Managing regulatory change comes with a unique set of challenges. Navigating complex compliance processes, including adhering to different regulatory standards by location, is just the beginning. Employee resistance is a common factor many face and requires thoughtful, human-centric solutions to ensure compliance and engagement.
How do others do it? This executive brief dives into the core challenges of managing regulatory change and offers practical strategies to overcome them. Gain insights from industry experts and learn from real-world examples on driving compliance while minimizing disruption and maintaining operational efficiency.
This roundtable was held on September 17th, 2024.
Roundtable Participants
Led by Brittany Gunter, Chapter Lead of ECLC
- Alessandro Prieto, Analog Devices - Senior Director, HR North America Lead
- Adam Schreiber, Johnson & Johnson - Global Director, Change Management, Enterprise Transformation Office
- Andranik Ziyalyan, Sony Pictures Entertainment - Executive Director, Finance Transformation - Organizational Enablement
- Awais Farooq, Crawford & Company - SVP, Strategy & Transformation
- Cenina Saxton, Global Payments - Senior Director, Talent Management
- Iris McQuillan-Grace, OLIVER Agency - Head of Employee Experience
- Laureen Knudsen, Empower Consultant Group - Chief Transformation Officer
- Michaela van Schalkwyk, Baker Hughes - Vice President, Change Management
- Michelle Weetman, ADP - Senior Director, Strategic Planning
- Nadine Hammer, Genentech - Sr. Organizational Change Lead – Product Development, Portfolio, Strategy and Execution
- Rosaline Hester, The Coca-Cola Company - Global Change Leadership Director, Marketing Transformation Office
- Saumya Vardhan, Yahoo - Digital Transformation Office Leader
Leading Regulatory Change: Common Challenges & Barriers
Understanding core obstacles to leading mandatory regulatory changes is crucial for developing effective engagement strategies. By identifying the source of the problem, you will be able to understand the reason behind it and come up with better solutions that will benefit the organization in the long run.
1. Managing Change Resistance
✔ Understanding the “Why”
Employees often question the rationale behind regulatory changes. Why do we need to do things differently?
“It’s hard when the ‘why’ behind the change doesn’t make sense to people. When resistance occurs due to a lack of understanding of regulatory change, it can easily lead to people over-complicating the process of making change happen.”
Awais Farooq - SVP, Strategy & Transformation | Crawford & Company
It is essential to explain why changes are necessary. When the purpose of the change is unclear, resistance builds and halts the progress of change, which in a worst-case scenario, results in adoption failure.
✔ Leveraging External Forces
People love fighting gravity. Employees may resist aligning with stricter policies unless the benefits are clear. Certain mandatory regulations, while inevitable, may cost the organization more in the long term.
“Positioning changes as coming from external authorities, such as the government or headquarters can help mitigate resistance. When employees perceive change as unavoidable, they are more likely to comply.”
Andranik Ziyalyan - Executive Director, Finance Transformation - Organizational Enablement | Sony Pictures Entertainment
2. Organization Size & Regulatory Standards
✔ Regulatory Change During M&A
Regulatory change becomes even more difficult during mergers, especially when integrating companies with looser regulations into a larger entity with stricter rules and procedures. If handled incorrectly, it can exacerbate issues that naturally arise with mergers and acquisitions.
“How you make changes happen becomes important because what needs to change isn’t flexible. It is important to build in a WIIFM perspective if possible.”
Alessandro Prieto - Senior Director, HR North America Lead | Analog Devices
✔ Industry & Location-Specific Regulations
Different industries have varying levels of regulatory oversight. Highly regulated industries like healthcare, finance, or pharmaceuticals often face more stringent and complex rules compared to others.
These regulations may also differ based on the local government where the organization is located. This can create confusion, as employees will need to understand not only the regulations but also the specific nuances related to their industry.
“Some companies manage a lot more regulatory changes than others. For a globally-operating organization, each region has its own requirements and regulatory issues. That’s where overall standards with localized compliance become key.”
Adam Schreiber - Global Director, Change Management, Enterprise Transformation Office | Johnson & Johnson
3. Mitigating Adoption Failure
✔ Delayed Involvement of Key Teams
Regulatory changes can fail due to the late involvement of key teams such as L&D which delays critical training initiatives. Involving the right teams early on ensures training is rolled out effectively, ensuring a smooth change adoption process across the organization.
“I have seen many instances where change conversations happen a little too late and the L&D team is brought in a little bit after the fact. There are some questions that need to be answered early on that go beyond rolling out standard training and webinars to ensure we have the right outcome.”
Cenina Saxton - Senior Director, Talent Management | Global Payments
Initial Approaches to Communicate the Importance of Compliance
Effective communication is critical when rolling out regulatory changes. It is not just about explaining what will change, but also ensuring employees understand why compliance matters. It is important to tailor your communication strategies to drive engagement around regulatory change within the organization.
✔ Top-Down Messaging Strategy
Avoid a one-size-fits-all messaging. It is good to silo your communication approach, with one big broad message from leadership, and then deep cascade them with learnings and specific messaging.
“Big regulatory change sometimes requires keeping people informed. For example, what will losing one of the company’s most lucrative patents following a new regulation mean to the business and the workers? Since you can’t be as creative in your strategy when handling regulatory changes as you can be with other types of changes, it should be, as much as possible, an incremental and straightforward process for the workplace.”
Adam Schreiber - Global Director, Change Management, Enterprise Transformation Office | Johnson & Johnson
✔ Highlighting the Cost of Non-Compliance
It is essential to stress the importance of clearly outlining the risks of failing to comply with the mandatory regulatory requirements. This will help ensure employees understand the real consequences of ignoring changes, thus motivating compliance.
“Sometimes, it can help if you put yourself in the shoes of the regulators. Instead of fighting change or trying to circumvent it, it’s good to understand where the change is coming from and how we fit into the positive bigger picture of a change. For example, regulations over sugar content for carbonated drinks may come from concerns over the population’s health. This is something bigger than the company itself and not just about reducing sales.”
Rosaline Hester - Global Change Leadership Director, Marketing Transformation Office | The Coca-Cola Company
✔ Frequent & Early Communication
Determine how much and how deeply the organization has to change. Advocate for early, frequent communication to help employees grasp complex regulatory changes. Continued communication and information sharing allow leaders to observe change more accurately and pivot quickly if challenges arise.
“Using an agile methodology can help with this, as you can track the progress of change and determine the impact of changes as they progress.”
Andranik Ziyalyan - Executive Director, Finance Transformation - Organizational Enablement | Sony Pictures Entertainment
Strategies & Tactics: How to Motivate Compliance & Sustain Momentum?
Sustaining compliance after the initial rollout is just as important as achieving initial buy-in. A combination of motivation, transparency, and result-tracking is key to ensure momentum is maintained over time for long-term compliance.
Factor 1: Ownership & Audience
✔ Identify Impacted Audiences
Identifying the impacted audiences is an important step in tailoring communications, increasing message relevance, providing targeted support and resources, building advocacy, and eventually addressing possible resistance.
“In my space, we now do a formal scenario analysis upfront to identify who will be impacted, the criticality of the impact, and our anticipation on engagement as well as push-back.”
Michelle Weetman - Senior Director, Strategic Planning | ADP
✔ Assigning Ownership
It is important to carefully select and create a specialized team that will work on change. Have a CoE in place with key capabilities to help implement mandatory changes within the organization. These people will be responsible for ensuring adoption is done correctly and in line with mandatory standards.
“Ownership of regulatory change can be difficult as it often impacts several departments and teams. You want to include everyone at the table, but that can still be too many people, with varying perspectives, priorities, and agendas.”
Cenina Saxton - Senior Director, Talent Management | Global Payments
Factor 2: Transparency & Authenticity
✔ Emphasizing Message Clarity
Keep in mind that even regulatory changes can impact workers on a personal level. With the complexity of it, you won’t always get it right from the get-go. Frame regulatory change as a mandatory requirement while asking for support to make the process smoother for everyone involved. It is also important to communicate clearly when you miss something right when it happens.
“In terms of transparency and authenticity in the communications revolving around regulatory change, it’s better to say ‘I don’t know, I’ll find out’ when you don’t know all the answers. Make regulatory change into a journey where we figure it out together and leverage change agents along the way.”
Michelle Weetman - Senior Director, Strategic Planning | ADP
✔ Leveraging Change Champions
Change champions are often respected figures within the organization, which will give them credibility to influence their peers positively. They can provide support to make change more relatable and less daunting and serve as the bridge between leadership and employees to communicate the rationale behind regulatory changes.
Factor 3: Goals & Timeline
✔ Ensuring Alignment on Goals
Employees are oftentimes told about what is not to be done instead of being given positive examples of how people are remaining compliant and its benefits. Better compliance happens when messages come from the top and also when it is framed as needing to catch up to competitors, providing a unified goal to further motivate employees.
“Sharing success stories and statistics will help in highlighting the possible benefits and achievements from flawlessly executing change. For instance, the business wins when the organization is 100% compliant with specific regulations.”
Alessandro Prieto - Senior Director, HR North America Lead | Analog Devices
✔ Flexibility with Timeline
Just because the system is ready, that doesn’t mean that the people are. Make sure to provide a realistic and flexible timeline for the change adoption.
“Regulatory change is often obligatory so let’s give stakeholders** options on how to make it happen** within the organization. For instance, let’s try to be flexible on when the changes will happen so that they will fit into their department priorities and roadmaps. This increases engagement and decreases change fatigue.”
Michaela van Schalkwyk - Vice President, Change Management | Baker Hughes
Factor 4: Training & Reporting
While it is essential to separate change initiatives into two categories, ‘business changes’ for regulated change and ‘L&D changes’ for new initiatives such as adopting new software into daily processes, we tend to undervalue the importance of L&D pieces in regulatory change adoption, and how the right approach and storytelling can help in making training relevant to the employee segments.
✔ Competitive Framing and Gamification
Framing regulatory compliance as a competitive advantage or using gamification approaches like leaderboards can keep employees engaged. Recognize top performers to create a sense of competition and accomplishment to drive higher compliance rates. Integrating quizzes that aren’t too easy at the end of each training is also effective in making sure that employees are paying attention to the training provided.
✔ Integrating Dashboard & Progress Tracking
Track progress and compliance through dashboards and regular reports. These tools not only motivate employees but also allow managers to monitor change and intervene when necessary such as if someone on their team hasn’t completed a specific training.
Real-Life Example of Successful Regulatory Change
Scenario 1
“A new regulatory requirement forced the organization to adapt its software development practice significantly, with 391 items that needed to be reviewed for each software release. However, as the company transitions into a more agile, cloud-based environment with monthly releases, this approach became impractical.”
✔ Solution: Simplify the Process Around Regulatory Change
Regulatory change can be complex so looking for ways to simplify it and make it easier to comply with becomes vital. When employees refuse to comply, determine what the real concerns are and address them as quickly as possible. It is important to align with their managers and make sure enough time is given to make the change feasible according to the requirements, and on top of other existing tasks they are simultaneously working on.
In this case, the team aligned with DevOps standards and consolidated their tech stack, successfully reducing verification items from 391 to just over 30. The shift focused on critical tasks, such as managing inactive user accounts, which automatically activated other required instances, making compliance more manageable and efficient.
Scenario 2
“A new mandatory regulation requires employees to make a switch to Microsoft Windows OS. Some resistors are refusing the adoption as they are more used to other operating systems such as the Apple macOS.”
✔ Solution: Showcase Effective Approach & Result
Sharing updates and findings as the first team implements the changes can be important to get others to jump on board. Find relatable, honest change champions to lead the way in demonstrating working solutions to the resistors.
Conclusion
Engaging your organization and navigating the complexities of regulatory change may seem daunting, but it’s entirely manageable with the right approaches. The key is addressing the challenges head-on and employing targeted strategies efficiently. Whether it’s to minimize employee resistance or ensure compliance is incorporated smoothly into daily operations across your organization.
Insights from this brief highlight the importance of clear communication, tailored adoption strategies, and ongoing engagement to sustain momentum. By learning from other industry experts who have successfully handled these hurdles, your organization can stay compliant, overcome resistance, and continue moving forward efficiently.
The Executive Council for Leading Change
The Executive Council for Leading Change (ECLC) is a global organization that brings executives together to redefine the landscape of organizational change and transformation. Our council aims to advance strategic leadership expertise in the realm of corporate change by connecting visionary leaders. It's a place where leaders responsible for significant change initiatives can collaborate, plan, and create practical solutions for intricate challenges in leading large organizations through major shifts.
In a world where change is constant, we recognize its crucial role in driving business success. ECLC’s mission is to create a community where leaders can excel in guiding their organizations through these dynamic times.
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