Unit 4 AOS2 - business

During times of change what can a strong leader do? (7)

Communicate a clear vision with stakeholders

Management strategies to respond to KPIs and/or seek new business opportunities (12)

Staff training

Staff training

Managers can use on-the-job or off-the-job training to upskill employees. This can boost employee productivity, as staff are able to create more output per hour of labour worked. Furthermore, by increasing the skills and abilities of staff, employees can undertake more challenging and interesting work, aiding employee motivation and boosting staff retention.

Staff training can improve what KPIs? (5)

Number of workplace accidents

Staff motivation (4)

To respond to KPIs, a manager can implement specific staff motivation strategies. Motivation strategies include performance-related pay, career advancement, and support and sanction.

Staff motivation can improve what KPIs?

Level of staff turnover

Changes to management styles

Managers can move from a centralised to a more decentralised management style, such as from an autocratic style to a participative style, in order to create a more inclusive culture. This may also motivate employees to contribute more, leading to more interesting ideas being proposed and implemented, ultimately leading to higher productivity. A move to a more centralised style can allow the manager to have more authority over staff.

Changes to management style can improve what KPIs? (6)

Rates of staff absenteeism

Changes to management skills

Management skills include communication, delegation, decision-making, planning, interpersonal, and leading. Using two-way communication, delegation, leading and interpersonal skills, a manager can create a more inclusive culture. By taking more control, using one-way communication and not including staff in decision-making, a manager can more closely monitor the behaviour of employees.

Changes to management skills can improve what KPIs? (5)

Rates of staff absenteeism

Increased investment in technology

A business can invest in technologies such as computer-aided design (CAD), computer-aided manufacturing (CAM), automated production lines and website development. The use of such technologies can boost accuracy, productivity and customer satisfaction.

Increased investment in technology improves what KPIs? (8)

Rate of productivity growth

Improving quality in production

A business can implement quality strategies including quality control, quality assurance and total quality management. By reducing the number of defects that reach customers and striving to provide a good or service of superior quality, the business can gain a competitive advantage.

Improving quality in production can improve what KPIs? (6)

Number of customer complaints

Cost cutting

Cost cutting involves aiming to reduce expenses that are considered non-essential. For example, a company may decide to print all documents in black and white instead of colour, saving on printing expenses.

How does cost cutting improve KPIs? (3)

Net profit figures

Initiating lean production procedures

Lean production techniques focus on eliminating the 7 wastes: overproduction, over-processing, excess inventory, excess motion, excess transport, defects and waste.

Initiating lean production techniques can improve what KPIs?

Level of wastage

Redeployment of resources

A business can boost efficiency by taking resources and reorganising them within the business. A common form of redeployment of resources occurs when technology, a capital resource, replaces the role of an employee, a labour resource. The business can then redeploy that employee to another area of the business. For example, an employee who worked in the factory bottling soft drinks might be reassigned to work in the call centre dealing with customer complaints.

Redeployment of resources can improve what KPIs? (4)

Net profit figures

Innovation

This involves improving existing methods and practices in a business to provide or use a method or feature that is not previously seen in the market or industry. This could improve productivity and thereby lower the number of inputs required in production or increase sales due to an exciting new market offering.

Innovation can improve what KPIs? (5)

Number of sales

Global sourcing of inputs

This involves importing inputs or in-process inventory from other countries. This is advantageous as it gives the business access to cheaper inputs, as generally labour is cheaper overseas or different skills are available.

Global sourcing of inputs can improve what KPIs? (4)

Net profit figures

Overseas manufacturing

This refers to a business relocating the production or assembly of goods to another country. Businesses usually do this because labour costs in other countries are lower.

Overseas manufacturing can improve what KPIs? (4)

Net profit figures

Global outsourcing

This refers to a business outsourcing an area of their production to a third party that is located outside of the business's headquarters. For example, Telstra globally outsourced their customer service call centres to the Philippines and India to cut costs.

Global outsourcing can improve what KPIs? (4)

Net profit figures

The learning organisation (Senge)

The idea that businesses will be constantly changing and adapting. Senge described it as a business where people continually expand their capacity to create the results they truly desire, new and expansive patterns of thinking are nurtured, collective aspiration is set free, and people are continually learning to see the whole reality together.

5 principles of Senge

Systems thinking

Systems thinking

The idea of viewing the organisation as a large complex system rather than only seeing individual components. Senge believed that managers must see the bigger picture and the broader context in which they operate before using the other four principles.

Personal mastery

This involves all the people within a business constantly developing their skills and knowledge. When there is a state of constant learning and improvement, objectives and change will be easier to achieve.

Mental models

To facilitate a process of change, a business and individuals must be introspective, able to analyse their actions and recognise mistakes. Mental models are deeply ingrained assumptions, generalisations, or pictures and images that influence how we understand the world and how we take action. These mental models must be seen and questioned in order to allow for a healthy change process.

Building a shared vision

Having a shared vision will ensure that all stakeholders within a business are motivated. Senge believed that if everyone truly believes in what a business is trying to achieve, then there will be a higher level of commitment and a higher success rate.

Team learning

In order to bring together a shared vision and personal mastery, Senge believed it necessary for people to also work together. With collaboration across the business there will be greater quality dialogue and more consensus, both of which will aid the change process.

Corporate culture

Corporate culture refers to the values, ideals, beliefs and expectations shared by members of the organisation.

Strategies to develop corporate culture

Training and development

Why develop corporate culture?

A safe and happy workplace leads to less resistance to change

Low-risk strategies to reduce employee resistance

Empowerment

High-risk strategies to reduce employee resistance

Manipulation

Communication

The transfer of information from sender to receiver, including listening to feedback. It enables the flow of information from management to employees and from employees to management so employees can express their ideas and be fully aware of all aspects of the change. Since they know more, they are more likely to accept it as fear of the unknown is reduced.

How and why use communication to reduce employee resistance?

How: collaboration through teamwork or groups, bonding activities, and verbal/non-verbal communication. Why: enables employees to provide suggestions regarding change, which reduces resistance to change.

Support

Change usually results in some employees being terminated. Those being asked to leave the business need to be given appropriate support and outplacement services. This ensures that their departure does not damage the culture they leave behind.

Threat

Using power to force resistors to accept the change. Threats may relate to loss of promotion, transfer or termination.

Empowerment

An effective manager should make employees feel that their input has a direct effect on the way the business changes. This can be achieved by giving employees the opportunity to work in teams and share ideas with senior managers. This process will help create a culture that is supportive of change.

Manipulation

The skilful or devious exertion of influence over someone to get them to behave the way you want them to. This can include hiding information, such as forced redundancies, and may be considered either skilful or deceptive.

Incentive

In most cases employee resistance can be overcome by providing incentives. These may involve bonuses and pay raises or opportunities for advancement and training.

Advantages and disadvantages of low-risk strategies

Advantages: can build positive corporate culture

Advantages and disadvantages of high-risk strategies

Advantages: ensures change is implemented quickly and matches exactly what the manager requires

3 steps in the three-step change model (Lewin)

1. Unfreeze. 2. Change. 3. Refreeze.

Unfreeze

Preparing the business for change. Identify current problems and opportunities and then decide which elements of the status quo need to be changed. Analyse everything within the current environment and create urgency by demonstrating the need for change and challenging current beliefs.

Change

Once the business is in an unfrozen state, with every policy and procedure ready to be questioned, managers are able to move the business to a new state. During the transition, support and communication should be maintained between all levels of the business. People should feel empowered to take action and necessary resources should be provided towards implementation of change.

Refreeze

Change will only remain permanent if stability is established. Refreezing is about reinforcing change into the culture and ensuring the business does not fall back into its original state. Managers attempt to integrate the change into the culture of the business so staff will not revert to old behaviour and practices. Continuous support and training should be provided and adjustments made where necessary.

Unfreeze - why and how

Why: challenge the beliefs of employees so that change can be successful

Change - why and how

Why: management can transition the business to a new position. How: make the change but offer support so change can occur successfully, such as communication and training.

Refreeze - why and how

Why: prevent a business from reverting back to its previous state. How: embed change into everyday tasks

Stakeholders affected by change

Owners

Effect of change on owners

Changes to net profit figures.

Effect of change on managers

High rates of staff turnover, absenteeism and low employee morale may lead to a change of management style. Introduction of new technology can cause a change of processes. Downsizing or expansion can cause a change of structure and employment.

Effect of change on employees

Introduction of new technology can cause a change of work environment. Downsizing or expansion can cause a change of structure. New competitors entering the market can cause a change of focus or new strategies.

Effect of change on customers

Positive effects: increased quality of goods/services improves customer satisfaction

Effect of change on suppliers

Positive effects: volume of resources ordered by the business may increase, increasing supplier sales. Negative effects: business going through change may switch to a rival supplier, reducing the volume of materials ordered.

Effect of change on general community

Positive effects: if business change is successful, they may donate to charity or social causes with additional profit

CSR during change for… (3)

Employees

Why and how use CSR during change (employees)

Why: protects workers' wellbeing

Why and how use CSR during change (general community)

Why: better reputation

Why and how use CSR during change (environment)

Why: cost savings from using less energy and water

KPIs

Percentage of market share

Management strategies

Motivation strategies

Corporate social responsibility definition

When a business goes above and beyond legal obligations to benefit stakeholders, the environment and the general public.

Reviewing KPIs can

Analyse the size and extent of any transformation

When analysing KPIs you must include

The changing data that has occurred

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Leadership definition

Leadership is defined as the process of positively influencing and encouraging individuals to achieve the set objectives.