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Managing change

Introduction

Change is a planned or unplanned response by an organisation as a result of the application of internal or external pressures. Different scales of change take place, and change continues to be a natural process in business evolution. Organisations need to re-examine their situation in regard to change, and aim to create opportunities for their organisation.

Outcomes
What is planned change
Nature and sources of change in business
Structural responses to change
Managing change
Change management techniques

HSC Topic 1: Business Management and Change is covered in the Board of Studies NSW Syllabus (June 1999) on pages 25-26. The specific outcomes for this section are:

Outcomes

The student:

H2.1	describes and analyses business functions and operations and their impact on business activities
H3.2	evaluates the effectiveness of management in the organisation and operations of business and its responsiveness to change
H3.3	analyses the impact of management decision-making on stakeholders
H4.2	evaluates management strategies in response to internal and external factors.
H5.3	communicates business information, ideas & issues using relevant business terminology and concepts in appropriate forms.

What is planned change?

Alterations in people, structure or technology.
Any movement in the status quo.
A constant part of any learning organisation.
A situation often prompted or accompanied by innovation and increased stress.

Managing change

Nature and sources of change in business

External forces of change include the marketplace, labour markets, economic changes, technology, laws and regulations.

Internal forces of change include corporate strategy, employee attitudes, technology and equipment, and workforce composition.

Examples of external forces of change

Changing nature of markets	Natural resources Rise and rapid collapse of Asian markets for commodities International agreements relating to freer trade and protection Human resources New industrial relations climate Consumer goods and services New tax systems Growing international competition Financial markets Changes in interest rates Implications of the Ralph report
Technological developments	Changes in telecommunications Competition changes in this field Phenomenal growth in global information systems

Examples of internal forces of change

New business cultures	Changes in the norms, values, beliefs, expectations, behaviours and assumptions that exist - a change in the way things are done in this organisation Reorganisation of business structure Move towards business decentralisation Willingness to employ political power and influence Increased pressure from shareholders for returns Restructuring as a result of a new alliance
Technological development	Business process re-engineering Increased retraining needs Request for new technology from staff

Structural responses to change

Like any other process, change is a process that needs to be managed. Some examples of structural change follow.

Outsourcing

As organisations concentrate increasingly on their core business activity, support services are being supplied by external organisations.

Keeping abreast of technology in-house will no longer be so important to a company's competitive advantage," says Sun Microsystems' newly appointed president, Ed Zander. He says expensive upgrades are coming to an end and that the business use of technology will mainly involve outsourcing (Margaret Banaghan, 'Internet: Get 'com-ed' and go Web tone', in Business Review Weekly, 14 May 1999).

Sequel provides a specialised management consultancy service designed to facilitate the efficient and effective use of information technology in corporate and public sector reorganisations and restructurings ... (advertisement, Sequel Pty Ltd).

Flattening of corporate hierarchies

Organisations have continued to seek efficiencies by eliminating levels of middle management and increasing the span of control for those remaining.

With the shift from electro-mechanical to computer infrastructure, a more democratic structure evolves, where certain levels of management oversee the disappearance of others.

Strategic alliances and networks

Alliances, coalitions and joint ventures are being developed at a rapid rate. These approaches are seen to be a faster way to meet objectives in the context of rapidly developing technology, acquisition of new markets, acceleration of product differentiation and pressures for cost reduction.

Ford Australia wants to put the passion back into Ford. To re-ignite the flame, Ford Australia is doing something about rejuvenating its brand - ironically by sharing the billing.

In October Ford will launch the grandly named Ford Tickford experience, a network of 12 specialty dealers, located within existing Ford dealerships, to sell specialty niche vehicles. The exclusive franchise will offer the new T-series, to be manufactured jointly by Ford and Tickford Vehicle Engineering, the company that has been customising Fords since 1991 (The Bulletin, 3 August 1999, p 66).

Managing change

Identify the need for change

External and internal pressures require continual analysis and rethinking of the strategic direction of an organisation. Without adapting to constant change, an organisation is unable to remain competitive. For example, there is a need to comply with new government regulations.

Demonstrate improvement or change decisions

All stakeholders must know and appreciate why the change is necessary.

Set achievable goals

Consider the speed of change (e.g. when do the government regulations come into force?). Consider the change dimensions: how radical a change is planned (e.g. re-engineering of part of a process may be sufficient to meet new regulations)? Consider the resources available in the existing time frame.

Business plans and strategic plans with clearly defined and achievable goals need to be communicated to stakeholders, e.g. shareholders. Even small businesses require written planning that is able to be evaluated.

A transition management plan, just like any other business plan, is important in achieving a successful organisational change - particularly when changes are made to the organisation's plant, processes or structure.

Create a culture of change

Initiative, and highly developed skills and energy levels, are necessary. People have differing abilities to cope with change, but change agents improve this ability.

Change agents may take the form of:

communicating detailed information about the nature and procedures for change
reskilling; e.g. in operation and maintenance of new software
provision of a support network
involving workers in the decision-making process to promote 'idea ownership'
planning to allow sufficient time to prepare for the change
practising change.

Change management techniques

These may involve:

structural change - changes in complexity, formalisation, and centralisation, or job redesign
technological change - changes in work processes, methods or equipment
people change - changes in attitudes, expectations, perceptions or behaviour.

Change models

One example of a change model identified in the syllabus is FORCE FIELD ANALYSIS (FFA).

FFA is a strategy employed in order to identify the various forces influencing a particular situation or problem. The analysis answers questions about which forces it would be most worthwhile to influence.

A tabular approach is employed with this strategy:
Identify the driving forces for change.	Identify the restraining force acting as a barrier to change.
Identify those forces which CAN be changed.	Distinguish those forces which can be influenced from those which cannot.
Allocate a score (either qualitative or quantitative) to each of these identified forces which reflects: the degree to which it is possible to influence this force, and the likely effects of influencing this force.	Allocate a score to each force identified as changeable, as for the change forces opposite.

There need to be drive forces to counter each restraining force.

Decide on a course of action based on the manageable priorities identified as most worthwhile to influence.

Restraining forces need to be weakened before increasing the strength of driving forces; if they are not, the barrier of resistance to change will probably be strengthened further.

Example of FFA

Situation: upgrading a factory with new manufacturing machinery.

Forces for change	Score	Forces against change	Score
Customer wants new products	4	Loss of staff overtime	3
Improve speed of production	2	Staff frightened by new technology	3
Raise volumes of output	3	Environmental impact of new techniques	1
Stem rising maintenance costs	1	Disruption	1
		Cost	3
	10		11

(Adapted from who/jonassen/courses: http://www.ed.psu.edu/insys )

Analysis of the table

Train staff (cost, +1) to eliminate fear of technology (staff frightened, -2). In favour of the plan subtotal 10:10.
Show staff that change is necessary for business survival (new force for change. +2). In favour of the plan subtotal 12:10.
Show staff that the new machines will introduce variety and interest to their jobs (new force for change, +1). In favour of the plan subtotal 13:10.
Raise wages to reflect new productivity (cost, +1; loss of overtime, -2). Install slightly different machines with filters to eliminate pollution (environmental impact, -1). In favour of the plan total 13:8.

These changes swing the balance from 11:10 against the plan to 13:8 in favour of the plan.