Even the Greek philosopher Heraclitus knew that the "only thing constant is change," as far back as the 5th century, so you'd think by now change management would have been mastered so as to prevent any negative effects. Because change is ever-present and its negative effects cannot be avoided, many organizations continually focus on change management as the path toward convincing their employees that while change is inevitable, it is good.
Support from leadership trickles down to rank-and-file employees, many of whom listen for encouraging words from upper management about the strategic direction of the company. Because they are often overlooked in the development of the organization's strategic direction, they look to executives to inform them of the mission, objectives and vision. When leadership doesn't embrace change or doesn't actively work on change management initiatives, they abandon the dynamic and positive aspect of organizational change. When the leadership team does little to effect change from a positive stance, the company's staff feels the negative effects.
Unless there's a strategic communication plan for effecting change throughout the organization, and employees are provided the information they need to understand change, the employees can suffer from low morale. Even communicating uncertainty can be reassuring to employees, because it alleviates some of the angst they might feel by not being part of discussions about the direction of the organization. For example, if the rumor mill suggests impending layoffs, but there is no communication about the reasons why the rumor exists or if it is true, the fear of job loss may cause mass exodus or loss of productivity. While both of these circumstances might occur simultaneously, either one has a huge negative impact on employee morale, and ultimately, the company's bottom line.
Low employee morale is costly, and with the expense of employee departure, the effect more than just a negative work environment. The tangible cost of employee morale attributable to change management is upwards of $300 billion due to poor productivity, lack of employee engagement, on-the-job injuries, absenteeism and general malaise within the workplace, according to a 2008 Gallup survey of morale in the health care industry.
In addition to the tangible costs of change management, the intangible cost of poorly managed change initiatives is the organization's diminished reputation. Customers may interpret the change as a sign of instability or questionable leadership, but whatever their perception, unless change management initiatives are properly communicated throughout the employee base and the customer base, the effects can be devastating.