Researchers have long known that successful leaders and companies that thrive during challenging times consistently demonstrate flexibility and a willingness to move their business in a new direction when necessary. In fact, the key to maintaining excellence is to be agile and embrace change.
The current economic climate, along with proposed requirements in the financial industry, has powerful implications for financial advisors. They are being asked to raise their level of expertise and base investment decisions on an evolving and uncertain fiduciary standard, requiring many of them to engage in new behaviors. This transformation of the advisor role does not just affect the advisor alone. It requires everyone in the financial industry who provides them ancillary support to up their game as well.
Put in perspective, this move toward greater advisor accountability underscores an amazing opportunity for leadership within broker-dealers, as well as money management firms, to change the organizational focus of the solutions they deliver. By shifting performance expectations and redefining their relationships with advisors, both internal firm consultants and wholesalers can not only directly impact the success of their advisor clients, but ensure they achieve their own goals as well.
But many individuals are resistant to organizational change, often resulting in failed attempts at any comprehensive company-wide transformations.
For some people change is exciting, while for others it creates a sense of anxiety and uncertainty. This is especially true when modifications in thinking or learning new behaviors are required, forcing an individual to approach their work world in a different manner than they have in the past.
Assess Responses to Change
The ultimate test of leadership in this process is the ability to demonstrate a delicate balance between the clarity of your future vision for a proposed initiative and sensitivity to the personal impact these modifications will have on your employees. While everyone clearly has a unique response to change, researchers in the change management field have identified common patterns of response to transitions. By understanding both unique and collective reactions to change, you will be better equipped to guide the change process.
In his book Developing the Leader within You, John Maxwell suggests that when change is introduced in an organization, people fall into five categories in terms of their response:
- Innovators are the dreamers. They often have great ideas but are not generally acknowledged as leaders or policy makers.
- Early adopters are respected in the organization. Although they did not create the idea, they will try to convince others to accept it.
- Middle adopters are the majority of people. They can be influenced by both the positive and negative influences of the organization.
- Late adopters are the last group to endorse an idea. They might never verbally acknowledge the benefit of the changes, but eventually will comply.
- Laggards are always against change and may be divisive to the organization.
Identifying your personnel's key style and anticipating their reaction to change is critical to ensuring the support of your employees in this process. Management needs to demonstrate traits such as empathy, optimism, assertiveness and agility. However, before you can lead your team through an effective transition, it is important to understand some basic principles related to change management strategies.
In Managing Transitions, author William Bridges cites three critical phases to experiencing change: letting go, the neutral zone and the new beginning. In the first phase, people are experiencing loss and sadness about things not "being the same." In phase two, they have started some acceptance that the old way of doing things is no longer viable, but they aren't quite ready for the new program. During this phase, critical psychological realignments and learning new behavior takes place. Phase three is when people start to develop a new identity, experience new energy and commit to a sense of purpose that makes the new change work.
Usher in Change Wisely
Psychologists have identified three fundamental human needs that impact an individual's reaction to change in their environment. They are: a need for control, a need for inclusion and a need for openness. While the level of need for these factors is different for everyone, there is always some element of each of these in an individual's reaction to change. If a change program does not address these issues, it is likely that you will encounter a negative reaction from your employees, ranging from ambivalence to outright opposition.