Surveys reveal some executives ignore the human side of their organizations.

Executives and their employees disagree about the effectiveness of change initiatives, according to a study released by international management consultants Kepner-Tregoe, Inc. The study, documenting the results of parallel surveys the Princeton-based firm conducted on management and employee

According to T. Quinn Spitzer, President and CEO of Kepner-Tregoe: "Short-range approaches may offer visible results more quickly, but, as organizations move beyond bloat to the next level of transformation, the neglected human systems will be reflected in lowered return on investment in the long run."

Change initiatives are proliferating at North American organizations. Almost half of the executives surveyed report undertaking five or more initiatives over the last 18 months. However, a rift exists between management and employee perceptions on the success of the initiatives and the effects the initiatives have had -- particularly on employee morale.

More than half of the executives surveyed report that their employees attitudes toward change initiatives are "resistant" or "skeptical". Similarly, more than half cite "people" issues -- commitment/buy-in, sinking morale, resistance to change -- as the concerns most likely to "keep them awake" at night. Yet fewer than one in four are planning initiatives such as employee involvement, leadership training or performance system improvements during the coming year.

The executives report that the flurry of initiatives succeeded in shoring-up their organization's bottom line, with 67% of them reporting improved profitability. Yet more than half admit neither their internal systems nor their employees' skills had improved.

The employees painted a different picture than their management:. three in four said their skills had not improved, and 49% perceived a drop in morale. Two in five agreed with their bosses that profitability had risen while three out of four workers agree that their skills are the same or worse. They also perceive the success percentages of the initiatives to be 20% lower than their executive counterparts.

Explains Quinn Spitzer, president and CEO of Kepner-Tregoe, "If organizations have a structured approach to using their people as agents of change, and measure results with the same rigor that has traditionally been reserved for monitoring financial and quality systems, they will not lose sleep over low employee morale."

Specific ways companies such as Corning, Rhone-Poulenc and Chrysler have found to include the human dimension in their downsizing and reengineering efforts and redress workers dissatisfaction include:

1. ARTICULATE VALUES and put them into practice.

2. DEVELOP A VISION to be shared throughout the company.

3. ESTABLISH A SOCIAL CONTRACT between employer and employee by forming and committing to an agreement that outlines mutual responsibilities.

4. DESIGN THE RIGHT PERFORMANCE ENVIRONMENT with clarity about what needs changing. Employees must be provided with performance specification, information, skills and support.

5. CREATE A LEARNING ENVIRONMENT with learning and education as part of a shared culture. Collect the knowledge created through sharing "know-how".

6. BUILD INFRASTRUCTURE by designing the organization's systems, structure and processes to support knowledge and information sharing.

Spitzer says, "What's needed is a model that recognizes that people are the basic unit, the first principle of change -- not the last. Management's task is to align the strategy, values and performance systems of the organization so that employees can create value that is passed along to customers -- and, ultimately, to shareholders."