Exam prep Business Management Unit 4- The Management of Change

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Business Management Unit 4: Managing People and Change AOS1: The Management of Change Study Design: 1. The concept of organisational change 2. The dynamic nature of the internal and external (operating and macro) environments as sources of change 3. Driving and restraining forces for change in large-scale organisations, including management, employees, time, competitors, low productivity, organisational inertia, legislation, cost 4. Key principles of the Kotter theory of change management 5. A r…

Change

Any alteration to an organisation and/or its work environment in response to pressures upon it

Stages of Change

1. Negation - employees deny the change, ignore it or panic.
2. Self-justification - employees give reasons for resisting and opposing change; this allows them time to try to regain control of the situation.
3. Exploration - this may involve a SWOT analysis or some type of cost benefit analysis as a way to look at the change in a context.
4. Resolution - this is when an employee focuses on the future and is positive about opportunities.

Internal Sources of Change

- Corporate culture- If the culture is seen to be inappropriate or negative, the management must make changes including training and retraining of employees, recruiting employees externally in an effort to bring in new ideas, values and attitudes
- Policies- For example, changes or introduction of new health and safety laws or anti-discrimination legislations will require organisations to review and amend their policies and formulate new ones if necessary.

Operating Sources of Change

- Customers- Organisations must change to a more customer-focused approach by making sure they are in tune with the tastes and requirements of customers, in order to maintain loyal and satisfied customers.
- Competitors- Organisations must be proactive and introduce change to stay ahead of the competition by focusing on product quality, innovation and customer service.
- Trade unions may exert pressure for change in an organisation, particularly in terms of a collective agreement, which can affect the wages and working conditions within the business.

Macro Sources of Change

- Economic- The level of business activity, inflation and interest rates, economic growth, unemployment rates and the value of the Australian dollar are all factors that may impact on the organisation. E.g. If the rate of interest is low, businesses are more likely to borrow funds and are therefore able to expand, as it is possible to service the business's debt. When interest rates rise, consumers usually have less disposable income to spend
- Political- Some changes to laws may impact on the operation of the organisation include health and safety laws and regulations, equal opportunity, anti-harassment and anti-discrimination legislation
- Social and demographic- Social pressures for change include changes in attitudes, values and lifestyles. E.g. The increased participation of women in the workforce has created a need for increased childcare facilities, more flexibility in work hours and job sharing, and has increased the demand for service businesses such as cleaning and home help.
- Environmental- Many organisations have adopted environmentally preferred practices for waste management, efficient use of water, recycling of materials, and for reducing greenhouse and carbon emission

Driving Forces

Those forces that initiate, encourage and support the change

Restraining Forces

Forces acting to restrain or decrease the driving forces for change; these may include apathy, hostility, and poor maintenance of equipment.

Examples of Driving and Restraining Forces

- Management Styles
- Employees
- Time
- Competitors
- Organisational Inertia
- Legislation
- Cost
- Productivity

Management Styles

Driving Force:
A consultative or participative management style allows a positive relationship between employees and management, it is more likely to allow change to be discussed and successfully implemented.

Restraining Force:
An autocratic or persuasive management style may lead to poor communication and misunderstandings, as well as a lack of consultation and a negative relationship between management and employees, which may mean that change is not accepted.

Employees

Driving Force:
Employees who are in an organisation with a positive corporate culture are more likely to be involved in change, and resistance is less likely.

Restraining Force:
Employees who do not feel part of the organisation or who do not feel appreciated will usually make change difficult to introduce, as they will be resistant to the change.

Time

Driving Force:
Organisations that are able to plan ahead and put into place strategies to deal with change are more likely to have the time to better manage the change process.
Restraining Force:
Organisations that have not planned or have not foreseen change in their industry or conditions, may find that they are unable to respond quickly to any change.

Competitors

Driving Force:
Competition between companies may mean that an organisation is always aware of what its competitors are doing and is able to respond to changes quickly.

Restraining Force:
If an organisation is always behind its competitors in responding after change has occurred, then changes in that organisation will be difficult and perhaps will be made too late.

Productivity

Driving Force:
High productivity may mean that an organisation is able to easily change its operations management systems with few issues and in an efficient manner.

Restraining Force:
Low productivity may mean that changes in an organisation can be expensive and impact on the operations management system.

Organisational Inertia

The lack of ability of an organisation to react to internal and external pressures for change.

Driving Force:
An existing organisation that is dynamic and quick to take on new activities and challenges is likely to change with few problems.

Restraining Force:
Organisations that are stable with little change over time are less likely to respond to changes quickly or in a positive way.

Legislation

Driving Force:
New laws can act as a driving force for change if a new initiative is introduced and organisations need to change in response.

Restraining Force
If an organisation finds that it has to manage and adjust to a change in the law that is unexpected or difficult to implement, it will be harder for that organisation to respond positively.

Cost

Driving Force:
The ability to minimise costs will allow an organisation to bring in change in an efficient and cost-effective way.

Restraining Force:
If the costs involved in the change are high, it may mean that the change is postponed or not implemented as well as it should be.

Kotter's Theory of Change Management

Kotter developed the eight-stage model for understanding and managing change. Each stage acknowledges a key principle that identifies people's response and approach to change, in which people see, feel and then change. Include:
1. Establish a sense of urgency- may involve conducting a SWOT analysis to highlight current threats and crises and/or potential opportunities
2. Assemble a group of people who will lead the organisation through the changes
3. Create a vision for the organisation- clear, shared sense of direction and purpose
4. Communicate the vision- It is important that as many people as possible understand and accept the vision and strategy.
5. Empower others to act on the vision and try to remove any obstacles that may undermine the change process and the new vision.
6. Plan to achieve short term gains- recognise and rewards short term wins so that employees will feel the change was worth the effort
7. Consolidate all of the changes- keep pushing the change. Ensuring employees are constantly encouraged to continue striving for the change which can be done through regular reminders of the need to change and the importance of the vision
8. Institutionalise new approaches and create a new culture. To ensure long term success, the connections between the new behaviour and corporate culture and organisational success must be reinforced. The HRM needs to ensure recruitment practises align with the new corporate objectives to ensure employees' behaviour align with the new vision. Policies and procedures also need to be updated to reflect the new corporate culture.

Low Risk Practices =)

Participative approach to implementation of change, use of communication, empowerment, work groups and support for those who are impacted. More likely to be successful in the long term and allow for all stakeholders within the organisation to feel valued as their ideas and feelings are taken into account. Include:
• two-way communication between management and employees
• empowerment of employees to make decisions
• establishment of work teams to implement changes
• support for those going through the change, e.g. counselling

High Risk Practices =(

Autocratic approach to implementing change, involving use of force, threats and manipulation of situations. Include:
• coercion and threats to employees who do not agree with the change
• manipulation of the situation - for example, information distorted or details left out
• use of autocratic management styles where employees are told what to do and there is little or no opportunity for discussion.

Strategies for Effective Change Management

If organisational change is to be successful, it is necessary to carefully plan and implement appropriate strategies. Patience and tolerance are required to help people to see things differently. Managers must make time to understand the people they are dealing with, and how and why they feel the way they do. Leaders must have the skills to articulate strategy, implement changes effectively and keep all staff informed about decisions impacting on them, the introduction of a change can be successful and sustained. Leaders need to focus on building relationships with employees and external stakeholders. By cultivating teamwork, coaching, encouraging diversity, developing talent within the organisation and having open communication, change is more likely to be successful.

The Role of Leadership

There are three skills necessary for effective leadership:
• Diagnosing
• Adapting
• Communicating

Diagnosing

Being able to understand the situation and knowing what could be expected in the future

Adapting

Being able to adapt behaviour and other resources to help close any performance gaps

Communicating

Being able to communicate what needs to be done to others.

Impact of Change On the Internal Environment

- Structure
- Human Resources
- Operations

Impact of Change on Structure

- Outsourcing non-core business activities
- Flatter structures usually abolishing middle management positions which means more responsibility for front-line staff

Impact of Change to Human Resources

- Recruiting new employees that have the necessary knowledge and skills in accordance with the change
- Termination of employees due to downsizing of operations etc

Impact of Change To the Operations Function

- Introduce technology to facilities, design and activities within the organisation to cut costs etc
- Taking more quality-focused measures in the operations system to satisfy customers

Technology

Practical application of science to achieve a commercial or industrial objective; it often involves the use of computers and can relate to information, communication, design and manufacturing

Impact of Technology on Change

• a code of conduct for internet and email use
• policies and procedures in place to deal with cyber-bullying and inappropriate use of the internet and email
• privacy policies and practices to ensure that information and data is not given out
• practices in place to ensure that viruses are stopped and data protected
• practices in place to try to ensure that technology is used to reduce pollution and emissions in the manufacturing and processing industries
• recycling of old hardware so that it does not end up in landfill
• use of 'green' technology to contribute in a positive manner to the environment.

Arguments For Technology

- ICT can save time and money for organisations, which allows for employees and managers to spend more time on other activities, such as people management, quality strategies and policy development.
- ICT allows organisations to become more efficient and effective in their operations; for example, in inventory management and barcode scanning for products.
- ICT has led to the development of different occupations and skills for employees. Jobs now exist in areas such as software development, training, computer programming, blogging and web development.
- The development of the internet has allowed organisations to move into markets across the world. Customers can come from anywhere in the world and the internet allows businesses to market and sell products in the global market.

Arguments Against Technology

- Technology can be seen as a substitute for labour, many jobs are now non-existent as technology has replaced labour, therefore leading people losing their jobs.
- Technology leads to automation which can lead to de-skilling of employees. Some employees on production lines may find that the work is unskilled or monotonous.
- The use of technology in organisations can have high costs. The purchasing, developing, training required and the continued IT support can be very expensive.

Technology As a Pressure For Change

- Trade Unions
- Customers
- Employees
- Corporate Culture
- Management

Trade Unions

New technologies may mean that some of the workforce is no longer required and employees may lose their jobs. Trade unions often oppose job losses or campaign so that losses are minimised to ensure that this does not happen if at all possible.

Customers

Customers now expect organisations to have up-to-date technology as part of their normal business functions. Most consumers and potential customers will use the business's website to find out about the company and the products they sell. Websites also provide customers with the opportunity to seek out further information and receive information by email. Therefore it is necessary for organisations to keep their websites up to date as a well-managed website will increase the number of customers buying their product/service.

Employees

Employees need to develop their skills in these areas and adapt as technology continually changes. Technology can cause work-life imbalance, as the new technologies make it easier to keep in contact with employees, and for customers to contact employees more readily, thus adding to work hours and stress.

However technologies can be a positive thing and provide for flexibility in working conditions

Corporate Culture

Cultural shifts may occur when applicants are recruited for their technological skills. The new employees and their perspectives may mean that their new ideas and attitudes will influence the culture. Employees and managers may also become stressed or resist change due to technology if they are unclear about the purpose or implications of the change.

Management

Managers need to have a skill set that allows them to manage the demands of technology. Management skills should include:
• creative-thinking skills to see the patterns and possibilities and be able to build systems to convert these to advantage
• the ability to develop and manage effective teams.

Social Responsibility In Times Change

In order for an organisation to act in an ethical manner during times of change, managers and leaders must implement change in a transparent process that allows for open and honest communication between employees and management. The employees need to be involved in all aspects of the implementation of change and understand the current state of the organisation and know where it is going with the change. All stakeholders should be informed of why, when and what measures will be taken to get there.

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