A company I know recently replaced its time clocks with an "automated" timekeeping solution. The goal was to streamline payroll processing by eliminating some manual procedures. Employees now log in and out at a computer and the information is electronically fed directly to the payroll system. There are no timecards for managers to tally or reports to complete; everything is automatic.

Except, of course, that it isn't.

Sometimes the computer is down and employees can't log in. Or they forget to log out prior to going home. Or they log out seven minutes later than their scheduled quitting time, pushing them into overtime. Or…well, you get the point.

Organizational development experts call these issues second-order consequences. When attempting to solve one problem, companies often create indirect or deferred glitches along the way.

And second-order consequences can cause more trouble than the original problem. While the new timekeeping system has saved time for the company's payroll department, it has placed a new burden on its unit managers. All those exceptions must be tracked and entered into the system. So, to address these unforeseen consequences, the company has implemented another change. Now, when employees neglect to log in or out, for example, they simply fill out a form detailing the exceptions. Their managers must then manually make the adjustments on the automated system.

One manager, who has dozens of employees, comes in on weekends just to sort through the stack of exception forms and update the system. She would do it on work time, but she can't fit the extra four hours into her schedule. In this case, the solution to the second-order consequences has created third-order consequences.

At the pace with which change happens in the workplace today, second-order consequences are inevitable. Leaders can try to predict all the possible ramifications of change, but every new initiative carries the risk of unanticipated side effects. The way in which leaders adjust to those consequences -- and keep them from spiraling out of control -- defines how well they manage change.

Labels: business, employees, leadership, management