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This report shows how external sectors and environments influenced the change of my organisation. I am currently working in a group of colleges offering finance & accounting, business, information technology, engineering and professional courses for both Malaysian and international students. It has 6,000 students studying on its campus. Introducing change in my organisation existing system and process is a difficult job. Managing change is even more difficult. No matter how good is the change, the resistance to change from employee still exists. Therefore the successful of implementing a change depends on how well the management and employee understand the need for change and make use of good changes and intervene if a change seems detrimental.
Sectors and elements of external environment which I consider to have had the most influence on the change within my organisation are as follows:
A PEST analysis (Gerry Johnson and Kevan Scholes 2002) referring to the political-legal, economic, technological and socio-cultural factors that influence on the change within organisation.
The first dynamic in PEST's analysis is the social and cultural environment. In this section of evaluation, business and organizational leaders are concerned with things like demographics, religion, lifestyles, education and age distribution of population.
It is important for educator to understand their district demographics which is concerned with statistical data of student population. Student population can be increased dramatically through technological advances which student can study the program online through internet. Student population can also be increased due to increase in mobilization of which student move out from home area to town area. Increasing of need for finding funding sources for those students who came from low income family also is another important demographic to be considered as a change in the educational sector.
Another change in student demographics is the increasing of student from abroad studying in Malaysia universities or colleges. As a result, the number of international student in my college has increased by 20%. It is predicted that the increase will continue within the next few years.
Since 1990s, information technology has played an important role in the educational sector. The popularity of distance learning has given people chance to study for qualification or new career in their spare time. More and more people can now access career training and even degree courses online. Most universities now require lecturers to place their teaching materials online so that students can access them outside the regular lectures and tutorials classes.
Due to the advances in Internet, more and more traditional schools or colleges expanded their online courses in the new world of virtual learning. Universities that cannot meet the demands of today's society and technologically will quickly find themselves left behind and suffering from decreased enrollment, and consequently, federal and state funding will also be decreased.
Economic factors that affect businesses are income, inflation, recession, interest rate and exchange rate. Because of the economic downturn, firms and companies try to scale down the operation and cut costs. Government has come out with new economic policy to overcome the crisis but sometimes this policy is not productive.
People too, cut costs on all expenditure. Many become unemployed which force them to spend much lesser. All these affected the business of an educational sector.
Another factor that influences the change within organisation is the government policy on scholarship and National Higher Education Fund Corporation (PTPTN). With the announcement of Malaysia Budget 2013, repayment of full loan by student within a year upon this announcement effective from 1 October 2012 until 30 September 2013, a discount of 20% will be given on their loan.
For those with consistent repayment of PTPTN loan in accordance to their repayment schedule, a 10% discount per annum on their repayment will be given effective from 1 October 2012. As a result, enrollment in my colleges has increased dramatically. The National Higher Education Fund Corporation (PTPTN) has allocated RM5.8 billion for loans to students pursuing their studies locally and abroad this year. It was an increase of almost RM2 billion from over RM4 billion disbursed to 210,000 students last year. This number will continue to rise annually as PTPTN is one of the main financer for students in the country, although there are other government and state government agencies also providing such loans. PTPTN had given out RM24 billion to 1.3 million students in the country since its establishment in 1997.
One of an equally important part of external assessment is to identify competitors and to ascertain their strengths, weaknesses, opportunities, threats, objectives and strategies. Weaknesses of competitors can become 0pportunities, while major competitive strengths can become threats. The more competitive information is collected, the more it is advantageous for a company as it possesses a good basis for strategies.
As seen above, educational sectors are not immune to shifts to external factors such as those explored through the analysis of Johnson and Scholes; namely, political, economic, technological and socio-cultural. As such, university executives and their boards must actively monitor what is going on around them in order to design relevant strategies from their respective institutions. Only by being actively aware of present and future trends in the external environment and responding in a proactive manner will be able to offer programs that are applicable to the needs of their constituency.
The advantages and disadvantages of the change are as follows:
Change in an organization is inevitable in order to maintain its survival and success. Change can be created either internally or externally. Depending on the source of change, there are different advantages and disadvantages associated with the change.
Advantages of change
Change allows companies to compete better with their competitors and develop new skills or products which can bring high profit. With implementation of a change management methodology, it allows change management teams or managers to deal with any proposed new direction by providing adequate training and guidelines.
Change management also helps individuals realize why the change is needed so that they will accept it and move forward. Change can be good for employee since it will bring them the opportunity to learn something new and gain new skills (Colin Carnall, 2007).
Change also creates opportunity for growth, only for those who recognize it and seize it. Without change, businesses would likely lose their competitive edge and fail to meet the needs of what most required by loyal customers.
With the open communication and discussions that change management methodology promotes, individuals (employees, stakeholders and customers) will have a greater chance in the outcome since they have helped in the implementation of the plan. People generally do not resist to things which they have involved.
Change reduces the status quo mentality, and can facilitate growth in a positive way. One problem we face today is that people get used to work within their own little comfort zone and become comfortable with a status quo mentality. . People used to work in the same way and always thought that problem can simply be solved by applying same practices.
Change can create risk management and contingency systems to safe-guard successful vertical movement, and succession. Risk management is an organized method of identifying and measuring risk and then developing, selecting, implementing and managing options for addressing.
Change can also promote flexibility. Flexibility is very important for a business because changes must be made occasionally from plans to strategies. Being able to change accordingly and always having the option to do so will make your business more flexible. Business is always uncertain, so flexibility is needed to accommodate it.
Appropriate change can respond to negative internal and external driving forces. Situations or events that affect businesses in either a positive or negative way are called "driving forces". There are two driving forces; internal driving forces, and external driving forces. Internal driving forces are situations or events that occur inside the business, which are generally under the control of the company. Examples of internal driving forces are organization of machinery and equipment, technological capacity, organizational culture, management systems, etc. External driving forces are situations or events that occur outside of the company and are usually beyond the control of the company. Examples of external driving forces are the industry itself, the economy, demographics, competition, political interference, etc.
Change gives the opportunity to develop solid strategic planning and tactical maneuvers. Strategic planning determines where an organisation is going over the next year or more. What are we trying to accomplish? Change helps to improve the efficiencies of an organization, to focus its resources on overall goals.
Change in business is good, but if change is not managed well, it will destroy the organisation. Managers are often drawn to change by imagining the possibilities of outcome and the positive impact it can have on their organization without realizing that the change might not be suitable to their organisation.
Disadvantages of change
Change might not equal to progress. Many companies emphasize a culture of continuous improvement. Mistaking change for progress is similar to the common problem of mistaking activity for productivity. Every organization can be improved, no matter how well it is performing, but a manager should always ask the question, "How is this proposed change going to improve my organization's ability to achieve our key goals?"
Cost-to-Benefit Ratio. Change is never free. Every change also has opportunity cost; spending your equipment budget on new computers which means you have to wait to upgrade the computer systems and there are intangible costs such as morale and customer satisfaction during the adjustment period. Determine whether the cost of a change is outweighed by the benefit that change will create.
Internal Resistance. Generally, people resist change is lack of knowledge about changes and fear of the unknown. You can expect some level of resistance to any change, no matter how small or how much benefit it might give. The key tools for managing this problem are complete, honest, and timely communication with your work team, clear communication of the value of the change, and patience with your team as they go through an inevitable adjustment phase.
Choosing the Wrong Solution. Organizations will initiate change when they have problem that need to be solved. But it is dangerous to assume the root cause of problem without investigating it and implement solution prematurely. This approach incurs additional cost of change without producing the intended benefit, plus it can create problems in areas that were functioning properly.
A bad change management plan can also affect an organization negatively. Change management is just to manage change and without a plan to deal with every step of the change (before, during and after), the strategy could fail at any point in time, possibly bringing down the entire company.
While change can be risky, the benefits still far outweighing the potential pitfalls. Change allows organizations to continue staying on top of their industry in an uncertain market.
The sources of resistance to change and how did the management try to combat them are as follows:
Sources of resistance to change can be categorized into individual and organisational responses.
In each organization, there are four types of people responded to changes:
People that initiate changes.
People that accept changes.
People that reject changes
People that indifferent towards changes.
I have been conducted an analysis of resistance to change in my organisation. There are many factors that caused such a phenomenon to organisational changes but I only select those factors that are most relevant to my organisation:
Lack of understanding around the vision and need for change. Analysis indicated that the primary reason for employee resistance was that employees did not understand the objective of the particular change project. Employees did not clearly understand why the change was needed. Employees did not have answer from Management for questions, "what should I do?"How will the change impact my daily work?" "How will I benefit from the change?".
Comfort with status quo and fear of unknown. The current processes and systems seemed fine to the employees. They felt comfortable with what they are doing now. They were opposed to the change because it forced them out of their comfort zone. The comfort zone conditions them to follow known path, and fear change.
Corporate history and culture. Organizational culture grows over time. Employees are comfortable with the current organizational culture and current performance. Employees were desensitized to change initiatives, as many had been introduced and failed. The change was seen merely as the "flavor of the manager," and employees expected it goes away like those in the past.
Opposition to the new technologies, requirements and processes introduced by the change. Some employees resisted the change because they felt that the change will increase their job load, adding unwanted job, responsibility and accountability although change can improve performance and process measurement of their work. Lastly, some employees opposed the new processes, systems or technologies because they felt the change would not solve the problems.
Fear of job loss. Employees perceived the business change as a threat to their own job security. Some employees felt that the change would eliminate the need for their job, while others were unsure of their own abilities and skills in the new environment.
The top-four reasons for manager resistance to change were:
Loss of power and control. The primary reason for manager resistance to change was a fear of losing power. Changes often eliminated the manager power and control. Managers perceived the changes as infringements on their autonomy, and some even perceived it as a personal attack on the managers.
Overload of current tasks, pressures of daily activities and limited resources. Managers felt that the change was an additional burden. The change initiative seemed like extra work and burden when the pressures of daily activities were already high. In many projects, managers were expected to continue all of their current duties in addition to the duties of implementing the change.
Lack of skills and experience needed to manage the change effectively. Managers were fearful of the new demands that would be placed to them by the business change. Several skill areas were identified as areas of concern. First, managers were uncomfortable with their role in managing the change. Some feared recrimination while others did not have the experience or tools to effectively manage their employees' resistance. Managers also were concerned about the demands and responsibilities placed on them by the new business processes, systems or technologies.
Disagreement with the new way. Some managers disagreed specifically with the change. They did not feel that the solution was the best approach to fix the problem. Managers who did not play a role or provide input in the design and planning phases tended to resist the solution. Some resistance was due to the solution not being the idea of the manager ("not invented here").
There are several actions the management can take which will reduce the resistance due to uncertainty and insecurity to work. John P. Kotter and Leonard A. Schlesinger (2008) explained that there are six different approaches for dealing with resistance to change as follows:
Education and communication. Management must explain to employees why change is needed, identify the benefits of change to individuals and departments, and be willing to answer all questions as and when they arise. Topics regarding change that must be covered are why, what, when, where, and how. Communication between management and employees can occur in the form of discussion groups, memorandum, formal reports, scheduled meetings, one-on-one meetings, etc.
Participation & Involvement. Every employee must be participated in the change plan. That participation begins at the top; hence the organization's leadership must be especially accustomed to successful implementation. One pessimist on the leadership team can ruin the entire process.
Facilitation & Support. Managers must manage the change in a way that employees can cope with it. Managers must responsible to facilitate, and to help employees to understand the reasons of change. This can be done by providing special training and counseling.
Negotiation and Agreement. Successful implementation of change should be acknowledged by way of compensation and recognition. Managers can combat resistance by offering incentives to employees not to resist change or change resistors can also be offered incentives to leave the company.
Manipulation and Co-optation. Managers can resort to manipulate information, resources and favors to overcome resistance. This also involves selecting resisting individual to participate in the change effort and giving them desirable role in the change process.
Explicit and Implicit Coercion. Managers can explicitly and implicitly force employees into accepting change by making clear to them that change cannot be a choice and must be committed. Every person affected by the change program must be held responsible for implementing his or her individual change activity. Failing of meeting that responsibility must be reprimanded. Managers sometimes dismiss or transfer employees who against the change.
Overlooking any one of the items above reduces the chance of successfully implementing a change program.