ATD Blog

The Cost of Change—On Organizations and Employees

Wednesday, January 27, 2016

Change is a must for organizations today. Yet all change requires adjustment—not just from the organization in terms of money or time, but from the employees who must adapt to the changing workplace. They must tap into their personal resource banks and invest cognitive or physical energy to learn new information and skills, change their behaviors, and even think and feel differently. 

Every person has a resource bank that they use to do their job. Similar to a regular bank, people make investments and withdrawals. Each change, regardless of the size or impact, incurs a transaction fee, a small withdrawal from the bank. 

  • Migrating from one technical system to another: withdrawal
  • New work schedule: withdrawal
  • Moving to a better benefit plan: withdrawal

Our research, described in a new Center for Creative Leadership white paper, explains the cumulative effect on employees by defining how each withdrawal (change) compounds the previous withdrawal. 
Employees care about how workplace changes affect them, and with each change they face, they determine whether it has had a negative, neutral, or positive effect on their job. 

  • Negative changes. Changes perceived as negative drain resources further, making it difficult to cope with and implement change. For example, a new supervisor who micro-manages direct reports decreases the ability they had to make independent decisions. Negative changes are like large withdrawals from the resource bank; they deplete employees’ energy and increase stress because the resource investment required is not offset by resources gained from the change.
  • Neutral changes. Perceived neutral changes, such as moving the location of a printer, don’t modify the resources available to employees. These changes don’t require an active withdrawal, such as in the case of a negative change, but they still incur a small transaction fee. For example, employees must still spend mental energy walking to where the old printer once lived only to remember it had moved. These seemingly inconsequential changes begin to add up, creating negative feelings in an employee, similar to the effects of negative changes.
  • Positive changes. Changes perceived as positive increase employees’ access to resources to do their job, growing their resource bank. For example, a new knowledge management system that provides greater access to information saves time and provides more autonomy to employees. Positive changes act like deposits into an employee’s resource bank; they reduce employees’ stress because their resource investment is offset by the resources gained from the change. 

Managing Change Capital in a Change-Driven World 

Employees’ resource banks can be thought of as an organization’s change capital. Leaders must ensure the changes occurring in their organization—planned and unplanned—don’t leave employees’ resource banks depleted. Leaders do this by paying attention to the recent change history in their organization, including how employees have perceived the changes the organization has implemented in the past. 


Research from the Center for Creative Leadership (CCL) found that cumulative negative and neutral changes were bankrupting employees’ resource banks. Positive changes, on the other hand, were like big, fat investments into employees’ resource banks, improving employee commitment, engagement and excitement. When implementing future changes, leaders need to ensure the aggregate of required changes remains positive. 

Change Is Cumulative, Invest Wisely 


CCL research shows three main points that leaders should remember when managing their organizations change capital. 

  • All change requires investment. Every change, no matter how seemingly insignificant, requires employees to tap into their resource banks and drains corporate change capital. Implement changes that improve the organization or employees’ jobs.
  • Recognize the cumulative cost of change. Employees must adapt to many changes beyond those identified as planned change initiatives. Prioritize, sequence, and coordinate changes throughout the organization to reduce or offset the cumulative change cost to employees.
  • Ensure change is perceived as positive. Employees need to feel that the changes they are asked to implement are worth the resource investment. Show employees how the change will positively affect their current resource pool to ensure a positive change perception. 

Employees are not universally resistant to change, nor are greater amounts of change uniformly bad. However, organizations must understand the full scope of change initiatives, including the many unplanned changes that affect employees, in order to fully prepare for the cumulative cost of change to the organization.

About the Author

Kristin Cullen-Lester is a senior research scientist at the Center for Creative Leadership, a top-ranked, global provider of leadership education and research. Kristin leads CCL’s R&D work on network applications in leadership development. Her research focuses on relational aspects of leadership, including leader’s social networks and the role of organizational networks in shared leadership, complex collaboration, and implementing change across organizational boundaries as well as leadership in turbulent, changing workplaces. 

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