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European companies struggling to deal with change

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Global study reveals European companies are slow to adapt to the changes needed to stay competitive.

Towers Watson, has released findings that show companies in Europe, the Middle East and Africa (EMEA) have had to deal with more change management challenges than their global counterparts and have struggled to deal with them as effectively. The study*, entitled Clear Direction in a Complex World, shows that many companies around the world have been forced to implement significant change in order to adapt to economic challenges and remain competitive during the past two years. For organisations based in EMEA this has meant downsizing at nearly half (47 percent) and pay freezes at almost a third (31 percent). EMEA companies’ experience of change has been more extreme than in other areas of the world with figures showing lower instances of redundancies (37 percent) and pay freezes (24 percent) across the globe.

Crucially, when faced with change, only a third of organisations in EMEA create an integrated communication and change management strategy, compared to just under half globally. EMEA companies also fall behind when it comes to being clear to employees about what they need to do differently to be successful. Globally, two-thirds of companies that are highly effective in managing change provide clear direction to employees, compared to only half in EMEA. In addition, European companies have been less clear at defining their “employment deal” or Employee Value Proposition (EVP) which lets employees know what the company expects from them and what they can expect in return. Only around a third of highly change-effective companies in Europe believe they currently have a clearly defined EVP but promisingly, nearly half are developing targeted EVPs for different employee groups.

The survey, the fifth biennial edition, shows that the way in which change is managed and communicated within an organisation has a significant impact on financial performance. It concludes that companies that are highly effective at both communication and change management are found to be around 2.5 times as likely to outperform their peers as companies that are not highly effective in either area. Nicola Cull, Director of Communications and Change Management at Towers Watson, said: “Companies need to communicate a clear story about the business and the changes that occur. Creating greater certainty, confidence and engagement with employees has a significant impact on employee motivation, engagement and retention and this in turn is shown to be fundamental to better financial performance.”

Engaging management
The report also found that engaging management is critical to driving sustainable change, although fewer than half of all companies say that their managers are good at explaining the reasons for change to employees. Just under a fifth of companies who are rated as highly effective in managing change had managers who promote their EVP, compared with one tenth overall.

Building communities
Building communities within organisations also creates a sense of shared ownership and purpose. While most organisations (two-thirds) rely on one-way electronic media to communicate the organisation’s values, highly effective communicators are also using one-on-one discussions with senior leaders and managers, as well as interactive media to build communities and communicate company messages more effectively. Nicola Cull said: “The best companies are not afraid of change. The most effective communication and change management relies on the hard work of creating clear, relevant, measurable programmes that drive results. And these companies recognise that managers are the most effective median through which to communicate company messages, but must be given the tools and mandate with which to do so.”

*The study identified the best communication and change management practices at 604 top-performing companies and makes comparison between organisations in different regions.

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