Sustaining Employee Morale and Productivity During Organizational Change

Leaders often have no control over organizational change driven by external forces, such as general economy, policy or changing regulations. Yet leaders have a duty and responsibility to manage organization and lead people through such unwelcome change. We discussed in a previous article that to manage organization change effectively, a leader focuses on five management components:

● Creating a vision
● Setting strategic goals
● Redeveloping organizational systems
● Managing people and their reactions
● Enhancing one’s leadership skills

While all of these components are very important in leading through organizational change, managing people is the most critical component that can make or break an organization.

When a change is not managed effectively, it increases employee anxiety. According to Catastrophe Theory, while anxiety increases to a certain point, employee performance increases as well. When some anxiety is experienced, we feel excited, energetic, and motivated to perform well. However, when anxiety reaches “catastrophic point” (which may be at different level for different people depending on their coping skills), performance starts decreasing. At that point cognitive anxiety starts dominating over somatic anxiety and one’ performance starts decreasing. People are less productive and may feel unmotivated and deflated. High anxiety also causes safety dangers, and may be a cause of “infection” of negative attitude in organization.

Leaders in organizations can apply several strategies to keep employee anxiety at”workable” level and employee performance at optimal level. Let’s consider at case of HCL Technologies, India based company. During 2008-2009 because of economic hardship a number of technology companies closed their doors or significantly downsized. In the meanwhile, HCL Technologies grew by 21%, was rated #1 in employee satisfaction, and their customer satisfaction went up by 43%. So, how did they do it? HCL Technologies focused on employee satisfaction before customer satisfaction. “Satisfied employees increased revenues from the existing customers through the passion and value that they demonstrated” (Vineet Nayar, CEO of HCL Technologies). Also, management asked employees for ideas on how to reduce the costs, and implemented these ideas. Many times front line employees have the best insights on cost reduction. More so, by being included into a decision making process, employees felt more empowered and motivated.

CEO of SRC Holdings Jack Stack advises creating and maintaining “an open book culture” during organizational change. When employees know that they can come to management and seek answers to the unknown, their anxiety level naturally decreases. Avoiding repetitions about information that is anxiety producing is also important in increasing certainty at workplace. Organizational change is less challenging when executives and higher management coach, develop, and support middle management. With coaching and development middle management will be better equipped on how to approach front line employees and how to reduce their anxiety or resistance.

Another strategy is talking to employees one-on-one after announcing an upcoming organizational change. That way, employees can express their concerns, ask questions, and participate in organizational change management rather than feeling that a change is “happening to them”. When announcing an upcoming organizational change, leaders should discuss with employees – individually or in groups – “what’s in it for me”. Employees’ resistance and anxiety will be reduced if they know how they would benefit from a change.

Appreciation and recognition during organizational change help employees stay motivated and focused. Performance certificates, plaques, gift cards, length of service awards, and a surprise day off are not expensive recognition strategies, and they go long way in keeping employees motivated. Among appreciation strategies are smiley faces (one would be surprised how this “daycare” tool works wonders in a workplace); thank you letters and e-mails; and celebrating employee successes.

According to Ken Blanchard, “Everything rises and falls on leadership”. When leading through organizational change, a leader herself has to demonstrate certainty and keep her own anxiety “in check”. The calmer, more collected and supportive a leader is, the calmer and more collected his employees and followers will be. A stressed leader creates a stressed workplace. Thus, taking care of oneself should be a leader’s starting point.

Leading people through organizational change is a challenging, yet very rewarding process. Managing people and their reactions is a critical organizational change management component. Leaders can partner with employees and include them in the process by creating “an open book” culture, allowing employees to ask questions and express concerns, coaching middle management, and recognizing and appreciating employees.

Blanchard, K. & Miller, M. (2004). The secret: What great leaders know – and do. San Francisko, CA: Berrett-Koehler Publisher, Inc

India Knowledge @ Wharton. (2010,July 15). HCL’s Vineet Nayarwinning more business in a recession means putting employees first. Retrieved from

Stack, J. (2010, February 11). How the recession made us stronger. The New York Times: Business Day. Retrieved from