People Equation Factors in Successful Organizational Transformation

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What makes for a successful organizational transformation? According to consulting firm McKinsey’s latest research, there are several key success factors. A study of a large cross section of companies revealed success indicators that line up with what you might expect: keeping executives up to speed, capital asset allocation and setting clear objectives.

But what really sets apart organizations who thrive through change are those who understand (and build in) practices that honor the people equation. In this post, I’m going to break down three key findings from McKinsey’s research and parse out how the social psychology (aka the “people equation”) of these factors contributes to successful change/transformation initiatives.

Human Connection Outranks Resource Allocation in This Key Instance

Of the top nine predictors of a successful organizational transformation, individual performance dialogs came in at number four. That’s right, talking with your team members about their contributions and their growth was shown to increase the likelihood of success by a factor of 1.5.  These conversations outranked planning/budgeting, IT resource allocation, talent allocation and capital funding. 

The People Equation Upshot:
People want to have conversations with their leaders. 

This really isn’t rocket science. Most employees value having productive, empowering conversations with their team leader. (Note: “performance dialog” doesn’t not mean “verbal beat-down.”) And it all starts with consistent check-ins with members of your team. 

Looking for resources on creating better connection with your team members? Try this post on celebrating “wins” at one-to-one meetings, and this post on being truly plugged in when you meet

Setting the Bar High Works – If These Conditions Exist

Research on goal-setting (and unfortunately, misguided mythology about “go big or go home” that often accompanies them) demonstrates that there is power in setting ambitious goals. McKinsey’s recent research bears this out. The study authors write, “Setting an overall financial target for the transformation is one of the most important steps to take, as it sets the tone for the whole program and what’s possible; if companies set high expectations, people tend to meet them.” 

However there’s a huge asterisk in this statement: goals will be met only if two important conditions exist: people understand their role and the information gets disseminated clearly

Employees need to be on board and one of the biggest ways to ensure they adopt the transformation leaders are pitching is that employees see their role in the overall transformation narrative. “People need to understand what these goals mean for their day-to-day jobs and what they will be expected to do differently; if they don’t know how they connect to the transformation, their behaviors and how work gets done won’t change,” write the McKinsey research team. Remember the importance of 1:1 performance discussions described above? This element ties into that as well.

And, the information must trickle down and reach all members of the organization. It appears this isn’t always the case. The survey results suggest a possible perception gap: senior leaders are nearly 20 percent more likely than people in other roles to believe that their transformation’s goals have been adapted for relevant employees across the organization. Let’s not have this happen at your company: “I thought YOU were gonna tell them . . .” “Me? No YOU are supposed to tell them . . .”

The People Equation Upshot:
Just because senior leaders “get it” doesn’t mean
everyone else does.

One of the things I constantly remind leaders of during communications coaching sessions is that just because they are settled with the information of a new initiative, doesn’t mean the rest of the company is.  The grapevine is a notorious slayer of accurate information, so leaders need to connect the dots. It can also be helpful to think of your leadership communications in terms of “curation” – what do the messages you send communicate to the larger organization? This becomes especially important when you are communicating to people who don’t report directly to you. 

Influencers – Beyond Role Models to Thought Partners

I’ve been covering the role that influential employees make in the success of transformation efforts for years. Influencers are still very much a thing and their opinions matter. According to McKinsey’s latest research, influencers increase the likelihood of a transformation’s success by 1.4 times. But as with all of these reported findings, there is nuance. At their most influential, opinion leaders were most effective when they were acting as “thought partners” with line leaders, helping these front line leaders understand the impacts of the changes being made.  Surprisingly, this “walk alongside” approach was even more effective than role  modeling behaviors and mindsets that supported the change.

Photo by Amy Hirschi on Unsplash

The People Equation Upshot:
Being a “thought partner” means listening to
and communicating with one’s peers.

As this research points out, it’s not enough for a well-respected role model to “walk the talk” by demonstrating a new set of standards. In order for the change to really take root, these influential peers need to also be willing to set up shop next to those doing the “in the trenches” work – and then listen to their ideas, frustrations and suggestions as they work through the changes. Too many times, executives come up with strategic ideas that make total financial sense, but often don’t translate well to the “shop floor” (whatever your company’s “shop” is.) 

Being a thought partner often means knowing when to shut up, knowing how to get derailed convos back on track and using encouraging language to build positive rapport. And notice none of these suggestions have anything to do with one’s industry or technical knowledge? 

Capitalization, talent acquisition and technology all have a place in determining the success of an organizational transformation. But truly savvy leaders understand that strategy and money only go so far. The true differentiator in change initiatives rests with the people equation. Is your leadership team up to par with these elements?

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