Business last SAC

What is Leadership?

The ability to influence and motivate employees of a business to achieve objectives.

10 KPIs

Percentage of market share, net profit figures, rate of productivity growth, number of sales, rate of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints, number of website hits, number of workplace accidents

Management Strategies to respond to KPIs and seek new business opportunities (12)

• Staff Training

• Staff Motivation

• Change in management styles and skills

• Increased Investment in technology

• Improving quality in production

• Cost Cutting

• Initiating lean production techniques

• Redeployment of resources (natural, labour and capital)

• Innovation

• Global Sourcing of Inputs

• Overseas manufacturing

• Global Outsourcing

Management Strategies: Staff Training (Definition + KPI’s that could be positively affected)

The process of improving an employee’s level of skill and knowledge. Training can be either on or off-the-job.

• Number of sales

• Number of customer complaints

• Level of staff turnover

• Number of workplace accidents

Management Strategies: Staff Motivation (Definition + How it can be achieved + KPI’s that could be positively affected)

Refers to a business’s ability to encourage an employee to expend effort over a sustained period of time. It can be achieved through performance related pay, offering non-financial rewards and setting goals for employees to achieve.

• Number of sales

• Rate of staff absenteeism

• Level of staff turnover

• Number of customer complaints

Management Strategies: Change in management styles and skills (Definition + How it can be achieved + KPI’s that could be positively affected)

Change in management style and the adoption of different management skills when dealing with employees is done for the purpose of improving employee performance. e.g. shifting from an autocratic management style to a consultative.

• Rate of productivity growth

• Level of staff turnover

• Rate of staff absenteeism

• Number of customer complaints

Management Strategies: Increased investment in technology (Definition + KPI’s that could be positively affected)

Refers to the purchasing of new or improving on existing software (CAD, CAM), hardware (laptops, phones), robotics, or machinery

• Rate of productivity growth

• Number of sales

• Level of wastage

• Number of website hits

• Number of workplace accidents

Management Strategies: Improving quality in production (Definition + KPI’s that could be positively affected)

Refers to the implementation of quality assurance techniques or embracing the principles of Total Quality Management to improve the degree of excellence in a business’s goods or services

• Number of sales

• Level of wastage

• Number of customer complaints

• Percentage of market share

• Net profit figures

Management Strategies: Cost Cutting (Definition + KPI’s that could be positively affected)

Involves reducing the expenses of a business e.g. sourcing cheaper supplies, reducing employee numbers, changing power providers etc. in order to help boost business profitability

• Net profit figures

• Rate of productivity growth

Management Strategies: Initiating Lean Production Techniques (Definition + KPI’s that could be positively affected)

Involves a business identifying any areas of waste and seeking ways to minimise their impact on the business e.g. JIT inventory control or the pull principle of lean management

• Level of wastafe

• Rate of productivity growth

• Net profit figures

• Number of sales

Management Strategies: Redeployment of resources (Definition + KPI’s that could be positively affected)

Involves re-arranging the assets of a business so they are working at a greater capacity. This can involve:

• Redeploying employees (labour) to a different role within the company or sending them to work in a different location

• Redeploying natural resources so they are stored, transported, and distributed in a way that enabels the business to operate more efficiently and effectively

• Redeploying capital resources involves moving items like equipment and machinery to another department, site, or country to improve a business’s ability to operate.

• Rate of productivity growth

• Level of wastage

• Net profit figures

• Level of staff turnover

Management Strategies: Innovation (Definition + KPI’s that could be positively affected)

The process of improving on an already existing product, service, or process within a business to better meet the needs and wants of customers.

• Number of sales

• Percentage of market share

• Net profit figures

• Number of website hits

• Rate of productivity growth

Management Strategies: Global Sourcing of Inputs (Definition + KPI’s that could be positively affected)

Refers to a business seeking the inputs they need from overseas locations often because of greater availability, quality, and/or affordability

• Net profit figures

• Level of wastage

• Rate of productivity growth

• Number of sales

Management Strategies: Overseas manufacturing (Definition + KPI’s that could be positively affected)

Refers to a business producing its products outside its country of origin. Often a business will do this to reduce business expenditure through lower wage costs, to establish a strategic business location closer to customers, or to gain access to greater levels of manufacturing expertise.

• Net profit figures

• Rate of productivity growth

• Number of sales

Management Strategies: Global Outsourcing (Definition + KPI’s that could be positively affected)

Refers to when a business hires external organisations located overseas to complete non-core business activities e.g. web design, customer call centres

• Net profit figures

• Rate of productivity growth

• Number of customer complaints

Corporate Culture

The values, ideals, beliefs, and expectations shared by members of a business that drives actions, decision making and impact on the entire business.

Examples of values and ideals in positive corporate culture

• Hard work

• Diversity/inclusion

• Innovation

• Sustainable business practices

• Being people focused

• Team bonding

Examples of beliefs and expectations in positive corporate culture

• Collaboration and teamwork

• High work standards/performance

• Employees being encouraged and supported in improving themselves

• A positive mindset regarding change

Strategies for developing a positive corporate culture

• Rewarding/acknowledging employees who demonstrate hard work, honesty, teamwork, innovation, etc.

• Celebrating employee achievements such as work milestones and the achievement of business objectives

• Providing the opportunity/encouraging employees to participate in training and development opportunities

• Hiring staff who fit the values of the business

• Changing the prevailing management style

• Senior managers acting as role models and setting the example for others to follow

Benefits of having positive corporate culture

• Increased productivity as employees are motivated to do their best for the business

• Reduced behavioural issues, as all employees embrace the same approach to work

• Enhances a business reputation in the wider community

• Reduced staff absenteeism and turnover as employees are less likely to leave a business when they experience a corporate culture that is positive.

• The business is attractive to new employees, allowing the business to pick from the best candidates in the field

What is a learning organisation

A term used to describe a business that is flexible, adaptable and productive during periods of rapid change.

5 principles of a learning organisation (Senge)

1. Systems thinking

2. Personal Mastery

3. Mental Models

4. Team Learning

5. Building a shared vision

Senge Principles - Systems thinking

Involves a business acknowledging the connections that exists between all areas of a business and that a decision made that changes one area of a business will likely have an impact on another.

How does systems thinking help to create a positive culture for change

• Builds trust

• If business owners/managers can show an ability to understand the consequences of the decisions that they are making and how this will impact across the business, employees will be more willing to believe in and be on board with the change rather than fear the ramifications of these decisions

Senge Principles - Personal Mastery

A principle that seeks to provide employees with opportunities to become experts in their chosen profession. To facilitate this, a business needs to provide an environment that allows individuals to learn and improve to reach their full potential. Ultimately, businesses learn through individuals who learn and people who have a high level of personal mastery are in a continual learning mode

How does personal mastery help to create a positive culture for change

• Creates a culture where people are motivated to learn, improve, and adapt

• This makes employees feel more positive and open to change, as change will often require new things to be learnt. This strengthens the whole business’s ability to grow and succeed

Senge Principles - Mental Models

The assumptions and generalisations of how we as people understand the world. This can involve pre-conceived ideas of how things within a business should be done as this is the way they have always been done.

*Businesses need to be willing and able to change their mental models in order to drive the business forward

How does breaking down mental models help to create a positive culture for change

Helps businesses replace outdated thinking with open-minded, innovative, and adaptable attitudes, which supports a more positive and change-ready culture

Senge Principles - Team Learning

Members of a business need to be able to collaborate and learn together. Teams that learn together in a business will achieve improved results. A key to team learning is open communication between colleagues, accompanied by a genuine effort to ‘think together’

How does team learning help to create a positive culture for change.

Creates a supportive, collaborative environment where people feel confident and motivated to face change together. This helps remove the fear and uncertainty associated with business change, building a stronger and more positive business culture.

Senge Principles - Building a shared vision

• When building a shared vision it is important to ensure a business’s vision comes from a range of people and not just leaders.

• A shared vision helps a business to implement change as it spreads ownership of the vision throughout the business, helping it to be reinforced by others

How does building a shared vision help to create a positive culture for change

• By involving a number of different individuals in determining the future direction of the business, there will be greater commitment and ownership of the vision.

• This shared vision turns change from something that’s forced onto employees into something they feel a part of, increasing the likelihood of it being accepted and implemented successfully

Low-risk strategies to overcome employee resistance to change (Definition + Examples)

Tactics adopted by a business that aim to minimise any unwillingness to embrace change and that will be of benefit to the business over the long-term

1. Communication

2. Empowerment

3. Support

4. Incentives

Low-risk strategy to overcome employee resistance to change - Communication

Effective two-way communication between managers and those employees who may resist the change being implemented builds understanding, trust and often leads to greater acceptance of the change.

Low-risk strategies to overcome employee resistance to change - Empowerment

Empowerment involves employees in the change process. This will increase the likelihood of employees taking ownership and being supportive of the change taking place, reducing resistance.

Low-risk strategies to overcome employee resistance to change - Support

Providing support (further training, being willing to listen to employee concerns, acting as a referee) to those employees affected by the change

Low-risk strategies to overcome employee resistance to change - Incentives

Employee resistance can be overcome by providing incentives to those who embrace the change. This can include providing bonuses, offering promotions, or providing opportunities for additional responsibility. These incentives can reduce employee resistance as it shows the business has faith in their abilities and is willing to move forward with employees who are on-board with the change

Advantages of low-risk strategies to overcome employee resistance to change

• Helps create a business environment where change is something that is embraced rather than feared

• It puts employees needs and concerns at the forefront of the change process and aims to minimise the disruption and disengagement that can occur with employees during periods of change

Disadvantages of low-risk strategies to overcome employee resistance to change

• Strategies that involve the provision of financial incentives can see the expenses of a business increase substantially during times of change

• When the need for change becomes urgent, the time-consuming nature of some low-risk strategies may mean the business misses out on potential opportunities

High Risk Strategies to overcome employee resistance to change

Actions taken by a business that may succeed in the short-term but run the risk of generating negative outcomes for the business in the longer term.

• Threats

• Manipulation

High Risk Strategies to overcome employee resistance to change - Threats

A way to make employees accept change through the removal of an incentive or by raising the prospect of a consequence (e.g. demotion, work transfer, or redundancy)

High Risk Strategies to overcome employee resistance to change - Manipulation

The process of withholding or misrepresenting the truth. Can help a business overcome employee resistance to change as if employees are only made aware of the positives and not the negatives, they are more likely to comply with the changes.

Advantages of High-Risk strategies to overcome employee resistance to change

• The chance of change being successfully implemented can be enhanced when high-risk strategies are utilised as they are powerful motivators

• Can be a time efficient approach to overcoming employee resistance as they often force immediate compliance

Disadvantages of High-Risk strategies to overcome employee resistance to change

• Working relationships can be permanently damaged, leading to an increase in staff turnover

• The business’s reputation can be adversely impacted, reducing a business ability to attract high performing staff

• Employee motivation and work quality can be reduced due to a loss of trust and faith in management

Similarities and differences between High and Low-risk strategies

Similarities:

• Both provide a business with the means to overcome employee resistance when trying to implement change

Differences:

• Low-risk strategies will have minimal detrimental impact on the employee-employer relationship when implemented whereas high-risk strategies can cause irreparable damage to the relationship.

• Low-risk strategies are usually slower to implement, whereas high-risk strategies are usually faster to implement

• Low-risk strategies lowers the chance of any conflict occurring between employees and managers when change is being implemented whereas the use of high-risk strategies increases the possibility of conflict occurring

The 3-Step Change Model Steps

Unfreeze

Change

Refreeze

3-Step Change Model - Step 1

Unfreezing is when management prepares the business for the change. The aim of this step is to create energy and urgency around the change.

This can be done by:

• Clearly communicating what needs to change

• Working to reduce any restraining forces

• Implementing a pilot program for the change

• Effectively managing any doubts and concerns regarding the change

3-Step Change Model - Step 2

Change

With the business now unfrozen, it can begin to implement the change and move toward its new desired state. It is important that open communication and support (e.g. training if needed) is provided at this state to help those that are finding the change difficult

3-Step Change Model - Step 3

Refreezing is about maintaining momentum for the change and ensuring it is implemented and maintained in the long-term.

This can be accomplished by:

• Celebrating the successful implementation of change

• Re-writing and communicating updated policies e.g. staff rosters

• Providing ongoing support and training

• Updating marketing and promotional material

Without refreezing there is the potential for employees and the business at large, to fall back into old habits, undermining the change process.

How are owners effected by change (Definition of owners + Positives + Negatives)

Owners are in charge of overseeing and determining the strategic direction of a business. Owners can be heavily involved in the day-to-day operations of a business in the case of a sole trader or partnership or removed, in the case of a shareholder of a public company.

Positives:

• Increased return on their investment if the change translates into improved financial performance for the business

• Owners being heralded as the reason for the business’s success if the change implemented puts the business on the right path to long term success

Negatives:

• Creating additional workload should the change require policies and procedures to be written/re-written

• Placing the owners under further pressure if the change doesn’t work out as planned

How are managers effected by change (Definition of managers + Positives + Negatives)

Responsible for successfully implementing the strategic direction of the business as determined by the owners of the organisation.

Positives:

• Making their jobs easier if the change means employees are more motivated

• Managers being rewarded with financial bonuses or promotions should the change be successfully implemented in the business

Negatives:

• Creating additional workload should the change require policies and procedures to be written/re-written

• Placing the managers under further pressure if the change doesn’t work out as planned

How are employees effected by change (Definition of employees + Positives + Negatives)

Members of the business that carry out the day-to-day tasks of the business.

Positives:

• Higher levels of motivation and job satisfaction if the change involves improvements to their working conditions

• Employees becoming more effective and efficient at their job, if the change requires employees to undergo further training or the acquisition of new skills or incorporates new technology into their work activities

Negatives:

• Causing disgruntlement amongst employees, who as a result of the change, are required to complete their work tasks in a different manner than what they are used to

• Employees losing their job if the change involves replacing human labour with technology or the change seeks to reduce business expenses through downsizing or outsourcing.

How are customers effected by change (Definition of customers + Positives + Negatives)

Individuals who purchase a business’s good or service.

Positives:

• Customers benefiting from the business’s products being better able to meet their needs and wants

• Customers experiencing cost savings, if the change implemented involves a reduction in their expenses and thus a decrease in the selling price of the product

Negatives:

• Potentially leading to customer dissatisfaction if the good or service now does not meet the needs and wants of customers or if the changes made lead to an increase in the selling price of the business’s product or service

How are suppliers effected by change (Definition of suppliers + Positives + Negatives)

Businesses that provide another business with the resources/inputs they need to perform services or manufacture goods.

Positives:

• Greater profitability if the businesses they are supplying too changes in a way that results in higher demand for supplies

• Suppliers may have to become more environmentally sustainable if the business they are supplying to changes to adopt this mindset, this may enhance the suppliers reputation

Negatives:

• The supplier may see a fall in their financial performance, if the business they are supplying to changes to adopt a more lean, waste minimising approach to operations that requires less resources

• If a supplier does have to adopt more environmentally sustainable practices, this could see an increase in their expenditure without any guarantee of a financial return

How is the general community effected by change (Definition of general community + Positives + Negatives)

Encompasses the people who live in and around where a business operates.

Positives:

• More employment for local residents if the business change results in a higher demand for the business’s products or services.

• A cleaner environment if the change results in the business reducing emissions and energy consumption

Negatives:

• Large numbers of people becoming unemployed in a local community if the business change involves considerable downsizing of the work force.

• Increased pollution or carbon emissions, if the change implemented results in more energy and resource consumption

CSR

Corporate social responsibility refers to a business’s ability to go above and its legal responsibilities and behave and act in a way that is in keeping with society’s values and expectations.

CSR and Employees - Termination of employees

Often changes within a business can result in the termination of employees. Examples of CSR practices in this situation might include

• Paying for re-training or further education

• Providing paid time off to attend interviews

• Extending the notification period so exiting employees have plenty of time to find other employment

CSR and Employees - Alterations to tasks, activities, and roles completed by an employee

Changes made can result in substantial alterations to the tasks, activities, and roles completed by an employee within a business

Examples of CSR practices in this situation might include:

• Additional training above the minimum requirements

• Additional safety measures above the minimum requirements

• Management providing ongoing support and guidance to affected employees

• Being transparent and open with any communication related to the change impacting employees

Other CSR considerations to do with employees

• Offering employees the opportunity to take time off work to volunteer their time to foundations and charities

• Providing employees with the opportunity to change their work schedules to more ‘family-friendly’ hours.

CSR and Suppliers

A business may decide to change its suppliers. In doing so, it is important to consider:

• Any new suppliers the business enlists the services of also act in a way that is socially responsible

• A business can also consider using local suppliers, as a way of demonstrating CSR. This will reduce transport time and distances minimising the indirect carbon emissions of a business

CSR and new Technology

If the change involves the implementation of new technology, this new technology could negatively impact the environment through greater energy consumption. To deal with this change the business could

• Donate money to a climate research fund

• Focus on minimising energy consumption in other areas of the business

CSR and Customers

Customers are very aware of the activities and actions of businesses. Therefore, CSR is more than just a consideration in response to change but it can actually be a source of change itself as businesses seek to eliminate any areas of their operations that could be judged as not being socially responsible

Advantages of considering CSR when implementing change

• Improved morale in the workplace

• Reduced employee turnover

• Greater ability to attract more/retain existing customers

Each of these examples enhances the business’s reputation, making it an employer of choice that staff members will want to work for and see succeed and customers will want to buy from.

Disadvantages of considering CSR when implementing change

• May increase the operating expenses of the business through the provision of additional benefits to employees, implementation of more sustainable business practices (e.g. energy saving technology) or the changing of suppliers

• Can slow the process of change down due to a desire for a business to adhere to its Corporate social responsibility benchmarks instead of simply implementing change without considering these elements

Why is it important to review KPI’s to evaluate business transformation

• To determine if the change has been successful

• To decide if the business should continue with the current strategy or potentially change their approach if KPI’s aren’t improving

• To justify whether the time and money invested in the business transformation was worthwhile and therefore help with future planning