Digital transformation initiatives in organizations need to be improved by the significant challenge of employee fear of change. Research indicates that employees resist change for different reasons, like uncertainty, loss of control, lack of communication, fear of the unknown, or job insecurity. Thus, understanding and addressing these factors is imperative for organizations to implement digital transformation through various change Models successfully.
Why Employees Are Fearful Of Change
Many employees fear change due to the common factor of uncertainty. Suppose staff members need clarification about how this alteration would impact their job responsibilities, employment safety net, and possibilities for professional development in this firm. Anxiety may cause resistance to change. When Amazon declared its intention to purchase Whole Foods Market, workers needed clarification about the destiny of their employment and the possible modifications in office culture. Several workers were worried that automation could replace their positions, resulting in a loss of job stability (E Delfanti, 2021). Providing clear communication and explanations of how the change will impact employees is a way organizations can address this issue.
Loss of Control
Employee apprehension towards change is increased due to loss of control. Feeling excluded from the change process can cause employees to resist it. Therefore, they could face a loss of control regarding their work, tasks, and decision-making processes. The introduction of a new performance management system at IBM led to employee anxiety about relinquishing control over evaluation procedures (Wiemann et al., 2019). Their apprehension stemmed from the possibility that the new system’s greater level of automation and diminished personalization could cause them to lose control over their performance evaluations. Providing opportunities for feedback and input while involving employees in the process of change can help organizations overcome this issue.
Lack of Communication
Employee fear of change is significantly contributed by lack of communication. If communication is lacking, employees may not be properly informed about the reasons behind changes or what they entail for their work. Hence, they might develop anxiety and show reluctance toward the change. Employees were afraid when Nike declared its intentions to reorganize its company. In addition, they needed to be given precise communication about why the change was made and how it would influence their duties and obligations (Allen, 2016). Organizations can mitigate this problem by offering employees clear communication and explanations about the change and its impacts.
Fear of the Unknown
When employees are confronted with changes, their concerns about the unknown can intensify their fears. Uncertainty about how a change will affect their work, job security, and prospects can lead employees to fear the unknown. A significant number of employees at General Electric became frightened and uncertain after the company announced its intention to reduce staffing levels. Their uncertainty about downsizing criteria and its effect on their prospects within the organization is highlighted by Manuel & Heron (2020). Organizations should provide straightforward communication to resolve this challenge that clearly outlines how the change will impact employees.
A significant contributor to employee fear of change is job insecurity. Employees might experience fear of change if they think it could have negative effects on their job stability, such as layoffs or reductions in job security. The announcement made by Ford regarding its plan to restructure resulted in employees being fearful about job insecurity. They were still determining how this would impact their jobs and the organization’s future (Fankhauser, 2014). In order to tackle this issue, corporations can supply lucid communication and reassurance concerning employment security along with prospects for expansion and improvement.
Organizations Losing Or Winning
An organization excelling in digital transformation is Amazon. Though founded as an online bookstore in 1994, Amazon is now recognized as a worldwide e-commerce giant. Leading the charge in digital transformation, Amazon’s constant innovation and introduction of new technologies and services have disrupted the retail industry. Amazon owes its triumph in digital transformation to its dedication toward customers and the utilization of data for customized product recommendations and personalized consumer interactions. The use of artificial intelligence and machine learning at Amazon has allowed for the optimization of operations while reducing costs, thereby improving efficiency. Besides that, Amazon has put a lot of resources into enhancing its logistics and transportation infrastructure through the use of robotics technology, such as drones or self-driving delivery cars, which have made it possible for them to deliver goods quickly with reliability to their customers (He et al., 2022; pp.71) Positioned as a leader in digital transformation, Amazon’s commitment to innovation, customer-centric approach, and investment in technology and infrastructure are the key drivers.
Another Digital transformation winner is Netflix. After years of growth, Netflix began operations as a DVD rental company via mail services. It became one of the largest video streaming platforms globally, boasting over two hundred and eight million subscriptions spanning almost every country. To succeed in digital transformation, Netflix used a data-driven approach that helped them personalize the content recommendation and optimize their collection. Using artificial intelligence and machine learning techniques, Netflix has improved its content discovery algorithms, decreased churn rates, and enhanced the overall customer experience (Chan et al., 2022, p. 92). In addition, the utilization of modern technologies has allowed for this achievement. Furthermore, by heavily investing in creating original content, Netflix has distinguished itself from the competition and delivered unique programming unavailable elsewhere. By investing in original content, utilizing technology, and making data-driven decisions, Netflix has established itself as a front-runner in digital transformation.
Sears is one organization struggling with digital transformation, on the other hand. During its heyday, Sears dominated retailing, with department stores spread out across the United States. It was founded back in 1886. The company’s inability to adapt quickly enough to the digital revolution led Sears towards bankruptcy as it filed for Chapter Eleven protection in October 2018 (Hornell-Kennedy et al., 2018, p.19). Sears’ incapability to adjust to shifting consumer behavior and preferences is the main cause of its difficulties in digital transformation. Sears neglected to invest in e-commerce and digital marketing. Therefore, the company relinquished its market share to competitors, including Amazon and Walmart. Also, Sears’ stores needed to be more balanced regarding technology and infrastructure essential for competing with modern retailers. Digital transformation proved elusive for Sears due largely to the company’s inability to adapt effectively to ever-changing customer habits while investing enough resources into e-commerce platforms and online marketing strategies. Additionally, they should have upgraded their physical locations, further compounding these issues.
Change Management Models
Lewin’s Change Management Model at Amazon
Organizations widely use Lewin’s Change Management Model as one of the most popular change management models. During the 1950s, Kurt Lewin undertook its development. Besides that, it is based upon the belief that change constitutes a triad of steps: unfreezing, modifying, and freezing again.
Lewin’s Change Management Model involves an initial step called unfreezing, during which organizations raise awareness and acknowledge that changes are necessary. The initial step is to recognize why changes are necessary. Then it would help if you created an atmosphere of urgency before readying your company. The reasons for the change must be communicated effectively during this stage while creating an urgent need and securing stakeholder support. By taking this step, the organization can prepare for impending changes and alleviate resistance. Amazon acknowledged the need for change to stay competitive in the rapidly developing digital landscape during the unfreeze stage (OE et al., 2022, p. 32). By communicating with its workforce about change, the company created an understanding among them regarding digital transformation’s benefits. Innovation and agility were underscored as crucial by Amazon’s leadership team, which motivated their staff to be receptive to fresh ideas and ways of operating.
The organization executes the required alterations and adjusts accordingly during the change stage of the model. The change is planned, implemented, and monitored during this stage. Proper planning is crucial for the successful implementation of changes. Clear goals/objectives need to be established along with allocating necessary resources. The involvement of employees and stakeholders in the change process, along with the necessary support and training to adapt, is also essential during this stage. Monitoring progress and making necessary adjustments are essential during this challenging stage. Development of new digital products and services such as Amazon Web Services, Amazon Prime, and Amazon Go took place at Amazon during the change stage. Thanks to these products and services, Amazon implemented the change successfully. (OE et al., 2022, pp. 33). By implementing these initiatives, the company was able to broaden its revenue sources, grow its client pool and increase its operational proficiency. Amazon’s leadership team was critical in driving the change towards transformation, which set clear goals while providing resources and support for employees to take ownership of the process. Besides, their efforts ensured a successful transformation process.
Organizations strengthen modifications during refreezing by incorporating changes into daily routines and cultural norms. This ensures that the modification is integrated permanently into the organization’s operations. To successfully integrate the change into organizational culture, one must establish new norms, values, and behaviors that align with it. Continuous employee support and training, along with celebrating success stories, are crucial in this stage while also recognizing the contributions of supportive staff. The change can be made sustainable and integrated into the new organizational culture by doing so.
To summarize, at the refreeze stage, Amazon strengthened these changes by incorporating them into their culture and making them a part of day-to-day activities (OE et al., 2022, p. 33). Amazon’s culture of innovation and customer obsession are integral parts of its identity, leading them to launch new products and services quickly and continuously. Amazon heavily invests in employee training and development. This guarantees the employees the necessary abilities and expertise to propel continuous innovation and transformation.
Kotter’s 8-Step Change Model at Netflix
Netflix has applied Kotter’s8-Step Change Model to implement changes. This specific model necessitates completing eight steps. Providing a step-by-step approach for managing changes in organizations and addressing all related aspects is the main feature of this model. In the first step, all stakeholders should be effectively communicated with a compelling reason for the change, which is crucial in establishing a sense of urgency. This stage is crucial to generating the momentum required to move the change forward.
Forming a guiding coalition requires bringing together a group of essential stakeholders who possess the necessary expertise and authority in the second step. The second step involves facilitating this process. This group will be responsible for leading and implementing the change initiative. With responsibility for developing a vision and strategy to bring about positive change, this coalition ensures alignment with organizational goals and objectives.
Step three involves developing a vision and strategy that creates an appealing image of the organization’s future state post-change implementation. A common goal that aligns all stakeholders is crucial in providing direction and focus for the change effort.
Communicating the vision and strategy for the change to all stakeholders is the fourth step in implementing change. Establishing support and momentum for the change is essential during this step. Additionally, it assures that every stakeholder comprehends the direction and aims of the change initiative. Netflix communicated the vision to its employees, who were then given the essential resources and training needed for execution (Margiono, 2021, p. 317).
Enabling others to take action is crucial in making the vision a reality; therefore, we must provide the necessary resources, training, and support during the fifth step. Getting all stakeholders engaged and committed to the change effort is critical.
Creating short-term wins by delivering visible and tangible results early on during the change process can help ensure success. Showing stakeholders that progress is being made is critical to building momentum and credibility for the change effort.
The seventh step involves producing more change and consolidating gains. Scaling the change effort across the organization involves building on short-term wins. The sustainability of the change within an organization’s culture depends on critical steps like this one, which ensures its integration.
The organization’s culture must be embedded with new approaches as the final step. The organization’s systems and processes need to be adjusted to incorporate these new practices and behaviors. This essential measure guarantees that the change becomes an enduring aspect of organizational culture rather than a momentary undertaking. By making data-driven decisions an institutionalized practice, Netflix has integrated new approaches into its culture (Margiono, 2021, p. 319).
The McKinsey 7-S Framework at Sears
The McKinsey 7-S Framework is a beneficial instrument in determining if an organization is ready for change and capable of executing it proficiently. Success in any change initiative is dependent on considering various key elements. With the challenge of adapting to digital transformation, Sears is witnessing declining sales and financial losses. Sears could have identified areas that needed improvement by analyzing each element of its organization using the McKinsey 7-S Framework.
Strategy, the plan an organization has to achieve its goals and objectives, is what this refers to. It entails selecting the markets in which one will compete, determining the products or services that will be provided, and devising strategies for distinguishing oneself from competitors (Salvarli & Kayiskan, 2018, p. 113). For instance, Sears might have devised a distinct strategy to align their digital transformation plan with their business goals. E-commerce platforms investment, development of mobile apps, and enhancing the online customer experience are some things that could have been done.
Structure refers to the organization’s formal and informal hierarchy, its reporting relationships, and how decisions are made within it. The division of work and the organization of teams is determined by it. By restructuring its business units and systems, Sears could have more effectively support their digital transformation initiatives. New systems and process implementation would have supported e-commerce operations while enhancing supply chain management.
Systems: The technology processes and procedures that help the organization operate are what this refers to. The process includes recognizing and executing mechanisms that boost productivity and efficacy. By examining the proficiency of its staff, Sears might have recognized areas needing improvement. Training and development programs could have been provided to help employees acquire new skills related to digital technologies.
Shared values: Members of the organization share beliefs and values referred to as here. To achieve alignment with organizational goals and reinforce desired behavior creating, a culture necessary to align is necessary by adopting new values and a modern leader significant progress in driving digital transformation initiatives. Promoting a culture of innovation, risk-taking, and experimentation was an option.
Skills; Abilities and knowledge of individual employees as well as the organization as a whole, are referred to as skills. Identifying required skills and developing related training programs is essential
to address skill gaps that hinder organizational goal achievement.
Staff refers to the number and types of employees required to fulfill organizational goals. It involves identifying which roles and responsibilities require specific skill sets and then recruiting, hiring, and retaining employees accordingly (Salvarli & Kayiskan, 2018, p. 109).
Style; ‘Style’ encompasses the leadership style and management practices that are employed within the organization. Identifying effective leadership behaviors for achieving organizational goals requires aligning management practices with those same behaviors.
Addressing Fear of Change
Winning or losing in digital transformation depends on how organizations like Amazon, Netflix, and Sears have utilized employee fear of change to capture or generate value. Digital transformation initiatives implemented by organizations often face significant challenges due to employee apprehension toward change. Fear for their jobs’ security coupled with a sense of uncertainty has been identified by researchers as some cause for employees resisting change. Feeling uncomfortable and hesitant, employees may be resistant to embracing new ideas and processes due to these factors. The fear of change among employees has led some organizations to succeed in digital transformation while others have faced difficulties.
The acquisition of Whole Foods Market is a perfect instance where Amazon effectively tackled employees’ fear of change. Clear communication and explanations from Amazon reassured employees about their job security and potential growth opportunities during the acquisition process. Amazon expanded its market reach while generating additional revenue streams using this acquisition, resulting in significant added value for the organization. The introduction of automation in Amazon’s warehouses initially caused employee concern about job security. Amazon’s provision of upskilling programs and clear explanations on how automation would boost productivity led to higher employee contentment and enhanced organizational efficiency.
Netflix has successfully dealt with employee apprehension toward change to create and capture value. To digitally transform, Netflix shifted from a physical DVD rental service to an online streaming platform (Margiono, 2021). The organization allayed employee concerns about job loss by communicating clearly how the change would impact employees. Additionally, the firm supplied occasions for supplementary instruction and enhancement. A new market has been created for online streaming platforms by Netflix after successfully disrupting the traditional media industry. Hence, it has established itself as a leading figure in the market and obtained noteworthy value.
Sears has needed help with digital transformation due to its inability to handle employee apprehension toward change. Employees at Sears faced job insecurity due to the company’s delayed investment in e-commerce and digital marketing. Competitors like Amazon caused Sears to lose market share and eventually file for bankruptcy in 2018. Sears’s inability to tackle employee apprehension toward transition eventually caused its downfall.
In conclusion, organizations implementing digital transformation initiatives must effectively manage employee fear of change to generate and capture value. To succeed in the market, organizations must ensure clear communication with employees while involving them in changes made. Reassuring employees of job security and providing growth opportunities should also be emphasized. Amazon and Netflix’s prosperity shows how conquering employee apprehension towards change can lead to victorious digital transformation and market ascendancy.
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