The LOE Index: A Quantitative Tool for Measuring the Individual Response to Organizational Change By special guest contributor Victoria M. Grady, PhD

“The role of Change Management is the transformation of chaotic inconvenience into a manageable process first within the individual and then collectively within the organization.”  ~ Victoria Grady, PhD

This tutorial is designed to introduce the LOE Index. The LOE Index is a diagnostic tool that identifies behaviors, perceptions, and attitudes that emerge in organizations as a response to change and that ultimately impact overall effectiveness. The tool enables organizations to anticipate symptoms and to plan and adapt efficiently to the impact of change. The index focuses on the individual, and how factors inherent in change affect the individual’s performance and subsequently have a negative impact on the organization.

What is the LOE Index?

Effective and long-lasting change initiatives take time to build and implement. To be successful, it is critical to understand the individual employee change perceptions and change readiness. The Loss of Effectiveness (LOE) Index is a quantitative individual assessment tool, which assists in bridging the unavoidable behavioral disconnect found between individual employees and an organization undergoing change. The LOE Index is based on the original research conducted to define the Model of an Organizational LOE.

The Model of an Organizational LOE (Figure 1) states that an organization transitioning through an organizational change initiative will experience a loss of stability, resulting in the exhibition of a set of symptoms that are predictable and measurable. The symptoms are categorized based on an: overall predisposition toward organizational change, decreased productivity, decreased morale, decreased motivation, increased conflict, increased absenteeism, and increased turnover (Table 1).

Figure 1: Model of an Organizational LOE

Organizational Change causes a loss of stability which results in the development of a predictable and measurable set of symptoms within an organization. When a significant number of these symptoms are present simultaneously, an organizational loss of effectiveness will occur. (Grady, 2005)

Table 1: Symptoms Equivalents

The simultaneous exhibition of a majority of the symptoms will negatively impact the overall effectiveness of an organization and lead to the development of an organizational LOE. The LOE Index contains 54 questions which identify and quantitatively measure these symptoms. The average time to complete is between 14-16 minutes.

What does it do?

The LOE Index is a diagnostic tool that specifically identifies behaviors, perceptions, and attitudes that emerge in organizations in response to change and that ultimately impact overall effectiveness. The tool enables organizations to anticipate symptoms, to plan and adapt efficiently to the impact of the change. The Index focuses on the employees and how factors inherent in change affect their performance and could subsequently have a negative impact on the organization.

An individual’s results of the LOE Index are compiled into a collective report that provides a snapshot of the organization, which forms the baseline for evaluating the overall “change health” of the organization in the current state and into the future. The LOE Index can be administered intermittently, at set intervals, or before-during-after each change initiative. The reiterative administration of the LOE Index provides the organization with continuous information and flexibility to re-evaluate the success of the organizational change initiative.

Why is it valuable to my organization?

The LOE Index provides the baseline for creation of a comprehensive implementation plan by collecting individual quantitative data to enhance situational awareness, assist with defining the support structure and strengthen the strategic analysis. The following are examples based on our cumulative experience of how the LOE index can assist an organization in the development of a successful and comprehensive organizational change implementation plan:

• If the LOE Index indicates that decreased morale (increased anxiety) is a significant problem, a qualitative analysis would be performed to determine the “root” cause of the morale issue. Through the root cause analysis, we learn the problem with morale is predicated upon a new technology that was implemented without the proper training. Then, we integrate components to our implementation plan that include increased education/training and other methodologies focused on minimizing anxiety and other morale related behavioral characteristics.

• If the LOE Index indicates decreased motivation, the qualitative component of the analysis would assist in determining the basis for decreased or lack of motivation. For example, the qualitative analysis might uncover an employee perception that increased participation or input is not well received and often ignored by management. This employee attitude is fundamentally unhealthy for the organization. It hinders productivity, performance, and innovation. Methodologies would be built into the implementation plan to address these employee concerns and other related behavior that could, otherwise, potentially go undetected.

• If the LOE Index indicates the potential for increased absenteeism, the organization will need to implement strategies to identify and mitigate the potential for unnecessary absenteeism which can directly impact performance, productivity and potentially, profitability. It should be noted that the research supporting the LOE Index highlights both the mental or emotional form of absenteeism as well as physical absenteeism. For example, an employee can be physically present at work, but emotionally or mentally absent from his/her job responsibilities.

Ultimately, this approach provides valuable insight into the organization’s perception of change and provides leadership with a unique perspective to help design a comprehensive, customized change management plan. Sample data taken from independent organizations utilizing the LOE Index can be found below (see Sample 1, Sample 2, and Sample 3 below).

Note - The following are data samples from previous clients who have utilized the LOE Index as a preliminary individual assessment for the employees who will be directly impacted by an upcoming organizational change. Each data sample includes a brief description of the organization and the change initiative. It should be noted that the higher the LOE Index score, the more likely the organization is to suffer an Organizational LOE. The length and severity of an Organizational LOE directly correlate with the organization’s responsiveness to the symptom occurrence.

Data Sample 1: For Profit Medical Facility

This organization uses the LOE index to periodically measure the “pulse” of the organization. Both significant peaks on the graph occurred as the result of the introduction of new leadership. The first peak is the result of a new office manager who began her work in September 2007. In February of 2008 her employment with the organization was terminated citing irreconcilable differences between the leadership style and overall work environment. The results indicate a return to a more stable index score by April 2008.

The second peak in June 2009 was the result of the introduction of a new physician to the practice. As the data indicates, the most recent index was administered in May 2010, the organization has returned to a more stable index score. The sample size is 100% of the invited participants for all index administrations.

Data Sample 2: Federal Gov’t Organization

The organizational change for this Federal Gov’t Agency was a process/structural change. The interesting component about the graph above is the high LOE Index results for employees (managers) with many years of service with the organization. This was the opposite of the qualitative communication given to the consultants prior to the engagement.

This analysis provided critical information that resulted in cost/productivity/performance savings because the organizational change implementation plan designed by the outside consultants was customized to account for the higher symptom occurrences in all of the individuals with extensive years of service. It should also be noted that the Director of this organization scored in the uppermost range of LOE Index results. Again, this quantitative information at the outset of the project resulted in significant cost/productivity/performance savings--- additional resources allocated to alleviate the symptoms of the organization’s leadership were seen as positive reinforcement by the employees. The sample size was 62% of the invited participants.

Data Sample 3: Not For Profit Medical Facility

The organizational change experienced by this non-profit healthcare facility was the introduction of a technology change. The LOE Index was administered twice. The sample size was 95% of the invited participants. Again, there were no statistically significant changes in LOE scores from the first test to the second test from a cumulative perspective. However, differences are apparent in the data specific to the four office locations and employee positions.

The “providers “in this sample were the physicians who were required to use new electronic tablets instead of pen and paper to record all medical notes; their average LOE score represented an overall 23% increase in “loss of stability”. Further investigation in the form of qualitative interviews with the physicians revealed a significant shift from a doctor/patient cultural perspective that had gone unrecognized until the results of the LOE Index were reported and subsequently analyzed. This information was integrated into the organization’s change implementation plan at this time. It should be noted that the personnel (excluding the physicians) had received extensive training and education with the technology and were more accustomed to it at the time of the administration of the second index.

LOE Index Value Summary

The Loss of Effectiveness (LOE) Index is a quantitative individual assessment tool which assists in the change management process by bridging the disconnect between the organization and its employees. The LOE Index identifies “change perceptions” and “change reactions” in those individual employees impacted by the change. The collection and subsequent integration of this individual data into each comprehensive organizational change initiative will maintain the focus of the project on its most critical assets, thereby increasing the strategic success potential.

About the Author

Victoria M. Grady completed her Doctoral Studies at the George Washington University in May 2005. Dr. Grady’s dissertation focused on the inherent loss of stability suffered by organizations introducing and implementing organizational change initiatives. The research resulted in a validated model explaining the tendency of individuals, often subconsciously, to struggle, resist, and potentially disrupt the organizational change initiative.

Dr. Grady continues to build upon her research in the field of change management and extended her original model to include a validated index that quantitatively measures the tendency of individuals within the organization to embrace organizational change initiatives. The Loss of Effectiveness (LOE) Index focuses on the employee, and how factors inherent in change affect their performance. Subsequently, this shift in performance will have a negative impact on the overall health of the organization. Additional areas of research interest include Organizational Trust and its respective impact on organizational change initiatives.

She is currently an Assistant Professorial Lecturer in the Department of Organizational Science within the Columbian School of Arts and Sciences at the George Washington University.

For additional information, please visit her website at www.loeindex.com or contact her directly at vmgrady(at)loeindex(dot)com.