Leadership And Change Management In Businesses Commerce Essay

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Change is part of every organization. Every decade witnesses fall of a great organization. The reason behind that is they were not ready to take part in the change that was happening around them (D. Ambani founder, Chairman Reliance Group Ltd). Every organization with different reasons has to take part in change. The reason may differ from increasing market share, moving with the competition, changing with the society or can also be in order to survive in the market. Change is something that is a critical, mandatory and requires all management functions, which are Planning, Organizing, Staffing, Directing, Co-ordinating, Reporting, and Budgeting (by Henry Fayol 1937).

1.2: - Why do we need change management?

It is very important to answer the question why do we need change management? Change management has attributes quite similar to Organizational Development. Than why is there a need to develop a new profession? Answer is quite realistic as change management is broader than OD in that it includes a broader range of increasing human resource performance, development of information technology Jelinek & Litterer, 1988 (http://ac.aua.am/gohar_grigoryan/Public/Fuller/273.pdf).

Over the years many change management theories and models have developed out of which there are some popular and widely used theories, there are no particular favourite theories for deploying change, and it would certainly be agreed that the whole concept is relatively young and developing. The whole concept is again very situational and requires individual approach based on the organization and the change it wishes to undergo. But, one of the most popular and widely used change management theory it the McKinsey's 7S model, which cannot only be used as a change management theory, but also in case of analysing an organization and its activities.

2. 'Royal Mail' Introduction

2.1 In Brief

Royal Mail letters bestowed with the responsibility of delivering and collecting posts from within the United Kingdom is a subsidiary of Royal Mail Ltd, which also manages the POST OFFICE & PARCEL FORCE. Attained its separate identity in the year 1986 (http://en.wikipedia.org/wiki/Royal_mail), Royal Mail employees the staff up to 121,000, which exceeds the number of staff in entire Royal Mail Group (http://news.bbc.co.uk/1/hi/business/8304722.stm).

The posting industry in United Kingdom was dominated by the Royal Mail, by as much as 99 percent of the local posts being managed by Royal Mail, which since 2005 has been facing ever increasing competition. Technological advancement is another external issue the has reduced the potential market size as The Royal Mail posts 9 million less letters than what it used to in the year 2005 (http://news.bbc.co.uk/1/hi/business/8304722.stm), as more and more business organizations and individuals depend upon E-mails and various IT based formats to communicate.

3: - The Issues of change

The management has been facing quite serious functional and survival issues in past few years. The organization is not performing well in the profitability criteria, as the figure mentioned below will prove that the management has serious functional issues to be sorted out to make the operation more effective. Ever increasing deficit in its pension funds has made the management to rethink its existing policies and increase its profit to fill the deficit, and in order to meet the market requirement and compete with the rivals on similar grounds the management has to induce its operation with modern technology and make their operations more effective.

3.1: - Decreasing Profits

Royal Mail faced serious functional issues, which made its operation suffer losses up to £279 million in the financial year of 2007 (http://news.bbc.co.uk/1/hi/business/7417634.stm). It faced serious issues relating to its traditional methods of sorting and delivering, which were critically evaluated to be the prime cause of its losses. The management decided to induce their prime operations which involved sorting and delivering mails with technology, in form of modernization policy to make the operation and eventually the functioning of organization more profitable. The losses were so severe that the proposal was passed in the hose of common to sell the major stake of Royal Mail to make privatise its operation (http://news.bbc.co.uk/1/hi/business/8426538.stm).

3. 2: - Increasing Competent Competition

After the liberalization of UK postal services in the year 2005, the competition that royal mail faced were ever increasing. A very good example was confronted to the management when they lost the contract of 8 million pounds to deliver the second class mail of Amazon Book a very popular internet shopping site (http://news.bbc.co.uk/1/hi/business/6252202.stm). The management found out that most of its competitors used hi-tech machinery for sorting and distributing making them more efficient and hence gaining the trusts of the customers, and that they are falling behind as they have not been able to modernize (http://news.bbc.co.uk/1/hi/business/6768983.stm). Thus, second most important issue requiring the management to make critical technological changes called for a modernization policy.

3.3: - Reduction in Market

Research conducted by the BBC shows that Royal Mail delivers around 75 million posts everyday. It counts to 90 percent of the UK's market. The number might look extravagant, but is reducing at an alarming rate of 10 percent every year. Plus a sharp increase in number of internet users have reduced the market of Royal Mail, around 70 percent of homes in UK use Internet and around 87percent of them send emails (http://news.bbc.co.uk/1/hi/business/8304722.stm). This reduction in the market shows that the management needs to be very efficient in their operations.

3. 4: - Pension Fund Deficit

An estimate from the similar research mentioned above shows that royal mail also faces serious issues in pension fund deficits, which has amounted around £8 billion (http://news.bbc.co.uk/1/hi/business/8304722.stm), These issues forced the management to move things differently, and to come up with a policy that make their operations more profitable, and the could guarantee their survival and existence as UK leading mail distributing organization.

4: - The Modernization Policy of Royal Mail

It is very clear, that a stringent policy was required to tackle all the issue (mentioned above) that management faced and to sustain in long run, the management did the exact thing by framing a modernization policy, which could be called as a type of process change by Managing change and transition Harvard Business Essential. The policy required the management to induce additional finance of around 1.2 billion in modern machine. Modern machinery meant that estimated 40,000 employees will loose their jobs (http://news.bbc.co.uk/1/hi/business/8304722.stm), and the policy also focused on changing the schedule of the employee, to make their labour hour management more effective.

The aim of modernization policy was to tackle and galvanize Royal mail functioning against all the above mentioned issues. The inducing of extra finance for machinery would mean that the functioning of mail would be more effective, speedier and able to compete with the increasing and competent competition. The reduction in staff would result into cost effective operations and hence increasing its profit and resulting into decrease in its pension fund deficits.

5: - Resistance to the 'Modernization Policy'

The framing of policy was such that would create obvious resistance from the staff/union. The policy implementation estimated around 40,000 job cuts, which increased to around 63,000 in the year 2010 (http://news.bbc.co.uk/1/hi/business/8339201.stm) and could further increase according to the CWU (Communication Workers Union, which represented the Staff of Royal Mail). The Union agreed with management on the staff reduction for survival, but disagreed on the pace of job cuts and the pay rise issues.

It would be unjustified towards the management if I said that they failed to adopt the change management theory, of McKinsey's seven 'S'. The data shows that they prepared and co-ordinated all the seven 'S' within their organization, including the staff for the change they wanted to implement by signing a contract in 2007 with the CWU stating their consent to implement the modernization policy (http://news.bbc.co.uk/1/hi/business/7038899.stm).

5. 1: - 'Royal Mail Industrial Dispute'

A confrontation and consent with CWU gave a go to the change policy to be implemented, and the implementation began in the year 2008 all around UK, but when the same reached London, as per the fear of CWU the job loss had already reached the expectation as mentioned above and it could no longer tolerate ignorance of staff over implementing the policy. Demanding a clearer picture and direct involvement in the implementation of the second phase of the change policy the union showed agitation in the year 2009, and presented management with below mentioned demands and a commitment from management to be able to successfully implement their demands. Management were neither capable nor wishing to fulfil their demand, i.e.

Pay rise that would make their pay equal to the national average (which would be around 27%).

Increase in pensions funding and facilities (http://news.bbc.co.uk/1/hi/business/6252202.stm).

The demand made by the CWU workers were not only outrageous, but simply not viably for the organization to follow, resulting in a series of national level strike by the CWU disrupting not only the normal functioning of the Royal Mail, but hindering the implementation of its policy and severely affecting small business in the UK (who still rely on posting and receiving cheques, etc, http://news.bbc.co.uk/1/hi/england/london/8277206.stm). The strikes started from August 2009 resulting into series of strike till November 2009, and came on a hold on account of Christmas (http://news.bbc.co.uk/1/hi/business/8345643.stm). The impact of strike cannot be represented in number, but the blow was to the performance of the companies as the small business shifted to other courier providers to take care of their mail.

6: - Harmonization between Management and the Union.

On 8th March 2010, a report from the BBC conformed that management of Royal Mail has successfully been able to persuade the Union to help implement the modernization policy. Demands of Union were cohesively meet underpinning the benefits of both the stakeholders. Management agreed to give a pay rise of 6.9% over three years and an additional monitory bonus of £1,400 to all full time employees. In turns, the Union agreed to use the modern technology in their sorting offices, and reduce their hours from 40 to 39 (http://news.bbc.co.uk/1/hi/business/8556487.stm).

6. 1: - Too little too late

The agitation and resistance with the union was dealt with but, the only question to be asked here was the deal time effective for the management and the organization? The national level strike started in middle of 2009 and the mutual agreement between the management and the staff was reached next year in the month of March 2010. The inability of the management to come on common grounds with the union at the very time of implementation cannot be overseen. Every change has its own resistance, that is were need of change management arises, management has to forecast and find out ways to tackle all the factors positive or negative to efficiently implement change.

6. 2: - Failure to Manage McKinsey's 7S

My view on the Change / Modernization policy adopted by the management of Royal Mail would be a failure. It surely adopted with McKinsey's 7S but certainly failed to follow/ the theory. They entirely failed to bring the Staff together with all other S. Although the cost of it might be difficult for me to prove but, it is proved from a report by BBC that it hired 30,000 staff from agency to meet with just its regular requirement in situation of national level strikes (http://news.bbc.co.uk/1/hi/business/8339201.stm). This should have increased the cost of Royal mails daily functioning, and the losses it might have incurred not being able to use the machinery it had invested £1.2 billion in.

This chaos in implementation of change policy has made me understand that Timely implementation of the change policy plays a vital role in its success. Royal Mail certainly failed in implementing the change policy in a timely and efficient manner.

7: - Personal Implication

Every change policy has a post mortem report, I would evaluate the change policies implementation of Royal Mail as a Failure and a most important lesson to be taken away by improper implementation of this policy is how important the involvement of staff becomes in effective implementation of the change policy, and how an entire organization's growth can be curtailed to failure just by not being able to clearly confronting and involving one factor into its policy.

7.1: - Conclusion

Effective leadership is very important for an organization as it provides the vision for the organization and all its stakeholders. (http://www.cipd.co.uk/subjects/corpstrtgy/changemmt/chngmgmt.htm?IsSrchRes=1) In case of Royal Mail the management clearly failed on below mentioned personally analyzed points

It failed to be effective leaders as they failed to provide the vision to the Union and therefore the staff about the effects of the change and how many of them will be directly as well as indirectly affected by the actual implementation of change.

"When ever human communities are forced to adjust to shifting conditions pain is ever present", John P. Kotter Leading Change, 1996, Pg 4, the management in this case clearly failed to mark these points and continued to progress change until it was met with harsh resistance.

Failures in communicating for buy in by John P. Kotter & Deloitte Consultancy LLC 2002. The management failed to communicate from heart about the directions of change before starting the endeavour of change. A failure can be associated with all the negatives and the 'don't' but in my view these reasons could in brief sum up the change process / modernization policy adopted by Royal Mail.