The Management of ChangeMiss Pate and Mrs LangeMelba College

Key Knowledge• The concept of organisational change• The dynamic nature of the internal and external

(operating and macro) environments as sources of change

• Driving and restraining forces for change in LSOs including management, employees, time, competitors, low productivity, organisational inertia, legislation, cost

• Key principles of Kotter theory of change management

Key Knowledge• A range of strategies for effective change

management including low-risk practices and high-risk practices

• Process of effective change management in context of a significant issue

• The role of leadership in change management• The possible impact of change on the internal

environment of LSOs including functional areas of operations and human resources

• Ethical and socially responsible management of change

The concept of organisational change•Change is an alternation in the internal

or external environments.•Organisational change is the adoption

of a new idea or behaviour by an organisation.

•To be proactive is to initiate change rather than simply to react to events.

•To be reactive is to wait for a change to occur and then respond to it.

The dynamic nature of the internal and external (operating and macro) environments as sources of change

Forces for change•Internal environment

▫Poor financial performance▫Crisis▫Innovation▫Corporate Culture▫Policies

The dynamic nature of the internal and external (operating and macro) environments as sources of change

Forces for change (continued)•Operating environment as a source of

change▫Customers▫Competitors▫Suppliers▫Interest groups

The dynamic nature of the internal and external (macro) environments as sources of changeMacro environment as a source of change•Economic forces•Political and legal forces•Technological forces•Global forces•Geographic forces•Social forces

Driving and restraining forces for change in LSOs

•Force-field analysis (Kurt Lewin) outlines the process of determining which forces drive and which resist a proposed change

•Driving forces are those forces that support the change

•Restraining forces are those forces that work against the change

Driving and restraining forces for change in LSOs

•Management•Employees•Time•Competitors•Low productivity•Organisational inertia•Legislation•Cost

Driving and Restraining ForcesDriving Force Restraining

Capable, make decisions, positive Management Procrastination, indecision or delayed decision making

Willingness and trust to change processes

Employees Organisational culture of insecurity (or a group within the organisation) that feels the uncertainty of change

Enough time Time Limited time

More organisations in the market or no major domination by one organisation

Competitors Domination of market

Acceptance that some productivity reduction may initially occur but will improve in the future

Low Productivity Fear of reduction of productivity

Culture that embraces change Organisational Inertia

Culture that does not embrace change

Does not restrict operational processes

Legislation Restrictions on operational practices

Cost has been factored into the change and accepted

Cost Purchasing new equipment, redundancy payments, retraining the workforce, reorganising plant layout

Key principles of Kotter theory of change management•Kotter’s eight-step model

1. Establish a sense of necessity2. Form a guiding group3. Create a vision4. Communicate the vision5. Empower people to fulfil the vision6. Recognise and reward achievements7. Consolidate improvements8. Institutionalise the changes

Kotter’s eight-step model1. Establish a sense of necessity

Current market opportunities and threats and analyse organisations competitive position

People more likely to embrace change if they can see that it is in response to an existing or future problem or possibility

2. Form a guiding group Team of people to as facilitators Relevant authority, recognition and respect

3. Create a vision Provide employees with a clear, shared sense of

direction that will allow them to achieve a common objective.

Kotter’s eight-step model4. Communicate the vision

▫Share vision with people affected▫Use wide variety of communication

channels to ensure message is transmitted as wide as possible

▫Communicating vision builds cohesion between employees and helps dispel fear of unknown

5. Empower people to fulfil the vision▫Participation tends to dispel rational and

irrational fears▫Participation develops a sense of ownership

Kotter’s eight-step model6. Recognise and reward achievements

▫Encourage further risk taking in the change process

7. Consolidate improvements▫Assemble benefits in the change process▫Change policies and procedures that no longer

match the new system▫Process of continued improvement

8. Institutionalise the change▫Clear statement showing the connections

between the new procedures and the success of the business

▫Closes the loop

A range of strategies for effective change management including low-risk practices and high-risk practices•Low Risk – impact if unsuccessful is minimal▫Identifying the need for change▫Setting achievable objectives▫Creating a culture of change –

encouraging teamwork

A range of strategies for effective change management including low-risk practices and high-risk practices

•High Risk strategies – if unsuccessful, then can permanently damage working relationships▫Manipulation▫Cooptation▫Threat

The role of leadership in change management•Leadership is the process of positively

influencing and encouraging individuals to set and achieve objectives

•Effective change management is based on three important elements:▫Thorough preparation and planning▫Clear communication▫Cooperative participation with all

stakeholders

The role of leadership in change management•A successful leader will need to:

▫Market and promote the change▫Resolve conflicts▫Keep an open mind▫Cultivate a sense of stability▫Show confidence in people▫Build and communicate a clear vision

The possible impact of change on the internal environment of LSOs including functional areas of operations and human resources

•Transformational change often results in a complete restructure throughout the whole organisation

•Incremental change results in minor changes, usually involving only a few employees

The possible impact of change on the internal environment of LSOs including functional areas of operations and human resources

•Impact of change on organisational structure▫Outsourcing▫Flatter organisational structures▫Work teams

•Impact of change on corporate culture•Impact of change on human resource

management•Impact of change on operations

management

Ethical and socially responsible management of change•Corporate social responsibility involves

managing organisational processes in order to produce an overall impact on the community

•Triple bottom line refers to the social, economic and environmental performance of an organisation

•Ecological sustainability occurs when economic growth meets the needs of the present population without endangering the ability of future generations to meet their needs

Ethical and socially responsible management of change•Sustainability report is a

comprehensive report of what a business has done, and is doing, with regard to social issues that affect it.

•A corporate code of conduct is a set of ethical standards for managers and employees to abide by

Exam QuestionsQuestion 4 2011 (10 marks)A writer for a business magazine recently stated ‘Change is a process that must be managed effectively to leadto success’. Management theorists have provided guidelines to assist managers with their change processes in order to achieve desired outcomes.Explain four steps from Kotter’s 8-step theory of change management. Discuss how the effective use of Kotter’schange theory could impact on the internal environment of an organisation.In your answer refer to an organisation or a significant change issue you have studied this year.

Exam Questions

Question 3c 2012 (4 marks)Explain a significant change issue that you have studied this year and describe two ways in which it impacts on large-scale organisations

Exam QuestionsQuestion 4 2012 (10 marks)Change management theories provide a template for successful change in large-scale organisations.Explain how Kotter’s change management theory could be used to• promote driving forces for change• reduce restraining forces for change• promote the use of low-risk practices.In your response, include an example from a large-scale organisation or significant change issue that you have studied this year.