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Change management is the process of developing a planned approach to change in an organization. Typically the objective is to maximize the collective benefits for all people involved in the change and minimize the risk of failure of implementing the change. The discipline of change management deals primarily with the human aspect of change, and is therefore related to pure and industrial psychology.
In organizations there are often two types of work. There is the normal delivery process where the main business of the organization is done. Then there are the change activities, whereby necessary change is made to the business and the way it is done.
As with other subjects, a great deal of this site is relevant to organizational change. However, there are more things to say that are specific and relevant to this situation.
Organizations deal with changes in equally ineffective ways. They don't act but simply react to the business environment around them. Many of the corporate moves and manoeuvres taking place in the marketplace these days are fuelled more by a fear of the future than by a clear vision of how to get there - profitably and through sustained growth (Carr et al., 1996). The paper provides an insight into various perspectives related to managing change within organizations followed by a case study on McDonalds to highlight the practical application of change management theories.
Change management involves individuals, human resources, technology, or the structure of the company itself. Because change is stressful, it is important to complete changes in the workplace in an orderly and efficient manner. Change management methodology involves eight success factors.
1. A sense of urgency must be established. If the affected parties see the change as required, they are more likely to accept the change.
2. The Vision for Change must be communicated in a clear and focused manner. All those involved should understand the vision for change and be able to act upon it.
3. Increase the Company's capability for change. Companies should be flexible enough to embrace change, rather than so rigid that change creates a revolution, uprooting the entire workforce.
4. Communication is vital. Information regarding the change must be communicated from those evoking change to those who are affected by it - in a reliable, credible and timely manner.
5. Stakeholders should be involved. When stakeholders are involved, change is effected in a swifter and smoother manner, with less resistance.
6. All levels of leadership ought to be engaged in the change. If the leaders are embracing the change, then they can oversee and manage the team members' reactions to the change. By having strong and educated leadership, the changes will move much more smoothly.
7. Integrate project management strategies with the change. By implementing projects, your company will have greater success with change management and with meeting strategic company objectives in general.
8. Enhance the performance of the company and reinforce behaviours that are desired in the company. By doing this, there will be less resistance to change.
Once these eight factors for success in change management methodology are acknowledged, change management can be executed (Reynolds, 2009).
Working Style of Organization:
We all have our own assumptions about how organizations work. The use of metaphor is an important way in which we express these assumptions. Some people talk about organizations as if they were machines. This metaphor leads to talk of organizational structures, job design and process reengineering. Others describe organizations as political systems. They describe the organization as a setting web of political intrigue where coalitions are formed and power rules supreme. They talk about hidden agendas, opposing factions and political maneuvering. Morgan identifies some organizational metaphors:
Flux and transformation (Cameron & Green, 2004).
The change equation is a simple tool that will helps in understanding how individual employees react to change. If the manager knows what form the resistance to change might take, he can begin to think about which elements need his focus, in order to change attitudes and win hearts and minds.
The change equation is very simple and allows managers to consider whether the elements required for successful change are greater than the resistance to the proposed change.
It's much easier to implement a change if individuals are pushed toward it by circumstances or feelings, rather than trying to pull individuals who are unwilling to change. When using the change equation, managers are looking at whether individuals are experiencing situations that are pushing for change (IBM, 2008).
Organizational changes talks about the situation where large numbers of people in the organisation have to start doing something different from what they have been doing. Leavitt, in the year 1965, developed a simple scheme for thinking about organisational change. He suggested that organisations comprise four integrating elements:
The people are the managers and the workforce
The technology is the tools and techniques that the organisation uses in performing its tasks.
The structure is the pattern of authority, responsibility, communications and workflow.
The task of the organisation is the reason for the organisation's existence i.e. its purpose and mission.
Change needs to be understood and managed in a way that people can cope effectively with it. Change can be unsettling, so the manager logically needs to be a settling influence. Check that people affected by the change agree with, or at least understand, the need for change, and have a chance to decide how the change will be managed, and to be involved in the planning and implementation of the change.
Change management is one of the challenges that managers' today face on a regular basis and successful implementation of any proposed changes highlights the ability of the organization to increase market penetration. Any changes to the current and existing work procedures are met with stiff resistance from the people involved. Managing and implementing changes in an organization is a complex task that requires an able leadership that has the capacity to visualize and identify possible barriers or resistance to the planned changes.
The IBM report (2008) on Making Change Work states that the "effects of globalization, technology advances, complex multinational organizations, more frequent partnering across national borders and company boundaries - just to mention a few of the enablers and accelerators of change." All this has resulted in a continuous process of change that requires capable change leaders who can achieve the change objectives by leading the employees towards a better way of working and increased market potential.
When transition occurs there are also three stages, which mirror those of the change process, but they are: end, neutral zone (or middle), and beginning. Transition begins with an ending, or grieving process, as individuals let go of familiar ways of working. They then move into a neutral, middle stage where they're uncertain or uneasy, before coming out on the other side. For people, the end of the change process is actually the beginning of a new way of working. It is widely accepted that competent change management can help businesses transform their operational procedures, outlook and approach towards more effective and efficient means of delivering goods and services. "Organizational success has become directly attributable to its ability to handle and sustain strategic change" (Wilson, 1992).
It's often transition and not change that people resist. They resist giving up their sense of who they are, their destiny as it is expressed in their current work. They resist the chaos and uncertainty of the neutral zone - the in-between state. They resist the risky business of a new beginning- doing and being what they have never done and been before. In order to effect change it is important to help people through the transition. Transitions associated with major upheavals might include major changes to roles and responsibilities, mergers of departments, schools or areas and ultimately loss of jobs.
Effective Change Leader
Dean Anderson (2001) in his book Beyond Change Management has defined change leadership as the function of leading an organization through the journey of transformation. "Transformation, ultimately, is the journey from where an organization is to where it chooses to be, when the change required to get there is so significant that it requires the people and the culture of the organization to transform, and the journey must begin before you can fully identify where "there" is." The role of these change leaders involves designing and implementing an innovative work culture that adapts itself to changing demands of the operating environment.
According to Jon Katzenbach (1993) and the other authors of "Real Change Leaders", the most effective change agents within businesses share seven common characteristics. This is probably the case for those who apply themselves to improving the businesses' performance in social responsibility just as they are in every other field.
Any manager concerned with project management has to be a change leader. He or she may be concerned only with incremental changes in a team, section or department or with large scale whole organizational change - whichever, he or she has to go through the following steps in managing change.
Recognising the need for change, including anticipating and not just reacting to, the need.
Analysing the change situation.
Setting change objectives.
Planning to achieve the change objectives.
Implementing and controlling the change process (Katzenbach et al., 1993).
The changing nature of work organisations, including flatter structures and recognition of the efficient use of human resources, coupled with advances in social democracy, have combined to place growing importance on leadership. Leadership is related to motivation, interpersonal behaviour and the process of communication (Mullins, 2007).
Attributes of Effective Change Leadership
The characteristics are:
Commitment to a better way. They share a seemingly inexhaustible and visible commitment to a better way, and believe deeply that the company's future is dependent upon the change - particularly their part of it - being successfully executed.
Courage to challenge existing power bases and norms. They develop the personal courage needed to sustain their commitment in the face of opposition, failure, uncertainty, and personal risk. While they do not welcome failure, they do not fear it.
Personal initiative to go beyond defined boundaries. They consistently take the initiative to work with others to solve unexpected problems, break bottlenecks, challenge the status quo, and think outside the box.
Staying undercover. They attribute part of their effectiveness to keeping a low profile; grandstanding, strident crusading, and self-promotion are viewed as sure ways to undermine their credibility and acceptance as change leaders. (Baker, 2010)
In his book, "The Dinosaur Strain", Mark Brown (1993) made some differences between two types of thinkers and called them as type1 and type 2 respectively.
Resistant to change
Open to change
Uncomfortable with uncertainty and ambiguity
Sees uncertainty as a natural reflection of a changing world.
Slow to learn from mistakes and may have difficulty acknowledging their mistakes.
Fast to learn from their mistakes.
Tends to look at problems through a fixed historical mind set.
Able to look at problems from several different angles
May find a difficulty fitting in a new team unless he is the boss or everyone knows him.
Flexible approach enables him to fit into new teams.
Absolutely knows that he is an excellent judge of character - and tends to select and promote people who fit his personal stereotypes.
Realise that all judgement is subjective and works hard to compensate for various factors that bias his view of others.
To ensure effective change leadership, the organization must establish a reporting structure conducive to the change; establish incentives and rewards that are related to desire results. It has to be ensured that organizational policies are made consistent with the desired change results, and encourage through positive influence what people should do to achieve desired results. Change leadership is the process of inspiring and encouraging people during an intervention.
Change leaders can use many approaches to encourage change. While they can try to persuade or sell the benefits of an intervention, they are more often involved in harnessing group creativity and group action to solve specific group problems that occur during the implementation of an intervention (Rothwell, 2001).
The change process isn't simply about introducing new systems or introducing new job roles - it's about people and their transition from an old way of working to a new way of working.
If you are aware of the difficulties that your employees might have with letting go of their old ways of working, you're well on the way to managing change successfully.
Steps of Change Process
Create a Sense of Urgency.
Help others see the need for change and the importance of acting immediately.
Pull Together the Guiding Team.
Make sure there is a powerful group guiding the change-one with leadership skills, bias for action, credibility, communications ability, authority, analytical skills.
Develop the Change Vision and Strategy.
Clarify how the future will be different from the past, and how you can make that future a reality.
Communicate for Understanding and Buy-in
Make sure as many others as possible understand and accept the vision and the strategy.
Empower Others to Act.
Remove as many barriers as possible so that those who want to make the vision a reality can do so.
Produce Short-Term Wins.
Create some visible, unambiguous successes as soon as possible.
Don't Let Up.
Press harder and faster after the first successes. Be relentless with instituting change after change until the vision becomes a reality.
Create a New Culture.
Hold on to the new ways of behaving, and make sure they succeed, until they become a part of the very culture of the group. (Kotter, 2007)
The benefits of leading effective changes within the organization is evident in the way change efforts "have helped some organizations adapt significantly to shifting conditions, have improved the competitive standing of others, and have positioned a few for a far better future" (Kotter, 1996).
Leading the Change Process Effectively
To persuade the employees of the need for change, it is necessary to put the arguments in several ways. The key is to use the best influencing style for the type of situation you are in.
Each of the influencing styles is equally effective when it comes to persuading your employees to accept the change that is happening. If you can use each of the styles effectively, you'll be well equipped to influence the different change situations you might encounter.
The four influencing styles are as follows: (IBM, 2008)
Assertive persuasion - Assertive persuasion is an evidence-based approach that involves using the power of logic, facts, and opinion to persuade others. People using this style tend to be energetic and persistent in putting across their arguments.
Reward and punishment - This style involves using pressure and incentives to control others' behavior. Punishment is threatened for noncompliance, and rewards are offered for compliance. To use this style, let others know what standards are being used to judge performance, and be clear about what you want.
Common vision - This strategy involves identifying and articulating what the future could be, and helping individuals to believe that outcomes can be achieved through their efforts. This style involves appealing to the hopes, values, and aspirations of employees, and focusing on being part of a larger group.
Participation and trust - This is an inclusive style that relies on getting employees involved in decision-making or problem-solving processes. When this style is used effectively, employees are made to feel that their contributions are needed, they are trusted, and their strengths are recognized.
Case Study: McDonalds
McDonald's, which was being opened in Illinois in 1955, is one of only a handful of brands that command instant recognition in virtually every country in the world. It has more than 30,000 restaurants in over 119 countries, serving around 50 million people every day.
The USP of McDonald's was cheap fast food, and the company's signature product, the Big Mac hamburger was considered an American icon. However, in the late 1980s and 1990s, the company's growth began to taper off. Analysts attributed this to a growing interest in a healthier lifestyle among people, which made them shun fat-laden fast food, and also increasing competition.
By the late 1990s and the first two years of the early 2000s, the company's profits had decreased drastically. In January 2003, McDonald's posted its first quarterly loss since it went public in 1965. In 2003, under the leadership of Jim Cantalupo, the company announced a turnaround plan aimed to restore the company's tarnished image and crumbling operations. By mid-2004, it was generally acknowledged that McDonald's had turned around. The company, which was once the favourite destination of fast food lovers around the world, had been receiving low ratings on quality and customer satisfaction since the early 1990s. Matters came to a head in January 2003, when it posted a loss of $343.8 million for the last quarter of 2002, making it the first quarterly loss for the company since it went public in 1965. Following the announcement of the loss, the share price fell to an all time low of $12 and McDonald's seemed to lose its magic. However, under the leadership of Jim Cantalupo, who was made CEO in early 2003, and Charlie Bell, the president and COO McDonald's managed a relatively quick turnaround (CaseStudy - ICMRI, 2008).
Analysts and company insiders attributed this to the successful implementation of the "Plan to Win" turnaround program that was adopted by the company in early 2003. Discussing the company's progress, Bell said, "We are encouraged by this progress and confident that our service, food, value and marketing initiatives will generate steady improvements over the long term. Under the turnaround plan, McDonald's introduced substantial system-wide changes that overhauled the company's products, operations and marketing. The new plan eliminated the negative elements in the system, while retaining and building on the positive aspects. The company moved quickly to tailor its operations to the changing trends in the fast food industry, confounding critics who had been sceptical about the company's ability to revive (CaseStudy - ICMRI, 2008).
Integrated Marketing Campaign aims to adopt a new health-conscious sub-image that would be consistent with the latest trend of health awareness and the growing concern in obesity among children and target market. In addition, its goal is to introduce a new low fat menu, which may be called McKids meal. This meal will be low fat and should contain more nutritional value. This kind of marketing strategy that gives importance to the health of the consumer would definitely attract both parents and children since they are different from the traditional McDonald's meals. Nowadays the consumers are shifting their eating habits to include healthier alternatives in their diet. In addition, the innovation of Integrated Marketing Communication that would be implemented may be able to provide an effective advertising and public relations campaign that would successfully introduce the new McDonald's to the public.
The changes have been implemented for enhancing the promotional and advertising campaign of the company and to make the company more competitive and adjust the organization to the existing changes emerging with its internal and external environment not bring it to its downturn. With the change management process implemented by McDonald, there are certain resistance or conflicts that have been encountered. One of the resistances that occur is the reaction of the company's employees and or customers. Although there are employees who are in favour of the changes for example in using Integrated Marketing Communication, some employees and managers are not in favour for such implementation. Some managers and employees resist the changes because of the fear that it won't help the company with the problem or it may worsen the problem. In addition, the people that implement the Integrated Marketing Communication might not have enough knowledge to resolve the malfunctioning of said approach.
The success of the innovation is still uncertain in a sense that shifting the attitude of children about healthy fast food meals can be difficult. However, because of the campaign's strong encouraging characteristics, there is a strong chance that it will be successful. Furthermore, the new advertisements for the new image of McDonald's will penetrate all types of media to make sure that message will reach every single children in the 119 countries the company serve. Also, it is the parents after all who buy children their food. Thus, with all the image building that will take place, it is hoped that the new advertisements and the new theme "I love it even more!" will encourage parents to encourage their children eat healthy meals. The campaign will also help in silencing the critics of the company because at long last, strong emphasis on health concerns is being advertised in a 'kiddie-friendly way.
Changes or innovation in business is achieved in many ways, with much attention having been given to formal research and development. But innovations may be developed by less formal on-the-job modifications of practice, through exchange and combination of professional experience and by many other routes. The more radical and revolutionary innovations tend to stem from R&D, while more incremental innovations may emerge from practice - but there are many exceptions to each of these trends (Lundvall, 1992).
If McDonald will be able to carefully plan such innovation and use strategic and effective tools to implement such change, there is a greater possibility that the company will achieved its vision of a food industry that provides a health-conscious sub image which is consistent with the latest trend in health awareness today and for the future.
Therefore, it is concluded that, changes of management is not bad as long as the changes made can really enhance the competitiveness and strength of an organisation. It is effective, if and only if, a thorough investigation and evaluation of the organization's performance has made. And if the study suggests that there is a need for change, then that is the only time, the organisation should imposed required changes to be done. Because, change of management system is very critical or crucial, one wrong move, the company, might faced its biggest downturn instead of strengthen and expand its business portfolio and survive to the stiff competition in the business arena.
It is recommended that McDonald must see to it that the changes are well planned and implemented carefully, because these will the basis for the success and/or failure of any organisation.