CHANGE MANAGEMENT.

CHANGE MANAGEMENT.

Tony.

Tony’s Business Series

                                                            Abstract.

This paper analyses change management methods that were used by two organizations. The paper also compares and contrasts the immediate positions of the organizations before they applied any change management method. The paper also describes the respective change management methods implemented in these two organizations, the role of human resource management in implementing these change management methods, and the relative successes of these change management methods.

                                                      Introduction.

Change management describes the use of basic structures to control the transitioning of teams and/or organizations from their present status to their preferred future status. Its main goals are to minimize the effects of change on employees and avoiding distractions (Straker, 2011).

Change management must always operate within an interactive system which is heavily influenced by the human system, hence, the need for constant monitoring of the change process (Naucler and Ahiberg, 2007). A basic model of change management has the following tasks and processes: orientation, organization, mobilization, implementation, transition and integration. Critical factors that influence any change management strategy are mindsets, organizational culture and the leadership of the organization (Jones et al, 2004).

In this paper two organizations will be used as case studies. The first organization is a small kitchenware company that doubled its turnover and experienced a six-fold increase in its profits within six years.  The second organization is a medium-sized organization, offering financial services, which strived for internal realignment via restructuring (Green, 2007).

                                           The Kitchen Ware Company.

Before this British kitchenware company was bought by two entrepreneurs, it was making substantial losses. It had fallen into disrepute due to poor customer fulfillment caused by the delivery of poor quality goods, poor marketing strategy that only targeted wholesalers instead of also including key retailers, poor product lines with large slow-shifting stocks, demoralized staff and high central overheads caused by paying for purchases using US dollars and having a distant warehouse (about 200 kilometers from the head office, thus, increased transport costs) (Green, 2007).

After acquisition of the company, two out of the four main clients were lost and the exchange rate of the dollar against the pound decreased, which, increased the cost of purchases. The new owners, Dennis and Nick, managed to retain the other clients by convincing them that they would deliver quality products on time. The owners then used the first six months to understand the business before instituting any changes. After careful analysis of the company’s business model, the owners decided to introduce changes especially on the business’ front end (Green, 2007).

They focused on marketing by revitalizing and developing one of the product lines into a well known brand. They were able to achieve this by uniquely rebranding that product. They also introduced better quality, state-of-the-art and cost-effective range of kitchenware products designed to be comfortably used by both right-handed and left-handed individuals. This immediately increased their sales volume.They consolidated their customer base by considering the customers’ requirements and assessing the customers feedback. They also started retail distribution in addition to the existing wholesale distribution; thus, they invested heavily in wooing buyers including retail outlets such as stores and mini-supermarkets. The company’s leadership key strategy was thus to meet the customer’s demand within the stipulated time. This was a strategic move towards sales oriented/customer satisfaction culture which relied heavily on the customers’ feedback (Green, 2007).

Other changes that were introduced are stated below. Quality literatures were produced as sales aids for the sales personnel. The company’s accounts were managed by the newly recruited national accounts manager. The company’s headquarter was relocated to the warehouse and most of the indifferent and incompetent back office staff that worked in the head office were retrenched. This action disbanded the prevailing culture of indifference that the back office staff exhibited concerning the welfare of the warehouse staff. The owners acting in the capacity of the human resource managers developed good employer-staff working relationships by creating working ethos from within the existing workforce. This fostered the morale of the staff. The old stock was sold off to clear the warehouse of valuable space (Green, 2007).

The owners’ personalities and complementary roles also influenced the outcome of the change management as the affable Dennis focused in building relationships with employees, customers and suppliers while Nick engaged the customers and galvanized the sales force (Green, 2007).

The change management strategy was thus top-down but emergent as new opportunities appeared during the course of several years (Green, 2007).

The change management brought about by Nick and Dennis was successful as it increased the profitability of the company six-fold within six years due to increased production of quality goods and their timely delivery to their customers (Green, 2007).

                                           The Financial Services Company.

This company had acquired smaller institutions and was diversifying several of its lending and saving functions. The company aimed at transforming itself from a traditional bank, into a group of autonomous, profitable, and consultant financial services businesses. This created the need for restructuring the company into clearly defined business entities that would increase its scope, scale and complexity of activities. The company’s leadership was tasked with these roles (Green, 2007).

The executive team thus evaluated the company’s structure, assessed the risks of change and reached a decision concerning the need for realignment. The executive, thus, evaluated and established the viability of the realignment stratagem. The envisaged new group structure would facilitate the achievement of the bank’s strategic goals in three main ways: the new group structures would ensure efficient management of the ever-growing group of distinct businesses, it would enhance the competitiveness of the individual business units, and, it would enable the CEO (chief executive officer) to improve the company’s relationship with the parent companies and other relevant external partners (Green, 2007).

This change management stratagem was implemented by the executive and the desired results were not achieved. The management later unanimously accepted that the change management method used was unsuccessful (Green, 2007).

The relative success of this approach of change management in this organization was highlighted by the following facts: the strategy was theoretically correct as the cascading process of restructure would start at the top and gradually move down, the redundant workforce was retrenched thus reducing labor costs, and there was also effective initial communication about the rationality of the strategy and the resultant restructure to all the concerned parties (Green, 2007).

            Several aspects of this change management that contributed to its failure include: the managers made a gross miscalculation of the risks and their effects, poor adherence to the realignment timetable, breakdown of communication after senior appointments were made, unnecessary leadership vacuum created during appointment of managers, vague job descriptions for the junior working staff, lack of contingency planning, thus, some departments outdo others by several magnitudes; and poor manager-worker relationships (Green, 2007). This exemplifies the need for the human resource department to maintain communication channels with the junior staff and address their concerns. The change management strategy used by company demoralized the workers as the decision making process was done by the managers who did not bother to ask the junior staff for their input (Jones et al, 2004). This meant that demotivated junior employees were supposed to implement a plan that was vague to them.

                                                       Comparison.

Comparing the two companies above, the kitchenware company was incurring heavy losses before it was bought by the two entrepreneurs while the financial services company was expanding because of the increasing profit margins that it was making, thus, it decided to diversify.

Both organizations retrenched redundant employees.

Both organization implemented top-down change management stratagem.

The kitchenware company change management method incorporated the need to motivate, and, establish good working relationship between the junior staff and the company’s executive; this is in contrast with the indifference that the financial company showed to the welfare of their junior staff, hence, the failure of the change management method.

            Hence, in conclusion the success and failure of any change management approach requires the incorporation of staff survey of the junior staff who will implement the plan, into the decision making process by the managers.

                                                     

                                                  References.

Green, M. (2007). Change Management Masterclass: A Step by Step Guide to Successful Change Management. London.

Jones, J; Aguirre, D; and Calderone, M. (2004). 10 principles of change management, Strategy + Business, retrieved August 19, 2011, from http://www.strategy-business.com/article/rr00006?pg=all

Naucler, T and Ahiberg, J. (2007). Leading change: an interview with Sandvik’s Peter Gossas, retrieved August 19, 2011, from https://www.mckinseyquarterly.com/Leading_change_An_interview_with_Sandviks_Peter_Gossas_1894.

Straker, D. (2011). Change management, retrieved August 19, 2011, from http://changingminds.org/disciplines/change_management/change_management.htm