The price of toxicity

If ever there was an example of how not to manage organisational change, it must be France Telecom, where former executives are facing prison over workplace harassment which caused a spate of suicides between 2008 and 2009. In a two-month trial which ended in July, the French state prosecutors called for executives to be found guilty of moral harassment and to be given the maximum prison sentence of one year, plus large fines. The verdicts have yet to be revealed.

What happened at France Telecom was shocking. During a major restructuring of the newly privatised organisation, in which one-fifth of the workforce needed to be culled, 35 employees committed suicide after falling victim to a campaign of strategic harassment aimed at forcing workers to resign, it was alleged. While France Telecom was said to have created a toxic workplace environment deliberately, the consequences can be just as bad when it happens unintentionally, say experts. Any period of major change can provide the perfect breeding ground.

‘France Telecom is a case study in what not to do,’ says Sam Gilpin, managing director of leadership consultancy YSC, which uses psychology to inform its methods. ‘They were deliberately creating a toxic environment in which people would be so miserable they would leave. However, it is possible to accidentally create a toxic environment, so you need to be intentional about what sort of environment you do want to create.’

So what is it about corporate change that can sow the seeds for a toxic workplace? The main problem is that leaders become so focused on achieving the aims of the change that they lose sight of the human element.

‘Senior people don’t realise it matters,’ says David Ferrabee, managing director of organisational change at agency Teneo. ‘A bureaucratic, hierarchical approach is the default, but the world is more complex; people have more complex lives.’ He cites the example of companies slashing cost bases by relocating workforces to lower-cost areas. ‘When you live in Newcastle and you are told you must up sticks and move permanently to Exeter that is very different to being relocated to Singapore for a couple of years.’

There will always be periods during change where there are no answers to questions – for example, where a consultation process is going on. But this is the time you need to communicate more and listen to people and their concerns

The way in which employees experience change is key. Alison Esse, director of change agency The Storytellers, says: ‘Toxic workplaces can happen when leaders are not articulate and people feel the change is being done to them and they have no control. This leads to a very unhappy workplace.’

Psychological studies, such as that set out in The Power Paradox, by Dascher Keltner, professor of psychology at University of California, Berkeley, show that as people take on power, they lose empathy. ‘People are often so busy thinking about the specific change, they don’t think about the environment they are going to create as a result of it,’ says Gilpin.

Esse agrees: ‘Leaders are often good at the ‘where’ and ‘how’, but they forget the ‘why’. They are good at the details and nuances of a restructure but forget to talk about the why. Some areas of the business become resentful and feel the change is being done to them.’

A breakdown in communication is the problem, argues Kathryn Burgess, director of Corporate Culture, a communications agency focused on managing change. ‘When there are problems, there is always a lack of communication at play. Communications can stop altogether when there are uncertainties leading to many questions from an HR perspective. There will always be periods during change where there are no answers to questions – for example, where a consultation process is going on. But this is the time you need to communicate more and listen to people and their concerns.’

A change programme can create a shift in workplace dynamic which can quickly go sour. ‘Many kinds of big change can focus people less on relationships,’ says Burgess. ‘For example, a restructuring can lead to a process of selection for jobs, so the more collaborative ways of working disappear and the collaborative culture becomes a competitive one. If it is all clouded in secrecy, this leads to awkwardness and collegiate support lessens. Uncertainty like this can lead to a dynamic shift in the work environment as people become less open.’

It may be that a company cannot give details about a change that is taking place – perhaps it is share price sensitive and the company is bound by Stock Exchange rules. However, this does not mean communications should cease altogether.

‘One of the biggest errors that companies make is they often take the time to support and invest in the top, thin leadership layer but not in the next big chunk of management,’ explains Burgess. ‘There is often a lack of time or the company is worried about the risk of leaks. You end up with this layer of middle managers with no answers to the questions they are fielding. Organisations need to paint a picture of what the future holds. Even if nothing can be said to counter specific concerns, being listened to is crucial.’

The method by which communications are delivered is also important, says Ferrabee. He points to the example of The Accident Group, which famously sacked 2,500 employees by text message when its parent company went into administration in 2003. This is a classic example of leaders being so focused on achieving the change necessary for the company’s survival that they make monumental failures in the treatment of staff. In this case, it seemed to make economic sense to sack people by text message because the news was time-sensitive.

‘They thought they had found a convenient way to tell everyone at the same time,’ says Ferrabee. ‘In the minds of the people doing it, it made sense. On a human level, it made no sense. An email about change to enrolment to the pension fund is okay, but it is not okay for informing someone that they have lost their job.’

Treating communications as a one-way street also leads to problems, says Gilpin. ‘Organisations often think the job of communications is just to issue communications, but it should be a two-way thing. You get terrible corporate-speak exercises where there is no intent to listen. You need to answer Why is this happening? and What does it mean for me? Leaders tend to adopt a defensive stance but people want to be treated like humans and you can lose the human element really easily.’

The biggest problem is people don’t like saying the same thing over and over, so they tend to add nuance or opinion each time they relay the same message

Another mistake companies make is not ensuring communications to staff are consistent. This does not mean leaders creating a PowerPoint deck and handing it out to managers to deliver to their teams, however. ‘If you do that, then leaders of each part of the business will just cherry pick bits and end up with different stories,’ explains Esse. ‘That leads to Chinese whispers, which creates uncertainty, confusion and a lack of credibility.’

Compounding all this are other specific issues which arise as a result of circumstances. For example, if a company has a track record of a toxic environment then everyone will already be sceptical. Or, in organisations where there has been very little change historically, where people have ‘jobs for life’, the shock of having to adapt is very profound, such as where a company has been privatised and has to operate radically differently, says Gilpin. Another example is where companies go through endless restructuring, meaning people’s jobs are changing endlessly, he adds. ‘It’s death by 1,000 cuts and people go into frozen survival mode, which reduces productivity.

Ferrabee adds: ‘If you have an organisation of 10,000 people and you announce that 2,000 are to be laid off, the immediate response from your employees is Will it be me?, then What are the terms? When do I start looking for a new job? But there is no sense in all 10,000 leaving – the business would grind to a halt. So the way this plays out is very important in how the business responds commercially. Any disturbance among the staff can cause ripples which can have a serious effect on the business itself.’

Conversely, well-managed change will have a positive effect on an organisation’s bottom line, says Esse. She gives the example of when electrical retailer Currys streamlined its distribution infrastructure, which involved closing multiple warehouses and switching to just two national distribution centres.

‘People were either going to lose their jobs, change roles or relocate. However, in one particular warehouse in Stevenage, productivity actually increased by four per cent until it closed because the change process was managed so well. There was a very clear picture of what the change was about and people felt in it together.’

How can organisations get this right? First, the narrative about the change must be consistent. ‘The biggest problem is people don’t like saying the same thing over and over, so they tend to add nuance or opinion each time they relay the same message,’ says Ferrabee. ‘But you need a consistent message of core concepts and ideas that remain the same each time.’

Sometimes, leaders forget they need to be open and honest and explain what change will look and feel like. It might be messy, but with a clear vision of success, they can get through it as long as they are telling the right story

Often a process of change is evolving as it happens, but this does not mean the narrative can’t be worked out beforehand, says Esse. ‘It’s not always clear at the outset what the minutiae of change will need to be – leaders are feeling their way through it. Sometimes, leaders forget they need to be open and honest and explain what change will look and feel like. It might be messy, but with a clear vision of success, they can get through it as long as they are telling the right story.’

The Storytellers works with leaders to construct a ‘story’ that will be delivered to employees. ‘We create a clear story about where the business is going and why,’ says Esse. ‘It is about preparing people and for leaders to empathise with their teams and say We’re in this together and we all have our part to play.’ To do this, the agency interviews all leaders on a one-to-one basis. ‘We help leaders to bring the journey of change to life in a human and compelling way: to explain why they are changing, their vision and strategy in a simple narrative, in order to bring it alive for teams. We start with What’s our role in this change and how will we contribute? It’s about creating an emotional connection to something that can be scary.’

Once the story is determined, all leaders must sign off on the final narrative and agree to stick to it like glue, she says. ‘If there are different stories coming from different leaders, you get a maelstrom of confusion.’ Honesty and transparency are vital. ‘Leaders must be clear, speak with one voice and empathise with the difficulties people are facing. If they can do this, people will go along with it with excitement’, adds Esse.

‘People need to have an end destination. You should be honest and say it is going to be a rocky journey, if it is. Where you don’t have an aligned story, the trust quickly goes. You get the rumour mill and then the toxic workplace.’ Next, the process is cascaded throughout the organisation. ‘Top leaders go to the next tier of leaders to present the business change narrative, explore what it means to them – how it affects us in HR, us in operations, et cetera. Then they take this new narrative to their teams and replicate the process.’ In essence, the employees take ownership of the change process.

An important function of the communications is to have one ear to the ground so you know what is happening among the staff and if the rumour mill has taken off

Burgess agrees strongly that all employees should be included, not just the top tier of management. ‘I would make it a top priority to invest in middle managers as well, otherwise you get Chinese whispers which leads to an ‘us and them’ divide as managers feel vulnerable and impotent as they can’t support their teams.’ This flow of narrative should be done in person and in an active ‘voice’, Gilpin says.

‘Leaders need to show up and talk to people and be open and honest. Using a passive voice – This restructure is being undertaken. It has been decided to close this site – is corporate speak: it dehumanises people.’ Managing narrative containing sensitive information which should not go public is a balancing act. ‘When organisations go toxic, the boundaries between what’s public and private become blurred,’ says Gilpin. ‘How can you be thoughtful about what you put in writing given it will probably go public at some point? This is one of the real challenges of communications, how to be honest within certain boundaries.’

Burgess adds: ‘Best practice is that the more affected by change an employee is, the more they should be dealt with face-to-face. Communication about change works best in small groups where people get the opportunity to talk about things and ask questions. ‘Companies need to be having these conversations with staff even if they can’t talk about the detail of the change. Be clear the change is happening and make the case for why change is necessary. Give a timetable of when they can give details. ‘An important function of the communications is to have one ear to the ground so you know what is happening among the staff and if the rumour mill has taken off. This should always be a formal part of the HR/ Communications role.’