EMC05103 Assignment - Zam

JANUARY SEMSTER 2012 LECTURER; Dr.
Goh Tee Teck
ASSIGNMENT CHANGE MANAGEMENT EMC05103
STUDENT;
NAME: MOHD. NORIZAM BIN MD. SALLEH MATRIC NO.: CGS 00534317 I/C NO: 670703-01-6045 COURSE: MASTER PROJECT MANAGEMENT
Name: Mohd. Norizam Bin Md. Salleh Matriculation No.: CGS 00534317 Assignment EMC05103 (Change Management)
Table of Contents
Table of Contents ..................................................................................................................................... ii Question 1 ............................................................................................................................................... 1 1.0 Introduction ........................................................................................................................................ 1 1.1 Definition of Leader ........................................................................................................................... 1 1.2 Definition of Manager ........................................................................................................................ 2 1.3 Leader Vs Manager ........................................................................................................................... 2 1.3.1 Roles of a Leader........................................................................................................................ 4 1.3.1.1 Creating vision and Strategy ................................................................................................ 4 1.3.1.2 Communicating and Setting Direction .................................................................................. 5 1.3.1.3 Motivating & Inspiring ........................................................................................................... 5 1.3.1.4 Aligning People .................................................................................................................... 6 1.3.1.5 Creating System that Managers can Manage Transform and etc. ...................................... 7 1.3.2 Roles of Manager........................................................................................................................ 7 1.3.2.1 Planning and Budgeting ....................................................................................................... 8 1.3.2.2 Organizing and Staffing........................................................................................................ 8 1.3.2.3 Controlling and Problem solving .......................................................................................... 8 1.3.2.4 Taking Complex System ...................................................................................................... 8 1.4 Theories of Leadership ...................................................................................................................... 9 1.4.1 Effective Leadership ................................................................................................................. 12 1.4.2 Effective Management .............................................................................................................. 12 1.4.3 Theories of Leadership and Understand the Effective Management ....................................... 12 1.4.4 Conclusion ................................................................................................................................ 13 Question 2 ............................................................................................................................................. 16 2.0 Introduction ...................................................................................................................................... 16 2.1 Development Change ...................................................................................................................... 19 2.2 Transitional change ......................................................................................................................... 20 2.3 Transformational change ................................................................................................................. 22 2.4 Different Organisation Requires Different Type of Change............................................................. 26 2.4.1 British Broadcasting Corporation (BBC) ................................................................................... 27 2.4.2 UK Coal ..................................................................................................................................... 28 2.4.3 Sime Darby ............................................................................................................................... 29 2.5 Conclusion ....................................................................................................................................... 30 Question 3 ............................................................................................................................................. 33 3.0 Introduction ...................................................................................................................................... 33 3.1 Five Key Steps in the Change Process ........................................................................................... 33 3.1.1 Phase 1 - Assess for Change/Recognition ............................................................................... 34 3.1.2 Phase 2 - Prepare for Change/Diagnosis ................................................................................. 34 3.1.3 Phase 3 - Plan for Change ....................................................................................................... 35 3.1.4 Phase 4 - Implement the Change ............................................................................................. 35 3.1.5 Phase 5 - Sustaining the Change ............................................................................................. 36 3.2 Diagnostic Model ............................................................................................................................. 36 3.2.1 Descriptive models.................................................................................................................... 38 3.2.1 Normative Models ..................................................................................................................... 39 3.3 Open System Model ........................................................................................................................ 39 3.4 Nadler and Tushman (1982) Congruence model ............................................................................ 45 3.5 Alignment is Determinant to Organisation Effectiveness ................................................................ 48 3.6 Conclusion ....................................................................................................................................... 52 PART B .................................................................................................................................................. 56 Question 1 ............................................................................................................................................. 56 1.0 Definition .......................................................................................................................................... 56 1.1 Managing Change ........................................................................................................................... 56 1.1.1 Change Models ......................................................................................................................... 58 1.2 What Drives Organisational Change ............................................................................................... 60 1.3 Nature of Organisational Change .................................................................................................... 63 1.4 Type of Change Approach .............................................................................................................. 65 1.5 Different Organisation Requires Different Type of Change............................................................. 69 ii Semester January 2012
Name: Mohd. Norizam Bin Md. Salleh Matriculation No.: CGS 00534317 Assignment EMC05103 (Change Management) 1.5.1. Tuning (Incremental and Proactive)......................................................................................... 70 1.5.2 Adaptation (Incremental and Reactive) .................................................................................... 70 1.5.3 Re-orientation (Transformational and Proactive) ...................................................................... 71 1.5.4 Re-creation (Transformational and Reactive) ........................................................................... 72 1.6 Some Samples of Organisational Change ...................................................................................... 73 1.6.1 British Broadcasting Corporation (BBC) ................................................................................... 73 1.6.2 UK Coal ..................................................................................................................................... 74 1.6.3 Sime Darby ............................................................................................................................... 74 1.6.4 British Airways .......................................................................................................................... 76 1.7 Conclusion ....................................................................................................................................... 80 References ............................................................................................................................................ 84
List of Figures
Figure 1: The most effective managers over long term are also leaders ................................................ 3 Figure 2: Communication Skills ............................................................................................................... 5 Figure 3: Leader as a Role Model and Aspire Trust ............................................................................... 7 Figure 4: Triple Project Success ........................................................................................................... 14 Figure 5: How Important Leadership and Management ........................................................................ 15 Figure 6: The Drivers of Change Model ................................................................................................ 17 Figure 7: Development Change ............................................................................................................ 19 Figure 8: Transitional Change ............................................................................................................... 21 Figure 9: Transformational change ....................................................................................................... 24 Figure 10: Type of Organisational Change ........................................................................................... 26 Figure 11: Five Steps of Change Process............................................................................................. 33 Figure 12: The Organisation as an Open System ................................................................................. 42 Figure 13: Overview of the Open System of an Organisation ............................................................... 45 Figure 14: Component of the Congruence model ................................................................................. 47 Figure 15: The Drivers of Change Model .............................................................................................. 61 Figure 16: Type of Organisational Change ........................................................................................... 69
List of Tables
Table 1: The Difference between a Leader and a Manager.................................................................... 9 Table 2: Theories of Leadership from Great Man to Transformational .............................................. 10 Table 3: Type of Change: Change is process of moving from present to future................................... 18 Table 4: The British Airways Success Story: Creating the Worlds Favourite Airline ......................... 77 Table 5: Applying Lewins Model to the British Airways (BA) Change Effort ........................................ 79
iii Semester January 2012
Name: Mohd. Norizam Bin Md. Salleh Matriculation No.: CGS 00534317 Assignment EMCO5103 (Change Management)
JANUARY SEMESTER 2012 EMOM5103 - CHANGE MANAGEMENT ASSIGNMENT (50 %)
INSTRUCTIONS: ANSWER ALL QUESTIONS. PART A Question 1 What is the difference between a leader and a manager? How can theories of leadership inform our understanding of effective management? [20 marks] 1.0 Introduction Before we go further it is good to differentiate what are the differences between the leader and manager and as well as their responsibilities. 1.1 Definition of Leader There are a lot of definitions about leader and some of them are appends as follows; Leader is defined as a person who influences a group of people towards the achievement of a goal. A leader by its meaning is one who goes first and leads by example so that others are motivated to follow him. To be a leader, a person must have a deep-rooted commitment to the goal that he will strive to achieve it even if nobody follow him (Alan S. L Wong, 2007). Leaders have long-term and future-oriented perspectives and provide a vision for their followers that looks beyond their immediate surroundings (Burnes B, 2004). The leader has a clear idea of what he wants to do, professionally and personally and the strength to persist in the face of setbacks, even failures. Unless you know where you are going, and why, you cannot possibly get there (Bennis Warrent, 1994). A leader is a person who has a vision, a drive and a commitment to achieve that vision, and the skills to make it happen (Reh John F.).
1 Date: Semester January 2012
1.2 Definition of Manager On the other hand some definitions on manager are as the follows; Manager is a person responsible for planning and directing the work of a group of individuals, monitoring their work and taking corrective action when necessary (Reh John F.). The manager plans, organises, directs and controls, on proprietors or own behalf, an industrial, commercial or other undertaking, establishment or organisation and coordinates the work of departmental managers or other immediate subordinates (Dakin and Hamilton, 1990). The manager has the task of creating a true whole that is larger than the sum of its parts, a productive entity that turns out more than the sum of the resources out into it (Drucker, 1985). Managers have short-term perspectives and focus on routine issues within their own immediate departments or group (Burnes B, 2004).
1.3 Leader Vs Manager Definitely it has a difference between both leader and manager. Bennis and Nanus (1985) associating management and leadership with different type of people:managers are people who do things right and leaders are people who do the right thing. In my personal views, there are some similarities between leaders and managers but generally, leaders are different from the managers as most of their job functions are different. Mostly the CEO or the MD of an organisation is called as leaders and the other leaders e.g. the general managers/ head of department and below can be identify as managers.
According to Nahavandi (2000), management and leadership are seen being distinctly different activities. Nahavandi sees the process of management as essentially concerned with achieving stability. On the other hand, he sees leadership as essentially being concerned with bringing about change. Samuel C. Certo and S. Travis Certo (2009) indicated, Leading is not same as managing. Despite some managers are leaders and vice versa, leading and managing are not identical activities. These can be seen on the following figure 1.
Figure 1: The most effective managers over long term are also leaders
(Adapted from: Certo & Certo, 2009)
What I had gathered from the above figure, only very small people can perform both as leaders and managers but mostly these two jobs are requires for different type of people and remains as it is. The differences between these two parties might be differed in scope, the way they think, type and role and effort through people and organisations.
1.3.1 Roles of a Leader John Kotter (who is an Emeritus Professor at the Harvard Business School), had emphasized the roles of leader covers creating vision and strategy, communicating the vision and setting direction, motivating action, aligning people, creating system that managers can manage transform and etc. 1.3.1.1 Creating vision and Strategy Leaders should have a strong sense of direction and a clear point of view. Unless the leader knows where he/she is going, people will be uncertain to follow. In my opinion leaders should always looking towards the future, plotting the course to new land. Nowadays leaders are modern explorers, always seeking new lands and striving for distant shores. Leader is important in developing a new vision push the organisation to move and change toward the new vision and translates it into action. Everyone should follow leaders vision and he/his strategy to achieve the vision. Creating a strong vision helps to lead an organisation to move towards success. The vision can come in various way e.g. to measure how the organisation is performing, assist in sparking motivation and keep the organisation or project aligned or in a right path. Leaders must be able to develop new business strategies in order to align the strategic directives so that organisational may able to growth and transform to achieve companys business objectives. Business strategies are wide and it is including technologies strategies, improvement strategies and develops people strategy. As an example, Hewitt mentioned that there are top 20 companies in leader development in U.S. closely linked development strategies with business strategies in the organisations (Salob & Greenslade, 2005). In my opinion, leader should be creative in order to generate new business ideas and strategies. Critical thinking among leaders is important because the strategies may affected by organisation budget, organisational location, appetite for change and many more because developing strategies is a roadmap in order
to achieve organisational vision. Thus, only true leaders will be able to transpire with effective business strategies while manager normally not. 1.3.1.2 Communicating and Setting Direction Communication is important as how good is your vision but shall the leader failed to communicate well about he/his vision, the change will still face a failure. Kotter believes a leader should able to assess how much communication of the vision is required and how to set a direction toward achieving it. Communication cab be oral (via walking and talk, presentation and etc.), written (via academic readings, procedures and etc.) and non-verbal (body language, awareness programme, personal presentation and etc). These are illustrates in figure 2. In my opinion, leader should have a strong communication skill in order to convey their vision and strategies through every existing communication means and channel. Thus, leader shall be able to communicate and convey the vision and strategies to his/her managers and workers. Figure 2: Communication Skills
(Source: Brown Debbie, 2011)
1.3.1.3 Motivating & Inspiring Leaders should motivating, inspiring and empower the workers. A good leader should able to focus, inspire and motivate workers towards achieving the vision and carry out the strategies to accomplish the vision. A leader that has been
adapted to natural emotional intelligence can perform this task easily. A leader need to bond commitment with all the workers in order to understand what factors may requires to motivate and inspire them, how to respond them in the best manner, to understand their passions and etc. Leader mandate natural feasible in his/her approach whilst manager be given their authority based on their position and responsibilities. Motivation can be done either by physical action, emotion and psychological and it is depend on what group we are facing. A true leadership motivation occurs not because of force but instead completing tasks because they want to for the overall benefit of the leader and the organisation. In any strategic management endeavour, we must make sure that the workers have a strong emotional commitment to realizing the end result. Middle and front-line workers are more effectively motivated when they can personally relate to the tasks necessary for carrying out the strategy. Only then does a business strategy have a real chance to succeed. Leader should set about to create an environment in which the team would motivate themselves. So he had each team member assess what activities got results and what didn't. They discovered that they spent more than 60 percent of their time on things that had nothing to do with getting results. Motivation is like a high voltage cable lying at our feet. Use it the wrong way, and we will get a serious shock but if we apply motivation the right way it will serve us well in many powerful ways throughout the years. 1.3.1.4 Aligning People A leader should set the positive attitudes that peoples follow (Boldani, 2008). A leader is a role model and should give a clear guide and a good example to his/her workers and subordinates. Workers and subordinates will take the guides and example from leaders. A leader requires follower whilst manager requires subordinates to complete task.
Figure 3: Leader as a Role Model and Aspire Trust
(Source: http://blog.funtado.com.)
As an example, If a leader are someone who treat people badly, bullies, does not listen to suggestions and irresponsible, I believe the workers either will not give him a respect or else will attracted to his/her bad attitude in the other hand if a leader showed a good examples to the workers e.g. very responsible in order to carrying the organisation objectives he /she will be give a fully respect and seen as a good role model. 1.3.1.5 Creating System that Managers can Manage Transform and etc. Inspiration by bring in new approaches or system also can motivate, inspire and guide manager, workers or subordinates. Different approach in solving different challenges should be inspired by leader. Leaders require emotional strengths and behavioural attitudes which able to shine their mental and spiritual appearances. It is important for leaders to be able to create new system in a dynamic environment. Leaders are relying on attitudinal on developing new and quality approaches. 1.3.2 Roles of Manager Managers role are diverse and totally different with leaders role. They are setting goal, planning and budgeting, organizing and staffing, controlling and problem solving, taking complex system and etc.
1.3.2.1 Planning and Budgeting These are important task for manager as they should be able to plan according to organisations aims and complete the task within the budgeted resources. Manager is setting goals in order to achieve this target. Managers scope always wider than a leader. It is necessary as manager entitle on deciding what need to be done via a process of goal setting, developing plans to do things better and developing entire steps in order to achieve their aims. Definitely, managers are bound to plan and manage the setting goals based on leader vision. 1.3.2.2 Organizing and Staffing Organizing and staffing can be done by influence and control. Manager has to ensure the staffing are sufficient and are organise properly, focus on day to the task, manage activities of subordinates and to get the job done, This responsibility is definitely goes to manager while leader may able to motivate through effective communications among all of them. For example; manager have to assigning work deadline, organise and scheduling his/her subordinates and ensure that the job get done while leadership are focuses on aligning and motivate workers. 1.3.2.3 Controlling and Problem solving Some manager has the chance and opportunity to identifies and solve problems solving, In some positions managers maybe located as frontline workers which were paid a bit more than other co-workers (Patty Inglish, MS, 2012). Managers usually are the higher performers among the employees level and that is the reason why managers earn extra compares to his/her subordinates for solving any problems in the organisation. Usually they require choosing the best alternative to solve the problems independently and arrive at the best option. 1.3.2.4 Taking Complex System Workers structure is one of the systems that a manager needs to follow. When the organisational has been structured, managers should arrange workers with the right knowledge, skills, qualification and capability to fill in the structure. Kotter mentioning that manager face a structural problem such for staffing in
order to build capacity while leader task is to align people accordingly. Managers are accountable to train/oversee the employees who is non-performance and with less experience which are not an easy task. In this situation, manager has to ensure the importance of hiring and firing and at the same time maintaining the potential workers. Whereas leaders will normally engage in lateral leadership in order to share understanding among their managers and workers. Table 1: The Difference between a Leader and a Manager No 1 2 3 4 5 6 7 8 9 Leader The leader innovates The leader is an original The leader develops The leader investigates it Manager The manager administers The manager is a copy The manager maintains
10 11 12 13
The manager accepts reality The leader focuses on people The manager focuses on systems and structure; The leader as role model and The manager relies on inspires trust. control The leader has a long-range The manager has a shortperspective. range view The leader asks what and why. The manager asks how and when The leader has his or her eye on the The manager has his or her horizon. eye always on the bottom line The leader originates The manager imitates The leader challenges it The leader is his/her own person The leader does the right thing The manager accepts the status quo The manager is the classic good soldier The manager does things right
(Adapted: Bennis Warren & Goldsmith Joan)
1.4 Theories of Leadership There are a lot of leadership theories. Kat Cansador (2012) defined leadership All form of theories as a key of ingredient in having effective management. management.
leadership is essential to the organisation including from top management to first-line
A review of the leadership literature reveals an evolving series of 'schools of thought' from Great Man and Trait theories to Transformational leadership appended in table 2 below. Whilst early theories tend to focus upon the characteristics and behaviours of successful leaders, later theories begin to consider the role of followers and the contextual nature of leadership. Table 2: Theories of Leadership from Great Man to Transformational
(Source: Bolden et al., 2003)
I believe leadership theories shall be able to develop better understanding on effective management. It shall able to develop better understanding on effective management by focusing of leader characteristic which can improve their effectiveness in an organisation. The understanding in term of what to contribute in making effective leader shall helps in building understanding of effective management. Subsequently leadership studies on differentiate between effective and non-effective leaders contributes to effective management.
Theories of leadership explained of personal factors of leadership which has been discussed about vision, capacity, ability, achievement, responsibility, participant, status and many more. As for example Great Man Theories was based on the belief that leaders are exceptional people, born with innate qualities, destined to lead. The use of the term 'man' was intentional since until the latter part of the twentieth century leadership was thought of as a concept which is primarily male, military and Western. On the other hand, in Trait Theories lists of traits or qualities associated with leadership exist in abundance and continue to be produced. They draw on virtually all the adjectives in the dictionary which describe some positive or virtuous human attribute, from ambition to zest for life Behaviourist Theories concentrate on what leaders actually do rather than on their qualities. Different patterns of behaviour are observed and categorised as 'styles of leadership'. This area has probably attracted most attention from practising managers In Contingency Theories its approach sees leadership as specific to the situation in which it is being exercised. Even though in situational theories has been also sparked on how to face the very best course of action based in various situations. There are four style of leadership mentioned in behavioural theories which is may inform our understanding of effective management namely; concern of people, concern of task, directive leadership and participative leadership. For example, whilst some situations may require an autocratic style, others may need a more participative approach. It also proposes that there may be differences in required leadership styles at different levels in the same organisation. The theories tend to converge on how leader should manage and adapt to various environment factors because it is lead on how to react on the best method. Transactional Theory emphasises the importance of the relationship between leader and followers, focusing on the mutual benefits derived from a form of 'contract' through which the leader delivers such things as rewards or recognition in return for
the commitment or loyalty of the followers. Transformational Theory is the central concept of change and the role of leadership in envisioning and implementing the transformation of organisational performance. 1.4.1 Effective Leadership The main objective of these leadership theories is to guide a leader to have effective leadership qualities. Although basically leader are born and cannot be trained some of the leadership qualities can be learned and polished. Leadership deals more with people's opinions and attitudes. It appeals to people's need to follow a person who inspires them, a person with a vision and the will to make it real. Effective leaders have good relationships with people around them. They teach others how to do things and they listen to their opinions. They are also capable of learning and they admit to mistakes. Effective leaders are able to take risks and assume responsibility for their actions. They know how to be part of a team and lead it at the same time. If a problem arises during the development of a project or business plan, they adapt quickly and make the necessary corrections. They also know how to persuade people to agree with the actions they take. 1.4.2 Effective Management Effective management deals with control and coordination, time management, resources, budget and finances. Effective managers set up goals and keep their eyes on reaching their target. They make strategic plans trying to consider all elements that could prevent them from achieving their purpose. They are also good organizers and they know which people to designate to get the job done. If the real results of a planned activity are worse than the expected results, an effective manager is able to provide the proper solution. If the results are better than expected, he needs leadership skills to reward his workers and motivate them to keep up the good work.
1.4.3 Theories of Leadership and Understand the Effective Management It is easier to acquire managerial skills because they are based on real and logical situations and processes. The development of leadership skills requires personal qualities and a desire to invest in relationships. An effective manager drives a
company toward its goals; a leader inspires employees to follow her. A manager provides the resources and sets the goal; a leader shares a vision and shows the way to achieve it. People appreciate an effective manager as long as they have their job, but they tend to remember an effective leader even when they don't have that job anymore. To be successful, a company needs both effective management and effective leadership. It's difficult, but not impossible, to find these qualities in the same person. 1.4.4 Conclusion As the conclusion, I personally believe theories of leadership helps towards achieving effective management. Leadership theories basically contribute to shape effective management. The leadership theories clarify that leader has very important task in order to generate a vision, communicate the vision, motivate and inspire peoples by assist them to achieve management effectiveness towards achieving organisation vision and goals. The theory of leadership also discussed about the leadership style in which is very important in towards achieving the effective management. The features of existing leader or previous leader may able to give some direction, guides or clear pictures in order to become a good leader. As for example, leadership theories highlighting the ideas the type of leaderships style e.g. bureaucratic leader, democratic leader, charismatic leader, autocratic leader, servant leader, transaction leader, environment leader and many more. Both the leadership theories and management theories cannot be separated as both theories are complementing each other towards achieving the company/organisation goals and objective via effective management. In order to achieve effective managements everybody should plays their roles start from leaders, management level, managers, supervisors, workers and even the general workers. Management theories on the other hand are the key on how to lead and maximise subordinates productivity in which it is lead towards how to become a good
manager. Management Objectives where basically consist of three objectives, ensuring organisational goals and targets are met, is looking after health and welfare, and safety of staff and lastly is protecting the machinery and resources of the organisation, including the human resources. Effective leadership that as the result of leadership theories will definitely are lead towards effective management. Being a good leader, of course such point e.g. the important to achieve the triple project success by completing a project on schedule, within budget and acceptable scope, quality, safety and sustainability will be conveyed to the managers and workers.
Figure 4: Triple Project Success
(Source: Alliance of Meeting Management Companies)
Finally, leaders and managers are complementing each others and I personally believe theories leadership do inform our understanding of effective management. Figure 5 shows the important of leadership and management and how they complementing each others.
Figure 5: How Important Leadership and Management
(Source: Kotter International)
Question 2 In an organisation, changes can be large or small, evolutionary or revolutionary, sought after or resisted. Explain the types of changes and the rationale why different paths of changes might be relevant for different organisations. [20 marks]
2.0 Introduction In any organisation, change is unavoidable. Why organisations require a change? Why do people change? Are they changing for the better or for worse? Organisation change doesnt simply happen. It is drive by a number of forces that trigger first awareness and then action. These signals for change usually originate in the organisations environment or marketplace. Such signals can include bold moves by competitors, new technology, or shifts in government regulations. Failures in the performance of a leaders own organisation can also signal the need for change. Whatever their source, these events require the organisation to respond. Different types of change require different strategies and plans to effectively gain employee engagement and acceptance of the change successfully. The change could be minor, incremental, accumulated over the years on what we have experienced or new knowledge we had acquired. Or, the change could be large in what is usually referred as a turning point to do or die situation. One thing for sure we change to betterment. It is critical for leaders to understand what drives change. It is essential that leaders realize the entire breadth of todays drivers for change and be able to counter each of them correctly, not only today, but for the organisations future success. Figure 6 clarifies what drives the need for change. The model describes seven drivers, four that leaders are most recognized and three that are comparatively new. The drivers move from what is external and impersonal (environment, marketplace, organisations) to what is internal and personal (culture and people).
Figure 6: The Drivers of Change Model
(Source: Anderson Dean & Anderson Linda Ackerman, 2001)
Change in an organisation called as Change Management, is a set of processes used to ensure that significant changes are carried out in good control and systematically. One of the change management goals is the alignment of people and culture with strategic shifts in the organisation, to overcome resistance to change in order to increase engagement and the achievement of the organisations goal for effective transformation. Achieving sustainable change begins with a clear understanding of the current state of the organisation, followed by the implementation of appropriate and targeted strategies. The focus of change management is on the outcome the change will produce and therefore the new arrangements must be understood for the change can be accepted and smoothly implemented. There are many types of organisational change and Harigopal K. (2006) had highlighted about eleven of them in his book, which I had append in Table 3 of the next page.
Table 3: Type of Change: Change is process of moving from present to future
(Source: Harigopal K., 2006)
Only three types of change occur most frequently in organisations which are developmental, transitional and transformational (Ackerman, 1997). Change management theories effectively support how to deal with developmental and transitional change, but are less effective in dealing successfully when implementing transformational change. A critical step in determining which approach to use in overcoming resistance to implementing organisation change is to determine which type of change the organisation is experiencing. 2.1 Development Change Developmental change occurs when a company makes an improvement to their current business can be either planned or evolving, whether it is first order, or incremental. It is change that improves or corrects existing aspects of an organisation, often focusing on the improvement of a skill, methods, and process or performance standards e.g. training , some applications of process improvement or quality, some interventions for increasing cycle time, team building, problem solving, improving communication, conflict resolution, increasing sales or production, meeting management, role negotiation and etc. Figure 7: Development Change
Companies are continually processing developmental change to some degree in order to stay competitive via a process of continuous adjustment, and do not require some major discontinuous shock to the system in order to trigger a short episode of revolutionary change. Change is evolving and cumulative. This type of change
causes minimum stress to present employees as long as the rationale for the new process is clearly conveyed and the employees are educated on the new techniques. When major change such as the decision to close a division, if the company attempted to implement developmental change as the first step in streamlining the business, employees may be more likely to accept the change. The employees could see that the company attempted different strategies before determining that closing the division was the only option. Nadler and Tushman (1995) make the point that the incremental changes are not necessary small changes. They can be large in term of the resources needed and the impact on people. Brown and Eisenhardt (1997) argue that many firms compete by changing continuously. They refer to the companies such as Intel, Wal-Mart, 3M, Hewlett-Packard and Gillette and suggested that for them the ability to change rapidly and continuously is not just a core competence but is in their DNA of their cultures. They also referred to Burgelman (1991) and Chakravarthy (1997), who had suggested that continuous change is often played out through product innovation as companies change and sometimes transform through a process of continually improving their products. Mean while Hewlett-Packard is identified as a classical case, the company changed from an instruments company to a computer firm through rapid, continuous product improvement, rather than a sudden disrupted change. It is continuous and is the outcome of the everyday process of management. Weick and Quinn (1999) also observe the distinctive quality of continuous change is the idea that small continuous adjustments, created simultaneously across units, can cumulate and create substantial change. 2.2 Transitional change Transitional change tries to achieve a known desired state that is different from the existing one. It is more complex, episodic, planned and second order, or radical. It is the required response to more significant shifts in environmental forces or
marketplace
requirements
for
success.
Rather
than
simply
improve what
is, transitional change replaces what is with something entirely different. Therefore it is more interfering than developmental change as it replaces existing processes or procedures with something which is entirely new to the company. Transitional change begins when leaders recognize that a problem exists or that an opportunity is not being pursued. Therefore something in the existing operation needs to change or be created to better serve the current and/or future demands. The period when the old process is being decommissioned and the new process is being implemented is called the transitional phase. Some examples for transitional change are companies mergers/consolidations; divestitures; corporate reorganisation; acquisition, creating new products, services, systems, processes, policies, procedures that replace old ones; and implementing new technology.
Figure 8: Transitional Change
Although transitional change may not requires a major shift in culture or behaviour but it still more challenging to be implemented compared to developmental change. With the right transitional change strategies, the critical impacts of the change whether to organisational and human can be dealt effectively. Such strategies include a well-communicated case for change, a clear change plan, high employee involvement in designing and implementing that plan, local control of implementation, and adequate support and integration time to ensure that employees succeed in the new state.
During the transformation employees might be uneasy as the future of the organisation may be at stake. They may feel that their job is at stake. Therefore education on the new procedures should be commenced at each stage of the new process to allow employees to feel that they are actively involved and engaged in the change. As the level of engagement in the new procedure increases, workers resistance to change may decrease. Richard Beckhard and Rubin Harris (1987) recommend the transition phase can be managed through two parallel and separate structures. One that keeps the operation running effectively and the other oversees the change, including the design of the new state, the impact analysis, and implementation planning. This is still an extremely effective approach for transitional change. They expressed that transitional change requires the dismantling of the old state and the creation of a clearly designed new state, usually achieved over a set period of time, called the transition state. This state is unique and distinct from how the old state used to function or how the new state will function once in place. Even they were first named and defined transitional change in their Three States of Change model, which differentiated old state, new state, and transition state. They are also the first to suggest that changes of this nature could and needed to be managed. These two pioneers in the field of change management provided some critical strategies that continue to be useful today for transitional change. 2.3 Transformational change Transformational change is radical shift from one state to another, very vital as requires a shift of culture, behaviour, and mindset to implement successfully and sustain over time. Meaning, transformation demands a shift in human awareness that completely contrast the way the organisation and its people see the world, their customers, their work, and themselves. In addition, the new state that results from the transformation, from a content perspective, is largely uncertain at the beginning of the change process and emerges as a product of the change effort itself. In the Change Model, the drivers of organisation change branches from changes in the environment or marketplace, coupled with the organisations inability to perform
adequately using its existing strategy, organisational design, culture, behaviour, and mindset. The pain of the mismatch between the organisation (including its human capability) and the needs of its environment creates a wake-up call for the organisation. In the end, if the leaders of the organisation do not hear the wake-up call, and the organisation does not change to meet the new demands, the organisation will be in trouble. The leaders must hear the wake-up call, understand its implications, and initiate a transformation process in order to succeed. Simply improving current operations might be adequate in developmental change and replacing current operations with new, clearly defined practices suffices might be enough in transitional change. But in transformational change, the environmental and marketplace changes are so significant and therefore an extreme penetration in peoples perspective about the transformation is required. Therefore in transformation change, the change process has a life of its own and, at best, leaders can influence and facilitate it. If they attempt to control it, they will curb creativity and progress. Transformation, in fact, is the emergence of a new order out of existing chaos or increasingly unstable dynamics of the organisation as its current form fall apart and is no longer as functional as before. The resulting new state is the product of both this chaos and the process that develop to create a better future. Normally transformational change occurs after the transition period. Transformational change may involve both developmental and transitional change. It is common for transitional and transformation change to occur in series. When companies are faced with the surfacing of radically different technologies, significant changes in supply and demand, unexpected competition, lack of revenue or other major shifts in how they do business, developmental or transitional change may not offer the company the way out, they need to stay competitive. Rather implementing new processes, the company may drastically transform themselves. When this occurs, the organisation might differ significantly in terms of structure, processes, culture and strategy. It may, therefore, result in the creation of an organisation that operates in developmental mode, one that continuously learns, adapts and improves. One way of viewing change is to consider it in terms of two dimensions, how radical the change is and how it centrally controlled.
Figure 9: Transformational change
The common transformational process begins with ever-increasing interference to the system, moves to the point of downfall of the old way of being but then proceeds toward an inspired renaissance. Normally an organisation will tend to works hard to maintain its success and, over time, functions on a plateau of sustained performance. This is the phase in which vibrant, entrepreneurial, and innovative organisations often turn bureaucratic and staid as they try to hold on to their current success. In the early 1980s, Apple Computer was a great example of this. Once successful, Apples creative, entrepreneurial, fly-by-the-seat-of-your-pants culture gave way to bureaucratic controls required to run the organisation more effectively. As necessary as this was, it squelched peoples creativity. Over time, most organisations on the success plateau begin to experience difficulties in any number of areas i.e. hovering stock price, stagnation in product development, equipment failure and obsolescence, productivity drops, loss of control over costs and information, dips in employee morale, threats from competition, inadequate resources and skills, loss of market share, or relentless customer demands. All these hurdles are wake-up calls signalling the need for change. Leaders often lie to the old ways that brought them to success, with their fear of the unknown. This causes them to deny, explain away, or overlook these wake-up calls. Consequently, the calls get louder, more painful, and more costly.
As these difficulties increase, the organisation moves into a period of struggle between internally and externally driven chaoses. The organisation is either forced out of business or responds to the essential wake-up call to shift its worldview. The true transformational moment occurs when the organisations leaders finally listen to the wake-up calls, which catalyzes a breakthrough in their awareness and beliefs. The transforming organisation rises out of the ashes of its old beliefs, behaviour, and form to take on a new direction that, in its new world, raises its performance capability to a much greater level of effectiveness. Armed with new insight, leaders begin to see the possibility of an entirely new direction that better serves their marketplace. All efforts to design the new state are driven by the shift in mindset. The leaders, and subsequently the rest of the organisation, come to recognize that their world is not as it once was and that now they must be and do something radically different, no matter how successful they have been. The leaders shift in mindset enables them to transform how they think, behave, and lead. Not only do they realize that they must create something entirely new in the organisation, but they begin to see that they must approach the transformation in a completely new way. They also begin to acknowledge what is required of them personally to shepherd the process of moving forward. In short, they realize that their old ways wont work for their new challenge. Transformational change occurs during period of disequilibrium, the term transformational change were used by Tichy and Devanna (1986), Kotter (1999) and Burke and Litwin (1992). Nadler and Tushman (1995) stated that most companies not only go through periods of continuous incremental and discontinuous transformational change, but that their pattern of change repeats itself with some degree of regularity and vary across sectors, for example periods of discontinuity may follow a 30-year cycle in cement, but a 5-year cycle in minicomputers. They added almost all industries the rate of change is increasing and the time between periods of discontinuity is decreasing.
Forester and Kaplan (2001) provide chilling evidence of the consequences of failing to adapt. They refer to changes in the Forbes top 100 companies between 1917 and 1987. Out of the original 100 companies, only 18 were still in the list and 61 no longer existed. 2.4 Different Organisation Requires Different Type of Change. The need for changes are also differs from one organisation to another. I believe the reason is simple, it is because the environment are differs, different organisation have different structure, different management process, different way in managing human resources, cultural management, using different technologies, political influences, different leaders and mindset, different type of market and others. Some organisational are much better at anticipating the need for change compared to others. The reason maybe they are more proactive and search out the potential threats and opportunities. By doing this they can initiate and to gain competitive advantages. While other organisations maybe more towards reactive and only act when they face a problem. Figure 10: Type of Organisational Change
(Source: Nadler et al., 1995)
Whether the change is development, transitional or transformation the earlier they are identified the more option the manager will have to figure out them. On the other hand the later they are recognised the lesser option the manager will have in solving
them. For example less time are there to carry out the planning works , insufficient time to get people to involve, not much time to do the experiment and little opportunity to influence and shift the market and technologies. Nadler et al. (1995) had appended the incremental (development) and
transformational change as what shows in figure 10. The topography shows how the organisational change responses to reactive or proactive. 2.4.1 British Broadcasting Corporation (BBC) Taking the British Broadcasting Corporation (BBC) as an example, they have force to change when the Conservative Government came into power in 1979 with an agenda for change that included plans to privatize much of the public sector. Margaret Thatcher viewed the BBC as a swollen bureaucracy that was overstaffed, incompetent which requires a reform. For 60 years BBC was able to survive in spite of its inefficiencies because its income from the license fee had grown in average 4% a year but with the new political climate this was changed in 1985. Somewhere in December 1992, its Director General, John Birt, in his autobiography The Harder Path (2000), described the dominant BBC culture at that time as a kind of imperialism, where every regional commander in every part of the corporation acquired a full fleet of facilities, irrespective of need. Waste in resources. He also found that staff utilisation was low and that in some areas are excess between 25 and 50%. The license fees that previously paid by every radio and television owners in UK were froze by the Margaret Thatcher government in order to force BBC to become more efficient. This however does only affect BBC towards 1995 as Birts predecessor heritage huge cash surplus form the early years. BBC was also facing threat from new technological developments and market pressures. The development of digital technologies is the biggest challenge as that
opened up the possibility of many more channels, better technical quality, video on demand and interactivity. Birt felt he had to introduce radical reforms as quickly as possible in order to safe BBC. 2.4.2 UK Coal As for UK Coal the state-own coal industry that was privatised in1994/95, due to downward trend in world coal prices they require for a change. In 2004 their turnover was down by half and the number of mines was reduced by more than 50% from about 20 deep mines and about the same number for opencast mines in 1995. New mines were not developed to replace those that have been closed due to low prices. Environmental opposition to the burning of coal with high sulphur content also contributed to this scenario. If that was not hassle enough, the imported coal which was cheaper attract the major customers (the power generators). Deep mine had made their prices become non-competitive. UK Coal was obliged to look for ways of improving the companys operating efficiency. Among changes that they need to carry out was to reduce the overhead cost of its central corporate headquarters by making each mine more autonomous and delegating to each unit a wider range of activities than used to be the case. UK Coal introduced a continuous improvement programme across all the remaining deep mines in order to make them more efficient and ensure their long term survival. Face with a doubtful future in the mining industry, UK Coal also began to relook its assets and consider how it might revise its old theory of business. They even decided to venture into property management beside mining company. This reorientation involved many changes, including bringing new senior managers into the organisation with expertise in the land and property management. Apart the changes carried out at the highest level, UK Coal continued to engage in the continuous improvement programme to increase the efficiency of individual deep mines.
2.4.3 Sime Darby In Malaysia Sime Darby is a leading multinational conglomerate. Started in 1910, by British businessmen William Sime and Henry Darby buy doing lucrative rubber industry it has under gone a few major changes throughout the years. The company had diversified to cultivating palm oil and cocoa and met with enormous success. The company had undergone some taking over exercises and in 1981; the group became a wholly Malaysian-owned company after former Malaysian Prime Minister Mahathir Mohamad engineered a raid by Permodalan Nasional Berhad to take over the group at the London Stock Exchange. In January 2007, the three Malaysian giants (Sime Darby, Guthrie and Golden Hope) merged into the vehicle entity named Synergy Drive and on 27 November 2007, Synergy Drive was renamed Sime Darby Berhad. The merged entity of three Malaysian corporations is a diversified Malaysian multinational with a workforce of 104,300 employees. Its core businesses are plantations, property, motor, heavy equipment and energy & utilities which are expected to benefit from continued population growth and economic development within the Asia Pacific region and the global economy. Sime Darby's non-core business units such as healthcare, insurance, and home products are grouped under its Allied Products and Services division (APS). Subsidiaries under APS include Sime Darby Medical Centre Subang Jaya (formerly known as Subang Jaya Medical Centre) (healthcare), Sime Alexander Forbes (insurance), and Dunlopillo Malaysia Sdn Bhd (home products). It also has a controlling share in the supermarket chain Tesco in Malaysia. Sime Darby is a multinational company, with more than 60 percent of the groups revenue coming from abroad. As a result of the merger, Sime Darby became one of the worlds leading listed oil palm plantation groups. Sime Darby Berhad also has a significant presence in downstream palm oil activities. The merger also made Sime Darby a leading developer of residential and commercial communities. Furthermore it holds Caterpillar rights in 12 countries worldwide and distributorship and dealership of well known motor brands such as BMW.
Starting from a small timer rubber industry it now successfully transform into a multinational conglomerate involves in five core sectors namely plantations, property, industrial including heavy industries, motors and energy & utilities inclusive oil and gas and construction dam, with a growing presence in healthcare. 2.5 Conclusion In my opinion BBC had forced to incremental changes due to political forces but its only make effect when their reserves had exhausted in 1992. Due to being in a monopoly market for the past 60 years and known as cash cows (BCG Growth Share Matrix), BBC became complacent. The world is changing but BBC was slow to respond. This can be understandable as the company have been protected by the government policy for sic decades. The wake-up called from the frozen of television and radio licences by the government had forced BBC to change themselves to become a more efficient organisation. Unfortunately they are too slow and the changes are a bit too late. Their changes are reactive rather than proactive and towards adaption incremental change as the response to a pressing external demand for the change where required them to become more effective and spending more wisely in term of their resources. The transformational change after that under Birt era are made more towards reactive change rather than reorientation that was carried out to transform the organisation through the fast and simultaneous change of all its basic elements. UK Coal was also forced to incremental changes due external forces in 2004 and they are also reactive to change due to the lower price on coal, environmental complaints and competition from imported coal to make them more efficient in their works by using new technology by increased autonomous and delegating more scope to each units. On top of that they also become proactive and carried out tuning incremental change by introduced continuous improvement programme to manage the deep mine at lower cost and trying to increase their operational life. I also noticed that UK Coal had carried out proactive reorientation transformational change when they had noticed and exploited their strength by diversified into housing developments.
Lastly the change undergone by Sime Darby which had successfully turned it to Malaysian huge multinational GLC which was also very much influenced by the government. Towards the years the company had experiences not only changes that involves incremental and transformation organisational change in its business but it had also involved transformation of its share holders. The transformation to a Malaysian company took place since the takings over from so called colonial companies in late 70s. Influenced by the Malaysians government to stand up for national pride, its merger with Guthrie and Golden Hope in 2007 is a transformational proactive change in which its try to be reactive. With the merger the expertise and resources can be shared for the benefit among the group. The strong price of plantation commodities e.g. rubber and palm oil the back bone of Sime Darby and a strong back up from the government especially on securing relevant licensing, help them venturing new business e.g. energy sector (Private Power Plant), automotive, shipping, heavy industries, medical sectors and etc. Being another cash cow company, where money is not a problems, Sime Darby had showed a good example by proactively keep continuing in making changes. Whether the changes undertaken by the company to date is for its survival, company cultural or because of the good back up from the government is still a debate. One thing for sure the company had use its strong point (good government back up) wisely to make the necessary incremental and transformational changes for the company improvement. In 2011 its revenue rose to RM 41.8 billion from RM 32.5 billion in 2011 and the pretax rose to RM 5.449 million from 2.818 billion (Borneo Post, 28/8/2010). This was their highest gain record ever after have a structural change where its President/Group Chief Executive Officer was removed after the company had suffered about RM 2 Billion losses in companies Oil and Gas subsidiary in Qatar and in Bakun Hydro Electric dam in 2010 (Malaysian Insider, 27/8/2010). I believed this was a transformation re-creation change as it was taken only the damaged have been done and to satisfy the public and the share holders.
As the wrap up, almost all the change in an organisation are either incremental/development, transitional and transformational. The paradigm posits that organisations may or may not adapt and transform themselves, as required, through a process of continuous adjustment or the company might lead to an end. The above examples had proved organisations change from one organisation to another are varies as different organisation might faced different type of driver forces form the external environments i.e. political climate, economic transition, environmental, social, emerging trends, and competitors (See figure 6). An organisations attitude towards change also differs, some may react type and some maybe proactive type. The organisation which are lie in a comfort zone i.e. company with cash risk and fully back up by the government will normally more reactive rather than proactive. Company culture and it structural will also play a role in their action dealing with changes. One thing for sure those who can adapt will survive, and those who are not, would suffer.
Question 3 Describe and explain the Open Systems models and Alignment as one of the diagnostic models adopted in organisation diagnosis. [20 marks] 3.0 Introduction Diagnosis is one of the Five Key Steps in the Change Process that introduced by Hayes and Hyde (1998). All the five steps are started with Recognise; Diagnosis; Plan and Prepare Change; Implement the change; and Sustain the Change. 3.1 Five Key Steps in the Change Process Figure 11 illustrate the five steps of change process use by Inner Work. It uses similar steps with Hayes and Hyde (1998) but had use some difference terms i.e. use Assess for Change instead of Recognise and Prepare for Change to replace Diagnosis. Figure 11: Five Steps of Change Process.
(Adapted: Inner Work) 33 Date: Semester January 2012
3.1.1 Phase 1 - Assess for Change/Recognition Organisational Assessment / Needs Assessment - To pinpoint the required change in an organisation e.g. key business and human performance needs, including key customers, stakeholder needs, who to involve, who will manage and etc. It can also help in identifying the most significant opportunities for useful financial, customer, organisational, and employee change. 3.1.2 Phase 2 - Prepare for Change/Diagnosis Organisational diagnosis is a process based on behavioural science theory for publicly entering a human system, collecting valid data about human experiences with that system, and feeding that information back to the system to promote increased understanding of the system by its members. The purpose of organisational diagnosis is to establish a widely shared understanding of a system and, based on that understanding, to determine whether change is desirable (Alderfer, 1976). Alignment of Vision, Strategy, Roles and Action can be done by reviewing the present state and identifying the preferred future state which will helps to identify the required change by diagnosis the cause of a problem, establish a baseline for change and to define the future direction. The diagnosis also help in identify whether the senior team need to be rebuilt, how to develop a vision, goals, strategies, and key change initiatives to engage employee action and commitment to necessary change. It also establishes the roles of senior leaders as "sponsors" of change, and other important roles for key individuals or key teams as "change agents." The step also includes the preparation of a Change Management Communication Plan and the selection of several communication methods. From my understanding, basically diagnosis change is to identify external factors that may lead to the need for change i.e. The political, economic, social, technological, legal and environmental factors that affecting operations in the workplace. As for example, new environmental regulations or market forces such as competition and a declining market base. List out the internal factors i.e. objectives, visions, mission statements, and organisational capacity. The capacity to effectively implement new environmental regulations is one of the examples. To
study how structures affect people's behavior by focusing on structures such as the hierarchies between managers and employees, incentives pay structures, social structures such as interpersonal relations and physical structures such as the working arrangement in an office. Normally structures changes might lead to change in people's behaviors at the workplace. Carry out a cultural analysis by identifying the values, norms, assumptions and attitudes of the employees and managers in the workplace. Observe how employees and managers work to meet business goals through teamwork, autonomy, hard work, integrity and competition. To recognize how the people perceive change and that negative culture may affect the workplace adversely and thus affect the need for change affected by the culture. The current human resource systems is to be assessed by identifying how the organisation recruits employees, trains and develops them, carries out performance appraisals and rewards employees are also to be carried out. Shall they are ineffective; changes need to be made for an effective and more skilled workforce. Identification of how difficult implementation of change will be required can be checked using change complexity analysis. Assessment on the complexity posed by people in areas such as their cultural diversity, their skill levels, and the actual number of people involved in the workplace are also need to be carried out. 3.1.3 Phase 3 - Plan for Change Implementation Plan & Communication Plan - This critical step precedes implementation, identification of a long list of things that need to be done to prepare the change and includes a formal Change Management Implementation Plan that is tied into formal Change Management Communication Plan. These plans are reviewed with key stakeholder groups who will be involved or impacted by the changes, and plans are adjusted based on opportunities, readiness for change, or identified risks. 3.1.4 Phase 4 - Implement the Change Provide Training & Facilitate for Results - The initiatives and actions are implemented using a variety of methods, programs, forums, meetings and communication strategies that have been identified. To conduct and provides training, facilitation and coaching to engage employees in identified opportunities
for creating positive change. Often training and coaching is necessary in new skills and behaviors to motivate and align people and teams to lead and respond to change effectively. Implementation requires some political approach in order to minimise the resistance. During this phase, real-time feedback is obtained and possible progress measurements are taken. "Gaps" and "areas of resistance" (anticipated or unanticipated) need to be addressed promptly, and correction actions are taken. Positive results from "wins" (small and large) are celebrated, and individuals and teams are recognized in appropriate ways for leading change. 3.1.5 Phase 5 - Sustaining the Change Integrate Results - To measure the financial, productivity, customer, and behaviour change results of the change intervention, and to integrate the new learning into the organisation's various systems, policies, and work practices. To conduct a Change Closeout and Evaluation process that includes "lessons learned" and appreciation and recognition for the key players who led the change effort. 3.2 Diagnostic Model A great number of authors in the field of Organisational Change and Development have given their diagnostic organisational model. The purposes of all these models are to aid the diagnosis process to understanding to help identify what needs to be changed. In the field of Organisational Development and Change, Organisational Diagnosis is a very important issue. It is often the case in studies that organisational change management comes down to answering three questions i.e. why (the causes of change), how (the process of change) and what (the content of change) (Pettigrew, 1987). The studies apply not only deal with theory, but also with practice. Leavitt, who claimed that most attempt of organisational change fail because of their limited scope. He was against the practice of partial conducting of changes both in technology and in human relations processes, as it was then the case. In order to show the necessity of a comprehensive approach to organisational change, he created a model where he presented the organisation as the object of change, which brings the structural and the human component of the organisation into balance.
Organisational diagnosis should provide the answer to the first and third questions, and answer the following: Why should the organisation is changed? What should the content of change include, i.e. what should be changed in the organisation? Therefore, the diagnosis is given great importance in published writings in the sphere of organisational change. Organisational diagnosis is a method used for analyzing the organisation in order to identify organisational shortcomings so they would be neutralized through organisational change. In itself, organisational diagnosis is a concept related to the concept of organisational analysis, and it is necessary to make a distinction between them at the very beginning. Organisational analysis is in many ways similar to organisational diagnosis, but there are some important differences. The main resemblance between organisational analysis and organisational diagnosis lies in the fact that both methods are focused on understanding the organisational content, i.e. on identifying the elements of organisation and their nature, as well as the relations between them. Both methods start with certain organisational models and use very similar, or exactly the same, techniques for data collection and processing. The key difference between organisational analysis and organisational diagnosis is their aim: the aim of organisational analysis is understanding the organisation for the purpose of its exploration, while the aim of organisational diagnosis is understanding the organisation for the purpose of changing and improving it (action). It could be said that organisational diagnosis is a specific form of organisational analysis a form focused on the performing of organisational change for the purpose of improving organisational performance. When it comes to organisational diagnosis, studies in the area of Organisational Development and Change are preoccupied with three main issues: 1. development of organisational diagnostic models; 2. the choice of procedures and methods for data collecting in diagnosis; and 3. methods and techniques of data processing and making conclusions (Hayes, 2002). This paper will only deal with the first issue development of diagnostic models. The diagnostic model is a model of an organisation that identifies its main components and relations between them for the purpose of understanding the organisation as an object of change. The main task of
diagnostic models is to simplify the reality. Researchers dealing with organisations are unable to treat the organisation in all its diversity and multidimensionality, or it is simply not practical, so they, therefore, choose one perspective, or portion, of the reality and observe the organisation through it (Morgan, 1990). It is the only possible way to act within the organisation and change it. Therefore, the main role of diagnostic models is to provide an understanding of the organisation and the effective action within it by simplifying the reality. Nadler and Tushman (1980) acknowledge the utility of such component models, but caution against combining, the specific assessments they provide in order to produce an overview of organisational functioning and effectiveness. They argue that there is a need for frameworks and models that provide an understanding of the way in which the total system of organisational behaviour functions, and they advocate a more holistic approach. Organisational diagnosis proceeds in three orderly phases: entry/input, data collection/output and feedback. These phases are well defined because there are a clearly observable beginning and end to each one. But the phases are also overlapping to a degree. The term recursive explains the nature of the overlap between each phase and the other two. Each phase has primary objectives, which determine the major thrust of the work in that phase, and secondary objectives, which relate the other two phases to whichever phase is being undertaken. Thus, there is some data collection and some feedback during entry, some entry and some feedback in data collection, and some entry and some data collection at feedback. Traditional diagnostic models can be categorised as descriptive models or normative models. 3.2.1 Descriptive models With descriptive models, the role of the OD expert is to illuminate what is for the client, and what could be. Within descriptive models, contingency theorists would argue that the OD experts facilitate change only, not focus. The client determines the direction of change and the OD experts help the client get there. Most diagnostic models fit under the descriptive category. Examples include:
Bolman and Deal: Four Frames Model Freedman: Socio-technical Systems Model Galbraith: Star Model Hornstein and Tichy: Emergent Pragmatic Model [Sometimes used in developing consultant or company specific models] McKinsey: 7-S Model Nadler and Tushman: Congruence Model Likerts Diagnostic (Causal-Intervening-Outcome) Model Burke-Litwin (Individual and Organisational Performance) Model
3.2.1 Normative Models With normative models, the experts recommend specific directions for change, prior to the diagnosis the one best way of managing. Examples include: Blake and Moutons Grid [Concern for People/Concern for Productivity 9, 9]. Likerts Profiles Levinsons Clinical Historical Approach 3.3 Open System Model An open system is a system that regularly exchanges feedback with its external environment. Open systems are systems where inputs, processes, outputs, goals, assessment and evaluation, and learning are all important. Aspects that are critically important to open systems include the boundaries, external environment and equifinality. Healthy open systems continuously exchange feedback with their environments, analyse that feedback, adjust internal systems as needed to achieve the systems goals, and then transmit necessary information back out to the environment. From the perspective of open systems, some of the main characteristics of organisations when they are;
Embedded within a larger system: Organisations are dependent on the larger system (environment) for the resources, information and feedback they require in order to survive. Able to avoid entropy: Through the exchange of matter, energy and information with the larger environment, organisations can forestall entropy, the predisposition to decay. They can even increase their vitality over time. People are partially a closed system, in that while they are capable of importing food, water and air to breathe, there are parts of their body that cannot be renewed or replaced. Groups and organisations, on the other hand, have the potential for immortality. In their simplest form, as illustrated by Figure 12, organisations can be portrayed as open systems in a dynamic relationship with their environment, receiving various inputs that they transform in some way and exports as outputs. For survival, organisations need to maintain favourable input-output transactions with the environment. Regulated by feedback: Systems rely on information about their outputs to regulate their inputs and transformation processes. Feedback loops also exist between the various internal components of the system. Consequently, changes in any one component can effect changes in other components. Outcomes are critically important to the success of an organisation. Outcomes are in regard to the changes, or benefits, that customers accomplish as a result of using a particular product or service. Outcomes are usually specified in terms of changed; 1. Knowledge (usually short-term outcomes). 2. Behaviours, notably those that comprise useful skills (often intermediate outcomes). 3. Attitudes, values and conditions, such as increased security, stability or pride (usually longtermoutcomes).
Adapted from Field Guide to Consulting and Organisational Development to obtain the entire book, select Publications at http://www.authenticityconsulting.com. Some examples of outcomes from a product or service are when customers learn to read from attending a training, achieve a healthier body by using a health clubs facilities or have a cleaner house from using the companys vacuum cleaner product. Notice the difference between outcomes (measures of changes in customers) and outputs (measure of activities in an organisation). Subject to equifinality: Equifinality means that the same or similar results can be achieved by using a variety of different processes. or more than one way to accomplish the same result. For example, management can achieve the same results by using different inputs or by using different processes with the same inputs. Equifinality suggests that there is no one right way to accomplish important results in an organisation. In contrast, closed systems have one right way to do things. For example, in heavily bureaucratic organisations, a person must finish the necessary procedures regardless of how useful an intended result will be for the organisation the focus is on doing things right, rather than doing the right things. The concept of equifinality explains why there is no one right way to lead or manage organisations. It explains why there is no one right way to guide organisational change. You should keep this in mind when adopting various solutions-based best practices, diagnostic models and assessment tools. Cyclical in their mode of functioning: Events are patterned and tend to occur in repetitive cycles of input, throughput and output. For example, the revenue generated from selling outputs is used to fund inputs, purchase more raw materials, pay bank charges, wages and so on, which are used to produce more outputs. Equilibrium seeking: Open systems tend to gravitate to a state where all the component parts of the system are in equilibrium and where a steady state exists. Whenever changes that upset this balance occur, different components of
the system move to restore balance. However, equilibrium found in an open system is not a true equilibrium, incapable of performing work. Rather, it is a dynamic pseudo-equilibrium (or quasi-equilibrium) kept constant at a certain distance from the true equilibrium. In order to achieve this, the continuous importation of energy from the environment is required (Bertalanffy, 1950, 1973). Bounded: Open systems are defined by boundaries. All systems have boundaries, although the boundaries can be difficult to identify because systems can be very dynamic. Open systems have porous boundaries through which useful feedback can readily be exchanged and understood. External boundaries differentiate the organisation from the larger environment and regulate the flow of information, energy and matter between the system and its environment. Internal boundaries differentiate the various components of the system from each other and regulate the inputs and outputs of subsystems. Closed systems, unlike open systems, have hard boundaries through which little information is exchanged. Organisations that have closed boundaries often are unhealthy. Examples include bureaucracies, monopolies and stagnating systems. Figure 12: The Organisation as an Open System
(Source: Richard L. Daft)
Burns and Stalker (1961) and Lawrence and Lorsch (1967) produced interesting research findings that suggested a link between the internal characteristics of an
organisation and the external environment. The organisations are systems of interrelated elements embedded in, and strongly influenced by a larger system. Organisational diagnosis described by Postma and Kok (1999) as a process of research into the functioning of an organisation that leads to recommendations for improvement. In routine, diagnosis is usually a multi-stage iterative process that begins with change managers using some kind of holistic model of organisational functioning to look at the organisation as a whole before moving on to investigate particular aspects of organisational functioning in more detail. However, sometimes this process is reversed. Change managers focus their attention on specific components of organisational functioning, such as motivation, group processes, leadership, task design, information systems, organisational structure or culture, in order to help them understand the whole picture. But while it is tempting to build a picture of what is going on in an organisation by looking at the various components separately, the picture this approach produces may be incomplete or misleading. Diagnosis starts with an assessment of how well the organisation is performing. Performance indicators provide the data for identifying discrepancies between actual and desired performance and signalling the need for change. They also provide the basis for monitoring whether the change is on track and whether the change plan (based on the diagnosis) is still valid. If the change is not proceeding to plan, it may prove necessary to revisit the original diagnosis and repeat the process. Nadler and Tushman (1980) maintain that the systemic nature of organisations implies that: There are properties of the whole that cannot be understood by simply adding together the component parts. Indeed, part of the dynamic of the whole concerns the nature of the interaction among the different components of organisational behaviour. Kotters (1980) and Nadler and Tushmans (1980) open systems models highlighted the importance of fit and pointed to internal and external alignment as key determinants of organisational effectiveness. An open system model considered organisations as systems of interrelated parts embedded in and strongly influenced by a larger system (the environment).
Siggelkow (2001) stated open system theory predicts that changes to any one of the internal and external elements of an organisations system will cause changes to other elements. This implies that in order to understand the performance of an organisation, one must view it as a system of interconnected choices. Kotter (1980) seven major elements elaborated in his integrative model of organisational dynamics as below; External environment, including the immediate task-related environment and the wider environment, which includes public attitudes, the political system and so on Employees and other tangible assets such as buildings, plant, inventories and cash Formal structure, job design and operating systems Social system including the organisations culture and social structure Technology (or technologies) associated with the organisations core products Dominant coalition the objectives and strategies of those who control policy making. The key to an organisations prosperity and long-term survival lies in its ability to adapt the external alignment. This adaptability is a function of the state of its structural elements. Kotter described these can range on a continuum from highly constraining and hard to align with other structural elements to unconstraining and easy to align with. Adaptability is important in order to identifies whether the organisation are able to maintain the required degree of alignment over a long period and therefore, the focus of change management must ensuring that the structural elements of the organisation are as adaptable as possible. Figure 13 is an overview of the Open System of an organisation. It depicts the overall open system of an organisation. The general flow of activities in the system is in a large loop or cycle. Each phase exchanges feedback (for evaluation and learning) with other phases and, as a result, some phases are changed and/or repeated in the overall cycle. Te following graphic is a model of the workings of an open system.
Figure 13: Overview of the Open System of an Organisation
(Source: Authenticity Consulting, LLC)
3.4 Nadler and Tushman (1982) Congruence model It is an alternative open systems model, proposed by Nadler and Tushman (1982). It also highlights the effect of the congruency of the component parts of the organisation on organisation effectiveness. Its elaborated the relationship between the organisation and its wider environment and focuses more explicit attention on the role of strategy. The model identifies four classes of input; 1. Environment: includes any larger suprasystem that the focal organisation is a part of a large corporation, markets, financial institutions, suppliers and so on and the wider environment that includes the culture (s) within which the organisation operates. It is this environment that provides the opportunities and constrains with which the organisation has to contend. 2. Resources: such as liquid capital, physical plant, raw materials, technologies and labour.
3. History: this is important because past strategic decisions and the development of core values and patterns of leadership can affect current patterns of organisational behaviour. 4. Strategy: this involves determining how the organisations resources can be used to best advantage in relation to the opportunities, constrains and demands of the environment. Effective organisations are those that are able to align themselves with the external environment and, as required, reposition themselves to take advantage of any environmental changes such as shifts in markets, technologies and so on. Nadler and Tushman argue that the strategy, and its associated goals and plans, defines the task (purpose) of the organisation and is the most important input to the organisations behavioural system. They suggest that effectiveness can be assessed in terms of how well the organisations performance meets the goals of strategy. The major components of the transformation process define by Nadler and Tushman as follows; i. Task, which can be viewed in interdependence and skill demands. terms of complexity, predictability,
ii.
Individuals who are members of the organisation and their response capabilities, intelligence, skills and abilities, experience, training, needs, attitudes, expectations and so on. Formal organisational arrangements that include all the mechanisms used by the organisation to direct, structure or control behaviour. Informal organisation, including informal group structures, the quality of intergroup relations, political processes and so on.
iii.
iv.
Same as what Kotter did, they dispute any useful model of organisations must go beyond merely providing a simple description of the components of the organisation and consider the dynamic relationships that exist between the various components. Congruence defined as the degree to which the needs, demands, goals, objectives and/or structures of any component of the organisation are consistent with the needs, demands, goals, objectives and/or structures of any other component. The
hypothesis made was that, when other things are being equal, the greater the total degree of congruence between the various components, the more effective the organisations behaviour. Figure 14 below summarises the congruence model and the double headed arrows indicate the six fits between the components of the transformation process (the internal organisation). Figure 14: Component of the Congruence model
(Source: Nadler and Tushman)
These six fits are; 1. Individual-formal organisation: for example, to what extent are individual needs met by formal organisational arrangements? 2. Individual-task: for example, to what extent do individuals have the skill necessary to meet task demands and to what extent do the tasks satisfy individual needs? 3. Individual-informal organisation: for example, to what extent does the informal organisation satisfy the needs of individuals or make best use of their talents? 4. Task-formal organisation: for example, to what extent are the formal organisational arrangements adequate to meet the demands of the task?
5. Task-informal organisation: for example, to what extent does the informal organisation facilitate task performance? 6. Formal-informal organisation: for example, to what extent are the goals, rewards and structures of the informal organisation consistent with those of the formal organisation? Nadler and Tushman choose to focus many of the components that on are different from Kotters model. They suggest that every facets of the organisation is working in harmony on the other hand Kotter suggested every facets of the organisation is working in alignment with each other. All models are simplifications of the real world, and the utility of any particular model, in the context of change management, needs to be judged in terms of whether or not it provides a helpful conceptual framework for managing the change process. It is the congruence or alignment between the organisation and the environment and between the internal components of the organisation that is the key concept that can aid organisational diagnosis and the development of change strategies. Nadler and Tushman model are useful as it provides a checklist for those changes that need to be carried out. This model also good in pointing out it retrospect and why changes did not work although it psychologically satisfying but it may not be productive. This model is more towards problem-focused rather than solutionfocused and also less guiding vision or setting up the achieving goals. McKinsey seven S models is more curved to facing organisational change which it covers staff, skills, system, style, shared values, strategy and structure. 3.5 Alignment is Determinant to Organisation Effectiveness Organisation design can be defined narrowly, as the process of reshaping organisation structure and roles, or it can more effectively be defined as the alignment of structure, process, rewards, metrics and talent with the strategy of the business. Jay Galbraith and Amy Kates (2007) have made the case persuasively (building on years of work by Galbraith) that attention to all of these organisational elements is necessary to create new capabilities to compete in a given market. This systemic view, often referred to as the "star model" approach, is more likely to lead to better performance.
Organisation design may involve strategic decisions, but is properly viewed as a path to effective strategy execution. Alignment always requires making trade-offs of one set of structural benefits against another. Many companies fall into the trap of making repeated changes in organisation structure, with little benefit to the business. This often occurs because changes in structure are relatively easy to execute while creating the impression that something substantial is happening. This often leads to cynicism and confusion within the organisation. More powerful change happens when there are clear design objectives driven by a new business strategy or forces in the market that require a different approach to organising resources. Internal and external alignment contributed to effective organisation towards achieving its goal. However, a state of perfect alignment is rarely achieved. Schneider et al. (2003) stated, internal and external alignment promotes organisational effectiveness because the various elements of the system reinforce (strengthens) rather than disrupt each other, thereby minimizing the loss of system energy and resources. Miles and Snow (1984) suggest that rather than viewing alignment as a state, it might be better to think of it as a process e.g. a dynamic search that seeks to align the organisation with its environment and the various internal elements of the organisation with each other. On the other hand observation by Higgins (2005) stated that one reason why alignment is becoming a greater challenge for many organisations is because in a fast-moving business environment, organisations are forced to revise their strategies more frequently than in the past. Organisations that recognises or anticipate shifts in their external environment may be better placed to initiate actions to manage this process of alignment than those who are slow to recognise the need for change. But even where a need to improve alignment is recognised, forces for inertia within the organisation can affect the results. The case appended by Greenwood and Hinings (1996) and Levinthal (1997) portray a contradiction to this condition. Refer to as tightly coupled systems, because the tighter the fit, the more difficult it is to modify individual elements of the system through a process of incremental change. Therefore an organisation with
tight fixed system will tends to oppose any shift that requires aligning with the need for changes. Alignment also requires some elements skill posses by both managers and leaders. The first element is the presence of a clearly articulated big picture i.e., a mission or vision statement that describes the outcome the organisation is seeking to achieve. Having such a picture and communicating it widely is a key unless leaders and stakeholders share a common view of the value the organisation provides, they cannot align their efforts effectively, nor can they allocate resources properly or measure their progress and achievements. The big picture is the touchstone against which all decisions are tested. Every person, program, system, and process must support that picture if there is to be aligned throughout the organisation or realignment due to some hick up. The second element addresses organisational challenges by focusing on the outcomes or impacts. Often organisations articulate their methodology instead of their value i.e., the how instead of the what. For example, a company that specialises in training accountants may praise itself as the best provider of accounting workshops, when what it really needs to do is identify the impact of those workshops on its clients. By focusing on its methodology, the company (a) ensures that its workshops are viewed as commodities, which are a dime a dozen, and (b) severely limits the effectiveness of its decision-making. Consider the difference between focusing on the quality or quantity of workshops provided (the how), versus concentrating on increasing clients peace of mind (the what) because they can be confident that the companys financial statements are being prepared correctly. Would you rather be selling workshops or peace of mind? Focusing on the value provided would result in greater opportunity, creativity, and innovation throughout the organisation. The third element of successfully addressing organisational challenges is stating the big picture in the affirmative. Too often we see well intentioned leaders proclaim their mission or vision in the negative, such as when the organisation dreams of eradicating a problem altogether. The problem with this approach is that it fails to
provide a substitute picture i.e., there is no information about what will be different when it achieves its goals. For example, an organisation may declare that it intends to stamp out world hunger or to end domestic violence. While these certainly are worthy goals, the fact that they are stated in the negative does not provide stakeholders with a clear picture of what things will look like when those goals are achieved. What they really need to know is what will be different after the mission or vision has been achieved e.g., what the world will look like when there is no more hunger anywhere on the planet, and how families will interact differently when there is no more domestic violence. For example, The Hunger Project is a global, nonprofit, strategic organisation committed to the sustainable end of world hunger. Its vision statement paints a clear picture of what the world will look like when it has achieved that goal e.g., every day, every person has enough of the right food to be healthy and productive; babies are born healthy and strong, and girl babies are prized as much as boy babies. Organisational challenges range from the relatively simple to the very complicated. Regardless of their level of complexity, having a clearly articulated big picture that focuses on outcomes and is stated or described in the positive will make addressing them much easier than if leaders had no such touchstone. The concepts of alignment also have some contenders. Wilson (1992) criticised on the grounds of being difficult to implement in practice. He refers to difficulties relating to problems of definition. Some view the organisation and environment as objective fact, readily open to description and definition, whereas others view them as subjective fact. Problems can submerge as managers, and others, observe them from their own subjective point of view. Therefore it is difficult to establish shared understanding of the current or desired level of alignment. Even it was agreed upon; no guarantee that this shared perception shall lead to organisation effectiveness. Other criticism says, the alignment might be a more valid concept when the focus is the management of incremental change but when faced with discontinuous change, alignment might be a less helpful concept because the need is to break with the past and introduce radical innovation before seeking to re-establish a new state of alignment around a new task and/or new structural elements. These criticisms may
have their merit; however systems models, alignment and the concept of fit can contributes vital roles to effective change management. 3.6 Conclusion Every organisation, regardless of industry or country, seeks to be more effective and achieve superior results. Business strategy is developed to achieve this. It amounts to nothing, though, if it remains on the drawing board and is never executed. Execution occurs when structure, roles, capability, leadership, systems, and culture are all pulling together aligned with the strategy and even changes are required for bettermen and sucess. One without the other will create misalignment and success can not be acheived. While the elements of success are the same for all organisations, the answer for your business is unique to your strategy, your customers, and your people. It is easy to discover the current reality and the drivers of success, but the big challenge is in equipping your business to act and embed the change, remaining focused and aligned with your strategy. The challenge brings a substantial benefit that ensures survival in a downturn and creates a competitive advantage when economic upturns arrive. Business cant afford not to get it right.
Today, various parts and processes of an organisation are clearly recognised in particular, their inter-relationships and alignment, for example, the coordination between the Board and the Chief Executive Officer, or integration between the Strategic Plan and other plans. Understanding of inter-relationships and alignment is not only about parts and processes within the system, but also to the system and its environment an open systems approach. Now the focuses are concentrated on the feedback among the various major parts and processes in the organisation and between the organisation and its environment. Problems are examined, not just by focusing on what appears to be separate parts, but on the larger patterns of interactions within the parts. Structures that provoke behaviours that determine events shall be focused rather than only reacts to events as what was done in the past. Open system helps in maintaining perspective on performance by focusing on the outcomes that the organisation wants to achieve, particularly in its external environment. I had gathered among the major benefits when using an open system
diagnoses are more effective in problem solving, leadership, communication, planning, in designing of projects, products and services, organisational results and avoid founders syndrome. Open system diagnosis model made the organisation more effective in problem solving as without clear understanding of the big picture of an organisation, management and leaders tend to focus only on the behaviours and events associated with problems in the workplace, rather than on the systems and structures that contributed to the problems to occur. It is critical to be able to identify the real causes of the problems and how to address those causes in any type of organisation than only we can effectively solve them. Systems that can provide clear view to understand of the big picture as what OS will do are very vital. More Effective Leadership - Leaders most important responsibilities are to set direction and to influence others to follow that direction. It is difficult to establish direction for an organisation and to keep that organisation on its course if the leaders themselves do not understand how the organisation works in the first place. Without a clear understanding of the overall nature and needs of an organisation, the leader can get lost in the day-to-day activities, never really giving attention to the more important activities, such as planning the organisations overall direction and organising their resources. As a result, the leader cannot see the forest for the trees. The leader ends up working harder, rather than smarter. OS systems view helps the leaders to really understand the overall structures and dynamics of the organisation and what must be done to guide the organisation towards it strategic vision and goals. More Effective Communication is one of the most important ingredients for the success of any system. Ongoing feedback, or communication, among all the parts of the organisation is very vital to convey the change process and to monitor them. Sporadic and insufficient communications are the first symptoms that an organisation is in trouble. Always in these types of situations, people are often struggle to see beyond their own roles in the organisation or project. Result the people to be less
effective than they could be otherwise. Lacking a clear understanding of how they relate to each other, it is difficult to know what to communicate and to whom. More Effective Planning - It includes identifying desired results (goals and outcomes), what measures or outputs (tangible results) will indicate that those results have been achieved, what processes will produce those outputs, and what inputs are required to conduct those processes in the system. OS is a systems view often makes the planning process much more clear and orderly to planners. More Effective Design of Projects, Products and Services Provide a stronger knowledge of the primary parts of their project, product or service and how they should be aligned to more effectively reach desired goals. A systems view also promotes focus on achieving overall results, so the day-to-day details of managing the project, product or service do not become the most important activities for people to address so people do not become focused in matters that are urgent, rather than important. More Effective Organisational Results - Successful projects and organisations often use a variety of methods to achieve results. Methods can include e.g., coaching, facilitating, training or provision of resources, strategic planning, business planning, management and leadership development, team building, supervisory development, organisational and employee performance management and principles of organisational change. Any manager or leader would be hard-pressed to occupy these various methods in an effective fashion without a good understanding of the overall systems of their project or organisation. Therefore having a systems view is critical to accomplishing successful results. Able to avoid Founders Syndrome This normally occurs when an organisation operates primarily according to the personality of one of the members of the organisation (usually the founder), rather than according to the mission (purpose) of the organisation. Founders often have to do whatever it takes to get the organisations off the ground, including making seat-of-the-pants decisions to deal with frequent crises that suddenly arise in the workplace when first starting their
organisations,. Due to this, founders often failed to see the larger picture and failed to make more proactive decisions. As the results the organisation gets stalled in a highly reactive mode characterized by lack of funds and having to deal with one major crisis after another. The best cure for this syndrome is developing broader understanding of the structures and processes of an organisation, with an appreciation for the importance of planning and this can be achieved by carried out using change diagnosis of an open system models.
PART B Question 1 Most of the texts on managing change include a list of nature of change. Explain the rationale why different types of changes might be relevant for different organisations, using appropriate theory and research. [40 marks] 1.0 Definition The pre-Socratic Greek philosopher Heraclitus had quoted that there is nothing permanent except change. If you want things to stay as they are, things will have to change (Giuseppe Tomasi di Lampedusa). How can he be wrong? Change is defined as to alter; to make different; to cause to pass from one state to another; to change the position, character or appearance of a thing; to change the countenance. Change in a process is an observed difference in form, quality, or state over time in an organisational entity, such as an individuals job, a work group, strategy, a product, or the overall organisation (Van de Ven & Poole, 1995). Change is a concept which has become an increasing focus of study and interest over the past decade. Across a wide range of disciplines the cry is going up-how can change be more effectively initiated, managed, implemented and accommodated? Organisation theory and management science in particular have focused closely on developing effective strategies for managing innovation and change (Burnes, 1992; Conner and Lake, 1987). 1.1 Managing Change Managing change has become the silver bullet in seeking the final component of successfully managing strategy, process, people and culture in most modern
organisations. More and more, staying competitive in the face of demographic trends, technological innovations, and globalisation requires organisations to change at much higher rates than ever before. Few people will argue with this statement, but fewer still will say their organisation does a good job at managing those changes. Managing change well is a continuous and ongoing combination of art and science that assures alignment of an organisations strategies, structures, and processes. A growing number of companies are undertaking the kinds of organisational changes needed to survive and prosper in todays environment. They are streamlining themselves and thereby becoming more nimble and responsive to external demands. They are involving employees in key decisions and paying for performance rather than for time. They are taking initiative in innovating and managing change, rather than simply reacting to what has already happened. Dumphy (1996) argues that planned change is triggered by the failure of people to create a continuously adaptive organisation, the kind of organisation that is referred as an effective learning organisation. Weick and Quinn (1999) suggest that this holde true whether the focus is episodic or continuous change, and they propose that the ideal organisation in both cases would resemble the successful self-organising and highly adaptive firms that Brown and Eisenhardt found in the computer industry. Nevertheless while some organisation might achieve this ideal and become so effective at double loop collective learning that they never misaligned with their environment, most do not. Organisational changes are dominant to the lifeline of an organisation; it is a process by which organisation moves from their present state to a desired state to achieve effectiveness. Significant organisational change occurs, for example, when an organisation changes its overall strategy for success, adds or removes a major section or practice, and/or wants to change the very nature by which it operates. It also occurs when an organisation evolves through various life cycles, just like people must successfully evolve through life cycles. For organisations to develop, they often must undergo significant change at various points in their development. That's why
the topic of organisational change and development has become widespread in communications about business, organisations, leadership and management. 1.1.1 Change Models One thing is for certain: quick-fix solutions do not really solve an organisations underlying problems. Several individuals have tried to identify effective ways to manage change within organisations. There are a lot of change model available and among others are Robert Lussier change model, Kotters Eight-Stage change model, Kurt Lewins, Huse Seven-stage change model and many more. John Kotter (1996; Kotter & Cohen, 2002) has described a successful model for understanding and managing change. According to Kotter, a general lesson learned from successful cases of organisational change is that the change process goes through a series of phases that, taken together, require a length of time. Skipping steps will only create the illusion of speed and never produce satisfactory results, according to Kotter. Making mistakes in any of the phases may have devastating impact, slowing momentum and negating gains. Each stage acknowledges a key principle identified by Kotter, relating to peoples response and approach to change, how people see, feel, and then change. Kotters eightstep change model can be summarized as follows: 1. Establish a sense of urgency--inspire people to move, making objectives real and relevant. A threat of losing ground in some way sparks people into action, and they in turn will communicate a sense of urgency to others. Kotter suggests that the urgency level is high enough when 75% of the leadership is convinced that business as usual is no longer an acceptable plan. 2. Build the guiding team--get the right people in place with the right emotional commitment, and the right mix of skills and levels. Efforts for change may begin with one or two people. Regardless of the size of the organisation, this beginning group for change needs to have three to five individuals leading the effort. This teams sense of urgency and sense of whats happening and what is needed is crucial. Involve leaders in this beginning coalition.
3. Get the vision right--get the team to establish a simple vision and strategy and focus on emotional and creative aspects necessary to drive service and efficiency. Successful transformation rests on a vision of the future that is relatively easy to communicate and appeals to customers, stockholders, and employees. The vision will clarify the direction in which the organisation needs to go. What is needed is a vision that can be communicated to someone in five minutes or less and that gets a reaction that shows both understanding and interest. 4. Communicate for buy-in--involve as many people as possible and
communicate the essentials simply to appeal and respond to peoples needs. Declutter communications--make technology work for you rather than against you. Kotter suggests that leadership estimate how much communication of the vision is needed and multiply that effort by ten. Use every existing communication channel and opportunity. 5. Empower action--Remove obstacles, enable constructive feedback and lots of support from leaders, and reward and recognize progress and achievements. Organisation members need to be allowed to make changes in their areas of involvement. Budget money needs to be allocated to the new initiative. Remove any obstacles there may be to get on with the change. 6. Create short-term wins--set aims in bite-size chunks that are easy to achieve. Create a manageable number of initiatives. Finish current stages before starting new ones. Commitments to produce short-term wins will keep the urgency level up. 7. Dont let up; consolidate improvements and sustain momentum for change-foster and encourage determination and persistence, ongoing change, and ongoing progress reporting, highlighting achieved and future milestones. However, premature declaration of victory may kill momentum and allow the old system to regain ground. Leaders of successful efforts use the feeling of victory as motivation to explore their organisation more deeply, moving people
committed to new ways into key roles. Leaders need to keep in mind that the process may take years.
8. Make change stick; institutionalize the new approaches--reinforce the value
of successful change via recruitment, promotion, and new change leaders. Weave change into culture. Change sticks when it becomes the way we do things around here. Two factors are particularly important for institutionalizing new changes: a conscious attempt to show how the new approaches, behaviors, and attitudes helped improve the organisation, and ensuring that the next generation of leaders believes in and embodies the changes. Each of the stages involves many smaller steps. Steps 1 through 4 involve a defrosting of the hardened status quo. During steps 5 through 7, new practices are introduced. The changes need to be grounded in the culture during step 8. 1.2 What Drives Organisational Change Different types of change require different strategies and plans to effectively gain employee engagement and acceptance of the change successfully. The change could be minor, incremental, accumulated over the years on what we have experienced or new knowledge we had acquired. Or, the change could be large in what is usually referred as a turning point to do or die situation. One thing for sure we change to betterment. It is critical for leaders to understand what drives change. It is essential that leaders realize the entire breadth of todays drivers for change and be able to counter each of them correctly, not only today, but for the organisations future success. Figure 15 clarifies what drives the need for change. The model describes seven drivers, four that leaders are most recognized and three that are comparatively new. The drivers move from what is external and impersonal (environment, marketplace, organisations) to what is internal and personal (culture and people).
Figure 15: The Drivers of Change Model
Change in an organisation called as Change Management, is a set of processes used to ensure that significant changes are carried out in good control and systematically. One of the change management goals is the alignment of people and culture with strategic shifts in the organisation, to overcome resistance to change in order to increase engagement and the achievement of the organisations goal for effective transformation. Achieving sustainable change begins with a clear understanding of the current state of the organisation, followed by the implementation of appropriate and targeted strategies. The focus of change management is on the outcome the change will produce and therefore the new arrangements must be understood for the change can be accepted and smoothly implemented. The management of change in any organisation poses many challenges facing managers. Burnes (2005:85) observes that;
Managing and changing organisations appears to be getting more rather than less difficult, and more rather than less important.
Given the rapidly changing environment in which organisations operate, there is little doubt that the ability to manage change successfully needs to be a core competence for organisations. Leaders and managers continually make efforts to accomplish successful and significant change as it is inherent in their jobs. Some are very good at this effort, while others continually struggle and fail. That's often the difference between people who thrive in their roles and those that get shuttled around from job to job, ultimately settling into a role where they're frustrated and ineffective. Brown & Eisenhardt (1998) noted that developing technology, the changing needs of stakeholders, and economic pressures all contribute to the need for organisations worldwide to significantly modify the way they do things. Major organisational change requires huge investments in energy, time, and resources, but many change programs fail to meet expectations. Published estimates of success levels can be as low as 10% (Oakland & Tanner, 2007). John Hayes (2010) quoted that there are three main categories of organisations that may not experience periods of discontinued change; 1. The kind of self-organizing and continuously changing learning organisations identified by Brown and Eisenhardt. Intel, Wal-Mart, 3M, Hewlett-Packard, Microsoft are good examples of companies that have the ability to change rapidly and continuously. As changes have become an everyday thing, these companies turn it into a habit and thus changes are made easy. 2. Companies operating in niche markets or slow-moving sectors where they have not yet encountered the kind of environmental change that requires them to transform their deep structures. These companies are yet to encounter the kind of environmental change require them to transform their deep structures. As they feel there is no need for a change this companies will face resistant when trying to implement changes. Some good examples are TNB, Celcom, Telekom, Astro and etc.
3. Organisations those are able to continue functioning without transforming themselves because they have sufficient fat to absorb the inefficiencies associated with misalignment. These organisations have big profits and possess a very strong market presence and this organisation cannot feel their inefficiencies thus hinder their ability to sense that they are in need of a change. However, beside these exceptions, most organisations experience change as a pattern of a punctuated equilibrium. These type of companies normally are the big secured companies with strong back up from the government of market e.g. BBC before the transformational took place in Margaret Teacher era, Enron are some of them. However, with the above exceptions, most organisations experience change as a pattern of punctuated equilibrium. Relatively it involves long periods of equilibrium when an organisation may only engage in incremental change, disturbed by short discontinuity during which an organisations survival dependent very much on its ability to transform itself. Gersick (1991) has studied change models in different domains and has suggested that the paradigm has the following components: relatively long periods of stability (equilibrium), punctuated by compact periods of qualitative, metamorphic change (revolution). The essence of this punctuated equilibrium paradigm is that systems evolved through the alternation of periods of equilibrium. Academicians like Pettigrem (1987) and Tushman et al (1986) has supported the punctuated equilibrium paradigm. Every organisation has their different pattern which we can categorize into several different change types. 1.3 Nature of Organisational Change Change as a phenomenon occurs across the disciplines in the natural, physical and social sciences, but there has yet to emerge any solid theoretical framework for exploring and describing its nature and dynamics. Vickers alluded to the need for such a basic understanding of the nature of change when he said: The view of entities as both systems and constituents of systems raises intriguing questions about identity and continuity. When does something, or somebody, retain its identity and continuity through change? When by contrast does
General Motor and
it cease to be its old self and either vanish or become something new or different? The question is not frivolous or merely metaphysical but may be of great practical concern. (Vickers, 1980, p. 20) From their research, Oakland and Tanner (2007) identified a number of key insights concerning the nature of organisational change; The agenda for change is driven by external events. All organisations interviewed by the researchers were reacting to shifts in their environment when introducing their change programs. Many agendas could be traced to an external event such as regulatory change or increased competition. In some cases, the organisations were being proactive, but it was more common that the organisations actions were reactive. Leaders set a clear direction and manage risks. The research indicated that leaders identify and select priorities for change. In successful change, before making a decision, alternatives were considered. However it was the leaders who made a definite decision to change something and stick with it. Once decisions were made, leaders set success criteria and communicated the need for the change. The need for change must be aligned to the operational issues. External events that trigger the change form part of the strategic context of the change. Needs should be translated into an operational context so people in the organisation understand how they will be affected. Some other writer urged the nature of change covers the followings; 1. The organisation change takes place because of internal and external forces. The internal forces may create instant change, whereas the external forces may results in the gradual change.
2. The effect of change in any one part of the organisation creates about the fundamental change in the entire organisation. 3. The effect of change on various parts takes place in varying degree and rates. 4. The means the effect of change will not be similar in every part of an organisation Some systems practitioners may point to the apparent success of certain wellestablished strategies for dealing with change, and query why such fundamental questions need to be asked at all. Historically, has not man learnt how to manage and cope, for example, with the effects of gravity and solar radiation without fully understanding what their causes and origins are? Today, however, he can much more accurately and effectively explain, manage and deal with these phenomena now that science has provided far deeper and more detailed answers to the 'what' questions. Similarly, the existing methodologies and strategies for system changewhether economic, social, technological or organisational systems-would benefit significantly from a greater understanding of the nature of change itself. 1.4 Type of Change Approach There are many types of organisation change. Lorenzi and Riley (2000) defined four types of change in an organisation: operational, strategic, cultural, and political. Operational changes affect the way ongoing operations of a company are conducted. Strategic changes occur in the strategic business direction. Cultural changes affect the basic organisational philosophies by which the business is conducted. Political changes, such as change in leadership and power struggles, may have ramifications at the higher levels of the organisation. Here we are going to discuss the change approach as what had been urged by Hayes (2007). He only mentioning on two type of organisation change approach and they are as below;
Incremental change it is associated with those periods where the industry is in equilibrium and the focus of change is doing things better through a process of
continuous tinkering, adaptation and modification. This type of change can be small or large in terms of resources needed and the impact of the people. A key feature of this type of change is that it builds on what has already been accomplished and has the flavour of continuous improvement.
Transformational change transformational change occurs during periods of disequilibrium. Weick and Quinn (1999) and Gersik (1991) refer to this kind of change as revolutionary but most writers such as Tichy and Devanna (1986), Kotter (1999) refer as transformational change. Nadler and Tushman (1995) make the point that incremental changes can also be large changes and may not necessarily be small. These are in reference to the resources required and needed and the impact to the people involved. According to the punctuated equilibrium paradigm, incremental change happens when the industry is in the equilibrium and focus to do things better through a process of continuous tinkering, adaptation and monitoring. Incremental changes focus on individual components, with the goal of maintaining or regaining congruence (Nadler and Tushman 1989). The gradualist paradigm however suggested that incremental change can be cumulative and after a period of time can lead or cause transformational change. Transformational change is based on new relationships and dynamics within the industry that may undermine basic core competencies, and questions the organisations purpose. It might necessarily be a better things but it is about doing things differently and to transform and change the entire organisations strategy and method of business. An example would be IBM which was only making machines and computer hardware and was focusing their entire business strategy to providing the hardware required for the computer. After Microsoft came into the picture IBM tried to challenge the operating system industry by elevating its own in-house Lotus Smartsuite. This is a big transformation move for IBM and various change methods had to be taken for this to be effective. Tushman and Nadler suggested that most companies do not only
go through periods of continuous incremental and discontinuous transformational change. These companies will see that the pattern of change repeats itself with some degree of regularity and different industry will see different period cycles. However, in general all industry will see that the rate of change increase and the time between this period of discontinuity decrease. An example in the cement industry it takes 30 years for a change to occur this is because of the stall in the cement technology but in the automobile industry changes occur in every 5 years. At the moment the information technology industry will be seeing the fastest change which sees changes every year as the technology is growing very fast. In a way this relates to the technology movement of where the industry is in. The faster the technology changes the faster the need for a change occurs. It is imperative that these organisations adapt with these changes or become obsolete and fail to supply the demand to the rising markets. Forester and Kaplan (2001) provide chilling evidence of the consequences of failing to adapt. A case study was done referring to the Forbes top 100 companies between 1917 and 1987. Of the 100 original companies, 18 survived until 1987 and 61 of those companies no longer existed which suggest their failure to adapt to changes and market forces or sentiment which is ever changing. Their ability to change affects the entire organisation which subsequently dooms the organisation to failure. There are infinite reasons why an organisation needs to change. An organisation that wishes to prevail and succeed will need to anticipate the requirement to change. There are changes which can be anticipated and some changes which are totally unanticipated. An example is like when new regulations are introduced which affects the way organisation do businesses, this is normally anticipated as new public policies take time to be implemented and the business communities are well aware of the changes to take place. Unanticipated changes are like the after effects of the 9/11 terrorist attacks or the SARS epidemic. The post effect of this incidents and happenings calls for new market forces and demands which lead to requirement of change for industry that are serving these markets. Example for SARS would be the
vaccination and health industry. This can be seen as an opportunity to change to reap the benefits from these happenings. Some organisations reign, adapt and do better dealing with anticipated changes and some are not. These organisations that have anticipated change will always seek out potential threats and opportunities by being proactive. Some also have special departments looking out for new opportunities and threats which require the organisation to adapt to these changes. They are always in the lookout and are careful for all major happenings. Some other organisations are just reactive and did not anticipate these changes and when the time for change come, they fail to react or resort to last minute desperate measure of changes which is unplanned and this subsequently will create bad results. Failing to plan is planning to fail. If the organisations is prepared up-front the options and resorts available at the company disposal is more and well thought out and helps to make an informed planned decision. The smaller the organisation the easier it is to adapt to changes which in some cases might not be true also, depending on how organised the organisation is. However, generally the size of the organisation will have an impact on how fast a change implementation can be executed. If a change is unanticipated managers will have less option to choose from as they will have inadequate time for a good planning. Careful planning requires time and this will not be the luxury that they will have if they do not anticipate the changes upfront. Time will also be required as these will involve many people. A good change process will require every bodys effort and it takes time. Participation from employees and employers will definitely assist in adapting the changes, which however does need time, the more time they have the better it will be. An unanticipated change will also be facing problems as they do not have the luxury to experiment the changes they wanted to implement. If they fail when changing to another state, it will take time for them to change to another state and once they do this, they will likely fall behind from other organisations which have already change to adapt to this need for change. Another point to note is when technology and market
shifts. If the organisation changes to this need at a later point, the market demands will definitely go for those organisations that can offer the supply earlier and the organisation will lose out to the those organisations that has adapted changes earlier on. Thus, it is advantageous for organisation to anticipate change which will lead them for a better planned change process. Whether an incremental or transformational change in an organisation, it is important because it predicts that all managers will be confronted with an ever greater need to manage it. 1.5 Different Organisation Requires Different Type of Change. The need for changes are also differs from one organisation to another. I believe the reason is simple, it is because the environment are differs, different organisation have different structure, different management process, different way in managing human resources, cultural management, using different technologies, political influences, different leaders and mindset, different type of market and others. Some organisational are much better at anticipating the need for change compared to others. The reason maybe they are more proactive and search out the potential threats and opportunities. By doing this they can initiate and to gain competitive advantages. While other organisations maybe more towards reactive and only act when they face a problem.
Figure 16: Type of Organisational Change
(Source: Nadler et al., 1995) 69 Date: Semester January 2012
Whether the change is development, transitional or transformation the earlier they are identified the more option the manager will have to figure out them. On the other hand the later they are recognised the lesser option the manager will have in solving them. For example less time are there to carry out the planning works , insufficient time to get people to involve, not much time to do the experiment and little opportunity to influence and shift the market and technologies. Nadler et al. (1995) had appended the incremental (development) and
transformational change as what shows in figure 16. The topography shows how the organisational change responses to reactive or proactive. 1.5.1. Tuning (Incremental and Proactive) Tuning is a change that occurs when there is no imperative requirement for a change in a proactive organisation. It is just like when you send your engine for tuning. You do not need to change for a new engine but all you need is for the mechanics to do some tuning to the engine to suit some minimal changes that you need. Tuning involves looking for better ways to achieve / maintain the current strategic vision of an organisation. For an example, it involves improving policies, methods, procedures, introducing new technologies, or even redesigning processes in place to reduce cost, time to market or even to enrich the intellectual skills by developing more people with the required competencies. Normally tuning is done internally in order for the changes to be minor adjustment to maintain the alignment that has already existed between the internal elements of the organisations and between its strategy and the external environment.
1.5.2 Adaptation (Incremental and Reactive) Adaptation occurs when there are pressing demands from external for a change which is incremental and is an adaptive response to these demands. It happens to reactive organisations. It can either be a response to a successful new marketing strategy adopted by a competitor or to a change in the availability of key resources. For an example when Blackberry comes out with its smart phone that has the business connectivity to the internet that attracts the corporate market, Nokia,
Ericsson and other phone makers rivals out to make the same smart phone that has the same capability to match or even outwit Blackberrys capability. If these organisations do not change or move towards a change process, it will definitely lose out to their competitors which are offering better products. Another good example to note when Mars reduce the price of its confectionary products, Nestle is force to respond and adapt change either by reducing its price or offering other variants of products which can challenge the cheaper Mars product. This change is about doing things in a fundamentally different way. While tuning and adaptation can involve minor or major changes, they are changes that occur in the same time frame which are bounded by existing parameters. Tuning and adaptation does not involve doing entirely different things like changing the playing field or breaking the rules of the game. It is more like changing the way a particular game is played. It is also not major and involves many parameters as opposed to reorientation and re-creation which entirely change the whole game and shift the goal post. This will be further elaborated below. 1.5.3 Re-orientation (Transformational and Proactive) Reorientation change happens in a proactive organisation that most of the times have anticipated for these changes to occur. It is a redefinition of the organisation which is initiated in anticipation of future opportunities or threats. These organisations are ready to adapt these changes. This however can involve a big transformational change but since it is already anticipated it can be done graciously and gracefully. Small change can be done in a smaller time period but a big major transformational change will require more time and perseverance. A good example are like of Nestle in the mid-1980s where they embarked on a major change programme to ensure that they are sensitive and remain align to the market forces over the medium term. Nestle has initiated a top-down review to decide which businesses it should be in and which business it should drop out. It has also reengineered the supply chain across the business and performed a bottom-up analysis of the added value contributed by their main activity. These changes are major and involved everybody in the organisation. However, since these changes are
well planned out and are not obvious to all as it is an anticipated change, and are not an urgent confirmed required change, it will take hard work to create the sense of urgency and acceptance by the organisation for the willingness to change. 1.5.4 Re-creation (Transformational and Reactive) Re-creation is a change in a reactive organisation. It involves transforming the organisation through the fast and simultaneous change of all its basic elements. Nadler and Tushman (1995) suggested that it inevitably involves organisational frame breaking and big changes and removal of some elements which is already in the system which can be disorienting. An example was the change by Lee Iacocca when he became the new CEO at Chrysler. He executed a process of revolutionary change that involved replacing almost all of the senior management team, withdraw the company from their familiar large car market but not making the margins and divesting in many foreign operations. This change is like re-inventing the wheels. It takes a lot of efforts and involved the entire organisation. This change requires everybody in the organisation to move together towards the change process and need high level of commitment from all participants of the change process. Of the four type of changes, the most common is incremental both tuning and adaptation. However, it is also common for an organisation to be in different type of changes at one time. An organisation can be doing tuning and also at the same time doing re-creation or even having reorientation and at the same time doing the adaptation or any combination of the four (4) category type of changes. The more the manager understand these change requirements and process the better the organisation will charge forward and better perform compared to its competitors. Different types of change can effect and focus for change efforts, the sequence of steps in the change process and the locus of change (Hayes, 2010).
1.6 Some Samples of Organisational Change Organisations do not evolve but are more likely to change in strategic reorientations that demand significantly different patterns of operations (Tushman & Romanelli, 1985). The followings are some samples of organisation changes undergone by varies companies; 1.6.1 British Broadcasting Corporation (BBC) Taking the British Broadcasting Corporation (BBC) as an example, they have forced to change when the Conservative Government came into power in 1979 with an agenda for change that included plans to privatize much of the public sector. Margaret Thatcher viewed the BBC as a swollen bureaucracy that was overstaffed, incompetent which requires a reform. For 60 years BBC was able to survive in spite of its inefficiencies because its income from the license fee had grown in average 4% a year but with the new political climate this was changed in 1985. Somewhere in December 1992, its Director General, John Birt, in his autobiography The Harder Path (2000), described the dominant BBC culture at that time as a kind of imperialism, where every regional commander in every part of the corporation acquired a full fleet of facilities, irrespective of need. Waste in resources. He also found that staff utilisation was low and that in some areas are excess between 25 and 50%. The license fees that previously paid by every radio and television owners in UK were froze by the Margaret Thatcher government in order to force BBC to become more efficient. This however does only affect BBC towards 1995 as Birts predecessor heritage huge cash surplus form the early years. BBC was also facing threat from new technological developments and market pressures. The development of digital technologies is the biggest challenge as that opened up the possibility of many more channels, better technical quality, video on
demand and interactivity. Birt felt he had to introduce radical reforms as quickly as possible in order to safe BBC. 1.6.2 UK Coal As for UK Coal the state-own coal industry that was privatised in1994/95, due to downward trend in world coal prices they require for a change. In 2004 their turnover was down by half and the number of mines was reduced by more than 50% from about 20 deep mines and about the same number for opencast mines in 1995. New mines were not developed to replace those that have been closed due to low prices. Environmental opposition to the burning of coal with high sulphur content also contributed to this scenario. If that was not hassle enough, the imported coal which was cheaper attract the major customers (the power generators). Deep mine had made their prices become non-competitive. UK Coal was obliged to look for ways of improving the companys operating efficiency. Among changes that they need to carry out was to reduce the overhead cost of its central corporate headquarters by making each mine more autonomous and delegating to each unit a wider range of activities than used to be the case. UK Coal introduced a continuous improvement programme across all the remaining deep mines in order to make them more efficient and ensure their long term survival. Face with a doubtful future in the mining industry, UK Coal also began to relook its assets and consider how it might revise its old theory of business. They even decided to venture into property management beside mining company. This reorientation involved many changes, including bringing new senior managers into the organisation with expertise in the land and property management. Apart the changes carried out at the highest level, UK Coal continued to engage in the continuous improvement programme to increase the efficiency of individual deep mines. 1.6.3 Sime Darby In Malaysia Sime Darby is a leading multinational conglomerate. Started in 1910, by British businessmen William Sime and Henry Darby buy doing lucrative rubber industry it has under gone a few major changes throughout the years. The
company had diversified to cultivating palm oil and cocoa and met with enormous success. The company had undergone some taking over exercises and in 1981; the group became a wholly Malaysian-owned company after former Malaysian Prime Minister Mahathir Mohamad engineered a raid by Permodalan Nasional Berhad to take over the group at the London Stock Exchange. In January 2007, the three Malaysian giants (Sime Darby, Guthrie and Golden Hope) merged into the vehicle entity named Synergy Drive and on 27 November 2007, Synergy Drive was renamed Sime Darby Berhad. The merged entity of three Malaysian corporations is a diversified Malaysian multinational with a workforce of 104,300 employees. Its core businesses are plantations, property, motor, heavy equipment and energy & utilities which are expected to benefit from continued population growth and economic development within the Asia Pacific region and the global economy. Sime Darby's non-core business units such as healthcare, insurance, and home products are grouped under its Allied Products and Services division (APS). Subsidiaries under APS include Sime Darby Medical Centre Subang Jaya (formerly known as Subang Jaya Medical Centre) (healthcare), Sime Alexander Forbes (insurance), and Dunlopillo Malaysia Sdn Bhd (home products). It also has a controlling share in the supermarket chain Tesco in Malaysia. Sime Darby is a multinational company, with more than 60 percent of the groups revenue coming from abroad. As a result of the merger, Sime Darby became one of the worlds leading listed oil palm plantation groups. Sime Darby Berhad also has a significant presence in downstream palm oil activities. The merger also made Sime Darby a leading developer of residential and commercial communities. Furthermore it holds Caterpillar rights in 12 countries worldwide and distributorship and dealership of well known motor brands such as BMW. Starting from a small timer rubber industry it now successfully transform into a multinational conglomerate involves in five core sectors namely plantations, property, industrial including heavy industries, motors and energy & utilities inclusive oil and gas and construction dam, with a growing presence in healthcare.
1.6.4 British Airways In 1982 Margaret Thatchers government in Great Britain decided to convert British Airways (BA) from government ownership to private ownership. BA had regularly required large subsidies from the government (almost $900 million in 1982), subsidies that the government felt it could not provide. Even more important, the Conservative government was ideologically opposed to the governments ownership of businesses, a matter they regarded as the appropriate province of private enterprise. The growing deregulation of international air traffic was another important environmental change. Although the overall mission for BA remained transportation, the specifics changed significantly, for example, new goals of customer satisfaction and profitability, neither of which had ever been emphasized before. The change of mission affects all other primary dimensions of an organisation: leadership, strategy, structure, culture, and systems. In Gersicks (1991) language, the deep structure has been affected significantly. It should be reiterated that the fundamental mission of an organisation is to survive. Air fares were no longer fixed, and the resulting price wars placed BA at even greater risk of financial losses. In order to be able to privatise, to sell BA shares on the London and New York Stock Exchanges, it was necessary to make BA profitable. The pressures to change thus exerted on BA by the external environment were broad and intense. And the internal organisational changes, driven by these external pressures, have been massive and widespread. They have transformed the BA culture from what BA managers described as bureaucratic and militaristic to one that is now described as service-oriented and market- driven. The success of these efforts over a five- year period (1982-1987) is clearly depicted in the data. This figure 8 reflects BAs new mission in its new advertising slogan was The Worlds Favourite Airline. Five years after the change effort began, BA had successfully moved from government ownership to private ownership, and both passenger and cargo revenues had dramatically increased, leading to a substantial increase in share price over the offering price, despite the market crash of October 1987. By the end of the 1980s, BA was one of the most profitable airlines in the world and had
improved its service record so much that passengers who had used to say that BA stood for bloody awful now revised the interpretation to bloody awesome (Power, 1989). Even, in late 1987 BA acquired British Caledonian Airways, its chief domestic competitor.
Table 4: The British Airways Success Story: Creating the Worlds Favourite Airline
(Source: CK Book Online)
The steps through which this transformation was accomplished clearly fit Lewins model of the change process, Unfreezing, Moving (Changing) and Refreezing. Organisational change can occur at three levels and, since the patterns of resistance to change are different for each, the patterns in each level require different change strategies and techniques. These levels involve: 1. Changing the individuals who work in the organisation that covers their skills, values, attitudes, and eventually behaviour. 2. Changing various organisation structures and systems offer reward systems, reporting elationships, work design, and so on. 3. Directly changing the organisation climate or interpersonal style to encourage people to be open with each other, how conflict is managed, how decisions are made, and so on. Unfreezing: In an attempt to become more competitive and cost conscious, CEO, Colin Marshall had took the followings steps;
i) Reduce the workforce from about 59,000 to 37,000. Although this act drew lots of criticism but Marshall stayed the course. Within a year after this staff reduction, virtually all BA performance indices had improvedmore on-time departures and arrivals, fewer out-of-service aircraft, less time on hold for telephone reservations, fewer lost bags, and so on. The consensus view at all levels within BA was that the downsizing had reduced hierarchical levels, thus giving more autonomy to operating people and allowing work to get done more easily. The downsizing was accomplished with compassion no one was actually laid off it was strategise with early retirement and substantial financial settlements. ii) Changing the BA culture. Historically, BA was formed from the former pilots and staff of the Royal Air Force of World War II and, quite naturally, had evolved into a command and control culture that was engineering rather than market-driven. BA had a great maintenance and safety record, but passengers seemed to be secondary to the whole process. A series of programs and activities were launched to move BA from a bureaucracy tied with military residue to a service business in which passengers were treated as human beings rather than as another form of baggage. The initial programmatic effort was a 2-day orientation to the new culture called Putting People First. iii) The next activities were to focus even more intensely and directly on the culture. Nick Georgiades, (head of human resources) at the time, conceptualised this aspect of the change effort in terms of a three-legged stool. The seat was the new, desired culture, one that was more customer focused (Burke, 1994). The conducting Managing People First (MPF) program, performance appraisal, and pay for performance. Train staff towards service oriented and giving reward base on performance.
Table 5: Applying Lewins Model to the British Airways (BA) Change Effort
(Source: CK Book Online) 79 Date: Semester January 2012
Refreezing: During the refreezing phase, BAs top management continued involvement and commitment had ensured the changes became fixed in the system. People who clearly exemplified the new BA values were much more likely to be promoted, especially at higher management levels. Additional programs introduced by Georgiades for educating the workforce, especially managers. Open Learning programs, including orientation programs for new staff, supervisory training for new supervisors, and so on, were augmented by Top Flight Academies that included training for executive, senior management, and management levels. One of the academies now leads to an MBA degree. A new performance appraisal system, based on both behavior and results, was created to emphasize customer service and subordinate development. A performancebased compensation system is being installed, and task forces continue to be used to solve emerging problems, such as those resulting from the acquisition of British Caledonian Airlines. BAs was also been given a new image with upscale uniforms, refurbished aircraft; and a new corporate coat of arms with the motto We fly to serve. A unique development has been the creation of teams for consistent cabin-crew staffing, rather than the ad hoc process typically used. Finally, there is continued use of data feedback on management practices throughout the system. 1.7 Conclusion In my opinion BBC had forced to incremental changes due to political forces but its only make effect when their reserves had exhausted in 1992. Due to being in a monopoly market for the past 60 years and known as cash cows (BCG Growth Share Matrix), BBC became complacent. The world is changing but BBC was slow to respond. This can be understandable as the company have been protected by the government policy for six decades. The wake-up called from the frozen of television and radio licences by the government had forced BBC to change themselves to become a more efficient organisation. Unfortunately they are too slow and the changes are a bit too late. Their changes are reactive rather than proactive and towards adaption incremental change as the response to a pressing external demand for the change where required them to become more effective and spending more wisely in term of their resources. The transformational change after that under
Birt era are made more towards reactive change rather than reorientation that was carried out to transform the organisation through the fast and simultaneous change of all its basic elements. UK Coal was also forced to incremental changes due external forces in 2004 and they are also reactive to change due to the lower price on coal, environmental complaints and competition from imported coal to make them more efficient in their works by using new technology by increased autonomous and delegating more scope to each units. On top of that they also become proactive and carried out tuning incremental change by introduced continuous improvement programme to manage the deep mine at lower cost and trying to increase their operational life. I also noticed that UK Coal had carried out proactive reorientation transformational change when they had noticed and exploited their strength by diversified into housing developments. Change undergone by Sime Darby which had successfully turned it to Malaysian huge multinational GLC which was also very much influenced by the government. Towards the years the company had experiences not only changes that involves incremental and transformation organisational change in its business but it had also involved transformation of its share holders. The transformation to a Malaysian company took place since the takings over from so called colonial companies in late 70s. Influenced by the Malaysians government to stand up for national pride, its merger with Guthrie and Golden Hope in 2007 is a transformational proactive change in which its try to be reactive. With the merger the expertise and resources can be shared for the benefit among the group. The strong price of plantation commodities e.g. rubber and palm oil the back bone of Sime Darby and a strong back up from the government especially on securing relevant licensing, help them venturing new business e.g. energy sector (Private Power Plant), automotive, shipping, heavy industries, medical sectors and etc. Being another cash cow company, where money is not a problems, Sime Darby had showed a good example by proactively keep continuing in making changes. Whether
the changes undertaken by the company to date is for its survival, company cultural or because of the good back up from the government is still a debate. One thing for sure the company had use its strong point (good government back up) wisely to make the necessary incremental and transformational changes for the company improvement. In 2011 its revenue rose to RM 41.8 billion from RM 32.5 billion in 2011 and the pretax rose to RM 5.449 million from 2.818 billion (Borneo Post, 28/8/2010). This was their highest gain record ever after have a structural change where its President/Group Chief Executive Officer was removed after the company had suffered about RM 2 Billion losses in companies Oil and Gas subsidiary in Qatar and in Bakun Hydro Electric dam in 2010 (Malaysian Insider, 27/8/2010). I believed this was a transformation re-creation change as it was taken only the damaged have been done and to satisfy the public and the share holders. As for British Airways from company operating in niche markets or slow-moving sectors where they have not yet encountered the kind of environmental change that requires them to transform their deep structures. All of this happen because BA is a government own company where they were not running for profit oriented. Until 1982 British government required to pump in millions in order to sustain its operation. With that kind of environment BA yet to encounter the kind of environmental change require them to transform their deep structures. They feel there is no need for a change until Margaret Teacher had put a full stop and made their last bail of $ 900 million for BA. Deep in the situation do or die, BA top management had carried out their re-creation transformation. The change covered changing the individuals who work in the organisation that covers their skills, values, attitudes, and eventually behaviour by reducing staff but in thesame time giving necessary trainning and made them more efficient. Changing various organisation structures and systems offer reward systems, reporting, relationships, work design, and so on. Directly changing the organisation climate or interpersonal style to encourage people to be open with each other, how conflict is managed, how decisions are made, and so on. In five years the company that $ 900 million annual subsidies from British government had
made a profit of $ 435 million and had becoming one of the most profitable airlines in the world despite share market crashed in October 1987. As the rap up, almost all the change in an organisation are either
incremental/development, transitional and transformational. The paradigm posits that organisations may or may not adapt and transform themselves, as required, through a process of continuous adjustment or the company might lead to an end. The need for changes are also differs from one organisation to another. In my
opinion the reason is simple and it is because the environment are differs, the organisation have different types of leaders with different visions, different organisation have different structure, different management process, different way in managing human resources, cultural management, using different technologies, political influences, different leaders and mindset, different type of market and others. Some organisational are much better at anticipating the need for change compared to others. The reason maybe they are more proactive and search out the potential threats and opportunities. By doing this they can initiate and to gain competitive advantages. While other organisations maybe more towards reactive and only act when they face a problem. The above examples had proved organisations change from one organisation to another are varies as different organisation might faced different type of driver forces form the external environments i.e. political climate, economic transition, environmental, social, emerging trends, and competitors (See figure 15). An organisations attitude towards change also differs, some may react type and some maybe proactive type. The organisation which are lie in a comfort zone i.e. company with cash risk and fully back up by the government will normally more reactive rather than proactive. Company culture and it structural will also play a role in their action dealing with changes. One thing for sure those who can adapt will survive, and those who are not, would suffer.
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18) Harwood Rafe, Organisational Change in Today's Economy; Models of Change and Overcoming th March 2012, from; Employee Resistance, Retrieved on 29 http://www.unfortu.net/~rafe/links/change.htm#focus. 19) Jan Tucker Suite 101, Retrieved on 19 March 2012, from; http://jantucker.suite101.com/types-ofchange-a28594. 20) Kerzner, H. (2009). Project management: a systems approach to planning, scheduling, and controlling (10th ed.), John Wiley & Sons, Hoboken, N.J. 21) Kotter P. John (1996), Leading Change, Harvard Business School Press, Boston, Massachusetts. 22) Mabey Christoper, White Mayon Bill et al. (2004), Managing Change (2 Publishing Ltd., Bonhill Street, London.
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23) Management vs. Leadership, Kotter International, Retrieved on 19 March 2012, from; http://www.kotterinternational.com/kotterprinciples/management-vs-leadership. 24) Nadler, D., R. Shaw and A.E. Walton (1995) Discontinuous Change: Leading Organisation Transformation, San Francisco, CA: Jossey-Bass. 25) Nadler, D and Tushman, M. (1982) A Model for diagnosing organisational behavior: applying a congruence perspective in D.A. Nadler, M.L Tushman and N.G. Hatvany (eds), Managing Organisations, Boston: Little, Brown. 26) Nebojsa Janicijevic (2010), Business Processes in Organisational Diagnosis, Retrieved on 28 March 2012, from; http://organized-changeconsultancy.wikispaces.com/file/view/Open_Systems_presentation_9-20-07.pdf 27) Olum Yasin (2004), Modern Management Theories and Practices: A Critical Overview, 15th East th African Central Banking Course, Kenya School of Monetary Studies Retrieved on 19 March 2012, from; http://unpan1.un.org/intradoc/groups/public/documents/AAPAM/UNPAN025765.pdf. 28) Reh John F., Manager, About.com, Retrieved on 15 March http://management.about.com/od/policiesandprocedures/g/manager1.htm. 29) Reh John F., What Is A Leader, About.com, Retrieved on 15 http://management.about.com/od/leadership/a/whatisaleader.htm. 30) Paton A. Robert & Mc Calman James (2000), Change Management (2 Ltd., Bonhill Street, London.
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37) The Nature of Organisation Change, Burke (Organizing), Retrieved on 29 March 2012, from; http://www.sagepub.com/upm-data/16846_Chapter_5.pdf. 38) The Nature of Planned Change, CK Book Online, Retrieved on 30 March 2012, from; http://ckbooks.com/management/organization-development/the-nature-of-planned-change/. 39) Tucker Jan (2007), Types of Change; Developmental, Transitional and Transformational. 40) Tushman, M. L., Newman, W. H. and Romanelli, E., (1986) Convergence and Upheaval: managing the unsteady pace of organisational evolution, California Management Review, 29, 1, pp. 29-44.
th
th

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JANUARY SEMSTER 2012 LECTURER; Dr.

Goh Tee Teck

ASSIGNMENT CHANGE MANAGEMENT EMC05103

iii Semester January 2012

JANUARY SEMESTER 2012 EMOM5103 - CHANGE MANAGEMENT ASSIGNMENT (50 %)

2 Date: Semester January 2012

(Adapted from: Certo & Certo, 2009)

3 Date: Semester January 2012

4 Date: Semester January 2012

(Source: Brown Debbie, 2011)

6 Date: Semester January 2012

Figure 3: Leader as a Role Model and Aspire Trust

(Adapted: Bennis Warren & Goldsmith Joan)

leadership is essential to the organisation including from top management to first-line

(Source: Bolden et al., 2003)

10 Date: Semester January 2012

Figure 4: Triple Project Success

(Source: Alliance of Meeting Management Companies)

14 Date: Semester January 2012

Figure 5: How Important Leadership and Management

(Source: Kotter International)

15 Date: Semester January 2012

16 Date: Semester January 2012

Figure 6: The Drivers of Change Model

(Source: Anderson Dean & Anderson Linda Ackerman, 2001)

17 Date: Semester January 2012

Table 3: Type of Change: Change is process of moving from present to future

(Source: Harigopal K., 2006)

18 Date: Semester January 2012

(Source: Anderson Dean & Anderson Linda Ackerman, 2001)

Figure 8: Transitional Change

(Source: Anderson Dean & Anderson Linda Ackerman, 2001)

21 Date: Semester January 2012

Figure 9: Transformational change

(Source: Anderson Dean & Anderson Linda Ackerman, 2001)

24 Date: Semester January 2012

(Source: Nadler et al., 1995)

28 Date: Semester January 2012

29 Date: Semester January 2012

31 Date: Semester January 2012

32 Date: Semester January 2012

(Adapted: Inner Work) 33 Date: Semester January 2012

36 Date: Semester January 2012

39 Date: Semester January 2012

40 Date: Semester January 2012

(Source: Richard L. Daft)

42 Date: Semester January 2012

44 Date: Semester January 2012

Figure 13: Overview of the Open System of an Organisation

(Source: Authenticity Consulting, LLC)

(Source: Nadler and Tushman)

53 Date: Semester January 2012

55 Date: Semester January 2012

57 Date: Semester January 2012

59 Date: Semester January 2012

60 Date: Semester January 2012

Figure 15: The Drivers of Change Model

(Source: Anderson Dean & Anderson Linda Ackerman, 2001)

General Motor and

64 Date: Semester January 2012

67 Date: Semester January 2012

Figure 16: Type of Organisational Change

(Source: Nadler et al., 1995) 69 Date: Semester January 2012

72 Date: Semester January 2012