Business Management Unit 3/4 All Terms

Leadership in Change Management

the ability to positively influence and motivate employees towards achieving business objectives during a transformation

Ways to demonstrate leadership in change

• building a shared vision

• providing ongoing support

• providing ongoing communication

Change management skills

• preparation and planning

• collaboration

• accountability

New business opportunities

refers to the new activities that a business could become involved in as a means of responding to the data from KPIs

Management strategies applying to change

• Staff training

• staff motivation

• change in management style/skills

• increased investment in tech

• improved quality of production

• cost-cutting

• initiating lean production techniques

• redeployment of resources

• innovation

• global sourcing of inputs

• overseas manufacturing

• global outsourcing

staff training impacting change

employees who are appropriately trained contribute to improvements in business productivity, safety, and the quality of goods and services provided. However, if inadequately trained, they lack knowledge and skills required to perform work tasks to a high standard, consequentially diminishing business performance

staff motivation impacting change

significantly improves business performance and fosters a culture that encourages employees to work towards the achievement of business objective. A manager can contribute to this by introducing motivation strategies or theories.

motivation

the willingness of an individual to expend energy and effort in completing a task

Change of management style impacting change

involves a manager altering the way they direct and communicate with employees. They should consider the complexity of the task, experience of employees, time available, and their personal management preferences. This directly influences staff engagement and the coordination of business activities.

change of management skills impacting change

involves a manager altering the way they approach business tasks and collaborate with employees. When responding to KPIs, a managers use of skills directly relates to the management style they’ve adopted. To effectively respond to KPIs, a manager must consider the management style they have adopted and alter the skills they prioritise to ensure that they are most appropriate to the business situation

cost-cutting impacting change

refers to the process of reducing business expenses. Managers will utilize this strategy to decrease unnecessary expenses within a business’ operations, meaning maximised profits and the achievement of business objectives. To successfully implement this strategy, a business must assess all it’s expenses and determine strategies to reduce unnecessary costs

Methods of cost cutting

• merging staff roles

• removing roles entirely

• reducing hours

• minimising wage expenses

• shutting down underperforming locations

• stopping production of unsold goods

• cheaper suppliers

• recycling and reusing

KPIs affected by staff training

• number of customer complaints

• net profit figures

• percentage of market share

• rate of productivity growth

• level of staff turnover

• rates of staff absenteeism

KPIs affected by change in management styles

• level of staff turnover

• rate of staff absenteeism

• rate of productivity growth

• net profit figures

KPIs affected by staff motivation

• level of staff turnover

• rate of staff absenteeism

• number of customer complaints

• rate of productivity growth

• percentage of market share

KPIs affected by change of management skills

• level of staff turnover

• rate of staff absenteeism

• rate of productivity growth

• net profit figures

KPIs affected by cost cutting

• net profit figures

• rate of productivity growth

• level of wastage

investment in technology affecting change

involves implementing automated and computerised processes into a business’ operations systems, which can be utilized to improve productivity, market share and profitability

improved production quality affecting change

implementing processes that increase the perceived value of a business’ good or service, which can be done through quality management strategies. Better quality leads to higher customer satisfaction and competitiveness.

implementing lean production techniques affecting change

involves a business adopting lean management strategies, enhancing CSR and therefore reputation and related KPIs and performance

Redeployment of resources affecting change

involves reallocating natural, labor, and capital resources to different areas of the business to improve productivity and effectiveness. Redeployment is when a business reuses resources for a new purpose to improve efficiency

Innovation affecting change

developing new goods and services that meet existing customer needs, promoting its products with unique marketing techniques, or implementing faster and more productive methods of operating. This can increase customer interests, create a loyal customer base ad improve efficiency and effectiveness

Global sourcing of inputs affecting change

involves a business acquiring raw materials and resources from overseas suppliers. When responding to KPIs, this can allow a business to gain a competitive advantage and increase its profit margins, sales and market share, by minimizing production costs significantly.

Overseas manufacturing affecting change

involves a business producing goods outside of the country where its HQ is located. It decreases operating expenses while retaining profit margins, increasing net profit and customer satisfaction

Global outsourcing affecting change

involves transferring specific business activities to an external business in an overseas country. It minimizes operations costs, increasing net profits and enhancing customer satisfaction

Advantages of staff training

• improves skills and performance

• increases productivity

• boosts morale

• reduces errors and accidents

disadvantages of staff training

• can be expensive

• time away from duties

• risks already trained staff leaving the business

advantages of staff motivation

• boosts productivity and effort

• improves morale and reduces turnover

• enhances teamwork and culture

disadvantages of staff motivation

• can be costly

• not all methods work for everyone

• may create unhealthy competition

advantages of global sourcing

• cheaper or better quality inputs

• wider supplier choice

• access to specialised products

disadvantages of global sourcing

• longer delivery times

• risk of poor quality

• cultural and language barriers

• global risks such as exchange rates and political rifts

advantages of waste minimisation

• reduces environmental impact

• lowers disposal/material costs

• improves brand image

disadvantages of waste minimisation

• high initial investement

• requires retraining

• some waste is unavoidable

advantages of redeployment of natural resources

• reduces waste and costs

• supports sustainability

disadvantages of redeployment of natural resources

• may need extra processing

• limited reuse options

advantages of redeployment of labor resources

• retains employee knowledge

• saves on recruitment

• maintains morale

disadvantages of redeployment of labor resources

• retraining costs

• resistance to change

• initial productivity decline

advantages of redeployment of capital resources

• maximises use of assets

• improves efficiency

• saves costs

disadvantages of redeployment of capital resources

• may not suit new tasks

• higher maintenance

• lower resale value of resources

advantages of changes in management style

• can improve communications and relationships with staff

• encourages greater adaptability to change

• potential to boost morale and productivity

disadvantages of changes in management style

• can cause confusion if change is frequent

• may be resisted

• takes time for adjustment

Advantages of changes in management skills

• enhances a managers ability to lead effectively

• improves problem solving and decision making

• can strengthen workplace culture

Disadvantages of changes in management skills

• training costs and time away from duties

• skills may be underused if not embedded

• managers must be willing to learn

Advantages of investment in technology

• boosts productivity and efficiency

• can improve quality and consistency

• enhances data collection and decision making

Disadvantages of investment in technology

• high purchase and maintenance costs

• risk of tech issues or downtime

• may require staff retraining

Advantages of improving quality

• increases customer satisfaction and loyalty

• reduces defects and wastage

• can justify higher prices

disadvantages of improving quality

• may increase production costs

• requires ongoing monitoring and improvement

• takes time to implement changes

advantages of cost cutting

• frees up funds for other areas

• can improve profit margins quickly

• encourages efficiency

disadvantages of cost cutting

• risk of reducing quality

• may lower staff morale if jobs/resources are cut

• can harm long term growth

Advantages of initiating lean production techniques

• minimises waste and lowers costs

• improves efficiency and workflow

• can enhance quality and customer satisfaction

disadvantages of initiating lean production techniques

• high initial set up and training costs

• requires cultural shift and staff buy in

• may be less flexible with sudden demand changes

advantages of innovation

• creates competitive advantage

• attracts new customers and markets

• encourages continuous improvement

disadvantages of innovation

• high research and development costs

• risk of failure or poor market response

• may require large cultural and operational changes

KPIs affected by improved quality

• number of customer complaints

• net profit figures

• percentage of market share

• level of wastage

• rate of productivity growth

KPIs affected by redeployment of resources

• net profit figures

• level of wastage

• rate of productivity growth

• rate of staff absenteeism

• level of staff turnover

KPIs affected by global sourcing of inputs

• net profit figures

• percentage of market share

• number of customer complaints

KPIs affected by overseas manufacturing

• net profit figures

• percentage of market share

• number of customer complaints

• rate of productivity growth

KPIs affected by innovation

• net profit figures

• percentage of market share

• rates of staff absenteeism

• level of staff turnover

• number of customer complaints

• rate of productivity growth

• level of wastage

KPIs affected by increased investment in technology

• percentage of market share

• rate of productivity growth

• net profit figures

• level of wastage

• number of customer complaints

KPIs affected by global outsourcing

• net profit figures

• percentage of market share

• rate of staff absenteeism

• rate of productivity growth

• level of wastage

• number of customer complaints

KPIs affected by initiating lean production techniques

• level of wastage

• percentage of market share

• rate of productivity growth

• net profit figures

• number of customer complaints

Corporate culture

the shared values and beliefs of people in a business.

Strategies to develop corporate culture

• developing and communicating core values

• providing training in line with values

• recruiting employees that fit with values

• implementing policies aligning with desired values

• changing management style

• leaders acting as role models

• rewarding those displaying desired values

• structuring work environment around values

Low risk strategies

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

list of low risk strategies

• communication

• empowerment

• support

• incentives

advantages of low risk strategies

• all methods result in a higher chance of long term success

• support and communication reduce fear of change in employees

• incentives and empowerment can advance careers

• sustainable over time

• makes employees feel valued

• valued employees stay at a business

disadvantages of low risk strategies

• empowerment is sometimes bad for experienced employees

• incentives can be expensive

• incentives may be seen as bribes

• not useful in crisis situations

high risk strategies

a different way a business can overcome resistance to change. They allow a manager to overcome resistance quickly, but with a greater risk they will result in negative consequences compared with lower risks

list of high risk strategies

• manipulation

• threat

manipulation (high risk)

gaining support from employees by the selective use of facts or deception

threat

forcing employees to embrace the change or receive retribution. This may include retrenchment, loss of promotion, demotions or decline in working conditions

advantages of high-risk strategies

• no employee input, full manager freedom

• inexpensive

• effective in crisis situations for rapid change

disadvantages of high risk strategies

• development of negative corporate culture

• employees believe they are easily replaceable

• only short-term effective

• management and employee relationship is compromised

• low morale increases employee absence

• expense of replacing employees

Senge’s theory

the theory that a business should be a learning organization and follow the 5 principles

learning organisation

an organization that facilitates the growth of its members and continuously transforms itself to adapt to changing environments

5 principles of Senge’s theory

• systems thinking

• personal mastery

• mental models

• shared vision

• team learning

systems thinking

considers the interrelationship between the parts of a whole system - seeing the bigger picture. It gets all the individual parts of business to operate together to achieve the business’ objective objective of continuous learning and improvement.

personal mastery

when an individual is voluntarily committed to self-improvement and becoming a lifelong learner

mental models

existing assumptions and generalizations that must be challenged so that learning and transformation can occur in an organisation, like organisational inertia

Shared vision

a strong and clearly communicated vision/goal that all employees in an organisation believe in, encouraging employee focus.

Team learning

the collective learning that occurs when teams share their experience, insights, knowledge and skills to improve practices.

Advantages of Senge’s theory

• boosts creativity, thinking, innovation and competitiveness

• makes a business adaptable and flexible

• improving output quality

• increases staff motivation

• improves corporate image

Disadvantages of Senge’s theory

• requires cultural changes, which are time consuming

• large businesses may struggle with principles reaching everyone

Lewin’s three-step change model

a method of successful and smooth change implementation, consisting of the steps, unfreeze, change and refreeze

Unfreeze (3-step model)

involves moving a business to a state where stakeholders are prepared to undergo change, changing the beliefs, behaviors and values that currently exist within the business.

Change (3-step model)

involves moving a business towards its desired state, transforming the business’ practices to meet its new objectives.

Refreeze (3-step model)

involves ensuring a change is sustained within a business for the long term.

Owners in change

responsible for making major decisions associated with business change, and usually have the final say

positive effects of change on owners

• increased return on investment and financial security if the change is successful

• provides opportunities for use of leadership skills

• can be perceived more positively after successful change

negative effects of change on owners

• personal and financial implications from unsuccessful change

• overwhelmed and stressed by workload of change

• may be resented after redundancies

managers in change

responsible for monitoring a specific area of the business or the business overall and are usually required to lead, support and implement the change.

positive effects of change on managers

• provides opportunities to develop leadership skills and career advancement

• may have rewards from successful implementation of change

• increased authority means new benefits and skills

negative effects of change on managers

• increased workload through change can be stressful

• if change is unsuccessful, job and financial security can be threatened

employees in change

integral to change implementation and are usually the most affected as their roles can be completely transformed

positive effects of change on employees

• new opportunities for career advancement, improves job satisfaction

• improved job and financial security from successful change

• may be rewarded for successful change implementation

• possible training for change increases skill set

negative effects of change on employees

• increased stress

• redundancies

• higher workloads

customers in change

affected by adapted outputs and changes in quality, price or experience

positive effects of change on customers

• increased satisfaction from higher output quality after change

• lower prices increase satisfaction

• increased CSR increases satisfaction

negative effects of change on customers

• cheaper inputs from change may mean lower quality outputs

• prices may increase

• discontinuation of goods is possible

• new products not meeting needs

positive effects of change on suppliers

• input demand may increase if change means expansion