Why is policy and other change often so difficult? Because humans are involved.

Following on my previous post regarding South Africa’s likely rough and rocky path to structural reforms, I ponder why the road to big changes is not always a smooth one. Often, when we view a looming change unemotionally from the outside, for instance a Government policy change, the particular change seems to make perfect sense and it frustrates us no end that the interested parties involved in that changed cannot just embrace it and move on to a better future dispensation. We see the change as good for the country, and perceive the organizations or people resisting the change to possess seriously flawed thinking, put politely.

Not understanding human nature  and its attitude to change properly is what often makes us economists and many others slip up when it comes to our expectations of how a process of change will proceed, and how it will impact on the economy in the interim while change is under way.

In classical economic textbook theory, a change in a market merely shifts supply and demand curves in a certain direction until a new equilibrium is reached. And many people end up almost assuming that it is that simple in real life too…that the adjustment to change happens smoothly and quickly.

Evidence of such simplistic assumptions was arguably reflected in a huge spike in both the BER’s South African Consumer and Business Confidence Indices in the early stages of 2018, shortly after Cyril Ramaphosa won the ANC presidential election, which in turn set him up to replace Jacob Zuma as the country’s president shortly thereafter. The spike was known as “Ramaphoria”.

These spikes were not long lasting, however, confidence slumping back into mediocrity and worse as the country quickly realized that nothing surrounding policy and economic performance was going to change quickly.

The reality is that change is often a long, slow and turbulent process, as the proponents of change are forced into battles with those forces resisting it. South Africa has many historic examples of such hard won policy changes.

Below is a diagram that I obtained on Thwink.Org that portrays a simple view of the broad cycle of acceptance”. Step 1 is a “normal existence”, which I interpret as an existence that has come to be seen as “normal” due to a significant length of time over which it has prevailed. It is a situation where the individual is likely calm and able to think clearly and perhaps “rationally” if there is such a thing. People may well be in what is called a “comfort zone” at this stage of the cycle.

Then comes step 2….”Receipt of Bad News”. Here we can insert “News of Change”……change not necessarily being bad but often seen by some as bad news. And then the “battles” begin as people and organizations start to make their way through the “cycle of acceptance”. First there is the “denial” (step 3) stage….where we try to either convince ourselves that “this is not happening”….or that “it won’t be that bad”. But facts are facts and sooner or later one has to accept that change is taking place. Then comes the anger (step 4), which can sometimes manifest itself in aggression, or deteriorate further into depression (step 5). In these stages there can be fierce resistance to change.

Step 6, bargaining, is where we start to  accept that life must go on, that we must adapt to the change….if we didn’t manage to stop the change from happening….and we start to position ourselves in the best possible way to benefit from the approaching “new normal”. Finally step 7, Acceptance, after which we settle into a new way of doing things in the “new normal”.

The big question is, especially when a big change may be for the better, why would there be sometimes huge resistance to it during the “anger”and “aggression”,and perhaps the “depression”, stages?

Here are some possible “human” reasons:

Change can imply loss of control: Change can imply a loss of control for someone or for an organisation. Having control can hold financial benefits, or it can merely be about power and status for some. Think of the possible reluctance of someone in corporate senior management who is informed that certain entities under their control are set to be moved to another area of that company, or a senior person in Government being informed that certain entities under their control are set to be privatised as Government scales down on what it owns and manages. These “restructurings” may make a lot of sense economically or from a profitability point of view, but not necessarily from the manager’s personal point of view.

Change can imply uncertainty: Change often also implies uncertainty. People are creatures of habit and are often in search of greater certainty. The mere uncertainty of change, even if its a positive change, can cause some people to resist it purely out of fear of the unknown ….preferring a “better the devil you know” stance even if the status quo is sometimes terrible.

Rapid change can be too much too fast for peoples’ minds to cope with: In this regard it is often important to move at a pace not too fast for peoples’ minds to cope. Think of the sudden lockdown-enforced work from home policy for many office workers worldwide in 2020. Prior to Covid-19, many company management teams were slowly but surely moving their work forces to a more flexible work arrangement, waxing lyric about how wonderful it would be, with greater levels of work from home to come. But prior to 2020 it was at a pace that they could mentally cope with and a process that they could feel in control of. Then, enter 2020 lockdowns, and overnight their office buildings emptied out and their entire workforce “vanished”. This was just too much too fast for many senior managers, even for those in favor of more flexible work prior to Covid-19,  and a good dose of panic set in. Now, many are trying hard (not always successfully) to reverse the process significantly and get everyone back to commuting and office attendance.

At any policy level, therefore, the success of implementation can often depend on the pace at which changes are implemented.

Bad communication can mean that change is misunderstood: The reasons for change are sometimes badly communicated, contributing to suspicion and resistance to it. Good communication and an understanding of the benefits of it can thus be a crucial ingredient of successful change.

Change can create fears around one’s own competence: People can fear change due to fears regarding their own competence. Think of a company implementing a new system of some sort. Staff can often fear that they may not be able to operate this new system, and may thus attempt to delay implementation as they prefer to stick to the old way that they know so well.

Change can create fears around others’ competence: Then there is sometimes the fear regarding other peoples’ competence, causing a resistance to change. A familiar scenario comes to mind in companies where an individual gets a promotion, but can’t mentally “leave” his former job, constantly looking over his succesor’s shoulder and not willingly relinquishing control of his former responsibilities and decision-making powers to his successor.

Accepting change can be perceived by some as an admission of being wrong: To some, pride gets in the way, with acceptance of a new and different way of doing things being perceived by themselves as an admission that their previous modus operandi was wrong. Many people are not prepared to admit to their flaws. In politics we often see political leaders having to change course due to the voters beginning to tell them that, if they don’t, their time in Government may be up. Those that can move with the times and change can often see their careers go from strength to strength, but those who can’t take such steps risk being cast aside at the next election.

Change can imply more work/effort: Sometimes, change is resisted because it implies more work. Whether it is a person’s need to take on additional responsibilities, or being required to learn new skills to keep pace with the change, more work is very often a reality that comes with change. Some will see the potential future benefits of the change and embrace the need to increase their efforts, but others will not understand those benefits, and perhaps then resist the change.

And yes, change often means that some stand to lose…often quite significantly: Finally, the reality is that some people will gain more than others from change , while others may stand to be marginalized and “lose out”. Corporate restructurings often mean retrenchment. In some cases, where the economy is weak and not creating many jobs , some affected staff may fear that alternative employment may not be forthcoming. This fear gets worse when they know that they lack appropriate skills for a changing labour market. 

It gets even worse in the case of South Africa’s state owned enterprises, where changes aimed at rooting out corruption and criminal activity in these entities could not only see some people losing their jobs, but in some instances also facing jail time. In such instances one should expect strong resistance to change.

In short, the process of change can be a long and bumpy road, sometimes highly disruptive to the economy and society around it. This process often does not receive strong enough attention from analysts, policy makers, the public and business planners. Therefore, society is often ill-equipped for change and taken by surprise when it happens, and taken even more by surprise when certain changes that appear positive are met with fierce resistance, take a long time, and cause a great degree of volatility at times.

Change is the only certainty in the world. Being in a change “mindset” that involves expecting change, embracing positive change, and better understanding the nature of the process of change, would serve many of us well.