U4 - AOS2 - change management

Leadership

The action of positively influencing and motivating individuals to set and Schieve objectives during the transformation of the business

 

Qualities for leading through change

• preperation and planning

• communication

• support

• collaboration

• acountability

Preparation and planning

Develops a plan of action, outlining the change, strategies, timelines and vision.

• Employees have clarity about what is happening and why, reducing uncertainty and helping them feel more prepared for change.  

Communication

Clearly conveys the vision, reasons and benefits of change and consequences of not changing - clear instructions, informs stakeholders of challenges/progress and uses two-way communication. 

• Employees feel informed and heard, increasing trust and reducing resistance to change.  

Support

Provides employees with assistance and services such as counselling, training or mentoring to help them cope with change and demonstrates concern for their wellbeing  

• Employees feel valued and supported, making them more willing and able to accept the risks involved with change.   

Collaboration

Forms a team to facilitate change, delegates tasks and shares responsibility with employees, giving them opportunities to participate in the change process.  

• Employees develop a sense of ownership and responsibility, increasing their commitment to the change.

Accountability

Takes responsibility for whether the change is successful, demonstrates integrity and works to solve problems.  

• Employees develop trust in management, reducing confusion and increasing their commitment to the change. 

Staff training

aimed at improving the skills, knowledge, attitudes and behaviours of employees in order to allow them to do their job more efficiently and effectively then before

• on the job or off the job training

Staff motivation

Strategies used to encourage employees to work harder and perform better, such as rewards, recognition, responsibility and teamwork. 

 

Types of motivation

• performance related pay, career advancement, investment in training, support, sanctions

Change in management style or skills

Changing the way managers lead and make decisions such as autocratic to consultative and therefore developing the skills managers use, such as communication, delegation, decision-making and interpersonal skills, to improve employee and business performance. 

Cost cutting

Reducing business expenses to lower costs and improve net profit figures.cost savings can translate into cheaper prices for customers leading to increased sales and market share

• raw materials – seek lower cost suppliers domestically or internationally, lean management

•   labour – outsourcing, overseas manufacture or replacing labour with technology

• rent – seeking cheaper locations, work from home system

Redeployment of resources

Transitioning existing natural, labour or capital resources to areas of the business where they can be used more efficiently or are needed more

Investment in technology

increasing the amount or spending more money on technology, equipment or systems to improve efficiency, productivity, quality or reduce costs

•   Replaces employees by making job positions redundant

• Mass production (standardised products)

Overseas manufacturing

producing products in an overseas location and importing it into the businesses domestic country for sale often to access lower production costs, specialised skills or resources. 

Sourcing inputs from overseas

aquiring raw materials and resources from overseas locations and importing it into the businesses domestic country, this may be for cheaper prices or seasonal availability

Global outsourcing

involves a business hiring an external business from an overseas location to conduct their activities on its behalf such as manufacture that could otherwise be performed internally

Innovation

Developing new or implementing improvments to existing products, services, processes or methods to improve business performance or gain a competitive advantage. 

Implementing lean production

involves systematically eliminating waste so that from the customers perspective they are receiving the most value from the fewest resources

-              Pull – production only begins when a customer places an order

-              One piece flow – the operations system focusing on one product at a time

-              Takt – synchronising the steps of the production process to create a continuous flow

-              Zero defects – aiming for perfection by continuously improving until no errors or mistakes are made

Improving quality in production

implementing strategies within the operation process to ensure products meet customer expectations and pre determined standards and therefore minimise defects

• Quality control – involves inspecting the product at various stages of the production process to ensure it meets pre determined standards and discarded those with defects

• Quality assurance – hiring an external body to assess the businesses operations systems to achieve a certified standard of quality

• TQM – a holistic approach to quality and commitment to excellence in which employees are involved in the pursuit of quality in everything they do – employee participation, continuous improvement and customer focus

Senges learning organisation

businesses where managers and staff continually seek to expand their capacity to achieve the results they desire 

Mental modes

existing assumptions and generalisations that must be challenged

• Employees should challenge their existing behaviour and beliefs so learning can occur

• The businesses should aim to constantly challenge their employees to break down this existing mindset

• Builds trust, culture and empowerment to create something new and better then before

Building shared vision

An aspirational description of what an organisation and its members should like to achieve

• A business should develop and promote a goal that all employees can believe in

• A strong and clearly communicated vision can encourage a unified focus for employees – enabling employees to align their individual efforts to the shared business goal

Team learning

The collective learning occurring when teams share their experience, insights, knowledge and skills to improve practices

• Collaboration allows employees to combine their knowledge and skills to make more effective decisions

Personal mastery

The practice of an individual to undertake personal growth and learning 

• If individuals in a business can continually improve, then so can the business 

• Done through training, development, performance management, and career progression. 

Systems thinking

Systems thinking is the ability to see the business as an interconnected whole, identify relationships and patterns between different areas, and develop long-term solutions rather than isolated quick fixes. 

Strengths of Senges model

• The adaptability of the business allows them to respond to issues quicker in the future 

• Improves quality of all outputs 

• Increased levels of creativity, innovation and continuous improvement allows for competitiveness 

Limitations of Senges model

• Requires cultural shift, which can be time consuming 

• Large businesses may struggle to share ideas and knowledge between all its employees 

Low risk strategies

measured management approaches that gradually encourage employees to accept and participate in a business change 

• They are actions taken that are likely to generate positive outcomes in the short and long term 

Low risk strategy - Communication

• Openly and honestly transferring information and listening to employee feedback to they are fully aware of the reasons for change, impact, and timeline

• Fosters trust

• two-way communication - listen to feedback to have their concerns addressed 

IMPACT ON EMPLOYEES → well-informed and are less likely to resist change as they understand its necessity

Empowering

involving employees in the change process by giving them authority and responsibility to make decisions

• Employees are given the opportunity to provide input into decisions that have direct effect on their job 

IMPACT ON EMPLOYEES → increases trust and confidence, involvement in process means more likely to be invested in its success 

Incentives

Financial or non-financial rewards provided to employees if they demonstrate a desired change behaviour 

This can include

• promotion

• bonuses

• training and career advancement

• greater autonomy/responsibilities

IMPACT ON EMPLOYEES → more likely to reduce resistance knowing they will be rewarded when they perform as requested

Support

management providing employees with assistance in moving from the current state to the new 

• Services such as Employee Assistance Program (EAP)

• E.g. if the change requires termination of staff, the business can assist those employees to find new employment

• If employees see their colleagues being treated poorly, they will be less supportive of the change

IMPACT ON EMPLOYEES → reduce fear and anxiety in response to change, improvement in morality 

Advantages of low risk strategies

• Preserves employee morale 

• Reduces resistance 

• Maintains commitment to the business 

Disadvantages of low risk strategies

• Can take longer to initiate change 

• Can require additional expenses and time to implement support, counselling, incentives 

High risk strategies

are autocratic approaches that are used to influence employees to quickly accept and follow a business change, often generating negative outcomes 

• may be effective in short-term but not long-term 

High risk strategy - Manipulation

a manager selectively leaves out relevant information about a change so that it appears more favourable or beneficial than it actually is 

• employees are less likely to disagree 

IMPACT ON EMPLOYEES → may feel deceived and lose trust in management if they find out the truth, damaging relationships and CC and also demotivating employees 

High risk strategy - Threat

where an employer may intimidate an employee into coercing them to carry out the change 

• examples include → loss of promotion, transfer, overtime or termination 

• employees may be compliant in the short-term but more resistant in the future 

• can result in industrial disputes 

IMPACT ON EMPLOYEES → can create stress, anxiety and resentment, increase turnover/absenteeism, damage trust with management 

Advantages of high risk strategies

• Allows for immediate implementation of change 

• Little financial cost 

• Appropriate for critical situations where speed is important 

Disadvantages of high risk strategies

• Likely to foster a negative corporate culture - mistrust in the long-term 

• Poor employer-manager relationship 

• Increase resentment → absenteeism and turnover 

Lewins three step change model

Theory that suggests change occurs at many levels within a business - and that businesses must move from an existing state (equilibrium) → through change → to a new state 

Unfreeze

Moving a business to a state where stakeholders are prepared to undergo change. 

• Challenge beliefs, behaviours and values that currently exist within the business 

• The need for change is identified and communicated to stakeholders 

• If stakeholders accept the change, then the business can proceed with the transformation 

Change

Moving a business towards its desired state 

• All processes, policies and practices are able to be changed to meet the business’s new objectives 

• Management should provide support and training to reduce stress 

• Open communication so employees can seek guidance and feedback on what is taking place 

• Staff empowerment to ensure involvement in process → less resistance 

Refreeze

Putting strategies into place to make sure that the change is stabilised in the long term 

• Establish the new state of stability 

• Rewriting policies to reinforce new culture 

• Celebrating achievements 

• Incentivising employees who have embraced change 

Advantages of the three stage model

• Simplistic structure that the business can easily follow and communicate 

• Able to reduce resistance (unfreezing prepares employees) 

• Encourages long-term change 

Disadvantages of the three stage model

• Too simplistic - assumes change occurs in a straightforward sequence when in reality a business experiences multiple changes at once 

• Less suitable for continuous change where a business must constantly adapt 

• Time consuming[Text Wrapping Break]Unsuitable for rapidly changing environments 

Corporate culture

the shared ideas, values, beliefs which exists within a business

• Official corporate culture - the shared ideas, values, beliefs which exists within a business which they aim to convey to the public – usually visible through mission statements, vision statements and slogan

• Real corporate culture - the actual shared ideas, values, beliefs which exists within a business – visible from the way employees treat each other, dress

Strategies to develop official corporate culture

→ Publishing a vision/mission statement 

• Highlights business’s intentions and purpose for its operations to the public 

→ Establishing/amending policies and procedures 

→ Employee training  

• Ensures employees are equipped with knowledge and skills to represent business values 

Strategies to developing real corporate culture

→ Establishing appropriate rituals, rites and celebrations 

• employees feel valued, fostering a sense of belonging → positive relationships and behaviour 

→ Rewarding employees who exemplify appropriate values 

• Motivates other staff to follow in footsteps 

→ Communicating desired values to staff 

• Provides clarification on what is expected from employees 

→ Changing management style 

→ Senior managers, and the ‘heroes’ of the business, acting as role models  

Impact of change on owners

• (+) Improved financial performance is likely to result in an increased return on owners investment 

• (+) An owner involved directly in day-to-day operations can learn new skills 

• (-) Change may result in a reduction in value of shares or loss of the business 

• (-) Shareholder may find the change too risky and therefore sell their share of the business 

impact of change on employees

• (+) Employees may be satisfied with change that results in redeployment or change in work practices 

• (+) Employees have the opportunity to learn new skills, creating longer-term opportunities 

• (-) Possibility of redundancy due to downsizing or investment in tech 

• (-) Retraining may be required for a change 

• (-) Longer or shorter hours 

impact of change on managers

• (+)Managers may receive PRP based on success of change 

• (-) Manager may not be comfortable in utilising a different management style/skill 

• (-) Restructure/downsize can result in managers having reduced responsibilities or loss of job 

impact of change on customers

• (+) Improved quality in a product or service can increase satisfaction 

• (+) Reduction in prices can increase satisfaction 

• (-) Customers may be dissatisfied with the business’s decision to discontinue a good or service 

• (-) Decline in quality/price can decrease satisfaction 

impact of change on suppliers

• (+) Increased demand for resources, increasing supplier sales 

• (+) Adjustment of processes, creation of opportunities 

• (-) Decrease demand for resources and decrease sales 

• (-) Changing suppliers can result in a fall in sales 

impact of change on the general community

• (+) Creation of local employment 

• (+) Expansion = more traffic and increased sales 

• (+) Environmental sustainability and social needs = contribution 

• (-) Loss of jobs 

• (-) Non-renewable resources or lesser contribution 

Corporate social responsibility

the act of a business going above and beyond their legal responsibilities to positively benefit the environment, the community or economy

• Helps retain a positive business environment and acts as a competitive advantage

Advantages of CSR

• Improves reputation 

• Improves employee satisfaction and motivation 

• Sustainable future 

Disadvantages of CSR

• Time consuming 

• Expensive for non-core activities 

Reviewing KPIs to evaluate effectiveness

• analyse the extent and size of transformation 

• identify areas where they had the most success in and those requiring additional effort or time to be achieved 

• consider alternative management strategy if they did not achieve what they intended tp 

• Compare KPIs before and after change