Change Management Planning for change Internal causes New

Change Management Planning for change

Internal causes • New growth objectives set by management • New boss is appointed • Decision to open up new markets • Decision to increase shareholders’ dividend may make it difficult to find capital to invest in the business

External causes • • Rising consumer demand Economic boom benefits luxury product Closure/fire/strike hits competitor New laws affect your product/service

If rapid growth forecast, firms can • Compare sales estimate with available capacity • Budget for any necessary increases in capacity & staffing • Produce cash flow forecast to anticipate any short term financing shortfall • Discuss how to raise any extra capital needed

Change in management structure • Internal effect – team spirit hard to achieve • Potential for inefficiency & mistakes, leading to a loss of business • Difficult to build strong relationships with external customers & suppliers • Strong leadership essential

Problems of transition in size • Private to public • Retrenchment – cutting back • Rationalisation – significant changes to the organisational structure and/or capacity level

Types of retrenchment • • • Freeze on recruitment Offer voluntary redundancy Delayering Closure of a division or factory Targeted cutbacks & redundancies across the business

Planning for change • If you can foresee significant change, a strategic plan is needed • Manage change process & ensure that business has the personnel & financial resources to cope • How do we turn this change to our own advantage?

Strategic planning • Necessary because firms operate in a changing environment • Difference between profit objective & forecast performance of business is known as the strategic gap • Once identified, devise a series of strategies to close it

Contingency Planning • A Plan B in case Plan A goes wrong • Fallback position in case judgements prove wrong • ‘What if? ’ questions asked • Allows firms to consider what action it will take if particular opportunities or threats emerge as a strategy is implemented

Change Management Implementing & managing change

Market Growth Government legislation Technological changes Competitive pressures Causes of change Changes in strategy Adoption of new practices Customer pressures

Barriers to change • Lack of effective leadership & project management • Lack of effective training • Poor communication

Resistance to change • Concern about loss of control or status • Feel vulnerable to threat of redundancy • Resent break-up of social groups within workplace • Change goes against prevailing culture

Types of resistance • Active – Industrial action • Passive – Failing to attend meetings • Blocking successful change

Overcoming resistance • Start with objectives that are clear to all & accepted as necessary or desirable by the majority • Adequate resources to enable change to be effected efficiently – Financial, human, operational & technological back-up • Training

Implementing change successfully • Communication • Project champion • Involving staff rather than imposing change • Ensuring appropriate leadership • Creating a culture for change – a ‘learning organisation’

Managing change • Control – taking steps to ensure that the final outcome of change process is as close as possible to objectives identified at the planning stage • Review – what next?

Radical v. continuous change • In most situations, businesses are more likely to prefer a kaizen approach • Business process re-engineering = total rethink of current operations. Organisation is redesigned from scratch

Issues for analysis • Benefits & problems of introducing change • Is ‘do nothing’ an acceptable alternative? • Change seen as an operational or technological issue may prove unsuccessful – importance of staff • Resistance to change

Key issues • Planning change effectively • Managing change requires effective leadership • Coping with change requires a suitable culture