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Writer's pictureJoanna Stone

The True Cost of Neglecting People During Organisational Change

In the world of business, change is inevitable. Companies undergo mergers, acquisitions, restructuring, and transformations to stay competitive and relevant. However, while these structural changes often focus on business models, processes, and technologies, one critical factor is too often overlooked: the human element.

And yet:



Morale directly impacts the bottom line


And still, in the midst of significant changes, some companies fail to acknowledge this. Their response to workforce dissatisfaction is often dismissive: “If they don’t like it here, they are free to go.”


Such an attitude can be costly, as the math reveals. For every $1 million spent on wages, they may be losing $2.75 million in potential value due to low morale. This loss represents not only financial waste but a failure to capitalise on the true potential of their workforce. So, what is the true cost of neglecting people during organisational changes, and how can it be avoided?


The Financial Impact of Low Morale


Let’s break down Brad Bird’s quote in terms of real-world impact. When employees are demotivated and disengaged, the value they bring to the organisation decreases significantly. If you’re spending $1 million on wages, but morale is low, you’re only getting $250,000 worth of output or value. On the other hand, with high morale, that same $1 million in wages can translate into $3 million worth of productivity, creativity, and innovation.


The difference between high and low morale isn’t just a matter of happier employees; it’s a difference of $2.75 million in value for every million spent. And that’s just the start. Over time, the compounded effects of low morale can result in:


  • Decreased productivity: Disengaged employees work slower, produce less, and are less innovative.

  • Higher turnover rates: More employees will leave, either because they feel undervalued or because they’re frustrated with how the organisation is handling the change.

  • Reputational damage: High turnover and low morale can hurt a company’s reputation, making it harder to attract top talent.

  • Loss of institutional knowledge: When employees leave, they take with them their experience, knowledge, and relationships—intangible assets that are difficult to replace.


Now, those numbers above are more of a gut feeling than hard data. But just because they’re not exact doesn’t mean they’re off the mark. A recent Harvard Business Review article reinforces this idea. Research shows that the long-term costs of layoffs are often much higher than expected. Layoffs don’t just save money in the short term—they also lead to reduced innovation, slower rehiring, and lower overall performance. These effects linger well beyond the initial cost savings, ultimately weakening the company’s culture and morale.


The Emotional and Cultural Fallout


Beyond the financial implications, neglecting the human aspect during times of major change has emotional and cultural repercussions. Employees who stay on after waves of restructuring, layoffs, or leadership changes are often left to pick up the pieces. These "survivors" may face increased workloads, feel insecure about their own future, and experience emotional exhaustion from seeing their colleagues let go or leaving on their own.


The result? A bruised workforce. Studies show that it can take up to two years for employees to fully recover from major organisational changes. During this time, potential is wasted, and the opportunity to build momentum is lost.


Moreover, the culture within the company can erode. A lack of care for employees during transformative times fosters distrust, disengagement, and ultimately, a breakdown of the very values that make a business thrive.


The Long Road to Recovery


It’s not enough to simply expect employees to adjust to change. A hands-off approach leaves employees feeling unsupported and can lead to lasting damage to morale and productivity. Even those who don’t leave may be disengaged, doing the bare minimum to get by, waiting for clarity or, worse, for another opportunity elsewhere.


The road to recovery from such disengagement is long. Companies that fail to address these human elements often spend years trying to rebuild trust, re-engage employees, and restore productivity to pre-change levels. In the meantime, the organisation suffers from missed opportunities, wasted talent, and stagnation.


How to Prevent the Loss: Caring for People in Times of Change


The good news is that these losses are preventable. Companies that take the human aspect of change seriously can turn the potential disaster of low morale into an opportunity for growth and innovation. Here are a few ways to ensure employees feel supported and empowered during times of transformation:


  1. Prioritise Communication - Open, honest, and consistent communication is key. Employees need to understand not just the "what" of the change but the "why." Transparency helps employees feel included in the process rather than victimised by it.

  2. Empathy and Support - Leaders must show empathy towards their teams. This means acknowledging the emotional impact of change, offering support, and actively listening to concerns. Creating channels for feedback and addressing anxieties early on helps to reduce uncertainty.

  3. Invest in Engagement - Employee engagement should not be an afterthought during times of change. Workshops, team-building activities, and one-on-one check-ins are critical to maintaining a sense of community and purpose within the organisation. Employees who feel connected are more likely to stay engaged and contribute to the company’s success.

  4. Empowerment through Involvement - Employees who are part of the change process are more likely to embrace it. Involve them in discussions, decision-making, and implementation to ensure they feel a sense of ownership and responsibility in the organisation’s future.

  5. Recognise and Reward - Acknowledge the contributions of employees who go above and beyond during difficult transitions. Recognition helps to maintain morale, and rewarding those who take on extra responsibilities can motivate others to stay engaged.


Don’t Let Neglect Be Your Legacy


Organisational change is complex and challenging, but the most successful transformations are those that recognise the vital role people play. Neglecting the human element isn’t just a matter of bad morale; it’s a multi-million dollar mistake.


By prioritising communication, support, engagement, and empowerment, organisations can protect their most valuable assets—their people—and avoid the costly consequences of low morale. After all, if every dollar spent on wages can yield three times its value with high morale, investing in people is not just the right thing to do; it’s the smart thing to do.



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