How your Employees can cope after the Shock 7 Phases
of Change

The new Financial Accounting Software

Ms. Schmidt and Mr. Klein have been working in financial accounting for the manufacturing company CRONUS AG  for over 25 years and know the financial accounting processes like the back of their hands. They can assign business transactions to the right accounts almost blindly.

But then, out of the blue, they were told by their department head that they should only work paperless. This meant an end to mountains of notes filed in folders. And an end to screens and desks adorned with Post-it notes in every conceivable neon color. Routine trips to the printer are also a thing of the past. These used to be a welcome change, as you would regularly bump into colleagues from the neighboring office for small talk. Instead, CRONUS AG has implemented a new ERP solution with integrated financial accounting software.

Since then, not only does everything run digitally, but there is also less and less to do in financial accounting because many postings run automatically thanks to the integrated financial accounting module. The employees here are supposed to work mainly in a cloud.

The 7 Phases of Change

Ms. Schmidt and Mr. Klein reacted quite typically to this major change they were suddenly confronted with at work: with surprise, incomprehension and resistance. “This can’t be true,” they kept saying.

Unlike some technologies, people do not work according to the plug-and-play principle - in other words: new processes cannot be set up at the push of a button. In this change process, we differentiate between seven phases. Until the change has been successfully established, the employees have to go through these phases one after the other:

• Phase 1: Shock
• Phase 2: Rejection
• Phase 3: Rational insight
• Phase 4: Emotional acceptance
• Phase 5: Learning
• Phase 6: Realization
• Phase 7: Integration

What happens in the individual Phases?

Phase 1: Shock: “This can’t be true…”

The first phase is a kind of shock. The employees are surprised, feel overwhelmed and may even be afraid of the change. They do not understand why the change is necessary.

This often leads to them being less productive. Initially, they are sometimes unable to digest the fact that they have to adapt to a new situation. This can go so far that they are temporarily unable to think and act rationally.

Phase 2: Rejection: “That’s not true”

Once the initial shock has passed, some employees cling to the past as if they were clutching at straws. They would prefer to simply carry on as if nothing had happened. In this phase, it is important that managers help employees to understand why it is important to break new ground and what exactly the change means for each individual. This calls for communication at eye level.

Phase 3: Rational Insight: “Maybe after all…”

Now the employees are slowly realizing that their negative attitude is getting them nowhere. They now see change as sensible. However, there is no deeper insight yet. Initially, the employees only implement minimal changes and first look for short-term solutions for the new hurdles.

Phase 4: Emotional Acceptance: “It’s actually true…”

The decisive turning point follows in this phase: employees begin to accept the change instead of just understanding it. They begin to break away from familiar ways of doing things and develop a positive mindset and even optimism.

But first they have to go through the “valley of tears” and this is also necessary - in order to be able to move away from the old processes. Productivity inevitably reaches its low point for a short time here.

Only if your employees make it out of the valley of tears will they be prepared to engage with the new situation and actively help shape the change - and it’s worth it: productivity will then be at a permanently higher level.

Phase 5: Learning: “Just give it a try…”

Your employees are now in the “trial and error phase”. They start to deal with their situation and the new processes in a goal-oriented manner and try out the innovations independently. Of course, they also make mistakes here - but this is precisely how they learn.

Phase 6: Realization: “It really works…”

The employees slowly but surely come to the realization that the change is having a positive effect. This is consolidated through successful experiences and new skills that are built up. Employees become more and more confident in dealing with the new methods and implementing the new processes.

Phase 7: Integration: “Sure…”

If you successfully complete this phase of the change process, you’ve made it. Your employees have integrated the new processes and measures into their day-to-day work and now take them for granted. A new routine has been established that is lived by everyone.

Theory and Practice: the Curve deviates from the Model in Reality

The change curve helps you to classify and control the behavior of your employees during a change. However, you must not forget that this is still a model. This means that not all change processes follow this pattern.

The individual phases take different lengths of time depending on the person, company and initial situation. For example, the “shock” and “rejection” phases can take a relatively long time for employees to develop rational insight and then emotional acceptance. Therefore, there is also no general answer to how long a complete change process usually takes.

In addition, employees experience the phases themselves differently, so there are those who are as adaptable as a chameleon and then there are those who find it extremely difficult to cope with change or new situations.

It would be nice, but in addition to numerous successful change processes, there are also those that remain unsuccessful in the end despite all efforts. In this case, there may never be a (complete) realization and therefore no integration of the change. Instead, the employees remain stuck in the “valley of tears”.

So that your Employees get their Act together: how to help them integrate the Change

Ultimately, it’s about successfully completing the change process and keeping the low points as low as possible during the process. Change management envisages five roles for managers that have different tasks to fulfill

Promoting a Work Culture focused on Continuous Improvement

Does the abbreviation CIP mean anything to you? It stands for “Continuous Improvement Process”. In many companies today, such a culture is firmly established. The aim of the whole thing is to constantly optimize your processes.

Ensure Seamless Communication

A bubbling rumor mill and boiling emotions have never been good for the atmosphere in a company. Especially not during a change process. Avoid this as much as possible by improving your internal communication and always communicate and act in a transparent and comprehensible manner.

Ensure Tailor-made Training

Your employees must be prepared for the new challenges. To do this, they need suitable training and the opportunity to deal extensively with the innovations. You should also not be stingy with the budget you set for seminars, workshops and working groups.

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Allow sufficient Time

It is important that managers allow enough time for their employees to digest the change. Even if it is of course unfavorable at first that they spend some time resisting the change and their work productivity suffers at first - every long-term change needs time, so that it can consolidate and at some point is seen as completely normal by everyone without thinking.

Be a Role Model and show the Way

Employees need a role model who sets an example of change. This is the task of managers. They usually have the advantage of already being further along in the change process. Ideally, they themselves are already in the learning or realization phase when they announce the change to employees.

More efficient in the Long Term with an Integrated Financial Accounting Module

Ms. Schmidt and Mr. Klein have been working with the new financial accounting module every day for about three months now. They are slowly beginning to accept the change emotionally, even if they still get lost in the printer room from time to time. And not all the Post-it notes have disappeared from their desks yet. 😊 If you had to assign this to one of the phases, it would be phase four on the change curve.

The effort is worth it: in the long term, the efficiency of the financial accounting department will increase significantly thanks to the digitalization and automation of many processes. For example, the account assignment of recurring postings will run automatically. And employees can also work much more flexibly, e.g. from their home office - thanks to the paperless office and cloud technology.

Put simply: if you implement your change successfully, the “This can’t be true.” will eventually become a “Sure.”.