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Case Study Managing Change at Faslane

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Managing Change

Case Study Managing Change at Faslane

A transition was experienced by the company the HM Naval Base Clyde (Faslane)
submarine base in 2002. It was earlier controlled directly by the Ministry of Defence (MOD) and
was transformed to a private company Babcock International. Considering this significant
transition, the management considered it imperative for the organization to perform change
management for ensuring smooth transition and simultaneously increase the performance of the
company (Carter et al., 2011). This required a change in leadership, their change styles and levels
of change in an attempt to revamp the companys operations and remain successful.

Type of Change being pursued at Faslane
The main challenge in context to the change was to transfer the responsibility and
accountability from the MOD to the Babcock Marine, which is a part of the Babcock
International. This required a military branch to permit a private company to monitor the
operations of the naval base. There was a need to change the structure effectively from functional
one (in which individuals are responsible for performing a specialized set of tasks) to a
bureaucratic one (where a shift must be made to a more corporate entity, with standardization
and supervisors).
In order to understand the strategic change that was implemented at Faslane, Veronica
Hope Hailey and Julia Balogun can be used as a guide (Chow, 2014). Balogun and Hailey have
asserted that there are primarily four types of strategic change that are likely to be implemented

Managing Change

in an organization. These change include adaption, reconstruction, evolution and revolution.

These four changes form the foundation of strategic change in corporations.
The adaption change can be define as the one where the change is dependent on certain
influences that may include incremental changes, while ensuring to maintain the existing culture
or rapid changes that may possibly result in great upheaval (Carter, Clegg and Kornberger,
2008). Unlike adaption, evolution change can be considered as a strategy through which the
organizational culture may be changed gradually to ensure effectiveness. In most situations, it is
easier to implement this change despite the cost associated with it.
Reconstruction change can be defined as the change that occurs rapidly, where
organisation experiences significant disruptions in their operations. However, this type of change
does not require the management to transform the organizational culture (Chow, 2014). A firm
may experience this type of change in a turnaround situation, where it is likely to experience a
major structural change or implement a major cost cutting program to address the problem of
declining financial performance or changing market conditions. Lastly, a revolution change
occurs when the firm not only has to transform its strategy, but also change its organizational
culture. The organization may be required to implement this change, when it is unable to
effectively respond to environmental changes and becomes inflexible to adapt to changes
(Whittington, 2002).
Thus, considering this types of changes it can be said that the change being implemented
at Faslane was revolution. The John Howie, the Managing Director at Faslane, wanted to
implement the change by transforming the organisational strategy and the culture by reengineering the culture at government sector office and its management structure (Thompson and
Martin, 2010). As a result, the structure was transformed from the one with seven layers to four

Managing Change

layers in a short span of time. Although, Howie had analysed different companies and their
attempt to implement transformational change, he recognized that this approach will not be
effective and thus, decided to have a revolution change. The purpose was to have a structural
change at the company.

Levers of Change being used

There are two levers of strategic change have been defined by Michael Beer and Nohria,
which include Theory E and Theory O. Theory E has been defined as the one where change is
based on pursuing the economic value. In this theory the focus of organisations is on changing
systems and structures, downsizing, job lay-offs and financial incentives that are usually
associated with portfolio changes. On the other hand, Theory O defines change as based on the
capability of an organisation (Hatch and Cunliffe, 2006). The primary focus in this context is on
cultural change, experimentation and learning and participation in change program.
Analysing the case study the main lever for change at Faslane was economic, as in 2000
the aim of MOD was to reduce costs and enhance operational efficiencies at naval base. Hence,
they intended to partner with BNS for implementing change that could help them in saving $136
million. Moreover, it is important to note that implementing this strategy for reducing cost also
required the company to lay-off employees (Haberberg and Rieple, 2001). As a result 400
fulltime posts were reduced and the management structure was changed. Furthermore, they also
used Theory O as there was a cultural change, where private organisations culture was
implemented requiring participation in change program.
There are also other numerous levers of change that can be used by BNS for
implementing change and ensuring its effectiveness. A proactive approach could be used by

Managing Change

them, if they would have identified the issues earlier and be able to deal with them. This helps in
avoiding resistance and ensures effective communication during the change process.
In addition to this, there was a need to have clear communication through which
employees would have been aware and informed about the intended change process. At the same
time, they could have offered training and development programs so that the employees would
have not only been informed, but had been able to develop the necessary skills for being more
flexible and receptive to change (Carter et al., 2011). It is imperative for the leaders to be more
responsible in implementing change and driving the process to ensure that change is
implemented successfully.
Thus, the most important lever that could have assisted the management to implement
change more effectively was resistance management. Despite that several changes were taking
place at the organisation; one of the most important aspects that needed to be addressed was the
fear of employees regarding the negative consequences of the chance (Whittington, 2002). This
fear is likely to result in resistance to change, which could lead to low productivity and poor
performance. If the management had ensured effective resistance management, these issues
would have been resolved more easily.

Effectiveness of the Change Programme

The change programme that Howie initiated and later Lockhart continued proved to be
effective. They had integrated customer and businessmen for creating the business plan, this
unique change resulted in creation of new jobs. Considering the potential of creation of job and
job expansion it can be said that this change was effective for the company (Chow, 2014).

Managing Change

Furthermore, the effectiveness of this change programme can be quantified by assessing

the performance information against the targets that were set. The target set for one year was 3
million and the company was able to deliver 14million after the programme. Thus, it was able
to achieve 11 million than the targeted amount. In year 2, the target was set at 12 million and
the company managed to achieve 16million i.e. actual performance result exceeded 4million
than the target.
Additionally, the 5 year target was 76 million, but the company successfully delivered
100 million. Therefore, as the company wanted to reduce cost and improve performance; the
change programme was effective in achieving this target. The company achieved 20% reduction
by the end of year 5. It is expected that at the end of year 10 there will be savings of 280 million
that accounts for a 38.2% reduction in running costs each year.
There were also certain other unexpected challenges; however, BNS realised that the
change may take some time due to resistance throughout the change process. Nonetheless, the
management was able to address them and improve efficiency while reducing waste that resulted
in delivering results that were above the defined targets (Thompson and Martin, 2010).

Considering the changes in the environment it is important for firms to adapt to them by
being flexible. This requires firms to change their strategies and culture, where necessary to
address the changes. Organisations often implement change to enhance the performance, reduce
the cost and improve efficiency. Change was also implemented at Faslane, where there was a
transition in both organisational culture and structure to improve performance. A revolution
change was implemented when transforming into private company. However, change could have

Managing Change
been implemented more effectively where management is able to address resistance to change
due to fear of employees of negative consequences of change. Nonetheless, the change
programme proved to be effective for the company as they were able to exceed the set targets
and reduce costs. As Faslane had successfully adapt the change process along with the
exceptional management styles used by the managers inside the companys management team
they were able to perform well and improve performance.

Managing Change


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