That Moment—when the organisation, as it stands, can no longer continue. The point where the decision is made that the organisation in its current form cannot survive—must not survive. Increasingly, companies are facing acute cost-cutting needs as business figures continue to decline. Current and desired states are determined and defined, and actions are developed—usually behind closed doors with major consulting firms. The goal is short-, medium-, and long-term cost savings. The aim is for the business and organization to recover quickly, which is why every corner is examined. Beyond reductions in operating expenses, this also inevitably leads to examining personnel costs. Often, cost reduction programs bring layoffs, restructuring, or changes in working conditions.
The pressure is high, the budget tight, and time is running against the organisation. Understandably, decision-makers often want to jump straight into implementing the measures. Unfortunately, something not immediately included in the critical path for many leaders is change management.
Change Management—"We have no time or money for hand-holding. Let’s just get started."
It’s always interesting to see how such a difficult and intensive discipline initially gets put in a defensive position. It’s challenging and intensive because change management is about working with people’s needs and core emotions. Forces are at play here that, if ignored, can cause projects to crash. If change management is implemented too late or not at all in cost-cutting programs, the organisation risks losing the hard-won savings to resistance and productivity losses.
What is the purpose of change management?
Minimising Resistance: Cost-cutting programs often lead to uncertainty, fear, and resistance among employees. Change management helps address these fears and minimise resistance through transparent communication, inclusion, and employee empowerment.
Example: Regular information sessions, workshops, or feedback rounds help clear up misunderstandings and build trust at various levels. This helps reduce resistance as everyone understands the necessity of the change and feels heard.
Maintaining Productivity: Changes, especially those involving staff cost reductions, can lead to a drop in morale and motivation, as well as increased workload, resulting in inefficient work and burnout. Effective change management helps maintain productivity by supporting employees’ transition to new processes and tasks.
Example: Thoughtful empowerment of the workforce through mapping and matching methods, combined with a focus and prioritisation strategy, helps employees manage new tasks effectively, shifting their motivation away from fear of failure, grief for departing colleagues, and general resentment toward change and back to their tasks.
Securing Acceptance and Implementation: Without effective change management, there is a risk that cost reduction measures won’t be implemented as planned due to lack of acceptance and engagement. Change management ensures that employees understand and accept the new measures.
Example: Involving employees in the change process (e.g., through mood surveys and deriving concrete actions from them) promotes acceptance. Setting up an internal change network can reinforce this, as "Change Agents" or ambassadors within the organisation act as intermediaries between management and staff, communicating changes and addressing concerns.
Preserving Core Values: Cost-cutting programs can significantly impact company culture, especially when values like trust, collaboration, and loyalty are at risk. Careful change management can help preserve the core values of the company, even when circumstances change.
Example: As part of change management, targeted measures by management and leadership teams to foster collaboration and team spirit help ensure employees feel valued and supported.
Preventing Long-Term Negative Consequences: While cost-cutting programs may be necessary and successful in the short term, without change management, they can have long-term negative effects. Risks such as a general decline in work atmosphere, loss of talent and high potentials, or a poor employer reputation in the job market have the greatest impact on the organisation. Change management helps mitigate these risks by ensuring a structured and people-oriented approach.
Example: Proactively addressing the impact of changes on employees and developing strategies to mitigate negative consequences, such as employee retention programs or improving the work environment, ensures that valuable talent is retained and the company continues to be seen as an attractive employer.
Efficient Implementation of Changes: Change management helps the organisation not only plan but also effectively and efficiently implement changes by setting clear goals, defining responsibilities, and continuously monitoring progress. This prevents delays due to inefficient processes and misunderstandings.
Example: A roadmap displaying and timing changes and change formats, along with a detailed communication plan based on identified stakeholder groups, ensures that changes are approached systematically and structurally. Another effect is that all involved and affected parties know what is expected of them and how and when changes will be implemented.
Leadership in Times of Crisis: When business continues to decline, management becomes nervous. Alongside their own concerns, managers must address the concerns of their employees. This often leads to overwhelm and resultant misbehavior by managers, as few are trained for crisis times. Change management helps support leaders and empower them to support their teams.
Example: This empowerment can occur through practical training and workshops with leaders or through direct one-on-one support with their teams.
What Special Considerations Are Important?
Overall, change management is essential to ensure that cost-cutting measures are successful not only in the short term but also in the long term, allowing the organisation to emerge stronger from the change.
If there are still doubts, one fact can be kept in mind: The organisation needing to implement cost-cutting measures didn’t suddenly arrive in this situation. A major factor is very likely the failure to make important decisions in the past.
In this spirit: The world belongs to the bold.
