Chapter 5

Leadership in change management

Leadership in change management

• The ability to positively influence and motivate employees towards achieving business objectives during a transformation.

• Managers can show this by:

  • Building a shared vision – reasons, benefits and consequences of change

  • Providing ongoing communication - clear instructions, trust and confidence

  • Providing ongoing support - counselling, training, and consultation

Staff Training

• Can be On-the-job or Off-the-job

• Involves a business equipping employees with the knowledge and skills required to perform work tasks.

• Lack of this can lead to diminished business performance

Benefits of Staff Training

• Improved business productivity

• Better safety

• Better quality of goods and services

Staff Motivation

• The willingness of an individual to expend energy and effort in completing a task.

• When responding to KPIs, a manager can improve this by introducing motivation strategies or theories.

Benefits of Staff Motivation

• Enhanced business performance

• Encourages work towards business objectives

Impact of improved staff motivation

• Higher employee morale

• Enhanced corporate culture

• Improved work ethic and commitment

Change in Management styles

• Involves a manager altering the way they direct and communicate with employees.

• Considerations when changing style:

  • Task complexity

  • Employee experience

  • Time available

  • Manager's personal preferences

• If the business is not performing well, managers might use a more restrictive style (get the work done)

Change In Management Skills

• Involves a manager altering the way they approach business tasks and collaborate with employees.

• Relation to KPI’s

  • Manager’s skills use is tied to their adopted management style

  • Example: Autocratic style prioritizes decision-making and planning skills

• To effectively respond to KPI’s Managers need to:

  • Consider adopted management style

  • Prioritize appropriate skills for the business situation

Cost Cutting

• The process of reducing business expenses

• Purpose:

  • Decrease unnecessary expenses

  • Maximize profits

  • Achieve business objectives

How a business can cut costs

• Merging staff roles, removing roles entirely, or reducing the number of hours employees work to minimise wage expenses.

• Shutting down business locations that are underperforming.

• Stopping the production of goods with high amounts of unsold stock.

• Sourcing materials from cheaper suppliers.

• Recycling or reusing materials used in the production process

Increased Investment in Technology

• Involves implementing automated and computerised processes into a business’s operations system.

• Can reduce number of workplace accidents and levels of wastage.

• Improves rate of productivity growth and net profit figures.

Improving Quality

• In production involves a business implementing processes that increase the perceived value of its good or service.

• Refer to QC, QA and TQM

• Can reduce number of customer complaints and level of wastage

• Can improve number of sales and percentage of market share.

Initiating lean production techniques

• Involves a business adopting lean management strategies to systematically reduce waste in all areas of production while also improving customer value.

• Reduce level of wastage, number of customer complaints

• Improve the rest of the KPI’s

Redeployment of resources

• Involves reallocating natural, labour, and capital resources to different areas of the business to improve productivity and effectiveness.

• Improve net profit figures, rate of productivity growth.

Innovation

• The process of altering and improving or creating new products or procedures.

• Improve number of sales, percentage of market share.

• Reduce rate of staff absenteeism, level of staff turnover.

Global sourcing of inputs

• Involves a business acquiring raw materials and resources from overseas suppliers.

• Improve number of website hits, number of sales.

Overseas Manufacture

• Involves a business producing goods or services outside of the country where its headquarters are located.

• Improve net profit figures

• Reduce workplace accidents

Global Outsourcing

• Involves transferring specific business activities to an external business in an overseas country

• Reduce wastage

• Improve productivity growth

Corporate Culture

• Shared values and beliefs of a business and its employees

Impact of Business Changes on Corporate Culture

• New technologies

• Different work roles

• Restructuring of the business

Benefits of a Positive Corporate Culture

• Enhanced employee and customer interactions

• Favourable business reputation

• Improved financial performance

Official Corporate Culture

• Involves the shared views and values that a business aims to achieve

• Often outlined in a written format

Real Corporate Culture

• Involves shared values and beliefs that develop organically within a business

• Practised daily by its employees

• How to improve:

  • Use a more employee-oriented approach

Senge’s Learning Organisation

• A business that facilitates the growth of its members

• Continuously transforms itself to adapt to changing environments

Systems Thinking

• The ability to understand the interrelationships between different areas of a business

• Senge explains this as a principle where a manager analyses a business as a whole rather than separate parts.

• Managers in a learning organisation understand how change in one area may affect other areas of the business

Mental Models

• Challenging pre-existing assumptions and beliefs about a business and its practices

• Principle involves questioning:

  • current beliefs

  • behaviours

  • values

• These beliefs are usually held by many employees and can affect the entire business

Shared Vision

• An aspirational description of what a business and its members would like to achieve

Personal Mastery

• Encouraging individual development and learning through business activities

• Benefits for a Business:

  • Improved performance as employees are committed to continuous self-development

Team Learning

• Encourages individuals to combine their strengths and abilities to continuously grow together

• Principle states that people working together develop skills faster than individually

• A manager should provide opportunities for employees to work as a team

Lewin’s three-step change model

• A process which can be used by a business to implement successful change.

• Consists of three stages:

  • Unfreeze

  • Change

  • Refreeze

• Ensures that a business can implement change smoothly and successfully.

Unfreeze Step

• Prepares stakeholders for change.

• Challenges existing beliefs, behaviours, and values.

• During this stage, a manager should identify why change is necessary and what needs to be changed.

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

Change Step

• Moves the business towards the desired state.

• Transforms business practices to align with new objectives.

• Employees will usually have high levels of fear and confusion in relation to the change

  To counter:

  • Provide ongoing support to employees.

  • Offer training to facilitate understanding of new practices.

Refreeze Step

• Ensures the change is sustained within the business for the long term.

• This step stops a business from reverting to previous ways of operating.

• Achieved by embedding the change into daily operations.

• During this step, managers should introduce new policies and job descriptions to establish the new culture which aligns with the change.

• Management should also constantly evaluate the change during this stage to ensure that the business is performing as desired.

Low-Risk Strategies

• Gradual management approaches to encourage employee acceptance and participation in business change.

• Create a supportive environment for employees during the change process

Communication as an LR strategy

• Managers initiate open and honest two-way communication with employees.

• Ensures employees are fully aware of the reasons, impacts, and their roles in an upcoming change.

• Involves managers clearly outlining:

  • Reasons for the change

  • Benefits of the change

  • Other important information regarding the change

• Employees are less likely to resist when they are well-informed and understand why the change is necessary

Empowerment as an LR strategy

• Managers provide employees with increased responsibility and authority during times of change

• Empowers employees to contribute to the change, making them feel directly involved in the process

• Can increase employees’ morale and motivation to accept and implement the change

Support as an LR strategy

• Providing employees with assistance as they transition from current to new practices

• Managers ensure employees are assisted when adapting to new practices during periods of change

• Effectively reduces employees' fear and stress related to change

• Makes employees feel more prepared to embrace the change

Incentives as an LR strategy

• Managers provide financial or non-financial rewards to encourage employee support for change

• Los of variety to reduce employee resistance to change

Financial Incentives

• Bonuses

• Pay rises

• Commissions

Non-Financial Incentives

• Promotions

• New responsibilities

High-risk Strategies

• Autocratic management approaches used to influence employees to quickly accept and follow a business change

• Methods used to quickly reduce employee resistance to change

• Types:

  • Manipulation

  • Threat

Manipulation as an HR strategy

• Influencing employees to follow a proposed change by providing incomplete and deceptive information

• Managers persuade employees by selectively presenting information and details

• Distorts employees’ understanding of an upcoming change

Threats as an HR strategy

• Forcing employees to follow a proposed change by stating that harm may or will occur if they fail to comply

• Involves managers making statements aimed at intimidating employees

• Exploits the typical fears held by employees

Examples of Threats

• Dismissal

• Reduction of wages or paid working hours

• Poor employer references

• Physical harm

• Loss of promotion

Effect of change on Owners

• Responsible for making major decisions associated with business change

• Crucial role in ensuring the success of the change

• Often suggest the initial change in the business

• Typically have the final say on how the transformation will occur

• Majorly affected by the outcomes of business change.

Positive effects of change on owners

• If change is successful, it:

  • Can lead to increased profit

  • Can improve the relationship between the owner and the employees

  • Can improve the owner’s reputation

Negative effects of change on owners

• If the change is NOT successful, it:

  • Can lead to financial loss

  • Can lead to stress and increased responsibilities for the owner

  • Can negatively impact the relationship between the owner and the employees

Effect of change on Managers

• Can be in charge of the entire business or a specific area of management

• Coordinate employees and various business activities to ensure objectives are achieved

• Often required to lead business change to effectively achieve objectives

• They can be affected in many ways during business change

Positive Effect of change on Managers

• Opportunities to develop new skills or advance careers may be created by change.

• Financial or non-financial rewards provided if business change is successful.

• Increased authority and responsibility can improve a manager’s skills.

Negative Effect of change on Managers

• Increased workloads can lead to stress, which may impact a manager’s wellbeing.

• Loss of job and financial security if business change is unsuccessful.

• Reduced roles and responsibilities may lead to less authority and control.

Effect of change on Employees.

• Individuals who work for a business by completing allocated tasks

• Often the stakeholders most affected by change

• Can be affected in many ways during business change

Positive Effects of change on Employees.

• New opportunities and responsibilities can improve employee job satisfaction.

• May build long term job security and improve employee satisfaction if business change is successful.

• Better employment conditions or rewards can be provided if business change is successful.

Negative Effects of change on Employees.

• May need to develop new complex skills and knowledge to keep their job which can increase stress levels.

• May lose their job and financial security due to the change.

Effect of change on Customers

• People who purchase goods or services from a business.

• Goods or services can be affected by business changes aimed at achieving objectives.

• They can be affected in many ways during these changes.

Positive Effects of change on Customers

• Better product or service quality can increase customer satisfaction.

• Reduction in the price of goods or services sold can increase customer satisfaction.

• The practice of CSR may increase customer satisfaction.

Negative Effects of change on Customers

• Lowering quality to save on costs of production may frustrate customers and reduce satisfaction

• Increasing the price of goods or services may frustrate customers and reduce satisfaction.

• Discontinuing or changing a good or service may decrease customer satisfaction, especially if it fails to meet their needs.

Effect of change on Suppliers

• Sell raw materials and resources to other businesses for production.

• Businesses may alter their production processes for various reasons

Positive Effects of change on Suppliers

• May increase the amount of resources demanded by businesses which can increase sales for a supplier.

Negative Effects of change on Suppliers

• May decrease sales if businesses decide to switch to a different supplier or lower their volume of orders.

• May require adjustments in processes and supplies offered to meet the requirements of a business change.

Effect of change on The General Community

• Composed of individuals and groups who do not directly interact with the business

• Indirectly impacted by business activities, especially during the implementation of change

Positive Effects of change on The General Community

• Creation of more jobs can increase employment rates and improve society’s well-being.

• Increases customer traffic and sales of surrounding businesses if change involves opening or expanding into new areas.

• Greater ability to make donations to charity and contribute to social causes if business change is successful.

Negative Effects of change on The General Community

• Loss of jobs may increase unemployment rates and decrease society’s well-being, as poverty levels will rise.

• Decreases customer traffic and sales of surrounding businesses if change involves a shutdown or relocation.

Corporate Social Responsibility (CSR)

• Ethical conduct of a business beyond legal obligations, and the consideration of social, economic, and environmental impacts when making business decisions.

CSR considerations for Employees

• Promoting employee wellbeing during periods of change

• Their financial and job status impacts their families, which can lead to increased levels of stress and fear.

• Business change can lead to:

  • Abrupt changes in employee roles

  • Job loss

  • Reduction in wages

CSR considerations for the General Community

• Reducing or eliminating practices harmful to society

• Certain business changes can lead to:

  • Low employment rates

  • Reduced economic activity in the community

• Increased unemployment can lead to higher levels of crime and poverty in society

CSR considerations for the Environment

• Reducing the negative impacts of business practices on the planet.

• Unethical business practices can cause serious and irreversible harm to the environment.

• Vital for businesses to conduct practices in an environmentally responsible way to preserve the environment.

Advantages of CSR considerations

• Can develop a good brand reputation, which leads to more customers purchasing goods or services.

• May attract highly skilled employees who value ethical conduct and are committed to meeting objectives.

• Employees usually prefer to work for businesses who have ethical practices.

• Customers are willing to pay more for ethically produced goods or services.

Disadvantages of CSR considerations

• A constant focus on CSR may decrease productivity levels.

• It can be time-consuming to address various CSR considerations.

• CSR practices can be expensive for a business to implement.

Evaluating Changes

• Reviewing performance after a change is crucial for a business.

• Reviewing KPIs help determine if the change met desired objectives or if further adjustments are needed.

• Reviewing KPIs can also reveal unintended negative impacts on other areas, even if the main goals were achieved.