CHANGE MANAGEMENT.

Submitted for the module Change Management for the award of Masters in Business Administration.

PLANNED AND IMPLEMENTED CHANGE WITHIN A BUSINESS ENVIRONMENT (EVALUATION ON ROYAL MAIL GROUP)
CHANGE MANAGEMENT. EXECUTIVE SUMMARY:
This report represents factual components and the nature of change appreciated by Royal Mail group in light to meet modernidsation requirements. With reference to theoretical concepts, this report further evaluates the effectiveness of change examined by Royal Mail. In addition, this report appraises key management models scoped down towards the indicative contents of this report. Further instated in this report are facts conceptualized to focus on organizational development and (Rantala, 2013) (Crew & Brennan, 2014) (Clarkson, 2011)

SHIBIN S
CHERIAN
P134875 Date: 21 Feb - 2014

recognizing resistance to change and sustaining organizational effectiveness. Primary data discussing the indicative factors of Royal Mails downfall are extracted and summarized from independent reviews by Hooper, et al.(2008) and Hooper (2010) in order to conceptulize pertinet facts and in depth analysis of Royal Mails Change Situation, however an updated review of effectivness of this change shall be examined further in this report using key change management models and concepts. This report also explains limitations observed during the progression of this report.

OBJECTIVES:
1. Evaluate and examine and the reasons for change required by Royal Mail. 2. Investigate the effectiveness of the process of change that was planned and implemented

for maintaining sustainability for Royal Mail.

3. Evaluate the resistant factors to the emergent changes discussed above. 4. Evaluate whether the proposed change policies have been deemed commendable so far. 5. Recommendations for the improvement of the change process.

CURRICULUM OF ROYAL MAIL (INVESTIGATING THE REQUIREMENT FOR CHANGE).

In light to the requirement of this report, this Report scopes all its observations on to the change context and situation of the Royal Mail Group. Independent reviews by Richard Hooper (2008 & 2010) summarizes contextual key change factors scoping the contents of requirements for this report. Stated firmly, Royal Mails postal service faced substantial threats and was advised to meet modernidsation policies to meet stakeholders expectations. While Hooper, et al. (2008) firmly observes that universal postal services remain highly significant, Hooper (2010) reserves that royal mail has declined its market shares with further financial health of Royal Mail been shattered. The independent review by Hooper (2010) further states significant causes that destabilized Royal Mails sustainability: Decline in Royal Mails market shares. Decline in Universal Postal Services.

Resistance in implementing modernidsation policies. Increase in pension deficit since 2008. Expired policies and regulatory regime.

With such desolation, Royal Mail needs to observe that Royal Mails downfall in market advers ely gives enough market stage for competitors to enter. Furthermore, letter volumes were observed to decline further more in the future as reasoned with internet communication and digital media acceleration (Hooper, 2010; Clarkson, 2011; Rantala, 2013; Crew & Brennan, 2014). While Royal Mail was noted to sustain on packets and parcels, it is to be understood that relatively, packets and parcels represent a small and competitve scale than letter volumes, predominatly causing the decline in letter volumes eminent. In light to this desolative concern, Royal mail was disciplined to inject private sector discipline in order to sustain its operational services. While Hoopers report (2010) insited in developing new regulatory regime for Royal Mail, it is to be noted that Postcomm is now acquired by Ofcom, an independent regualtor and competition authority for the UK communications industries (Ofcom, 2011) and now operates all the regulatory regime for Royal Mail. In addition, Hoopers review (2010 ) further urges the government to relieve Royal Mail from its pension deficit as a part of wider package of measures, however in 2013 (Thurley, 2013) the government transferred Royal Mails historic liabilities to a new public sector scheme called RMPS (Royal Mail Statutory Pension Scheme) and is requested by the government to adminsiter further on. On a broader note, these private sector disciplines were injected in light to meet future sustainbility for Royal Mail. Hooper (2010) further supports that privatised capital will favor Royal Mail from being excluded from political interventions and commercial decisions. With primary analysis declared by HOOPER, et al. (2008), Royal Mail was concluded to have detroited financial health. In this perspective, private sector capital can futher generate cash to finance modernisation needs; thereby urging the need for change in its management and operations. In order to elaborate an understanding of Royal Mails change situation, this report will now deploy Kurt Lewins Force field analysis (Burnes, 2007).

DIVING FACTORS TO CHANGE

Overall financial health of Royal Mail

Lack of expertise in technological adaptation.

RESISTING FACTORS TO CHANGE

Failure to meet modernidsation policies

Common resistance to privatization

Decline in letter volumes.

Royal Mail

Resistance from Common Workers Union (CWU).

Decline in overall market Shares

Recession.

FIGURE 1: KURT LEWINS FORCE FIELD ANALYSIS: SOURCE: BURNES (2007)

While intertwining the factorial data by Hooper (2010) into Kurt Lewins force field analysis, it is observed that the driving factors exceed over the resisting factors of the change. Kurt Lewin explains that when organization is set for change, it must objectivise its driving factors againest its resisting factors of change. If the resisting factors of an organisation exceeds more than the driving factors, the organisation is not ready for a change to flow down in its operational and management structure. In this case, Royal Mail experiences heavy driving forces for change, making it necessary for accelrated modernisation policies to be implmented to maintain sustiainiblity for its business operations. One major deduction from Hooper et al (2008) and Hooper (2010) reviews were about the reduction of revenues due to the inception of 5% weighted avereage increases by Royal Mail in 2007 to 2008. The accelration of E Substitutes and digital media has developed a predesivce choice for customers as a faster means of communication. In comparison with European countries, the justification for the 5% weighted average may sound geniuine however, the accelration of e-substitutes was forcasted to cause severe turmoil in letter volumes adversly affecting one of its core business operations (Hooper et al., 2008) Hooper et al (2008) further suggested to implement pricing strategy to stimulate certain growth. Failure to meet modernisation policies led Royal Mail loose its competitve position to its competitors. Hooper et al., (2008) further declares that lack of upgrades were observed in their network of delivery offices and mail centers. With 70% of mails being sorted by machines, the automation

status of Royal mail was deemed to be low when compared to European countries who serves 95% of Automation process. As mentioned earlier, the uprising of digital media has caused a fall of -3.2% in letter volumes in 2007. With Pension deficit being unresolved at that moment, Royal Mails financial status eventually detrioted, losing its 350 year monopoly in the UK postal market.

EFFECTIVENESS OF THE CHANGE PLANNED AND IMPLEMENTED FOR MAINTAINING SUSTAINABILITY FOR ROYAL MAIL: The effectiveness of Royal Mails privatization is the essential objective of this section the report. Therefore the following influential observation will help deduce the effectiveness of privatization of Royal Mail. This section of the report is further divided in to two sub sections in order to produce an organized findings of the evaluation.

Planned Change on Royal Mail:

On broad reference with Royal Mail Holdings plc (BERR, 2009) and Hooper (2010), three major extents were identified for Postal Services Bill to address:
1. Regulation: Currently, Ofcom (Ofcom, 2011) is responsible in regulating further financial sustenance for the Universal postal service (UPS), providing new access regime and expanding competition law powers to the UK postal market (BERR, 2009). 2. Pensions: Currently, the government transferred Royal Mails historic liabilities and pension deficits to a new public sector scheme called RMPS and is requested by the government to administer further on (Thurley, 2013). 3. Strategic Alliance: In order to maintain Royal Mails sustainability, Hooper (2010) concludes in his review that Royal Mail has to achieve modernidsation objectives and additional obligatory legislations for the current government to peddle over minority stakes (BERR, 2009). With new regulatory regime being taken over today and in consideration with CWU, Royal mails universal postal service will remain public sector, part privatized. Further financial regime apart from the pension deficit will be supported by Ofcom (2011).

Burnes (2004) advocates that planned change (originally coined by Kurt Lewin (Schein, 1996)) was developed to distinguish change that was intentionally planned, analyzed and executed by an Organization in order to maintain its competitive

sustainability. Royal Mail can be coined towards planned change as structural and

strategic propositions were developed in order to save Royal Mails UPS. In addition, this report wishes to scope on Kurt Lewins three step model (Burnes, 2004) in comparison to Royal Mails change situation. The three step model refers to three consecutive steps; moving from a fixed state (Unfreezing), moving through a progressive alteration (Moving), and on to another fixed status (Refreezing) (See figure 2 above). Considering Royal Mails restraining forces, Kurt Lewins three step model implies that restraining forces such as CWU, resistance to privatization etc. are to be bought in salient agreement, implying the Unfreeze step; Implementation of modernidsation policies and other technological automations are made in motion since the coalition agreement in 2010 (BBC 2010); this can be considered as the Moving state; and refreeze can be the omega step to deduct the stability of the proposed change. In the case of Royal Mail, progress are yet to observed as it was just recently that CWU has come with agreement terms after several disputes with the privatization disciplines (Farrell, 2013).
FIGURE 2: KURT LEWINS THREE STEP MODEL; SOURCE BURNES (2004)

Effectiveness of the Planned Change in Royal Mail:

As per the observation of this report, following key aspects were deducted from reliable resources that will deduct current effectiveness of the planned change in Royal Mail. 1. Agreement between Royal Mail and CWU: While crucial disputes over pay and compensation regimes were observed ever since Royal Mails post privatization proposals were made between Royal Mail and the CWU, Farrell (2013) reports that Royal Mail staff will now receive 9% increase over three years duration. This can be considered as groundbreaking legal agreement on industrial relations at the newly privatised firm. In addition, 139000 Royal Mail staffs will now receive one off 200 payment on December, down a 100 from the previous agreement. In addition, Royal

Mail has further agreed to CWU;s demands on job security, pensions and other terms and conditions applicable in next five years. The deal consists of:
No Outsourcing of Royal Mails business (Farell, 2013). A prohibition on zero hours contracts for Royal Mail Staff (Farell, 2013). Full time workforce with no compulsory redundancies (Farell, 2013). No relegates to employees agreed working conditions. Additional payments to employees pension scheme by Royal Mail (Farell, 2013).

However in return, CWU was urged to proceed with measures to prevent local surges of strikes. Farell (2013) and PWC (2013) ironically forecasts fuelling use of internet and online shopping to surge soon and with a co-operative agreement between Royal Mail and CWU, this co-operation would underpin expansion of the packages and parcels segment along with the usage of proposed automation for Royal Mails modernidsation sustainability (BERR, 2009; CWU, 2010). According to Farell (2013), the 330p valuation of Royal Mail shares in the firms flotation in October 2013 (Roland, et al., 2013) was the prime risk associated to the national strike. Referring back to Kurt Lewins three step model, this phase can be coined as Unfreeze to Moving phase. In addition, Bernes (2004) suggestes punctuated equlibrium, a type of change that recognises the erratic and volatile nature of change. Royal Mail was categorised to have undergone through puntuated equlibrium change as the company faced severe turmoil during its post privatization propositions and it was recently that royal mail and the CWU came under legal mutual agreements (Farell, 2013). 2. Online Parcel Upsurge and Slow Projection of Letter Volumes: With UK total inland letter volumes declined by 6.3% from 2008 2013, the parcel volume further generated 3.7% growth from 2008 2013 (PwC, 2013). This signifies that the rate of online shopping by consumers have been observed to been increased at a par rate than the letter volume. In addition to this, Sky News (2014) reports Royal Mail has experienced an 8% rise in revenue from Parcel delivery since its privatization. According to Pwc (2013), the propensity of letter volume will project decline however observed to be of slow projections. The Pwc (2013) further elaborates that declaration that conceptually paper loyal consumers portray higher value of communication . Uncertain changes in demographics and acceleration of digital media are concluded to pose less threat in this segment. In addition to this the report further declares that the decline in letter

volumes will continue to exist as result of the healthy progression of parcels circulation driven by increased online shopping. Further projections by PWC (2013) forecast that letter volumes will experience further decline of 5% from 2013 2018 and 4% from 2018 2023 while the parcels will further experience increase of 3% from 2013 2018 and further 2% from 2018 2023. This signifies that despite the slow rate of decline, significant reduction of paper communications can be observed by 2023 and substantially, Royal Mail can expect booming revenue from its Parcel segments, however the proposed automation process should be met at the earliest. 3. Pension Deficit: As mentioned previously, the government transferred Royal Mails historic liabilities and pension deficits to a new public sector scheme called RMPS and is administered by the government further on (Thurley, 2013). Defining new pension scheme for the previous pensioners had been debatable under the House of Commons (Thurley, 2013) and further update on this was not observed in this report.

RESISTANT FACTORS TO THE EMERGENT CHANGES AT ROYAL MAIL:

Three influential resistant factors were deducted at the beginning of this report with the help of Kurt Lewins Force field analysis. This section of the report will now update the previously observed resistant factors in order to analyze and evaluate the effectiveness of the privatization of Royal Mail.
LACK OF EXPERTISE IN TECHNOLOGICAL ADAPTATION:

Hooper et al, (2008) deducted that Royal Mail staff believes employment redundancy will become imminent should Royal Mail envisage new technological automation. However, Farrell (2013; 2014) reports that Royal Mail staff win groundbreaking deal on jobs, pensions and practices. With agreements proceeded between Royal Mail and CWU, Royal Mail can expect efforts to seize such scarcity.
COMMON RESISTANCE TO PRIVATIZATION:

As Bernes (2004; 2007) states, wave of criticisms are eminent to approach while a firm undergoes structural, managerial and operational change. While Royal mail operating profits incurred 7 million GBP in 2009 (BERR, 2009), the CWU further resisted this appraisal as soon as the pay freeze was announced Royal Mail as a part of major modernidsation change (Prince,

2009). However, Farrell (2013) in favor corresponds the agreement between CWU and Royal Mail will now deem to be profitable for the Universal postal Service (SkyNews, 2014).
RESISTANCE FROM CWU:

With several references mentioned regarding the industrial disputes between Royal Mail and CWU (CWU, 2010; BBC, 2013; Thurley, 2013), and in reference with the above observations of this report, it can be assumed that CWU should now possess moderate resistance to Royal Mail. With statements being declared on the pension deficit (Thurley, 2013) and CWU settlements, Royal Mail can now take the pride of implementing co-operative modernidsation policies in order to maintain the sustainability for Royal Mails operations.

CONCLUSION: EVALUATION OF THE EFFECTIVENESS OF THE OVERALL CHANGE IN ROYAL MAIL:

With Royal Mails competitive position sinking in the UK postal market, the strategy of privatization can be deemed commendable. Despite the vigorous industrial dispute between the CWU and Royal Mail as mentioned previously, Royal Mail was successful to establish peace terms with its staff regarding the stated settlements. The case of resistance observed in Royal Mail was eminently strong as the liabilities occurred by Royal Mail were concluded to be Nationalized, with no further clarifications to resolve such deficit. However, dynamic inferences were implemented despite the forecasted resistance from Royal Mail Staffs. As stated by Robbins & Judge (2010), Resistance can be defined immediate, deffered or implicit regardless of its generic suppositions. Among these, implicit and deferred resistance can be deemed most challenging for an organization. Royal Mail suffered an implicit resistance from the CWU and Royal Mail staff regarding its post privatization propositions. Historically, poor industrial relations between Royal Mail and CWU were also recorded (Hooper et al., 2008) and further implmentation of privatization discplines only created a bigger turmoil. However, efforts developed and deducted from various sources define the positive inc eption of Royal Mails privatised business operations. Neverthless, it is desolative that co-operative industial agreements were settled just recently between Royal Mail and CWU which leaves a lacking query to conclude a specific statement of wether or not the privatisation was a intellective move. So far, the conclusions adhered in this report clarify that Royal Mails privatization effectiveness was observed to be commendable even through the huge turmoil of preclaimed liabilities and

indutrial disputes. Referring back to Kurt Lewins three step model, the Unfreeze and move/change are observed be to achieved by Royal Mail, however the refreeze phase is yet to be cited.

RECOMMENDATIONS:
1. Royal Mail must understand that the route cause for delay in the modernidsation process

was the CWU settlement. Royal Mail must take restrained steps in order to maintain a balance with the current regulatory regime proposed by Ofcom (2012) and positive relationship with CWU.
2. As mentioned previously, Royal Mail must update its progress on the proposed

technological automation for sorting the parcels segment. This will Royal Mail to gain back its competitive position from its existing rivals.
3. Lack of expertise in technological adaptation must be considered as strategic issue. With

rising usage of digital media, Royal Mail must explore different strategies to tap the talent pool to retain commendable expertise to adapt with technological automation proposed by Royal Mail. Royal Mail must also recollect five post modernidsation terms which both CWU and Royal Mail has agreed upon before further implementing this talent acquisition strategy.
4. In reference to common privatization resistance, Robbins & Judge (2010) and Rantala

(2013) suggests to invest substantially in training and development in order to infuse Royal Mails current staff with the proposed technological automations. This would help Royal Mail in barricading the search for external talent and rather focus on developing internal talent, which mutually benefits Royal Mail and its staff.
5. Ofcom must constantly regualte the financial regime of Royal Mail in order to create

competitor power over the UK postal market industry.

LIMITATIONS:
1. The change case of Royal Mail is an interesting and influential case to refer. However,

due to the delay of the expendable disputes in last few years between Royal Mail and CWU, it is declared that the information deduced in this report can be assumed generalized as it is yet to discover the potentiality of Royal Mails privatization.

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2. Resource database allocated for this report, Moodle (Supportive Dashboard for Students

to use online resources) constantly faced disturbance, disrupting collection of further statistical data to validate the conclusions of this report.

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REFERENCES
BBC, 2010. Royal Mail part - privatisation planned by coalition. BBC: Business, 20 May, p. http://www.bbc.co.uk/news/10130415. BBC, 2013. Royal Mail Privatisation in the coming weeks'. BBC: Business, 12 September, pp. http://www.bbc.co.uk/news/business-24058989. BERR, 2009. Royal Mail Holdings plc: Reports and Accounts year ended 29 march 2009, s.l.: Department for Business Enterprise and Regulatory Reform. . Burnes, B., 2004. Managing Change: A Strategic Approach to Organisational Dynamics. Business & Economics ed. s.l.:Pearson Education . Burnes, B., 2007. Kurt Lewin and The Harwood Studies the Foundations of OD. Journal of Applied Behavioral Sceince, 43(2), pp. 213-231. CBE, R. H., 2010. Saving Royal Mail's Universal Postal Service in the Digital Age., Surrey : Crown Copyright. CBE, R. H., Hutton, D. D. & Smith, I. R., 2008. Mordnise or Decline: Policies to maintain the universal postal service in the United Kingdom, s.l.: Crown Copyright. Clarkson, K., 2011. Postal Service case as it strives to sustain business operations, s.l.: GRIN. Consumer Focus, 2012. Royal Mail's Quality of Service 2011/ 12, s.l.: ConsumerFocus. Crew, M. & Brennan, T., 2014. The Role of the Postal and Delivery Sector in a digital age. s.l.:books.google.com. CWU, 2010. Business Transformation 2010 and Beyond: A National Agreement Between Royal Mail & the Communication Workers' Union., http://www.cwu.org/assets/_files/documents/mar_10/cwu__1268063930_Business_Transformation__2010.pdf: CWU. Farrell, S., 2013. Royal Mail Workers Win Pay Increase of 9% Over Three Years.. The Guardian: UK news: Business, 9 December, pp. http://www.theguardian.com/uk-news/2013/dec/09/royal-mailworkers-pay-increase. Farrell, S., 2014. Royal Mail Staff win 'Groundbreaking' deal on jobs, pensions and practices.. The Guardian: Business., 05 Februaury., pp. http://www.theguardian.com/uk-news/2014/feb/05/royal-maildeal-jobs-pensions-cwu-dave-ward. Hooley, G. J., Saunders, J. A. & Piercy, N., 2004. Marketing Strategy and Competitive Positioning. Business & Economics ed. 622 pages: Pearson Education: . Ofcom, 2011. Postal Services. [Online] Available at: http://stakeholders.ofcom.org.uk/post/ [Accessed 10 Feb 2014]. Ofcom, 2012. Review of Regulatory Conditions: Postal Regulations, s.l.: Ofcom. Prince, R., 2009. Royal Mail warns staff to expect a pay freeze.. The Telegraph: Finance: Recession, 24 April , pp. http://www.telegraph.co.uk/finance/recession/5215678/Royal-Mail-warns-staff-to-expect-apay-freeze.html. PwC, 2013. The Outlook for UK Mail Volumes to 2023, s.l.: PwC Strategy & Economics.

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Rantala, O., 2013. Development of Postal Servivces until 2020, s.l.: ideas.repec.org. Robbins, S. P. & Judge, T. A., 2010. Organizational Behavior. Business & Economics 13th Ed ed. s.l.:Prentice Hall. Roland, D., Chan, S. P. & Martin, B., 2013. Royal Mail share float: as it happened. Business News and Markets Live., 11 10, pp. http://www.telegraph.co.uk/finance/business-news-marketslive/10371566/Royal-Mail-share-float-as-it-happened-October-11-2013.html. Schein, E. H., 1996. Kurt Lewin's Change Theory in the field and in the classroom: Notes toward a model of managed Learning.. Systems Practice, 9(1), pp. 27 - 47. SkyNews, 2014. Royal Mail Rides The Online Parcel Wave.. Business, 2014 January, p. 1. Thurley, D., 2013. Royal Mail Pension Plan - Commons Library Standard Note. [Online] Available at: http://www.parliament.uk/business/publications/research/briefing-papers/SN04940/royalmail-pension-plan [Accessed 10 Feb 2014]. Todnem, R., 2005. Organisational Change management: A critical review. Journal of Change Management., 5(4), pp. 369 - 380.

ANNEXURE1: PRESENTATION REPORT:

In light to the requirement of this assessment, a presentation on Change Analysis of Royal Mail was conducted on the 10th of January 2014 for a duration of 8 minutes. The presentation however concluded a schematic analysis of change on Royal mail, but failed to have presented a more updated research, thereby making it necessary to prepare an updated report prior to this Annexure. The objectives of this presentation were: To investigate and analyze the context and change situation for Royal Mail Group (RMG). To evaluate the change situation of Royal Mail using key change management models. Presentation reported four contextual factors describing Royal Mails historical market position namely:
Downfall of market shares. Decline in Modernization. Pension Deficit in March 2008. Turmoil in current regulatory scheme.

Next, the report en-stated the change need on Royal Mail, following points were noted:

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Rapid acceleration of the digital media, adversely declining letter volumes. Continuous financial turmoil due to the 2008 pension deficit has caused a negative impact on Royal Mails profit/loss, balance sheet and cash flow (Hooper, 2010). Royal Mail has continued to lose its market shares with its competitors. Royal Mails financial stability has been observed to have turbulence

Stating the above factors, the presentation later reported the stakeholders map in order to give a brief outlook on Royal Mails stakeholders. The presentation reported ten main stakeholders for Royal Mail to keep up with their expectations. The diagram below is exact extraction from the presentation:

ROYAL MAIL

Colleague s Unions

Sub Postmasters Customer s and suppliers

OFCOM

Post Europe

UK GOVT.

International Post Corporation

Universal Postal Union

The stakeholders map presented was to generalize the stakeholder expectations that Royal Mail have to keep up with. The cluster of major stakeholders represent the corporate network

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that Royal Mail is obliged to please. Following to this, the presentatio n deployed Kurt Lewins Force field analysis to derive the driving and resisting forces to change in Royal Mail.
Overall financial health of Royal Mail Lack of expertise in technological adaptation.

Failure to meet modernidsation policies

Common resistance to privatization

Decline in letter volumes.

Royal Mail

Recession.

Resistance from Common Workers Union (CWU).

Kurt Lewins force field analysis deployed in the presentation described that the driving forces were exceeding the resisting force, urging the company to adapt change. In light to the observed quo of Royal Mail, the presentation later discussed recommendations in reference to the contents discussed above. Following were the recommendations: As resisting as it can seem, introducing a private sector capital into Royal mail is a sustainable decision. Inject private sector discipline. Develop a more customer oriented commercial strategy/ diversification for the digital age. Urge government to remove pension deficit as part of a wider package of measures. Transferring regulatory frameworks to a private regulatory body to ensure sustainability and efficient universal postal service.

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