Organizational change and the limits of rationality

Susan Letterman White
BridgeTower Media Newswires

As lawyers, we place great importance on being rational and logical. We pride ourselves on keeping our emotions under control.

However, as business leaders, when we present rational arguments to persuade a person or group to change behavior, are we too often neglecting the non-rational influencers?

Any time you ask people to change their behavior — which is what happens when you attempt to transform a prospective client into a client, or when, as a leader of a firm, department or organization, you lead mergers or acquisitions, attempt to change the culture, or introduce new technology — remember the non-rational and invisible influencers of human behavior.

ABC law firm was highly successful for over 50 years. The business model, culture and management style were based on a few rainmaker partners who did all the marketing and sales work. This centralized model had produced steady growth for many years.

Changes to the competitive landscape and new advances in technology threatened ABC’s continued success. Revenue dropped. Rainmaker partners held on to their work for themselves. Their compensation did not change.

Cost reductions were the first line of defense, but the rainmaker partners decided that all partners needed to become more “entrepreneurial” rainmakers.

The rainmaker partners presented their case for a “sales culture” and waited for behaviors to change.

When nothing different happened, they were surprised. Morale dropped. All lawyers cared even less about the health and wellbeing of the firm.

Mergers and acquisitions temporarily improved the firm’s financial well-being, at least on paper. Then recruited people left the firm, which had taken on those people at a significant cost.

What went wrong?

Consider organization dynamics, meaning the interactions of key elements.

Firm structures (connections among people), processes (how decisions are made and actions happen), and resource allocation influence the behavior of people involved as much as the ability (skill set and network) to do what you are asking.

Are the people in the organization connected to people who can direct business to the firm? Will they be rewarded or punished for time spent developing the skills and relationships to develop new business? Does the firm encourage cross-selling to leverage relationships with existing clients, or reward protecting one’s own clients at all costs?

In the book “Covert Processes,” Robert Marshak describes six dimensions involved in organizational change aside from structures, process and resource allocation and skills of the people involved: reasons (the logic), politics (interests), inspirations (values-based aspirations), emotions (affective and reactive feelings), mindsets (hidden beliefs and assumptions), and psychodynamics (anxiety-based and unconscious defenses).

Most organizational change begins with a logical explanation of why change is necessary and what that change will be.

At the outset, the leaders of ABC may have said:

Due to economic forces, a highly competitive marketplace, and client demands, all partners must become more entrepreneurial and develop their own business. No longer can some partners rely on the rainmaking of other partners. If we make this change, we will once again be a successful and prosperous law firm.

When all partners could not become entrepreneurial, the leaders may have said:

Due to economic forces, a highly competitive marketplace, and client demands, we must cut back expenses. We’ll reduce support staff and space, and we cannot guarantee salaries of partners who do not generate a predetermined level of revenue for the firm. In addition, we will seek strategic acquisitions and mergers to expand our global footprint with practice areas in high demand.

When acquisitions did not bring the desired outcome, the firm may have faced an existential threat from the departure of attorneys and practice groups.

The unspoken assumption was that all lawyers hearing the messages would be rational and logical and embrace the solution. They would heed the message and immediately deliver new clients and new work.

But if structures are not aligned, delivering new clients and new work is more difficult because there is no cross-selling.

If processes are not aligned, delivering new clients and new work is more difficult because people will do what they are rewarded for doing. If they are rewarded for billing more hours and punished for falling short of minimum requirements, they will prioritize that over learning new relationship-building skills, developing new relationships, and seeking new work.

When resources are not aligned with desired new behaviors, people who need more time, technology, mentorship or money to perfect a necessary skill won’t.

If people who are asked to change behavior are incapable of changing their behavior, they won’t.

People and groups act on their own needs and interests. Rainmakers are often reluctant to consider changing the business and compensation model of a law firm because of the risk that a different model may have a detrimental impact on their interests, even though it may have a positive effect on the organization.

Changes sometimes fail because they undermine the values and aspirations of key employees or groups. If you’re asking a lawyer who values time for family or to pursue a hobby to devote that time to business development, resistance is highly likely.

Regardless of whether all other dynamics are aligned with the proposed changes, ignoring emotions, hidden thoughts and deep anxiety will lead to resistance. People naturally experience change as a loss.
As a leader, respond to the emotional components of change. Share a clear vision of what will be different and better for people involved because of the change. Create a forum for questions and for venting feelings. Provide opportunities for people to develop the new skills required to thrive.

When you face resistance to requests, make sure that the organization and personal dynamics of the people involved are aligned to propel your change forward.


Susan Letterman White  is the principal consultant at Letterman White Consulting. She practiced employment law for more than 20 years.