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It is in the nature of people to be afraid of change. In our everyday life we normally establish routines and become comfortable with the way things just happen. The idea of potential change of the patterns of behavior makes us feel uncomfortable, brings uncertainty and risk in the everyday life. As social entities, corporations are no different. Daily work schedules and process organisation become part of the corporate identity and gradually slow down the speed needed to remain competitive and be a winner. According to Tabrizi (2007), "To stay competitive, a player must be dynamic in the marketplace, constantly revising its own strategy in response to the strategies of its opponents, as well as aligning itself with the changing demands of its customers. The organizations that can most quickly respond to the marketplace, particularly those that adapt faster than their competitors, are the ones that make it to the top."
In general, reviewing the initial reasons for change, it can be reactive, when organizations respond to external factors, and proactive, when companies initiate the process of change themselves. However, no matter what the initial reasons were, once the process has started, we can be sure that change in one part of the company invariably will affect people and processes in all other parts. Moreover, a thorough change can influence, or be influenced by the organizational mission and strategy, structure, products and processes, its employees and culture, technology and know-how employed.
Change can be provoked by external or internal factors, or a combination of both. External factors may be changes in demand of consumers, threatening actions of competitors and suppliers, newcomers in the business, M&As, changes in the legal and political environment, new technologies, changes on the labor market, etc. The internal factors can be found within the company itself and may result from redefined mission and strategy, need for major changes in the culture and management style, need for improvement of quality and efficiency, etc.
There are lots of algorithms and prescriptions about how exactly shall changes be implemented. In order to get deeper understanding of the contemporary methods, first we will examine the basic change management theories and approaches.
The three main theoretical schools are differentiated by the addressed levels of change - individual, group or organizational level. These are The Individual Perspective School, The Group Dynamics School and The Open Systems School (Burnes, 2009).
Individual Perspective school
According to Burnes (2009), the Individual Perspective School is divided into two main movements - Behaviorists and Gestalt-Field theorists. Both of them address organizational changes on individual level. The main idea of the Behaviorists is that people's reactions are closely interrelated with their interaction with the environment. One of the first Behaviorists, Pavlov, stated that all behavior is learned and all individual's actions are led by the expected results. Through his well known experiment with the dog that associated the sound of the bell with food, Pavlov proved that one can easily manage people's behaviour through external stimuli and reward.
The other movement, the Gestalt-Field theorists, argues that human actions could not be product only of the surrounding environment, but from the interpretation of this environment through changing the understanding of the situation and modifying the external stimuli.
Group Dynamics School
According to Cummings and Worley (2009), The Group Dynamics School emphasizes on the implementation of organizational change on a group level. Its founder Kurt Lewin argued that the individual will respond to the group's interactions and pressure and will adapt to its culture and behaviour, accepting its values, norms and roles.
Open Systems school
The main focus of the Open Systems School is the organisation as a whole, "composed of a number of interconnected sub-systems" (Burnes, 2009). The different parts and subsystems are interacting with each other and with the environment. Mullins (2008) writes that most important is to achieve an overall synergy within the organization, rather than "optimizing the performance of any one individual part".
Approaches to change
The three basic approaches to change management are the Planned approach, the Emergent approach and the Contingency approach (Burnes, 2009).
The basic principle of the Contingency approach is that there is no "one best way" to change. Change has to be applied in line with the environment and the organisation has to adapt to it. The contingency approach examines the effectiveness of different models, techniques and methods of change management and advises to choose according to the situation.
The basic idea of the planned approach is that organizations shall first identify areas where changes are required and initiate a process of its implementation (Burnes, 2009). It was launched in the 40s in the work of Kurt Lewin, who developed the most popular models of planned change: Action Research and Three-Phase Model. The approach has been widely used since the 80s. The Action research model is based on the statement that change requires action, and action is based on analysing the situation correctly. The Three step model is based on three phases of implementation: unfreezing - moving - refreezing.
The Planned approach represents a more general prescription about how change should happen in a world much more ideal than the world we know today. As the contemporary situation is changing rapidly, the chance that the environment has changed again during the implementation of your change plan and has made it useless, is extremely high. That is why, I consider the Emergent Approach much more effective and useful.
The Emergent approach is focused on the assumption that change is a continuous. According to Dawson (2002), organizational change is a persistent, open-ended process of adaptation to changing environment. It emerges in an unpredictable and unplanned fashion. Maybe the most distinctive feature of the approach is the "bottom-up" approach of control, i.e. that the employees are most closely involved with the process with the change process (Dawson, 2002). The approach requires a major change in the traditional role of the managers. Unlike the planned approach, here, the role of the manager is not to initiate and control the process, but rather to assist and facilitate it. In order to summarize the main models of implementation, Burnes (2009) has chosen the three most practical models of emergent change: Kanter's Ten Commandments for Executing Change, Kotter's Eight-Stage Process for Successful Organisational Transformation and the Seven Steps model of Luecke.
In order to illustrate the overall impact that emergent change has on organizations, I have chosen the case of Ken Freeman, who made Corning Clinical Labs from "a business in shambles" to the industry leader in the size (Appendix I).
CASE STUDY Ken Freeman, Corning clinical labs, Appendix I
Change and the Manager
External and Internal Approaches to Change
As we have already outlined in the previous part of the work, change can be planned or unplanned (emergent). Planned change is sought when the "organisation deliberately attempts to make internal changes to meet specified goals or to pursue a set of strategies" (French et al, 2008). However, not all change in organisations happens as a result of intended direction. Unplanned change is provoked by some external triggers such as market forces, economic crises, economic opportunities or social changes. Unplanned change occurs spontaneously and without the organisation's provocation. "The appropriate goal in managing unplanned change is to act immediately once the change is recognized, to minimize any negative consequences and maximize any possible benefits." (French et al, 2008)
However, no matter whether the changes were planned or unplanned, in order to implement a successful and thorough change management plan, there shall be sufficient dissatisfaction with the existing situation, strong attraction to moving towards a more desirable position, desire to formulate a strategy that will realize the vision (French et al, 2008).
Change may be triggered by internal or external forces:
External forces may be changes in the demand for the organization's products as a result of changing consumer preferences, action by competitors, government etc., threatening tactics of competitors by aggressively cutting prices, newcomer in the market, political or legal changes, changes in the terms of trade (tariffs, exchange rates), lack of skilled employees, etc. (Martin, 2005)
Internal forces should theoretically, be more clear and predictable. For example changes in strategy as a result of revised mission or goals, need for cultural changes, changes in the management style, need for improvement in quality, efficiency, standards, need to cut costs (Martin, 2005).
However, according to Mabey and Salaman (1995), irrespective of the initial reasons for the change, change is characterized by two important dimensions: "firstly, the scale of change (from fine tuning through to corporate transformation) and secondly the style of change (collaborative through to coercive)".
Selected models of Change
Organizations typically respond to the challenges of the above described external and internal triggers with the help of various programs, each designed to overcome obstacles
and enhance business performance. According to Luecke (2003), these programs fall into one of the following four categories:
Cultural changes focus on the "human" side of the organization. It handles with the "general approach of doing business" and the relationship between the management and the employees. A typical example for cultural change is changes in the mission and vision of the company and the organizational development.
In order to illustrate the overall impact on the company that cultural changes may produce, I have chosen the example with AT&T and NCR.
Case study - AT&T and NCR (Apendix II)
Structural changes address the structure of the organisation and the design of jobs and working arrangements as the key levers of change. According to Mabey and Salamn (1995), structural changes are "triggered by an organisations inability to fully realize the strategy it is following due to administrative deficiencies caused by a mismatch between the new strategy and the existing structure" (Mabey & Salaman, 1995). Luecke argues that these programs treat the organization as a set of functional parts-the "machine" model. Through mergers and acquisitions, between companies, reengineering of units, reconfiguring of divisions, managers try to improve the overall performance and results.
A classic example of redesigning the whole management structure in order to complement the strengths of the top people, is provided by Google (Appendix III).
CASE STUDY GOOGLE, Appendix III
The third program for change is cost cutting. Its core idea is to eliminate non-essential and non-profitable activities. This can be done through reengineering of the structure, decrease of the personnel, focusing on the production of profitable items, etc.
Process change aims at making processes faster, more effective, more reliable, less costly. "These programs focus on altering how things
get done" (Luecke, 2003). Examples include reengineering a loan approval process, approaches to handling customer warranty claims, production processes, etc.
Attitudes to Change
3.1. Reactions to change
In general, there are different reactions to the proposed change process and according to them people are split into three main different groups - supporters, apathetic and resistors. According to French et al (2008), change initiatives are typically met by some resistance. "Resistance to change is any attitude or behaviour that reflects a person's unwillingness to make or support a desired change". The reasons for this reaction are manifold - people are afraid of the unknown, many of them don't understand the need for change, or some may even think that the proposed change goes against the values held by members in the organisation. These reactions outline the need to consider also changes in the culture of the organisation, including changes in member's values and beliefs.
French et al (2008) outline also another perspective of resistance to change in their work, namely to see resistance as "feedback that can be used by the change agent to help accomplish his objectives. The essence of this notion is to recognise that when people resist change they are defending something important that appears to be threatened by the change attempt" (French et al, 2008).
There is no universal recipe on how could resistance to change be overcome, however, considering the limitations of this paper, one example method illustrated also by a brief case study will be presented in the third part of this paper, The People Problem, which shall give the essence that could be followed.
Gender and Change Management
Preece, Steven & Steven (1999) describe several studies that have concluded that women are more likely than men to display characteristics which would make them good team players. The authors cite a survey conducted in the company Bass, designed specifically to examine gender-related issues in public house management. According to the survey, women appeared to focus on teamworking - 82 % of them answered that they find it beneficial due to issues such as the mutual development of ideas, helping each other and problem solving. In the same time, only 65% of the men stated to have positive attitude against team work. These results evidence that women are in general better teamplayers than men and consequently may experience a greater impact in the changeover of the company they are employed with.
Case study - AT&T and NCR (Apendix III)
What aspects of the external change environment did Jerre Stead and his
advisers choose to focus on? Could they have defined the external environment
in a different way, perhaps using scenario planning techniques
discussed above, which would have allowed them to construct
other, more realistic scenarios? By way of illustration, had they been less
US- and head office-centric, could they have created a more accurate
picture of the organization and its problems, one that would haveallowed them to see the potential for the problems they would create in
Scotland, their key subsidiary location? The central point of this message
is that managers are active agents, not merely passive recipients of
abstract and external market forces. Good managers understand how
to enact their environment in order to control it through more intuitive
and creative interpretations, re-definitions and action (Weick, 2001).
Weick argues that managers are often better advised to 'act their way
into thinking', by taking smaller, incremental steps and learning from
them, rather than 'think their way into acting' through top-down,
transformational planning strategies such as those depicted in the
AT&T case. The dangers of a top-down, planning-then-action
approach are twofold. The first danger is that by making big changes
there is little chance for learning to occur because you don't really
know which of the many components of the change had the most
effect. The second danger, and more likely consequence, is that by
constructing a plan that is complex you are likely to fall into the trap
of 'paralysis by analysis'.
The key point is that culture, once understood,
is treated as a highly manageable feature of organizations. This
seemed to be the perspective of Jerre Stead, the CEO of AT&T (GIS) in
the case study. Such unitary assumptions and analysis may have a degree
of validity in certain contexts, but in others they are likely to be misplaced
and misleading. Ask yourself the questions in the AT&T case: (1) How
realistic were the assumptions made by Stead regarding the potential to
create a unified culture in the company? (2) Were leadership and communications
all that was necessary to overcome barriers to change?
Perhaps he could have taken a different view, distinguishing between:
â- the corporate culture, which is essentially what managers want
the organization to be like, similar to the concept of corporate
identity in Chapter 6 and more amenable to control; and
Chapter 9 Managing organizational change 385
â- the organizational culture and subcultures, which are more akin
to the notions of organizational identity in Chapter 6, and
which are less amenable to control, for a variety of reasons.
Bearing in mind the preceding 'health warnings', and the concerns
expressed about the concept of unitary cultures, managers need to have
a set of sophisticated techniques to identify and manage their organizational
cultures. For example, in the AT&T case, Jerre Stead and his colleagues
might have benefited from constructing alternative scenarios of
what the organization might have looked like. More importantly, they
would clearly have benefited from an understanding of the nature of the
different subcultures in the various subsidiaries of AT&T (GIS).
The People Problem
The real change comes from the people. Individuals are those who create, implement and support change processes. "Unless people are involved, committed and prepared to adapt and learn, objectives, plans and future desired states will be likely to founder on the rocks of resistance" (Rosenfeld & Wilson, 1999).
Any transformation of significance will create people issues. And the more significant the transformation and the impact on the people, the greater is the need for full involvement (Burnes, 2009). A successful implementation of turn-around organisational transformation requires not only good planning, but also understanding of the human part. Discipline is a key factor for success; however, it demands strict data collection and analysis, planning, and implementaÂtion discipline as a redesign of strategy, systems, or processes.
The main goal of this work is concerned with the role people play in managing strategic change how they do it.
Role of the management
Typically, the people at the top of any organisation are seen by others - employess, stakeholders and outside observers - as intimately associated with strategic change, whenever such occurs. Therefore, the overall role of management in the process of change is highly significant (Johnson, Scholes & Whittington, 2008).
1.1. Change Management at the Top
According to Mullins (2008), the successful management of change is a key factor of organisational performance and effectiveness and should emanate from the top of the organisation. The people at the top of the company are responsible for the strategy and philosophy, the culture, for creating and sustaining a healthy climate and establishing and directing appropriate organisational processes. "The successful implementation of change demands positive action from top management and a style of transformational leadership in order to gain a commitment to change" (Mullins, 2008).
Extremely important management features and capabilities are effective communication skills, ability for recognizing and releasing the potential of everyone involved with the change, setting a good personal example, self-pacing to avoid unnecessary stress.
1.2. Managers and leaders
However, top managers may be the initiators but are not always the real leaders of the change process. Luecke (2003) argues that "leaders create an appealing vision of the future and then develop a logical strategy for making it a reality. They also motivate people to pursue the vision, even in the face of obstacles. Managers, on the other hand, have the job of making complex tasks run smoothly". Managers are those who elaborate and implement process details, assure resources and direct the process.
John Kotter has described the relationship of leadership andmanagement in a simple two-by-two matrix, shown below (Luecke, 2003):
The main idea of the matrix is that long-term transformation process requires involvement both from leaders and managers and that "transformation goes nowhere when both leadership and management are found wanting" (Luecke, 2003).
1.3. Middle managers
Middle managers are the implementers of strategy. Their role is to put into realization the direction established by top management by making sure that resources are allocated and controlled appropriately, monitoring performance and behaviour of staff and, where necessary, explaining the strategy to those reporting to them (Johnson, Scholes & Whittington, 2008)
Role of Employees
According to Brill and Worth (1997), in order to make the change effort work, "we must learn how to capitalize on positive human qualities, such as trust, idealism, and dedication, and mitigate the impact of those other natural human traits (suspicion, stubbornness, anxiety) that often undermine the change process".
The role of employees is most obvious in cases where the chosen approach to change is bottom-up, not top-down. Strictly speaking, bottom-up change can not only be implemented from the lower levels of the hierarchy, but also initiated from the employees. However, Burnes (2009) argues that "there is little point in encouraging staff to identify change opportunities unless they are also encouraged to implement them". The need for using the bottom-up approach is evident when taking the emergent approach to change. Having in mind the rapid pace of environmental changes, they need to be dealt with speedily and be treated locally, in order to achieve optimal and timely success.
Role of Stakeholders
In the process of change stakeholders are not actively participating, however, gaining their support is extremely important. In a turnaround situation it is crucial that key stakeholders, like the major financing bank, trade unions and some key clients are kept clearly informed of the situation and the following improvements as they are being made. Moreover, a clear assessment of the power of different stakeholder groups may become vitally important, especially when implementing major transformations (Johnson, Scholes & Whittington, 2008). The support of powerful stakeholder groups can help to build a strong fundament, especially in cases where the change agent does not have a strong personal power base from which to work.
Dealing with Difficult People
Understanding the roles of the participants in the process and showing them the right direction to the desired change is the a major part of the transformation. However, as already outlined in the previous part of this work, "change imposed by others feels threatening rather than exciting" and the lack of choice makes people feel powerless and leads to stress and defensive behaviour (Mabey & Salamen, 1995). That is why, the earlier in the process the resistance "agents" are found, the better the whole process can be managed. French et al (2008) have outlined the following general approaches for dealing with "difficult people":
Education and communication - discussions, presentations, demonstrations;
Participation and involvement - allow others to help design and implement changes, contribute ideas;
Facilitation and support - providing emotional support, actively listening to problems, training;
Negotiation and agreement - offering incentives, working out trade-offs, special benefits;
Manipulation and cooptation - influence others, selective information, buying off leaders;
Explicit or implicit coercion - using force, threatening (French et al, 2008).
Resistance to change as resource of new ideas
Resisters to change are problematic and typically, when something goes wrong, they are the first that are blamed for the disaster. However, this is not only pointless, but leads also to destructive management behaviours - mangers may become defensive, uncommunicative, competitive (Ford & Ford, 2009). "Strong leaders can hear and learn from their critics" and understand that even difficult people can provide valuable input when treated with respect and let to communicate their point of view. An example of such situation is presented in Appendix IV - a brief case study about Alison, IT executive, aiming to implement a major change in the computer system of the hospital she was employed with.
CASE STUDY Alison, Appendix IV
Linking Strategic and Operational Change
In the previous chapters of this work, I have examined the theoretical grounds, the major approaches to change, the roles of the different participants in the change process. However, no matter how good the plan for change may be, the most critical part, i.e. the bottleneck remains the implementation of the transformation. According to Luecke (2003), 70 percent of change initiatives fail to meet their objectives. Kotter has also written that "If you were to grade them using the old fashioned A,B,C,D, and F, I'd be surprised if an impartial jury would give 10% of these efforts an A. But I'm not saying that 90% deserve a D either.What is tragic is that there are so many C-pluses. It's one thing to get a C-plus on a paper; it's another when millions of dollars or thousands of jobs are at stake" (Luecke, 2003).
Implementing Strategic change
Burnes (2009) argues that the implementation of change is a "two-way process" of ensuring that strategic decisions lead to operational changes and on the other hand, operational changes influence strategic decisions. The process of implementation may follow the models either of Planned or Emergent approaches. Although that by many, including Burnes (2009), there are no universal rules for leading change, supporters of panned and emergent approach propose sequence of actions to be adopted, which could "facilitate" and give a structure to the implementation of the strategic changes.
Pettigrew & Whipp (Burnes, 2009) propose a simplified model of actions to be taken in order to structure the change process:
Kanter and Kotter (Burnes, 2009) also propose some ideas for implementation of change.
However, I consider that Luecke has given the most practical "recipe" for action. His model consists of seven steps:
Step 1. Mobilize Energy and Commitment through Joint Identification of Business Problems and Their Solutions
Step 2. Develop a Shared Vision of How to Organize and Manage for Competitiveness
Step 3. Identify the Leadership
Step 4. Focus on Results, Not on Activities
Step 5. Start Change at the Periphery, Then Let It Spread to Other Units without Pushing It from the Top
Step 6. Institutionalize Success through Formal Policies, Systems, and Structures
Step 7. Monitor and Adjust Strategies in Response to Problems in the Change Process (Luecke, 2003).
For me, this approach is very close to the practice, as it is very much result-oriented and in reality results are the real measures of success, not plans and theories. In order to illustrate this consideration, please refer to Appendix V, a case study about Xerox.
CASE STUDY XEROX, APPENDIX V
The role of the Change agent
In the process of change there are always factors limiting the implementation of the changes in the operational level. According to Mabey and Salaman, (1995) an important factor for successful implementation of strategy into operational level is the formal and informal presence of a change agent. According to Rosenfeld and Wilson (1999), "change agents are the individuals or groups of individuals whose task is to effect the desired change". They can be both internal and external to the organisation. The agent acts as intermediary and his responsibilities may range from complete collaboration with staff to acting as absolute authority and expert. Internal change agents are mostly experts in the field, to who people trust. External agents may have political credibility and support, however, often lack the detailed knowledge of the company (Rosenfeld & Wilson, 1999).
Considering the complexities involved with change, the range of abilities and expertise of the change agent could be significant. Vital to the success of the change agent is also the support from the senior management of the company.
Change agents see the need for change and articulate it effectively to others. They are critical catalysts for a change initiative and should be placed in key positions (Luecke, 2003). Here are some of the most important implications of change agents:
articulate the need for change;
are accepted by others as trustworthy and competent;
see and diagnose problems from the perspective of their audience;
motivate people to change;
work through others in translating intent into action;
stabilize the adoption of innovation; and
foster self-renewing behavior in others so that they can "go out of business" as change agents (Luecke, 2003).
People suitable for this job can be "professional" change agents like those working in the HR consultancy companies, or people from the business. They can also be "produced" like GM did in the past. Luecke (2003) describes the case: "General Motors attempted something very similar in its joint venture with Toyota: the NUMMI small car assembly plant in California. That plant was run according to Toyota's world-beating production methods, and GM rotated manufacturing managers through the plant to learn Toyota's methods and, hopefully, bring a working knowledge of those methods back to Detroit".