This report looks at the impact of major change, uncertainty and division of opinion in the workplace and considers the implications for leaders. It examines themes and issues surfacing from the UK’s recent EU referendum, such as increased anxiety and reduced employee morale and draws on literature in the fields of neuroscience and leadership to consider ways of managing the impact of change and leading in times of uncertainty.
The paper discusses change and uncertainty, in the context of Stacey’s Complexity Diagram (2002), and its application within leadership for identifying an ‘agreed upon future state’.
The emotional and behavioural impact of change/uncertainty on the individual is considered within the context of the Minerva Engagement Change Spiral (2016). Further insights are drawn from Ashridge Open Space Brexit Events (July 2016), in which leaders and senior executives from UK organisations acknowledged high levels of uncertainty at an organisational level and reinforced the importance of placing renewed emphasis on robust organisational vision and values during such uncertain times.
Both primary and secondary data* supports the assertion that an increase in stress and anxiety, amidst high uncertainty, post-referendum is a reality in some organisations. A negative impact on employee and organisational well-being factors such as morale, engagement and team collaboration is also evident.
These data sources also indicate a level of reluctance amongst some leaders to discuss the implications of the referendum with employees, due to lack of knowledge or insight, and indicate that whilst the vast majority of respondents recognise the importance of discussing Brexit in the context of organisational vision and values, less than half believe this is currently happening within their organisations.
“We’ve seen an increase in levels of uncertainty amongst business leaders and employees. Why does this matter to business and what’s the significance for leadership?”
*This paper was produced in accordance with both primary and secondary research conducted by Minerva Engagement. Primary research involved conducting a Brexit Employee Impact survey in August 2016 amongst a sample of 1,000 leaders with a 6.3% response rate amongst senior business executives across all functions in medium (above 50 employees) to large (up to 15,000 employees) organisations across the UK. It also includes attendance and participation in one of two Open Space Brexit events run in July and August 2016 by Ashridge Hult Business School.
Secondary data was drawn from desk research, academic literature and journals in the field of neuroscience, leadership and emotional intelligence and a further survey conducted by Gatehouse; State of the Sector (Internal Communication & Employee Engagement) Brexit Special in July 2016. Gatehouse’ survey had 250 respondents, 82% from UK organisations, and 10% from mainland Europe. The vast majority (88%) of respondents indicated internal communication as their main responsibility, while just over half (51%) also considered employee engagement a key part of their role.
The Context for Change and Uncertainty
In the immediate aftermath of the EU Referendum, the key political figures from both sides of the campaign resigned their posts. This, according to the Economist left the country “sailing into a storm with no one at the wheel” (2016).
Since then the UK has seen the appointment of a new Prime Minister, and the creation of new Governmental departments for Brexit and International Trade. The UK media and economists deliver daily conflicting views on the impact Brexit is having on spending, the economy and business, making it difficult for the business community to move forward with any degree of certainty.
There is continuing uncertainty within the political elite, concerning a subject that arguably impacts many individuals across the country to a lesser or greater degree. As these same individuals work within organisations across the UK, there is perhaps a renewed requirement for business to focus attention on robust leadership skills and capability during this period.
Both Minerva Engagement research and Gatehouse’ survey suggests increased levels of uncertainty among business leaders and employees with 63% of leaders thought to be unsure about the impact Brexit will have (Gatehouse, 2016). This raises the question; why should this matter to business and what is the significance for leadership? Particularly when one third of businesses believe that Brexit will pose no risk to their strategy and only 17% of businesses believe Brexit will negatively impact their business strategy (Gatehouse 2016).
The workplace is not a purely rational domain, decisions are based on conscious and unconscious emotions. Pre and post Brexit, the emotions of UK People have spread across the entire emotional spectrum from disgust to joy. This is relevant when considering the impact individual emotion and energy is having on collective behaviour, motivation and morale.
The work of David Rock (2008) spotlights Certainty as one of the five social domains impacting an individual’s sense of threat or reward. Uncertainty contributes to a sense of threat which, if allowed to continue unchecked, impacts the ability to think and be creative as well as triggering damaging stress responses. If the other four social domains within Rock’s SCARF model (Status, Autonomy, Relatedness, Fairness) are negatively activated the impact is greater.
As emotion and moods are contagious (Cacioppo et al (1993)and Fowler, J.H., & Christakis, N.A., (2008)) the need for effective leadership and engaging communication is clear, if downward spirals of anxiety and fear are to be prevented from spreading through teams and ultimately the business.
The need for leaders to focus attention on reward/attachment emotions, such as trust and joy and avoid triggering the threat response is reinforced by Swart, Chisholm and Brown (2015) who explain that our natural ‘fight or flight’ response is triggered in times of uncertainty, impacting the ability to make decisions by narrowing the brain’s focus to the point where options are unrealistically restricted.
This is demonstrated by the Change Spiral in Figure 2, which highlights the ease of creating a downward spiral of anxiety and also performance, in situations where change or ambiguity are not thoughtfully considered.
Participants at the Ashridge Brexit Events expressed a spectrum of emotions from fear to joy, sadness, surprise, shame, anger and disgust. In fact, referencing Goleman’s eight primary emotions (1996), perhaps the most glaring omission of emotion is trust.
This breakdown of trust for those in charge became evident in the run up to the referendum as UK People rejected the expert view. Gillian Tett underlines this in her July 2016 FT article ‘Why we no longer trust the experts’;
“At a time when we increasingly rely on crowd-sourced advice rather than official experts to choose a restaurant, healthcare and holidays, it seems strange to expect voters to listen to official experts when it comes to politics”.
“There has been a breakdown of trust towards experts or ‘those in charge’, whether this extends to leadership in general is something to be seriously considered within business.”
Whether this breakdown of trust extends to leadership in general is something to be seriously considered within business. Strong leadership, employee engagement, vision, values and culture are always important within business. As the dust settles and the country collectively regroups, these skills and ways of working will take on a greater significance. Focused attention and strong leadership will be required to build and retain trust, to instil confidence in the way forward and to encourage a sense of motivation and optimism for the future.
Creating and maintaining an environment where trust flourishes is not easy even within a stable environment, yet it is fundamental to the long-term survival and success of any business. When trust is missing fear takes its place, uncertainty increases the sense of threat and reduces thinking ability, motivation and creativity (Swart et al, 2015).
Leaders have an important role to play now, continuing to inspire trust, to encourage team bonding, continued learning and innovation. Whilst Brexit may not have had an obvious direct impact on some businesses, there has been impact, either at a conscious or an unconscious level. Progressive, insightful business will understand this and look to support the wellbeing, performance and long-term success of not only their business but every individual who makes their business.
The Stacey Diagram in Figure 3 (2002) is helpful in that it maps out potential approaches for leaders in circumstances dictated by the degree of Certainty and the level of Agreement. In the case of Brexit, the low level Agreement and Certainty has pushed political decision making more towards the chaos zone. This is problematic for any system (either political or organisational) more comfortable with traditional, rational, evidence-based decision making.
Seeking Certainty in the Absence of Information
The Chaos Zone in the Stacey Diagram (Fig. 3) depicts situations where there are very high levels of uncertainty and disagreement, which can result in anarchy. In such contexts it can be tempting to opt for a protective strategy of avoidance, as traditional methods of planning tend to be insufficient. Avoidance in this context however, can be disastrous for an organisation (Cheek, 2016).
Taking the time to understand where business is and what it means for leadership, communication, learning and support within different businesses will be important if individual wellbeing and organisational performance are to be maintained over the long term.
Survey data indicates some evidence of avoidance of employee issues and concerns in the workplace, with 40% of respondents stating they did not feel that the implications for Brexit were being openly and honestly discussed with employees (Minerva Engagement, 2016). However, for successful businesses avoidance is not an option of choice and this is perhaps reflected by the expected 43% increase in the need for change communication skills and the 48% who consider timely communication to be a top priority in the coming months (Gatehouse 2016).
“There is too much unknown, without any clear plans in place, so people can only be so prepared/able when it comes to Brexit discussions” (Minerva Brexit Impact Survey)
That said, faced with decisive action, lack of information and guidance at a national level, in terms of when or how the UK will leave the EU and the likely effects on business, it is perhaps inevitable that some leaders will be tempted to avoid any kind of debate or planning around Brexit in the short-term. As one survey respondent suggested;
“There is too much unknown, without any clear plans in place, so people can only be so prepared/able when it comes to Brexit discussions.” (Minerva Engagement, 2016).
The uncertain, unpredictable nature of the current business environment in the UK, lends itself to the Emergent Change school of thought (Burnes, 2009), whereby successful change is less dependent on detailed plans than understanding the key issues.
The need for leaders, therefore, to act as connectors, creating synergy as they implement the known and react to the emerging situation, is high. Enabling leadership to be sense-makers, build resilience, strengthen emotional regulation and learn to manage stress will be a critical role for those who hold influential internal advisory positions.
The need for this is highlighted when we consider results from the Minerva 2016 survey;
Survey data source: Minerva Engagement, 2016
The Minerva Engagement survey (2016) highlights the requirement for leaders to create synergy as they implement the known and react to the emerging situation, with;
Insights such as these can provide leadership with a clearer understanding of the key issues potentially being experienced in their own organisation. Whilst it may not be possible in the midst of deep uncertainty to draw out detailed plans based on unknowable information, it is possible to concentrate efforts on tackling any negative impact internally by first taking steps to find out what they are and second, identifying the areas in which there is high agreement to focus on improvement.
Reconnecting through Vision and Values
In the face of high external uncertainty, it is helpful to cultivate leadership agreement internally around key actions and deliverables, for example, how to sustain high engagement, morale and collaboration.
The Stacey Diagram (Fig. 3) in situations of uncertainty with high agreement would point to judgemental decision making. “In this region, the goal is to head towards an agreed upon future state even though the specific paths cannot be predetermined” (Cheek, 2016).
The need to focus on an “agreed upon future state” was echoed at the Ashridge Brexit Event (2016) where participants discussed the renewed importance the Brexit conundrum has placed on a company’s vision and values; first ensuring they are fit for purpose and secondly ensuring they are embodied moving forward.
“Strong vision and values are an important component in guiding business as it navigates through periods of instability, a Harvard Business Review article defines company values as ‘scaffolding in times of trouble’.”
Reinforcing the view that strong vision and values are an important component in guiding business as it navigates through periods of instability, a Harvard Business Review article (Coutu, 2002) defines company values as “scaffolding in times of trouble”.
After a strike at UPS caused a major divide in the company, Mike Eskew, the company’s Chairman and CEO said it was the company’s values that helped them reconnect;
“What saved us was our Noble Purpose. Whatever side people were on, they all shared a common set of values. Those values are core to us and never change; they frame most of our important decisions. Our strategy and our mission may change, but our values never do” (Coutu, 2002).
The importance of discussing Brexit with employees within the context of the organisation’s vision and values is recognised, evidenced by 82% of those completing the Minerva Engagement survey. However, almost half of respondents confirmed this wasn’t currently taking place. The importance of vision and values in times of change seems to be largely understood, however, this does not appear to be translating into tangible action and implementation.
The EU referendum has certainly created varying degrees of uncertainty within business and there is a need, regardless of the direct Brexit impact, to monitor and manage the effectiveness of on-going business strategy. However, there is also a need to monitor engagement, motivation and ultimately the emotional temperature, of those that make the business, if organisational performance and health are to be maintained.
“The world is watching us. This is our opportunity to demonstrate leadership [in times of] uncertainty” (Ashridge Brexit Event, July 2016)
In some instances, leadership itself is in a state of confusion regarding the post Brexit future. However, confidence can be instilled though focused attention on how to create and maintain trust, reducing threats and thereby releasing creativity, activating greater collaboration and facilitating higher level thinking. Leadership has a pivotal role to play here, sense-making, reinforcing meaningful vision and values and understanding the direct impact of behaviour and outlook on wider teams.
Whilst the country attempts to establish a new direction, leaders can seize the opportunity to provide focus and a way forward within business. For those who lean into the business and engagement challenge Brexit has created, the learning will be invaluable within our modern, somewhat complex, business landscape. As a participant at the Ashridge Brexit event summed up:
“The world is watching us. This is our opportunity to demonstrate leadership [in times of] uncertainty.”
Written by Deborah Hulme & Jennie Flower, Minerva Engagement. Deborah is trained in the Foundations of Neuroleadership and is a Practitioner of Executive Coaching (AoEC) and NLP. Jennie is a trained lecturer and an MBA Scholarship Student at Ashridge Business School.
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