Business Management Unit 4 - AOS 2: Implementing Change

Leadership

The ability to positively influence or motivate people to work towards the achievement of business objectives during a transformation

What is the Role of a Leader during a business change

A leader's role is to reduce the restraining forces of change, while strengthening the driving forces and achieving the desired change

What acts as a major restraining force during change and why does it

Stakeholders (such as employees) can act as a restraining force as people fear change and employees can fear their job security

Things a Successful Leader is likely to do during a period of change

- Prepare and create a plan to minimize negative consequences
- Communicate the change to all stakeholders, making use of two way communication
- Support stakeholders who will be affected
- Ensure all stakeholders are collaborating on the change
- Hold himself accountable to drive the change

10 Key performance Indicators

IMPORTANT: All are measured over a period of time.

- Percentage of Market Share
- Net Profit Figures
- Rates of productivity growth
- Number of sales
- Rates 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 KPI's

Motivation Stratagies
- Support Stratagies
- Sanction Stratagies
- Career advancement
- Investment in Training
- Performance Related Pay

Change in Management styles or skills

Investment in technology
- Automated production lines
- Robotics
- Artificial intelligence
- Computer aided design
- Computer aided manufacturing
- Online services

Quality Strategies
- Quality assurance
- Quality control
- Total quality management

Cost cutting

Waste minimisation
- The 3 R's (Reduce, Reuse, Recycle)
- Lean management (Takt, Zero Defects, One piece flow, Pull)

Redeployment of Resources

Innovation

Global considerations
- Global sourcing of inputs
- Overseas manufacturing
- Global outsourcing

What KPI's are motivation strategies used to address

- High customer complaints
- Low productivity
- High level of staff turnover
- High levels of staff absenteeism
- Workplace accidents
- Level of wastage

What KPI's are technological strategies used to address

- Low rates of productivity growth
- High number of workplace accidents
- High level of wastage
- Net profit figures

What KPI's are quality strategies used to address

- Number of customer complaints
- Level of wastage
- Number of sales
- Percentage of market share

What KPI's is cost cutting used to address

- Net profit figures

What KPI's are waste minimisation strategies used to address

- Level of waste
- Level of productivity growth
- Net profit figures

What is redemployment of resources

If resources are not being used efficiently and effectively, they may need to be redeployed, either toward the production of new products, or to different areas of the management responsibility

What KPI's is redeploying resources used to address

- Rate of productivity growth
- Level of wastage

What is innovation

The creation of a new good, service or system, or making improvements to an existing product or process

What KPI's is innovation used to address

- Rate of productivity growth
- Level of wastage
- Number of customer complaints
- Number of workplace accidents

What KPI's are global considerations used to address

- Level of wastage
- Net profit figures
- Customer complaints
- Productivity growth

What KPIs can be negatively affected due to global considerations and why

- Higher customer complaints as wait times are longer and their can be language barriers
- Due to workplace accidents due to less skilled labour

Corporate Culture

The shared values and beliefs held by the people in the business that guide collective attitudes, behaviours and decision making

Benefits for a positive corporate culture

- Improved morale and thus productivity
- Increased loyalty and thus lower staff turnover
- Better reputation and thus attracting more skilled employees

Strategies for developing a corporate culture

- Establish rituals, rites and celebrations
- Changing the management style
- Training employees in ways that reflect the values of the business
- Senior managers and 'heros' acting as role models
- Communicating the desired values to staff
- Rewarding employees that exemplify these values

Senge's five principles for creating a learning organization

- Systems thinking
- Personal mastery
- Mental models
- Building a shared vision
- Team learning

Systems thinking

This is the cornerstone of learning, and it is where an employee is able to look beyond what is just occuring within the business and see change from patterns that are occurring and have occurred

Personal mastery

Involves the people within the business undertaking continual learning or development to continually show improvement and movement towards achieving a goal through training.

Mental models

Team members challenging their ingrained assumptions about the world promoting a culture of openness and trust to move forward and innovate.

Shared Vision

An aspiration shared among all employees that they are genuinely committed to and are not just following orders, this vision empowers employees to want to learn and strive beyond what they would normally do.

Team Learning

Learning through open communication between employees allowing them to build off of each other, sharing knowledge and experiences to openly promote learning.

Positive culture that is developed if Senge's five principles are applied

- Employees feel empowered
- Culture is one of learning, improvement and innovation
- Employees have a sense of purpose and belongingness

Low risk strategies definition

Tactics used by managers during change process, making it more likely employees will embrace change with a positive attitude, where the risks of backfiring and causing large amounts of resistance are minimised.

Types of Low Risk Strategies

- Communication
- Empowerment
- Support
- Incentives

Communication as a Low Risk Strategy

Managers must transfer information about the change to employees, and listen for feedback on the changes. The greater detail of sharing the more trust will be built.

Advantages of Communication as a Low Risk Strategy

- Directly improve corporate culture by making the employee feel more valued
- Employees feedback can positively influence the change

Disadvantages of Communication as a Low Risk Strategy

- Time consuming
- Opportunities for disagreements

Empowerment as a Low Risk Strategy

Involving employees in the change process and providing them with greater resoponsibility and decision making power

Advantages of Empowerment as a Low Risk Strategy

- More responsibility can improve motivation
- Employees feel more valued increasing their job satisfaction
- Employees skillsets can improve, improving productivity

Disadvantages of Empowerment as a Low Risk Strategy

- Lower productivity if employees are not properly suited
- Some employees may feel resentment if they are left out

Support as a Low Risk Strategy

Management providing employees with assistance in moving from the current state to another through counseling and training.

Advantages of Support as a Low Risk Strategy

- Employees feel cared about increasing their motivation
- Higher motivation leads to reduce absenteeism
- Lower stress and fear levels can improve productivity

Disadvantages of Support as a Low Risk Strategy

- Time consuming
- Costly
- Not all employees can recieve it

Incentives as a Low Risk Strategy

Any financial or non-financial rewards provided to employees to embrace a change

Types of Incentives

- Providing a bonus
- Offering promotions
- Offering training

Advantages of Incentives as a Low Risk Strategy

- Improves motivation
- Employees want to improve to get rewarded

Disadvantages of Incentives as a Low Risk Strategy

- Fosters competitiveness which can be negative
- Costly

Advantages of using a Low Risk Strategy

- Fears and anxiety are likely to be reduced as change is outlined clearly
- Management and employee relationships are positive, with greater trust

Disadvantages of using a Low Risk Strategy

- Very time consuming as it takes time to involve all employees
- Can be very costly as rewards and training may need to be given

High risk strategy definition

Tactics used by managers during a change process that gives employees cause not to embrace change, where the risks of backfiring and causing resistance is enhanced potentially creating conflict between management and employees.

Manipulation as a High Risk Strategy

The skilful or devious exertion of influence over employees get them to do what you want during change.

Types of manipulation during change

- Withholding important information (usually negative)
- Telling people what they want to hear
- Highlighting only positive aspects of change
- Over praising

Advantages of Manipulation as a High Risk Strategy

- Immediate response to change
- Cheaper then low risk strategies

Disadvantages of Manipulation as a High Risk Strategy

- Low employee motivation, leading to higher turnover and absenteeism
- Conflict and feelings of resentment to managers
- Inferior quality of change as the vision may not be met

Threats as a High Risk Strategy

The suggestion that some sort of negative consequence will occur if employees fail to follow a requested change

Advantages of using Threats as a High Risk Strategy

- Some employees respond well to stress
- Expanded skill set
- Immediate response to change
- Cheaper

Disadvantages of using Threats as a High Risk Strategy

- Low employee motivation, leading to higher turnover and absenteeism
- Conflict and feelings of resentment to managers
- Inferior quality of change as the vision may not be met

Advantages of using High Risk Strategies

- Ensure change will occur immediately and successfully
- Will allow change to go through quickly during times of crisis or when it is unpopular
- Low cost

Disadvantages of using High Risk Strategies

- Fosters a negative corporate culture of mistrust and lies
- Leads to a poor employee and employer relationship
- Leave employees feeling nervous, undervalued and resentful, increasing turnover and absenteeism

Lewin's Three Step Model to Change

1. Unfreeze
2. Change
3. Refreeze

The Unfreeze Step and what occurs in it in order

Creates the need for change as well as reducing resistance to change

- Determine what needs to be changed
- Ensure there is strong support from upper management
- Create the need for change
- Manage and understand the doubts and concerns form employees

The Change step and what occurs in it

Implement the desired change in the business

- Communicate often with employees
- Empower employees
- Provide training and support to minimise resistance

The Refreeze step and what occurs in it

Embed the change into the culture and evaluate outcomes

- Rewriting policies and procedures
- Rewarding those who embrace change
- Use KPI's to determine success
- Celebrate success

Stakeholder

An individual or group that have a vested interest in the activities of the business

Positive effect on owners from change

- Improved financial performance will lead to a greater return on investment from owners or shareholders

Negative effect on owners from change

- There may be greater stress due to the risks and uncertainty of change
- Financial performance can suffer impacting owners lives

Positive effect on managers from change

- Changing management styles can improve employee motivation
- Managers may get career advancement and bonus pay if change is received well

Negative effect on managers from change

- Managers may lose their jobs if the business goes through restructuring
- Managers may be forced to use a different management style, creating stress

Positive effect on employees from change

- Employees may have better employment conditions after the change, leading to improved motivation
- Employees may have opportunities to learn new skills through training

Negative effect on employees from change

- Employees may lose their jobs in restructures
- Employees may experience high levels of stress
- Employees may need to be retrained due to change

Positive effect on customers from change

- Change could lead to lower prices which increases customers satisfaction
- There may be improved customer service
- New innovative products may make life easier

Negative effect on customers from change

- Customers may not like the new products a business makes
- New products may have a lower quality decreasing customer satisfaction
- There may be possible price increases, lowering customer satisfaction

Positive effect on suppliers from change

- If a business grows, suppliers will need to sell more resources to the business
- Businesses may need to change their contracts creating new opportunities for suppliers

Negative effect on suppliers from change

- Suppliers may face reductions in sales if the business becomes more productive
- Businesses may switch suppliers

Positive effect on the general community from change

- Change may result in more jobs being created, which improves employment and living standards
- Changes may lead to reduced waste, benefiting the environment and community
- If the business is a social enterprise, it may lead to greater meeting of a social need

Negative effect on the general community from change

- Change may result in a loss of jobs, increasing unemployment and worsening living standards
- Change may lead to non renewable resources being used, increasing pollution and damaging the environment
- If the business is a social enterprise, it may lead to not being able to meet the social need if change is implemented poorly

Corporate Social Responsibility

The obligation a business has above its legal responsibilities to the wellbeing of employees, customers, shareholders, the community and the environment

Benefits of adhering to CSR when changing a business

- Customers are likely to purchase more products
- Better reputation through word of mouth
- Easily attract highly skilled employees

Costs of adhering to CSR when changing a business

- Takes a long time
- Costly
- Large number of resources required

Ways a business can be socially responsible during a change

- When downsizing/restructuring, providing transition considerations
- Using local suppliers and ensuring they use sustainable operation methods
- Minimising the levels of waste in the environment and ensure proper disposal of waste
- Being honest and transparent to stakeholders

What should a business do once a change is implemented

Review the KPI's that were analysed prior to the change to note the difference (either improvements or deteriorations), these results should be passed onto stakeholders to determine whether the change was successful and to create refinements to changes in the future.

Changes at Woolworths

• 2024, Introduction of new CEO (Amanda Bardwell) to replace Brad Banducci following his poor response to price inquiry

• 2022, Introduction of AI into self-checkouts to supervise and identify theft

• 2022, Introduction of digital price tags to minimise paper waste, reduce labour