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Every organisation goes through change but the question lies; do they know the need for change. Why are they going through change. Have the employees understood the need for this change? Strategic change management is successful when there is participation from stakeholders, employees, the leader etc.
According to Bevington (2012) Strategic change affects employees, who create resistance because they do not understand the need for change and how will it benefit them. Some will resist change because they like the way things are and don't want anything to change also known as the status quo. Business organisations need to make sure that there are proper strategies in place to overcome this resistance and implement change. This change has to be constantly monitored to overcome any negative outcomes.
According to McMillan (2008) Kurt Lewin developed a change management strategy known as the force field analysis. He demonstrated that there are forces driving for change, forces repelling change. There is a need to balance out both these forces and ensure that change takes place smoothly.
Forces for change include:
Lewin - four forces of change
Miner (2007). ''Organizational behavior 4: from theory to practice''.
Burnes (1996) states that, there is the management on one end trying to implement change and employees on the other end who do not understand the need for change. They are affected by the sudden disruption in their smooth day to day work. Therefore, forces for change and forces resisting change. These forces can be internal or external.
Internal forces that drive change are cultural differences between employees, conflicts with other departments due to competition or performance, a want for increasing profitability.
The External forces that drive change in an organisation are new legislation and taxes, politics, competition, customer's needs and expectations, new technology.
According to Beer (2000) Lewin's 3 stage model is also known as the Unfreeze- Change- Refreezes. The first stage involves unfreezing, that is to create the platform for change. The second stage is change by bringing about transition via communication explaining why this change is beneficial and why there is a need for to implement this change. The third phase involves refreezing by establishing stability and letting individuals reconnect to their familiar environment. Refreezing helps in changing the low productivity state to a higher one.
In this report examples of Corus and AEGON have been provided. Corus is one of the world's leading steel companies, which produces heavy plates for construction, shop building, energy, semi finished products for re rolling and rod for wire drawing etc. AEGON is one of the world's largest life insurance and pension companies. It has 27,000 employees and over 25 million customers worldwide.
Q1 Learners need to show that they understand the background to organisational strategic change
Discussing models of strategic change
Evaluating the relevance of models of strategic change to organisations in the current economy
Assessing the value of using strategic intervention techniques in organisations
Ans) Change occurs due to different factors, it can be due to stakeholders, internal or external factors. The internal and external factors contribute to the force of change. The models that are used to implement change successfully are explained in detail. ADKAR, KOTTERS 8 Step model and Mckinsey's 7s model are all used for strategic change.
ADKAR - According to Hiatt (2006) the ADKAR change management is a management model that assists with change. It concentrates on change at personal level, and how to go about making that individual accept the need for change and work for the organisation with full motivation and co-operation. ADKAR was developed by Jeff Hiatt. Originally it was used to determine if change strategies were bringing the required results. Now days it is used to identify gaps to support the change process.
The Five Elements of ADKAR
In order for successful change each step of ADKAR needs to be followed.
Awareness - Awareness is to create an understanding for the requirement for change - That is, what are the benefits of change, Why is it necessary, what happens if we don't implement change etc Hiatt (2009).
Desire - Desire is to create the need to take part in the change - Leadership plays a very important role in desire. The leader has to motivate and influence the staff that they get encouraged for change Hiatt (2009).
Knowledge - Knowledge is give knowledge so the employees know what needs to be changed and how to go about changing that, example- explaining new tasks, providing training, understanding new roles Hiatt (2009).
Ability - Ability to implement change this can be done by monitoring, providing involvement, performance measurement etc Hiatt (2009)
Reinforcement- Reinforcement to strengthen the changes by rewards, recognition, feedback, performance measurement and audits. Hiatt (2009)
The ADKAR model can be used to monitor progress, identify employee resistance, an instrument for coaching by managers etc. The ADKAR Model can be used to ensure that there are smooth operations and that cultural change is taking place effectively. It can be used to fill the gaps within the organisational change strategies. Prepare individuals for change and emphasise areas of improvement.
Kotters 8 Step Model- According to Sabri (1967) Kotters 8 step model is used to find elements that are important to organisational change.
Sabri (2007). 'Purchase order management best practices process, technology, and change management.'
1. Create a sense of urgency- Creating a sense of urgency by finding the weakness and strengths of an organisation, examining the markets and completion Sabri (1967).
2. Develop a powerful coalition- By bringing together a skilful team to implement change successfully and forming strategies to achieve the vision Sabri (1967).
3. Create a Vision- Developing a vision to direct the change attempt and forming strategies to achieve that vision Sabri (1967).
4. Convey the Vision- Communicating the vision by guiding and training, communication plays a vital role in implementing change Sabri (1967).
5. Empowering others to accomplish the vision- Empowering employees to accomplish the vision by encouragement of new ideas, removing obstacles in change and changing systems that weaken the vision Sabri (1967).
6. Planning for and producing short term wins- Planning short term wins by rewarding employees and implementing a strategy to improve performance Sabri (1967).
7. Consolidating improvements- Consolidating improvements by reinventing the process with new themes and projects, hiring employees who can implement the vision and using a proper system that is credible to change the systems, policies, and structures that don't fit the vision Sabri (1967).
8. Institutionalising new methods- Institutionalising new methods by implementing proper channels to ensure the vision and mission of the organisation and the leader are clear Sabri (1967).
The 7S model: According to Witcher (2010) the 7S model was developed by Mckinsey's Consulting, it shows how to organise an organisation effectively and is based on seven key fundamentals.
It is split into two groups that are hard elements and soft elements.
The hard elements are tangible, whereas the soft are intangible.
hard and soft elements of 7s model
Framback (2001) 'Creating customer value through strategic marketing planning: a management approach'
The 7S Model
Plant (2001) 'E-Commerce : formulacioÌn de una estrategia'
The 7S Model where all fundamentals are interrelated.
Shared values are the most important in an organisation. It forms the basis for culture, performance and links the structure, system, strategy into the framework. Therefore it is highly important to have a proper culture.
Structure: The structure the organisation operates on such as coordination, task allocation, supervision etc. To bring about smooth operations have daily meetings Witcher (2010).
Strategy: Strategy is the plan created to succeed and have a competitive advantage. Eliminate waste and increase turnover by installing KAIZEN etc Witcher (2010).
Systems: The system that supports the firms such as IT, accounting, resource allocation, financial reporting etc. Introduce a good pay structure for the new team Witcher (2010).
Shared Values: The shared values are the core values of an organisation. The mission and vision of the organisation is very important to have a common shared value. Respecting their values and continuously striving for perfection Witcher (2010).
Style: Style how the organisation is run, democratic, autocratic, lassie faire.etc. A leader that coaches and motivates can ensure smooth change. A leader who is trained in emotional intelligence can empower employees Witcher (2010).
Staff: The employees are the number of people within the organisation the various departments and keeping in mind their cultural views Witcher (2010).
Skills: The skills that individuals bring to an organisation. Allow employees to take decisions Witcher (2010).
The 7s model is to analyse the situation, identify gaps, fill those gaps and use the fundamentals to achieve those goals. 7S Quadrants
PLANT,(2001) 'E-Commerce : formulacioÌn de una estrategia'
EXAMPLE- Corus understood the need for change and had a clear vision 'They wanted to achieve 15% return on assets by productive sales of products, solution and expertise to customers in the industrial markets and construction'. Corus planned to achieve this by using the resources available and driving its cost down and increasing productivity. It also seeks out new skills and expertise.
Q2 Learners will be expected to understand issues relating to strategic change in an organisation by;
1) Examining the need for strategic change in an organisation
2) Assessing the factors that are driving the need for strategic change in an organisation
3) Assessing the resource implications of the organisation not responding to strategic change
Strategic change occurs due to economy, a change in markets, new technologies being introduced and new procedures such as TQM (Total Quality Management) being introduced. Strategic change management can be explained with the SWOT (Strengths, Weaknesses, Opportunities, Threats) that is the internal changes that can occur inside and organisation and the PESTLE (Political, Economical, Social, Technological, Legal, Environmental) which is the external forces that bring about change in an organisation.
The external environment consists of the customer's needs and expectations, shareholders, changes in politics, product design, shareholders, and technology. To understand the external environment models such as the PESTLE can give an organisation an insight into the problems that can be faced externally by an organisation that may arise and how to deal with them.
A SWOT can be carried to check the strength weaknesses opportunities and threats an organisation may face. A feasibility study and scanning the environment can assist in studying the external environment and eliminating weaknesses. Market research is done to analyse the current market situation. Customer's feedback and complaints are taken to improve the quality of the product or a particular process.
TQM (TOTAL QUALITY MANAGEMENT)- TQM is about planning a structure to hold on to the market share. Customers look for quality, and they are ready to pay the price for better quality. Therefore quality has exchanged places with price. TQM is about identifying the customers want, to meet these needs economically. Checking the materials that are brought in is up to standard. Focusing on prevention rather that rectifying errors. Educating the employees and constantly training them for good output. Measuring the customer satisfaction and constantly reviewing the systems to ensure progress Oakland (2003). Therefore TQM is important factor in planning quality change.
PESTLE- Green (2007) The P.E.S.T.L.E framework takes into consideration the Political, Economical, Socio Cultural, Technological, Legal and Environmental
Predicting the future circumstances the organisation could deal with. The PESTLE can forecast the events that will influence the organisation as well as the ability to deliver the product.
Henry (2008) 'Understanding strategic management.'
PILOT STUDY- A pilot study is a small panel or committee that is established by the organisation to have an overlook of the entire business or a particular process. The feasibility study is conducted to give a yes or no signal to a business project. A feasibility study can take hours to weeks to give an answer, it depends on the amount of investment that dictates how much amount of energy has to be put into it Dalcher (2000).
ENVIRONMENTAL SCANNING - According to Kroon (1995) Environmental scanning takes into consideration the macro environment. The macro environment is the external forces that affect an organisation. The environmental analysis consists of environmental monitoring, assessment and forecasting. It is concerned with markets, companies, industries competitors and clients. On the other side there also exist the micro-level which is analysed within the industry. Customers, Suppliers and competitors signify the micro environment of a company.
SWOT- The SWOT Analysis analyses the Strengths, weaknesses, opportunities and threats of an organisation. Threats and opportunities are considered external factors whereas strength and weakness are considered internal factors (Weihrich, 1982) cited by Leung et al (2000)
Ferrell (1999) 'Marketing strategy.'
Strengths- The strength establishes the company's strong points
Weaknesses- It determines the weakness of the organisation not only from its standpoint but from the customer's vision.
Opportunities- It predicts how an organisation can grow within a market place
Threats- It analyses the threats that can crop up and thus establishing a plan of action to surpass them without getting affected.
EXAMPLE- AEGON needed to change because although it was successful it was not known to many consumers. The reason being the government imposed price controls that reduced its profitability. In order to be better known in the market AEGON took an audit and changed their strategy. They simplified financial services, developed a workforce and focused on customer service.
Q3 Learners will be able to lead stakeholders in developing a strategy for change by;
1) Developing systems to involve stakeholders in the planning of change
2) Developing a change management strategy with stakeholders
3) Evaluating the systems used to involve stakeholders in the planning of change
4) Creating a strategy for managing resistance to change
Stakeholders are people that belong to a group, organisation or individuals that have a direct or indirect stake in the organisation. Stakeholders hold a vital role in the organisation. It there is any changes going to take place it is important for the stakeholders to be aware of such change. Stakeholders can be customers, unions, government internal or external.
The vision and mission of an organisation is very important to send the right message to employee's stakeholders etc and letting them know what is the business about and what it wants. Communication strategies are very important to implement this change. The Kubler Grief cycle illustrates the process of change. Overcoming the grief cycle and implementing change can be done with models such as Burke Litwin's change model and Kotters 8 step model etc.
VISION & MISSION- Vision Statements and Mission Statements are motivational and inspirational words that are chosen by a leader to clearly and concisely convey the direction of the organisation. The vision and mission statement works better when the employees and employer sit together and decide on it rather than the employer making it alone, as the employees would feel valued and optimistic.
The vision and mission of an organisation is a clear and concise statement that answers the Question 'what business are we in?' A well devised mission statement has to answer five basic questions Ferrell (1999).
Who are we?
What customers are we serving to?
What are our competitive advantages?
What are our responsibilities?
What is our operating philosophy (values, ethics, beliefs etc)?
The Vision statement is used to communicate the end result. It is mostly written in the future. The vision and mission statement both have to be aligned with each other. The vision statement is important as the stakeholders will not understand the big picture of the organisation without it.
EFFECTIVENESS OF THE ORGANISATIONS EXISTING COMMUNICATION STRATEGIES.
Carr et al. (2001) the level of job satisfaction that is associated within organisations is associated with communication strategies. Every business has a unique selling point (USP) and for an organisation to succeed there has to be a communication strategy in place.
Communication is an intangible input to an organisation that is very essential for its success.
According to Carr et al. (2001) Management communication strategies have major job satisfaction. Clear communication of goals, job responsibilities have significant improvement in higher output quality. Communication within customers creates employer loyalty and quality production.
Clark (1996) Leaders have to look inside the organization to ease tensions making sure quality does not fail in the corporation. Mills et al (2009) communication should be continuous and training should be supported to overcome the change, Resistance is bound to happen during change but leaders can overcome them with great ease if there is proper communication.
KUBLER- Grief Model- According to Garcia (2009) the KUBLER grief cycle shows five phases the individuals face during change.
The first phase being SHOCK- Shock is the first reaction when an individual is told that there are some changes going to be made. Sometimes there isn't any initial reaction until the change process starts taking place and slowly starts to disrupt their schedule and they resist the change Garcia (2009).
The second phase is DENIAL- The individuals deny anything is wrong and behave normal by saying everything is fine but emotionally they have been wounded Garcia (2009).
The third stage is ANGER- When the individual realises that they cannot maintain denial they get angry. The individual gets angry and there is little that can be done because of rage and envy that is within him. Example- During a merger, a manager loses his position from manager to supervisor Garcia (2009).
The fourth phase is BARGAINING- The individual starts bargaining with their thoughts as to what this change means to their future or what can they do next Garcia (2009).
The fifth phase is DEPRESSION- The individual becomes silent and refuses to talk and spend time with other employees. It has to be noted that grieving must be processed in order to get out of this phase otherwise the anger or depression may build in the individual Garcia (2009).
The sixth phase is ACCEPTANCE-The individual slowly and steadily starts understanding the need for change and accept it Garcia (2009).
Proctor (2007). Community service chaplaincy: doing God's work in God's world.
Burke-Litwin Change Model:
Burke Litwin's change model demonstrates the various reasons for change and ranks them. It demonstrates that all the important factors are on the top of the model but it also argues that even if a change takes place on one of the factors every element in this model gets affected.
Mumford (2010). 'Gower handbook of leadership and management development'
According to Hatlie (2004) burke-litwin considers the environmental factors as the most important reason for change. The reason being most of the change is found to be external. Elements such as leadership, culture, mission and strategy are influenced by changes that occur externally.
The drivers for change
1. External Environment- The external environment consists of markets, completion, legislations etc. All of these factors have an impact on an organisation. To watch out for external changes it is important to continuously scan the environment Hatlie (2004).
2. Mission and Strategy- The organisation has a mission for a reason. The mission sets the direction for an organisation. A strategy explains in detail the plan and objectives of how to achieve that target, goal. In order for successful change in strategy it is important to communicate the consequences to the employees Hatlie (2004).
3. Leadership- The leader's attitude and personality reflect on the organisation. If they are successful at presenting the change they can implement it just as easily. Their strength inspires employees Hatlie (2004).
4. Organisation Culture- The culture of an organisation is the way things are done. It consists of a set of beliefs, attitudes, behaviours etc. Cultural change takes time to change. It has to be noted of how the employer wants his employees to behave and what he expects from them. There has to be a constant watch over employees and make sure the organisation is headed in the direction planned Hatlie (2004).
5. Structure- The structure of an organisation can change with the changes in strategy. This has an effect on responsibilities, relationships and ways of working. It is important to see the effects of structural change and make sure the team members know of what is required from them Hatlie (2004).
6. Work Unit Climate- The work unit climate is the perceptions of employees. If the employees are satisfied in their jobs it influences the organisation vice versa. Any immediate changes need to my managed sensitively as the employees may get angered and thus result in poor performance or interference from the unions Hatlie (2004).
7. Task Requirements - The skills of the employees will change from department to department. It is necessary to ensure if the skills are in the right place, if there is a need to bring someone new or if the skill can be developed Hatlie (2004).
8. Individual Needs and Values- The changes that occur in a team have to be looked at and carefully dealt with. It is impossible to get a perfect team in place therefore it is necessary to identify and potential risks and keep in mind the individual needs and values and treat them respectfully Hatlie (2004).
9. Employee Motivation- If employees are motivated there can be a successful change implemented. The challenge is to sustain motivation especially when there is resistance to change Hatlie (2004).
Q4 Learners will be able to plan to implement models for ensuring ongoing change by;
1) Developing appropriate models for change
2) Planning to implement a model for change
3) Developing appropriate measures to monitor progress
Change can be implemented using models such as Kaizen for continuous improvement, monitoring the system so there is always a constant watch over any side effects to the change. A gap analysis helps identify the gaps of an organisation. It looks to maintain the quality of an organisation. BPR (Business Process Reengineering) has to be constantly monitored during change.
5 GAP MODEL BUILD TO DEAL WITH THE SHORTFALL OF THE QUALITY SERVICE Nargundkar (2010).
According to Grigoroudis (2010) the Servqual model is used to manage quality and measure quality in an organisation.
Kusluvan (2003). 'Managing employee attitudes and behaviors in the tourism and hospitality industry'
The gaps are as follows
Gap 1. Between Customers Expectations Managements perceptions about these perceptions.
GAP2. Between Managements Perceptions Customers expectations
GAP3. Between Service quality specifications Service Delivery
GAP4. Between Service Delivery External Communication to customers about service delivery
GAP5. Between Customers expectations their perceptions on service quality
The GAP model takes into account the tangibles, reliability, responsiveness, assurance and empathy that is required in Quality Management.
BPR- BPR is known as Business Process Reengineering can be used in operations management to manage quality to meet strategic objectives. According to Radhakrishnan (2008) BPR was introduced by Frederick Taylor when he printed 'principles of scientific management' in 1900s. BPR is an analysis of the existing processes in an organisation and reengineering it for improvement in performances instead of a complete replacement of a process. BPR is used to bring about change in an organisation through focusing on employee responsibilities, organisational structures, incentive systems the use of information technology etc. It can reduce the time and cost of processes to do a certain job.
MONITORING- While implementing change the organisations change has to be monitored constantly. According to Khandker (2010) a monitoring system consists of setting goals and targets. The results that are derived from it are used to evaluate the performance. Monitoring helps in promoting accountability and dialogue among the policy makers and stakeholders and also policy design and implementation. Evaluation is an assessment of the results that are achieved by the programme.
The challenges in monitoring are too;
Identify the goals that are supposed to be achieved.
Identify key indicators that are used to monitor progress against these goals.
Set targets that are supposed to be achieved by a given date.
Set up a monitoring system to track progress to achieve specific targets. Therefore, encouraging better management and responsibility for projects and programmes.
KAIZEN CONTINOUS IMPROVEMENT- Kaizen is continuous improvement step by step involving everyone within the organisation. While implementing quality change Kaizen can be considered because kaizen means continuous improvement. It has to be noted that kaizen will fail if it is not conducted with commitment and kaizen philosophy. Kaizen is all about taking apart a process understanding how it works, how to improve it and make it better. Kaizen focuses on adding value to a process and eliminating its waste, Productivity Press (2002).
EXAMPLE- AEGON implemented change because people were confused who they were, what they did etc. They focused on brand strategy that helped it reposition the brand within the industry. The changes affected the organisation internally and externally. It influenced the behaviour and communication of customers. To implement change AEGON focused on customer service, it started making things more clear to the customers and made it easier to do business with. They developed strategies like external promotions that helped customers understand them. Talked to the media about the changes, and launched new and innovative products.
Conclusion- This report takes into consideration of two case studies AGEON and Corus. It explains the need for strategic change, implementation of strategic change and the involvement of stakeholders in change. Strategic change management is important for the success of an organisation as change is required.
Several models such as the PESTLE and SWOT are provided to show the internal and external factors of change. The implementation of change is show with models such as ADKAR, Kotters 8 step model, Monitoring, Conducting a pilot study, Mckinsey's model etc, Kurt lewins freeze model.
GLOSSARY OF TERMS-
Resistance- opposition to someone/something.
Emphasise- to give particular importance or attention to something.
Formulating- developing a plan, system, or proposal carefully, thinking about all of its details.
Reinventing-changing something that already exists and give it a different form or purpose.
Allocation-an amount or share of something that is given to someone or used for a particular purpose.
Monitoring- regular checks something or watch someone in order to find out what is happening.
Assessment- the process of making a judgment or forming an opinion, after considering something or someone carefully
Vital-very important, necessary, or essential.
Optimistic- someone who is optimistic is hopeful about the future and tends to expect that good things will happen.
Structures- the way in which the parts of something are organized or arranged into a whole.
Accountability-in a position where people have the right to criticize you or ask you why something happened.
Dialogue- a process in which two people or groups have discussions in order to solve problems.
Potential- the possibility to develop or achieve something in the future.
Forecasting- a statement about what is likely to happen, based on available information and usually relating to the weather, business, or the economy.