their organization poorly on change effectiveness is at high risk for turnover (Leavers and At Risk), with most of the rest representing less than fully engaged employees who are Soft Stays. However, when they approve of the way their employer has handled change, the number of employees who prefer stability who are at high risk drops to roughly 10% — consistent with the pattern for engagement.

For employees who prefer stability, handling change effectively is associated with higher engagement, significantly lower turnover risk and less productivity risk. Among employees who prefer change, more than half of those who believe their organization has handled change poorly are at high risk for turnover. Employees who both prefer change and believe that their employer handles changes well are less likely to be in these high-risk groups; and yet, while 86% are highly engaged, more than 20% still would be considered significant turnover risks.

Together these two sets of data indicate that employees who prefer change are more likely to approve of the way their employer handles change and to be highly engaged, but they are also more likely to be turnover risks. On the other hand, employees who prefer stability are less likely to leave the organization but more likely to be disengaged. A shorthand way of summing up these findings is that employees who prefer change might be champions of change but represent turnover risks, while employees who prefer stability may resist change and represent productivity risks.

Conclusion

The pace of change at most organizations is unlikely to slow dramatically in the future and, given the returns on handling change well, effective change management will likely provide a sustainable competitive advantage in the future. Despite its importance and the time and effort devoted to studying the best levers to drive success in these areas, only one out of four changes achieves its objectives.

While the tools and processes for communicating and managing change have improved, the people side remains a challenge. Some employees are fundamentally predisposed to embrace change, while others have an affinity for stability. The differences between these employee segments are reflected in their assessment of how well the company has handled the changes, their engagement and their retention risks. Some employees find change energizing and a boost to productivity. But, these same attitudes make these employees turnover risks even when the organization successfully delivers changes. Employees who are less comfortable with change are more likely to be skeptical and even critical of how it is handled. Some of these change-resisting employees may become retention risks, but they are more likely to become engagement and productivity challenges.

Recognizing the challenges these types of employees can pose is an important step in managing changes well, and helping them survive the process with their productivity and engagement intact. For organizations, the next step is to identify which employees might prefer stability and which might prefer change — the subject of an upcoming article.

About the study

The Towers Watson 2014 Global Workforce Study covers more than 32,000 employees selected from research panels that represent the populations of full-time employees working in large and midsize organizations across a range of industries in 26 markets around the world. It was fielded online during April and May 2014. The study is designed to help companies better understand their diverse employee segments and the factors that influence employee performance on the job by gauging changing attitudes that affect attraction, retention, engagement and productivity.


Endnotes

2. See “2014 Global Talent Management and Rewards Study,” Towers Watson, April 2014.

3. See "How Does Change Affect Employee Engagement?” Towers Watson, January 2015.

5. See “2013 – 2014 Change and Communication ROI Study,” Towers Watson, December 2013.

6. Employees who do not intend to remain with their employer over the next two years are identified as Leavers or At Risk — the difference being that at-risk employees expect to leave but would prefer to remain where they are, even if a comparable job were available elsewhere. Employees in both groups are significant turnover risks. Stayers intend to remain at their organization and would prefer to do so even if a comparable opportunity arose — they represent the lowest turnover risks. Soft Stays are interesting because, while they intend to remain with the organization, they’re open to changing their minds if a comparable opportunity becomes available elsewhere. Their intention to remain with their employer more strongly reflects their perception of a lack of comparable opportunities elsewhere than a desire to stay.