Understand the background to organizational strategic change

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25th Apr 2017 Management Reference this

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LO 1 Understand the background to organisational strategic change

I. John P Kotter’s eight steps to successful change;

Harvard-Professor Kotter, studying the process of organizational change for over three decades. While any change can be successfully implemented or otherwise be a failure. Kotter worked out an 8-step model. The first four steps here focus on de-freezing the organization; the next three make the change happen; and the last step re-freezes the organization with a new culture (Leading Change by John P. Kotter). The change management guru also mentions that when someone people need to make big changes significantly and effectively, he says that this goes best if the 8 steps happen in order.

They have been summarised as below:

  1. Create Urgency – One needs to create and imbibe an increased sense of urgency. This motivates people to make a move, make real and relevant objectives.
  2. Form Team – A strong and able guiding team needs to be built. Remembering to get the right people in place for the right job as commitment, and various levels of skill sets need to be matched.
  3. Create Vision – The team establishes a vision and strategy required to deliver quality service and efficiency.
  4. Communicate Vision – Involve as many people as possible, communicate the essentials, simply, and to appeal and respond to people’s needs. As the vision competes with various day to day organizational tasks one needs to communicate it frequently and powerfully, and embed it within everything. One should also lead by example.
  5. Remove Obstacles – At this stage one has to put in place a structure for imminent change. Empower leaders removing any hierarchical obstacles, enabling healthy feedback and enough support from all stakeholders.
  6. Create short-term wins – Create and set short-term targets that are easy to achieve. Manage the number of initiatives and finish running stages before starting new ones.
  7. Consolidate Improvements – Consolidate and encourage determination and persistence for ongoing change. Highlight achievements; reward progress; and set future goals. Instil new projects and themes.
  8. Make it Culture – One has to weave change into the corporate culture. Reinforce and institutionalise the value of successful change via recruitment, promotion. At this step one has to create plans to replace key leaders of change as they move on. This will help ensure that their legacy is not lost or forgotten.

It has been accepted the world over that change is inevitable. A change can be small restricted to a single or more processes, or even for that matter a system-wide change. Under Kotter’s theory create a sense of urgency, recruit powerful change leaders, build a vision and effectively communicate it, remove obstacles, create quick wins, and build on your momentum. Such a documented and methodical process can help make the change part of one’s organizational culture.

II. McKinsey’s 7S (strategy) framework;

Two consultants working at consulting firm McKinsey, in the early 1980s, Tom Peters and Robert Waterman developed this model. It says that, in order to ensure that all parts of the organization work as a single unit, there are seven internal aspects. (Ethan M. Rasiel, Paul N. Friga – The McKinsey Mind: Understanding and Implementing the Problem-Solving Tools and Management Techniques.)

The seven independent factors could be categorized as Hard Elements: Strategy, Structure and Systems; these are relatively easy to identify. Soft Elements are Shared Values, Style, Staff and Skills, which are more difficult to identify and influence. These are less tangible and more of the cultural aspect.(In Search of Excellence)

  • Shared values: This interconnecting centre of the model mentions the central beliefs and attitudes of the organization.
  • Strategy: Plans for resource allocation to attain identified goals. Need to look at factors like environment, competition and customers.
  • Structure: The way the firm’s units relate to each other: centralized or decentralized, matrix, network, holding, etc.
  • System: The procedures, processes and routines that say how to perform day to day work: financial systems, hiring & performance appraisal; information systems.
  • Staff: Numbers and the type of personnel required for the organization.
  • Style: Cultural style of the business leaders.
  • Skill: Skill sets and capabilities of the firms personnel as a whole.

These can be applied to a team or a project. It should be noted that alignment issues do apply, regardless of how the scope is defined. For example this strategy helps to:

  • align processes and departments amidst mergers or acquisitions.
  • improve company performance.
  • determine the best possible way to implement the proposed strategy.
  • scrutinize the likely effects of imminent changes internally.

Whatever be the type of change, this model can be used to understand how the organizational machinery is inter-related, ensuring that the broader effect of changes made in one area are considered.

The 7S model helps analyze the current situation (Point A), a proposed future situation (Point B) and to identify gaps and inconsistencies between them. It’s then a question of adjusting and tuning the elements of the 7S model to ensure that your organization works effectively and well once you reach the desired endpoint.

III. Burke-Litwin’s causal change model;

Burke & Litwin’s Causal Model of Organizational Performance and Change, enumerates how performance is affected by internal and external factors. Its framework gauges organizational and environmental factors key to bring in a successful change. It also reveals how these factors can be linked causally to achieve a change in performance.

Interestingly it incorporates all the variables in the 7S model adding 5 of its own, describing organisational variables and the relationship between them. Each of the variables interact and a change in any one of them can eventually impact others. This helps in understanding how organisations perform, and how they can be changed.

The causal model links what could be understood from practice to what is known from research and theory. The model not only discusses how different dimensions link with each other but also discusses how external environment affects the different dimensions in organization. The model focuses on providing a guide for both organizational diagnosis and planned, managed organization change, one that clearly shows cause-and-effect relationships.

Understanding & assessing the complexity of organizational change

Most organizational change is driven by environmental impact

  • Boxes indicate primary variables affecting organizational performance
  • Arrows indicate critical linkages
  • A change in any variable will affect every other variable
  • Higher level variables have greater weight in effecting organizational change

(A causal model of organizational performance and change, W. Warner Burke & George H. Litwin, Journal of Management, 1992, vol. 18.)

The model outlines that, important elements of organisational success, such as mission & strategy, leadership & organisational culture, are often forced by changes that finds its source outside of the firm. The change manager has to identify these external changes and understand the implications for him/her and the entire team. The model also distinguishes between transformational and transactional organizational dynamics.

IV. David Gleicher’s change formulae

Richard Beckhard and David Gleicher created the Formula for Change. It was later refined by Kathie Dannemiller. This formula, like other theories devised to manage change, provides a model to assess the relative strengths affecting the likely success or otherwise of the programs implemented to bring in change.

Change = (Dissatisfaction)(Vision)(First Steps) > Resistance

C= D x V x F > R

Three factors must be present for meaningful organizational change to take place. These factors are:

D = Dissatisfaction with how things are now;

V = Vision of what is possible (tangible and concrete);

F = First, concrete steps that can be taken towards the vision;

If the product of these three factors is greater than R = Resistance, then only is change possible. If not, the system would be not capable of overcoming the resistance. It is essential to include planned & tactical thinking, and authority to create vision and identify those crucial, early steps towards ensuring a successful change.

The model’s applications could be before change or during the process of change. When planning a major change, planning teams see to it that all the three elements are built in. During the change, the formula is used to trouble-shoot people resisting change finding out the reasons to any resistance.

Being different from earlier management theories, such as F.W. Taylor’s scientific management approach, this approach advocates employee involvement in change, and the use of the internal or external consultants to manage reactions to change. In modern organizations, employees are taking cognizance of the bigger role of the management and realizing their own role and involvement in the organizational success. Employers are now showing more trust in them. The two roles are, now, not mutually exclusive.

M1.

Since the General Election in May 2010, the UK Prime Minister has announced a handful of changes to a number of government tools and systems. One of the most urgent task facing the country is to wriggle out of the record debt situation and attain better financial position. This requires reforms to the structure of government, including ensuring that the government has the best machinery possible to deliver efficiencies. Restructuring the Civil Services departments was one such thing.

Context and rationale

The Government’s rationale was to ensure that its public machinery’s running costs are tightly managed, benefits are delivered and that any changes represent value for money. The change has been made in order to support him in carrying out his Ministerial responsibilities.

David Gleicher’s change formulae could be used to push further the need for change.

It has been generally accepted that the British public has various levels of (D) dissatisfaction with how things are now and they would like change. The top priority and need for them is change from the present situation. This brought in a change of guard at the highest level of governance.

Overview

The people in-charge envisioned a plan to usher in the required objectives. Possible (V) vision both tangible and concrete are drawn and the (F) first, concrete steps that can be taken towards the vision were implemented. As, in the formula, the product of the above factors is greater than (R) resistance, change was possible.

Signs of the new government and the changes brought in are highly visible: departments renamed; websites reset to year zero; and advisers appointed at the order of the coalition’s new ministers. The appointment of special advisers to the new cabinet ministers also revealed a subtle shift in the spin operation Cameron’s government will run. The majority have been taken from the ranks of policy advisors, as opposed to press officers, and some ministers have been told they can only have one special advisor instead of the usual two. Ministers also have a team of civil servant press officers within their departments.

Q1.3 Briefly explain any four out of the following strategic intervention techniques in organization change management;

I. Autocratic versus participative style

In an autocratic style of leadership is one where a single person holds unlimited power or authority. In such a system the team members are not encouraged and cannot put forward their views. They cannot criticize or question the leader’s way of getting things done. Owing to a single decision maker, the biggest advantage this style offers is that it leads to speedy decision-making and greater productivity. On the other hand, this form of leadership leads to greater employee absenteeism and turnover.

In a participative leadership style, also referred as the democratic style, leaders invite and encourage the team members to play an important role in decision-making process. However, one should note that the ultimate decision-making power is held by the leader. Here employees communicate to the leader their experience and suggestions. Its advantages are that it leads to satisfied and motivated employees. Such a system fosters employee skill development, encouraging creativity. However, in this style a lot of time is consumed and it is most often slow.

II. Proactive and reactive,

Proactive Strategies are interventions techniques used on an ongoing basis. Such steps on an ongoing basis attempts to reduce the probability of occurrence of a challenging behaviour. They are preventative in nature.

Reactive Strategies are interventions which are used only once a problem occurs. They are consequences to the behaviour. It is a damage minimization technique. In positive approaches to change management the emphasis of proactive strategies is encouraged. If one does a good job with the proactive strategies, then reactive steps and policies need not be necessary. Sometimes it fully eliminates the challenges.

Techno-structural interventions;

Techno-structural intervention’s purpose is to form appropriate work designs and organizational structures providing strategic support of organizational development (E lawler III, 1974). In this form of intervention, the restructuring of the organization is very important. Here, workload is divided in the overall organization via sub-units for effective task completion (M Tushman, E Romanelli, 1986). Restructuring can be performed on at least five major factors – environment, organization size, technology, organization strategy and worldwide operation (Thomas G Cummings; Christopher G Whorley, 2002). Employee involvement and work design are other major components.

IV. Human process interventions;

In today’s corporate world, strong emphasis is being laid on humanistic values. Focus is now turning on helping members to enhance themselves, each other and the ways in which they work together in order to enhance their overall organization. The following human process interventions might be particularly helpful during change projects: many new employees, different cultures working together, many complaints among organizational members, many conflicts, low morale, high turnover, ineffective teams, etc.

D1

Managing change is as important as ushering in change itself. Proper diagnosis of desired organizational changes, allows application of such strategic intervention as role playing, team development, survey feedback, process consulting, etc.

Adopting strategic intervention methods, modern organizations can build success and advancement within and outside their organization.

LO 2 Understand issues relating to strategic change in an organisation

Q2.1 examine and briefly comment on the need for strategic change in an organisation (P4)

Change has become the essence of organizational growth and development. Most change programmes arise from management whims such as culture change, business process re-engineering, and empowerment among others. Another reason for initiating change is competition and the organisations need to reposition it.

The following are the some key reasons that initiate the need for change in an organization.

They are

  1. forced,
  2. telling,
  3. participatory, or
  4. transformational changes.

By identifying the root cause, you can determine which mode of change you are actually dealing with in your business. Situations that require a mode of change can be financial, technological, economic, environmental or human focused. The time between the change and the realization of the results of that change is what William Bridges termed as the “neutral-zone” (Managing Transitions, W. Bridges). Most initiatives are given up because organizations do not see the gap for what it is; the transition between the old world and the new

Q2.2 Outline the forces that are impacting on an organisation and driving the need for change (P5). And critically analyse the current position of an organization of your choice and assess the factors in the organisation that are driving the need for change. (M2)

As discussed in the question above, situations that require a mode of change can be anything. Factors could be financial, technological, economic, environmental or human focused.

The change may be driven from internal or external circumstances such as a new competitive advantage or threat, economic considerations, advancing technology, management restructuring or ownership change, customer dissatisfaction, vendor disruption, or loss of key personnel just to name a few.

The figure below shows the contextual features and design choices for a change process undertaken by Glaxo Pharmaceuticals in 1988, prior to its merger with Wellcome in the early 1990s. (Balogun and Hope Hailey)

Glaxo was undertaking a proactive change initiative with time on its side. The initial scope was only realignment, as the aim was to generate readiness in its complacent sales division for the transformational changes that were to come to match the changing customer requirements of the National Health Service and the reduced income that would result from one of Glaxo’s major drugs coming off-patent in the mid-1990s. Interestingly Glaxo’s balance sheet was heavy, and had the capacity to invest in the change process.

However, it wanted to ensure that the change process did not antagonise its sales force and cause them to leave and join competitors. The timescales and the two phases of the scope allowed it to follow a path of reconstruction to generate the required levels of readiness, followed by a longer term evolution. Its capacity and time enabled it to invest in participative personal development initiatives and other symbolic interventions as part of the reconstruction, which would have been out of reach for a less profitable organisation.

Q.2.3 If strategic change is important, why do some people find it difficult to accept and what are the consequences of this on the resources of the organisation and on the change process. (P6)

As change can be for the proverbial good or bad for an organisation, there are more often than not resistance to the change process. Resistance could come from the following factors:

  • A lack of awareness about the change
  • Low tolerance to change
  • Comfort with the ways things are and fear of the unknown.
  • Conflict over the need for change
  • Misunderstanding
  • Parochial self interest
  • Fear of failure.
  • Loss of status and/or job security.
  • Peer pressure.
  • Disruption of cultural traditions and/or group relationships.

Change is also resisted because of the poor way in which change is managed.

Although most people feel comfortable with minor changes, it is not easy for people to live and work by yesterday’s reality. While a degree of resistance is acceptable, it could lead to

  • Disruption,
  • Stress,
  • Project delays,
  • Missed objectives,
  • Decline in production,
  • Absenteeism,
  • Loss of valued employees, and
  • The ultimate failure of the whole process of implementing change or even the whole organization.

LO 3 Be able to lead stakeholders in developing a strategy for change

Q3.1 Briefly explain how to involve stakeholders in the planning of change (P7). Use an organization of your choice to demonstrate it is workable in the selected organization. (D2)

It is important to consider and understand that people and all stakeholders would be personally be affected by the change process. On a broader scale change requires that “people do something they have not done before” (Galvin 2003). People are generally the most critical resource, supporter, barrier and risk when managing change.

At the onset of the change being conceptualised, the articulation of vision cannot be done exclusively and has to take all parties involved in the process. It is essential that at this stage one involves all of those who will have a stake in the achieving the vision. Strategic plan development requires consideration and articulation of values and priorities; the plan should reflect views expressed by all those involved in the process.

Q3.2 List and identify the different strategies that are available in the process of change management in an organization of your choice that would involve ‘stakeholders’ of such organisation. (P8)

For the organizational change exercise to succeed, the management team has to depend on an assortment of people at various stages of the organization. They can be divided into five groups. (Managing Change in the Workplace (2nd Edition)

Stakeholders at various Stages

Description

Examples

Change recipients

Intended receivers of change or change outcomes

End-users of new software

Employees of merged companies

Decision makers

People who approve a change exercise and decide its scope and direction

Steering Committee Members

Project Sponsor

Chief Executive Officer

Resource holders

People empowered to release financial and human resources required by a change effort

Chief Financial Officer

Financial institution such as a bank

Line Manager

Program implementers

People charged with the responsibility for bringing about the change

Program Manager

Project Manager

Project Team Members

External parties

People that are not the intended recipients but who are impacted by the change

suppliers whose access to a business is restricted after a change in business hours

broader community impacted adversely by a new product that contaminates the local environment

Once you have identified your stakeholders at each stage, consider the key messages you will need to deliver to each group in order to gain their support.

3.3 Evaluate ‘six step stakeholders circle’ as an effective system used to involve stakeholders in the development of a change strategy (P9). You need to evaluate the process, taking account of anything that worked well and anything that did not work well or could have worked better in an organisation of your choice. (D3)

The concept of ‘Stakeholder Circle’ is a registered trademark of the Mosaic Project Services Pty Ltd, Australia.

The following are considered when positioning a stakeholder within the circle

  • The radical depth of each stakeholders segment represents the power of that stakeholder.

  • Each stakeholders’ degree of influence is represented by the width of their segment, the wider the segment, the greater the influence.

  • The proximity of a stakeholder to the project is represented by how close their segment is to the project in the centre.

    The outcome of the visualisation above is to facilitate decisions on where the project team need to concentrate on their stakeholder management effort. This is based on the understanding of each element like key and relevant stakeholders. After such a careful study can one make a stakeholder-centric planning process be started.

    3.4 Using the same organisation in 3.3. Create a strategy for managing possible resistance to change that is appropriate to the selected organization (P10). You need to address the issues and provide a workable approach to overcoming the resistance. (M3)

    LO 4 Be able to plan to implement models for ensuring ongoing change

    Q4.1, 4.2 and 4.3 briefed below

    By looking at change as a process with distinct stages, the change management team needs to prepare itself for what to expect at each stage and make subsequent set of plans. In such a method it becomes easier to manage transition, rather than being caught unawares.

    Understanding the why the change needs to place, is one of the foremost in any successful change process. Lewin said that, “Motivation for change must be generated before change can occur. One must be helped to re-examine many cherished assumptions about oneself and one’s relations to others.” This is the unfreezing stage from which change begins.

    After the initiation in the first stage, the change stage is where people begin to make up their mind and are coaxed to look for alternative behaviours. Ideally team members begin to believe and act in ways that support the new direction.

    The final stage is all about stability. In the stage before this changes have been made and established. At this level changes are accepted and they replace the previous norm and become the new model. Team members shape new relationships and become comfortable with their routines. This can take time.

    UK retailer, Marks & Spencer (M&S), found its way into trouble in late 1990s and it subsequently tried to put in place programme of change. It explored issues concerning to the organisational culture, strategic drift, strategic choice and the management of change.

    The Unfreeze stage:

    One of the biggest and foremost needs for change came from the customers’ front. The management and staff’s attitude at M&S were now being termed as ‘rude and arrogant’ by some analysts. This was owing to M&S’ stellar performance and the distant competition. This way of doing things, had to be changed as its growth trajectory was taking a slight southward path. This was extremely difficult to change. The internal workings of at the retailer, which were mainly run by family members at the helm of affairs, had also become highly deferential, male oriented, with considerable bureaucracy.

    Amid this, the market began to see the tides of changes. More and more customers began to value higher levels of service, and were seeking novelty and difference. Competition was picking up too and the quality of service and range of products being offered started to take a toll on sales for the market leader.

    The Change stage:

    Luc Vandevelde, Chairman and Chief Executive, gathered info and talked to all stakeholders. It set up an executive team in place and began a strategic review which was rigorous and all inclusive and was radical. The change management team kept all people informed and took feedback from every important person who had something to offer.

    The Refreeze Stage:

    The change leader in the form of Vandevelde chalked out some successful strategies like

    • A rebrand and update of the corporate image thus avoiding the confusing ‘Marks & Spencer’ and ‘St Michael’ symbols.
    • A restructuring of the supply chain where stores were stocked based on demographic patterns.
    • stressed the importance of restoring confidence to M&S’ ‘core customers’

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