The Armed Forces have the best leaders in the UK when it comes to managing change, according to research released this morning.
The study, carried out by Orion Partners, a management consultancy, reveals strong leadership in the Armed Forces has helped 49% of Armed Forces personnel understand why change is good for them on a personal level – the highest proportion of any professional group in the UK. This compares to a UK average of just 35%. Research by Orion, driven by neuroscience principles, reveals explaining to employees why change is good for them personally is the key factor in successfully changing the way an organisation works. This stands the Armed Forces in good stead in the face of huge changes brought about by deep spending cuts and structural reforms.
The effectiveness of Armed Forces leaders at managing change and explaining it to their staff comes despite deep spending cuts and organisational changes in the Ministry of Defence. The 2010 MoD Spending Review – which stipulated an 8% cut in defence spending by 2015 – has caused 4,200 redundancies this year alone. The cuts have led to a major reconfiguration of the structure of the Armed Forces and the way they operate.
The Ministry of Defence has to lay off 54,000 staff by 2015, in an effort to reduce expenditure by £4.1bn. The National Audit Office (NAO) said “profound changes” to the way Armed Forces staff work will be needed to maintain a high quality of performance.
In sharp contrast, the civil service, another organisation in the midst of organisational upheavals, has the least effective leaders at managing and explaining change to their employees. Despite having to deal with a similar scale of change as the Armed Forces, just 23% of civil servants say they understand why the changes to the civil service are good for them personally – less than half the proportion of Armed Forces personnel.
Orion suggests this is thanks to the stronger leadership in the Armed Forces – traditionally a profession which excels in leadership training and development. The research from Orion reveals leaders in the Armed Forces are the most ‘brain friendly’ when it comes to managing change. Brain-friendly leaders understand how the brain works, and why their employees react the way they do. They then use this knowledge to manage their teams more effectively. Typically, they ask their employees lots of questions about how they’re feeling, which minimises feelings of threat and promotes feelings of reward, which help drive higher performance. Research from Orion, driven by the principles of neuroscience, has revealed to successfully manage change leaders must be ‘brain-friendly’ and explain to their employees why organisational and strategic changes are good for them on a personal level.
Jan Hills, the partner responsible for talent and leadership at Orion, explains: “The civil service and the armed forces need strong leaders if they are to successfully navigate their way through the most turbulent period in their recent history. Both are undergoing seismic changes which will trigger feelings of intense threat in their employees. The brain is hardwired to view change as a threat. To overcome these feelings of threat, and to embrace new ways of working, employees need to understand deeply why change is good for them and the organisation. Those feelings of threat are a huge roadblock to successful change. The best leaders at managing complex organisational reforms are those who understand how people automatically react to change and then take steps to help employees embrace it by showing them why it is good for them personally. The leaders of Her Majesty’s Armed Forces are the best in the UK at doing that. As a result more armed forces employees are embracing the reforms, which is making the period of transformation in the Armed Forces a less bumpy ride.
In stark contrast, the civil service has more ‘brain-fried’ leaders who simply tell their staff to change without explaining why that change is good for them, which increases negative feelings and tends to create resistance. This is slowing down strategic and operational effectiveness in the civil service and hardening resistance to change which will be difficult to overcome.”
That over three quarters of civil servants don’t understand why change in the organisation is good for them personally bodes badly for the success of the Government’s civil service reforms. The research from Orion suggests 77% of civil servants will be resistant to change, and view it as threat, because they have not had an explanation as to why the changes are good for them on a personal level. The civil service has been cut by 63,672 jobs since the Coalition came into government, which represents a 12% cull of civil servants since May 2010. Some departments have seen cuts of up to 90%. As many as 300,000 civil service jobs could be lost if the government follows through with its proposed public service reforms.
On top of that, leadership in the civil service is dealing with an unprecedented turnover of senior civil servants, with a majority of ministers now in posts for longer periods than their permanent secretaries. Staff turnover rates in some departments are now as high as 30 per cent. This lack of consistency in at the top of the civil service hierarchy has made managing and implementing change more difficult. The top of the civil service has been hit particularly hard by staff turnover, leaving some departments rudderless while they are supposed to be radically transforming the way they operate. For example, annual Treasury staff turnover was 28% in 2011, up from 22% in 2010. This is more than double the UK’s median labour turnover rate of 13%, underlining the severity of leadership upheaval in the civil service.
Jan Hills commented: “Despite the strides made by the civil service in other aspects of leadership development, it needs to work on how it manages change. Unless employees are engaged in understanding why the change is good for them, and civil service leaders understand the more positive impact they can get from being brain friendly, successfully implementing change in the civil service will be difficult. The high turnover of senior civil servants is having a destructive effect on the quality of leadership in the civil service. It’s creating brain-fried leaders who are managing change badly. This is potentially toxic to the success of the reforms. Less than a quarter of civil servants understand why the changes are a positive thing, which is a product of poor leadership. This lack of understanding is hardening resistance to change within the civil service and making it far more difficult for it to overcome the problems associated with deep spending cuts and major organisational upheavals the like of which haven’t been seen for 60 years.”
Further research by Orion found just 43% of leaders in financial services companies manage change well. Despite superior training and resources in the financial services sector, only 43% of financial services professionals say their leaders explain to them why change is good for them personally – the key skill in managing change in an organisation.
The financial services sector is undergoing significant transformations in the aftermath of the financial crisis. It is facing increased regulatory requirements and a more acute focus on risk management. Average salaries in the sector have fallen by 12% in real terms since 2006, a steeper fall in pay than the national average of 8%. In contrast to the reduced headcount in the Armed Forces and the Civil Service, the number of people employed in financial services has increased since the government took office has increased by 135,000 (or 1.5%).
Jan Hills said: “Financial services bosses are stronger leaders than the majority of UK bosses when it comes to managing change, but there is still plenty of room for improvement. To put it another way, well over half of financial services employees haven’t yet grasped why change is good for them on a personal level. This represents a huge roadblock to the improvements being made to the financial services sector following the 2008 crisis. Salaries are falling in real terms, and working hours are increasing. These are negative changes which will require strong, brain-friendly leaders if they are to be accepted by employees.”