Understanding How Human Psychology Leads to Resistance to Change During Digital Transformation

Written By: Eric Kimberling
Date: June 23, 2023

In order to understand why people within organizations resist change, it is helpful to first understand basic human psychology. However, what does psychology have to do with resistance to change?

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When assisting clients in their digital transformation journeys, we are often requested to help manage change, particularly addressing the human aspect of change and resistance to it. This involves ensuring employee adoption, buy-in, and understanding of the transformation objectives and goals associated with the project. However, it is common for organizations and their employees to resist change. Despite envisioning a utopian future, when it comes to implementing the change, people inevitably resist it. Today, I will discuss a basic psychological framework that explains why people resist change. Additionally, I will explore strategies to mitigate risks and overcome psychological challenges within organizations. 

Overview of Maslow's Hierarchy of Needs

To understand the psychology of change and the human aspect of digital transformation, it is helpful to unpack and comprehend a fundamental psychological framework known as Maslow's hierarchy of needs. This framework is often taught to first-year psychology students and is considered a basic concept. I recall learning about it in both high school and college during my introductory psychology courses. Developed by psychologist Maslow in the 1940s, Maslow's hierarchy of needs suggests that human behavior is driven by our essential needs. At the core and foundational level, we have psychological needs such as the necessity for food, water, and shelter, which are crucial for our survival in the world today.

Once our basic needs are fulfilled—such as food, shelter, and other fundamental requirements—we can progress through Maslow's hierarchy of needs. The next level involves considerations of Safety and Security. Having satisfied our basic needs, we can now focus on ensuring our safety and security. Upon achieving this level, we can ascend further in the hierarchy and seek Love and Belonging. As we continue to progress, we reach the stage of self-esteem. Finally, we aim for self-actualization, striving to be the best versions of ourselves and continually improving. It is crucial to understand that without fulfilling the lower-level needs, attempting to focus solely on self-actualization will be challenging. Our minds prioritize fulfilling basic needs over self-actualization concerns. This hierarchical framework emphasizes the necessity of establishing a solid foundation before progressing upwards.

This framework applies not only to individuals but also to organizations, particularly during times of change. Considering the needs of individuals within the workplace becomes crucial when undergoing digital transformations. In the next section, I will discuss how this psychological framework relates to digital transformations and organizational behavior.

Executive Self Actualization Vs Employee Survival

Now, let's explore the connection between digital transformation, change management, and the psychological framework discussed earlier. Specifically, I would like to address the common disconnect between executives who lead and set the vision for digital transformation and the employees who are expected to execute and adapt to the changes.

Executives primarily operate in the realm of self-actualization. Their role involves envisioning how to improve the organization, optimize profits, promote environmental sustainability, and create a positive work environment. They tend to think long-term, considering a horizon of three to five years or even further if the business is family-owned or multi-generational.

During a digital transformation, executives approach the initiative from a self-actualization perspective. However, when they introduce the concept of digital transformation to employees, employees are often starting from a similar level. While it's important to acknowledge that every employee is unique based on their position and tenure, for the sake of discussion, we will consider employees as a collective entity starting at this level.

During the course of a digital transformation, a significant shift occurs between executives and employees. While executives remain in the self-actualization mode, employees tend to move back down the hierarchy. The reason behind this shift lies in the introduction of individual changes within the organization, which can instill fear, uncertainty, and doubt. As a result, employees become preoccupied with meeting their basic physiological needs and concerns about safety and security. Their ability to self-actualize is hindered when they worry about job security, financial difficulties, or being the sole breadwinner in their family. In contrast, executives continue to operate from a self-actualization standpoint.

This discrepancy creates a disconnect between executives and employees. Employees resist change because their focus has shifted towards their own security and foundational psychological needs, while executives remain in a self-actualization mindset. The tension and resistance to change become evident. Furthermore, employees are experiencing a sense of change fatigue in the current landscape. Organizations are implementing both planned and unplanned changes, such as those brought about by the aftermath of COVID-19, mergers and acquisitions, process improvements, technological initiatives, job reassignments, and the shift to hybrid work environments. These factors contribute to fear, uncertainty, and doubt, leading employees to revert back to the basic levels of Maslow's hierarchy of needs.

Understanding these psychological dynamics within an organization is crucial to effectively navigate change management. It enables us to address the tension and resistance stemming from the differing perspectives of executives and employees. In the next section, I will delve into strategies for managing these dynamics from a change management perspective.

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Long Term Vs Short Term Need

To delve deeper into this topic, it's essential to consider the distinction between employees' long-term and short-term needs within an organization. Let's begin by examining the long-term needs and how they contrast with short-term needs.

In terms of long-term needs, employees aspire to advance their careers, acquire new knowledge, foster personal growth, contribute to their teams, and make overall improvements to the organization. These are the objectives that many employees strive to achieve in the long run, demonstrating their engagement and dedication to the organization.

While focusing solely on long-term needs may seem ideal for executives or project teams involved in a digital transformation, it's crucial to recognize that when employees revert back to the basic levels of Maslow's hierarchy of needs, their focus becomes more short-term-oriented. This is where tension arises, leading to resistance to change. So, let's discuss the nature of short-term needs.

Short-term needs revolve around job security, and it's remarkable how impactful this aspect can be. Consider the current discussions around artificial intelligence and the numerous studies suggesting that AI may displace millions of jobs worldwide. Suppose an organization implements artificial intelligence as part of its digital transformation. In that case, employees quickly shift their attention from higher levels of the hierarchy to concerns about having a job or the uncertainty surrounding their employment.

Additionally, employees may worry about the diminishing value they provide to the organization in the short term. This concern is particularly significant for organizations with long-tenured employees who have excelled despite outdated tools, systems, and inefficient processes, relying on their individual heroics and accumulated knowledge. When long-term visions of digital technologies disrupt or threaten this perceived value, employees question their relevance to the organization.

These short-term needs align with the lower parts of Maslow's hierarchy of needs. The challenge lies in navigating these discrepancies between the lower and higher levels of the hierarchy. How can we ensure that employees reach the level of self-actualization and meet the long-term needs of both the organization and themselves individually?

The answer lies in addressing the short-term needs first. If employees are preoccupied with concerns in the lower part of the hierarchy, it becomes difficult to elevate them to higher levels. Therefore, the next step is to explore how we can move employees from their current state to a higher level of Maslow's hierarchy. This question will be addressed in the following discussion.

Navigating The Psychology of Change

The dynamics discussed so far emphasize the significance of organizational change management. It is crucial to have a clear and well-defined change strategy to navigate these dimensions effectively. Specifically, considering the psychology that causes employees to revert to their short-term needs and the lower levels of Maslow's hierarchy, we must understand how to elevate them to higher levels by addressing their core needs.

To mitigate these concerns and address short-term needs, several prescriptive measures can be taken. First and foremost is providing clarity. From a change perspective, ensuring that employees and the executive team understand how jobs will evolve in the future is paramount. Failing to answer this question and provide explanations will inevitably lead employees to revert to the lower levels of the hierarchy. Additionally, employees need clarity regarding their value to the organization. Defining roles going forward, emphasizing organizational design, and outlining clear rules and responsibilities, along with detailed documentation of business processes, contribute to this clarity and help alleviate concerns. By establishing such clarity, individuals can move towards self-actualization, as discussed earlier.

Another essential aspect of change management is defining a vision for employees. It is crucial to communicate the long-term value and contribution employees bring to the team, extending beyond their day-to-day roles. While clarity is important for transactional aspects in new systems or processes, outlining the vision for each role's future becomes paramount. For instance, in the context of artificial intelligence, if 40 percent of Susie's job will be automated, it is vital to articulate how Susie can utilize that freed-up time in an exciting and impactful manner. This provides her with greater opportunities for learning and becoming an even more significant contributor than before.

By implementing these measures within change management, organizations can address short-term needs, clarify roles and expectations, and establish a vision that inspires employees to embrace the digital transformation and achieve self-actualization in their professional journeys.

In summary, the key is to enable Susie to transition from the lower level of the hierarchy of needs to self-actualization by providing her with a clear vision of her future job. While these are high-level recommendations, there are specific methodologies and tools available to achieve this.

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Consider how to assist individuals in the new organization in addressing their short-term needs, allowing them to shift their focus towards long-term goals. I hope this guidance has provided you with a better understanding of the psychology of change and the importance of navigating it effectively as organizations. For more information and a deeper understanding of change management, along with specific tools and methodologies for your change program, please refer to additional resources available.

I would enjoy brainstorming ideas with you if you are looking to strategize an upcoming transformation or are looking at selecting an ERP system, so please feel free to contact me at eric.kimberling@thirdstage-consulting.com. I am happy to be a sounding board as you continue your digital transformation journey.

Be sure to download the newly released 2023 Digital Transformation Report to garner additional industry insight and project best practices.

Kimberling Eric Blue Backgroundv2
Eric Kimberling

Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.

Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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