Let’s face it: we are massively failing at change. According to research from Gartner published last May, employees’ willingness to support enterprise change collapsed to just 43% in 2022, compared to 74% in 2016. And Gallup’s “State of the Workforce 2024” report, which came out this June, highlighted significant frustration: while 23% of employees are thriving and are fully engaged at work, 62% of employees are ”quiet quitting,” employed but disengaged. The report also included data that just broke my heart: a whopping 15% of employees worldwide are ”loudly quitting” — “directly harming the organization, undercutting its goals and opposing its leaders.”

As I look back on the past 1–2 years of fieldwork with mining, construction materials, banking, non-profit, and many other industries, I see that much of the pushback and sabotage we observe in the workforce is directly related to the topic of change. That pushback suggests to me that organizations need to revisit the psychological contract they have (deliberately or tacitly) with their employees when it comes to change.

Let me explain.

Originally introduced by Chris Argyris, and further defined by Denise Rousseau, a psychological contract is usually defined as “an unwritten set of expectations between the employee and the employer. It includes informal arrangements, mutual beliefs, common ground, and perceptions between the two parties.” As an unofficial contract between employer and employee, the psychological contract at the core highlights the “fairness or balance” perceived by the employee around what they put into the job and how they are treated in return.

When it comes to change, the status-quo psychological “deal” is reflected in these recent statements from our clients and students:

• “You asked us to do this big push and change pretty much everything. We did. Now, why don’t you leave us alone?!” (An employee of a global construction materials company.)
• “When the last big transformation project was introduced, I supported it. But I cannot waste my time on all this change all the time. I have work to do!” (A senior manager in a global non-profit.)
• “I think our executives are out of their depth — and out of touch. They keep changing everything all the time — when will the things finally normalize?” (A middle-manager in a bank.)

As the statements suggest, from the point of view of the majority of employees, the existing psychological contract can be summed up as follows: “I will support your transformation agenda, do a big push, and in exchange, you will leave me alone for a few years.”

This status quo contract reflected decades of economic reality when we lived in a relatively predictable world, customers had brand loyalty, employees loved staying at one company their entire lives, technology moved slowly, and milking the same business model as a reliable cash cow was possible for years if not decades. Change was rare, and when it happened it was treated as a project with a clear beginning and an end, often wrapped up into a new competitive strategy or a branded transformation project.

Fast forward to today, and the competitive conditions could not be more different. Accenture 2024 Pulse of Change Index shows that the rate of change affecting businesses has risen steadily since 2019, by 183% over the past four years and by 33% in the past year alone. Companies must keep up, moving from the world of sporadic change projects into a continuous reinvention process.

Our data confirms this. Every two years, we at Reinvention Academy conduct “speed of change” research with our clients and community. In 2018, in a survey of more than 2,000 managers, 47% reported that in order to survive, they needed to reinvent their businesses every three years or less. In 2020, amidst the pandemic, that number jumped to 60%.

In 2022, every 5th organization in the world was reinventing itself every 12 months or less — faster than the budgetary cycle. Our 2024 data is still coming in, but the first 500 respondents show that the speed of change remains incredibly high, with 22.5% of organizations reinventing every 12 months or less — the highest velocity we’ve ever seen. Even more telling: when asked about the portfolio of reinvention efforts, participants reported that in 2024, 44.9% of initiatives represented radical reinventions, compared to 33.4% of efforts dedicated to intermediate and 21.7% to incremental change.

In other words, we have entered an era in which the only way to manage continuous turbulence is through continuous reinvention. This means that, when it comes to the psychological contract, we are (inadvertently) lying to our employees everywhere. Gone are the days of “you support this one-time transformation, and things will go back to normal for a few years.” Now is the time for honest dialogue and explicit re-negotiation: “To survive and thrive in the perpetually turbulent world, we all need to allocate some of our time and resources to perpetual reinvention. That is the new normal.”

Such dialogue does not happen in one sitting. Rather, it requires extensive and continuous effort.

For Beeline Kazakhstan (part of Dutch conglomerate Veon), renegotiation of the psychological contract around continuous reinvention involves regularly holding many internal gatherings where questions are raised, skills and resources are transferred, and hard decisions are made.

“My favorites include ‘The Soft Kill’ sessions, where we decide which products and features need to be ‘killed’ or reinvented. In the last year alone, we ‘killed’ five products, reinvented three, and plan to stop another two this year,” says Tahmina Qodiri, Beeline’s Chief People and Business Support Officer. “I also love our bi-weekly Friday Talk that connects top managers with all levels of organization in an ‘ask-me-anything’ format, where we reinforce the need for continuous reinvention, as well as the IT Bazaar, where anybody who needs internal resources for development for digital process optimization gets support in figuring out the best value-creating pathway.”

For the Vancouver Island-based Coastal Community Credit Union, the path towards re-negotiating the new psychological contract started with a radical and very courageous decision: the executive team closed the entire Credit Union for a day to get everyone on the same journey at the same time. (You read that right. Every. Single. Employee.)

Opening the dialogue with trend reports, hands-on workshops, and deep dives, Coastal mobilized the chain of reinvention efforts that resulted in outstanding year-over-year employee engagement & trust, best-in-class profitability through the Covid-19 pandemic, and each year that followed.

The company also sponsored a reinvention evening for the entire local community to engage partners and stakeholders as well. As Adrian Legin, President and CEO reflects, “The timing of the Reinvention Day could not have been better. We took a plunge into this transformation just a few months before Covid — and the culture change that followed was the saving grace during those difficult months. In the long run, it helped us all align on the strategy of continuous reinvention — rather than occasional change — which allows us to stay future-fit in any disruption.”

For Bruno Dragani, Chief People & Administration Officer for Coastal Community, a new psychological contract is now embedded into the culture: “We use feedback from employees and customers to get a better understanding of our strengths and opportunities to improve so we can continue to reinvent and create an outstanding employee experience for all.”

What Companies Should Do

Whether you open the re-negotiation of the psychological contract with a big bang event or a gradual cascade of conversations, a number of practices seem to help with the task:

Regularly share data that speaks to the new reality of the fast-moving, ever-changing, hyper-disruptive world.

Reports such as the World Uncertainty Index, the Pulse of Change, the WEF Global Risk Report, and others can facilitate the necessary transition from the “change is rare” mindset to the “continuous reinvention” mindset. Even better: reports are spaced out throughout the year, so you have a perfect reason to come back to the conversation on a regular basis to assure sustainability. One of our clients, a manufacturing company, has now integrated a trend-watching session into its quarterly All-Hands Meetings, using the newly published reports to involve the team in a core question: “What should we do differently to succeed in this new reality?”

Use the data as a springboard for developing new rules and agreements around change as a continuous process rather than an occasional project.

The goal is to thrive in the new reality, not merely endure it, so reinvention and re-engineering across processes and teams are needed to go from words to actions. A global non-profit we are working with used the new hyper-disrupted reality to revise the standard business practices and operating procedures. One of the processes currently under reinvention is a move from a traditional to an agile strategy format with short quarterly planning sprints and frequent alignment around re-prioritization to respond to incoming disruptions and changing needs. Each Agile Strategy Spring Review allows the team to solidify the new psychological contract around continuous reinvention as a response to the volatile, uncertain, and perpetually turbulent reality in which the organization operates.

Find a way to make it fun with meeting platforms for open discussion and decision-making that actually makes life better for every employee.

Much like the Beeline Kazakhstan fun and engaging meeting formats, a financial services company we support instituted regular “Kill the Company” sessions to map out key risks and disruptions in a fun way while simultaneously reducing the resistance to change as all key threats are uncovered and reported by multi-functional teams of employees who then are ready to advocate and lead change again and again.

The fast-moving, ever-changing, hyper-disrupted world is here to stay. The faster we update the psychological contract around change with our employees, the more likely we are to actually thrive in it.

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