+
Business Management
Part 4 – Management and Change
+
Students learn about –
Management and change

Responding to internal and external influences

Managing change effectively

Identifying the need for change

Business information systems

Setting achievable goals

Resistance to change

Management consultants
Source http://4equalsides.com/wpcontent/uploads/2011/08/2328879637_c0d2e376ff.jpg
+

Organisational change
Change is any alteration in the business and work environment. For example:





Change in consumer tastes.
Change in production methods.
Change in markets or products sold.
Change in how employees perform tasks.
Change to the way things are perceived.

The ability to manage, embrace and adapt to change will determine a business’s
competitive advantage and survival.

Organisational change is the adoption of a business’s new idea or behaviour in
response to internal or external influences.

Successful managers are proactive rater than reactive. Proactive – anticipate and
adjust to changing circumstances. Reactive – swept along or caught unprepared.

The crucial management issue is how to manage change. It needs
to be:



Productive - used to renew and strengthen the business.
Constructive – occur at a pace at which it can be absorbed and
integrated into the business.
Thoroughly evaluated to assess their overall impact.
Define change.
Complete snapshot ‘Billabong rides the wave’
Questions 1-3 page 291
Source: http://4equalsides.com/wpcontent/uploads/2011/08/2328879637_
c0d2e376ff.jpg
Responding
to
internal
and
+
external influences

Changes can be major (transformational) and minor
(incremental).

Transformational change results in a complete restructure
throughout the whole organisation. A transformed business will
have:


A different (usually flatter) organisational structure.

New work systems and procedures.

A changed employee structure.

Greater use of technology.

An altered corporate culture.
Incremental change results in minor changes usually involving
only a few employees. For example:

1.
2.
Change from using a fax to email when sending information to
customers.
Activity
Distinguish between transformational change and incremental change.
Identify three minor changes and three major changes that have occurred
in your school over the last few years.
+

Activity – major and minor changes
Consider the following situations and determine whether the
change required would be major or minor. Give reasons for
your answer.

A sales representative complains that he is unable to access the
latest prices on some products quickly enough because price
changes are mailed to his office.

A distinct decline in the quality of manufactured items from the
heavy metal section has been traced back to the high turnover of
staff in this section over the past nine months.

The development of new technology in the paper manufacturing
industry will require the chief executive officer and the board to
completely reassess their present manufacturing operations.

The responsibilities of several key staff in the accounting
department will need to change as a result of the new
computerised accounting system.
Impact
of
change
on
organisational
+
structure

Businesses need to undergo structural change, changes in the business’s structure, that
is, the organisational chart.

Recently the main structural changes in Australian businesses included:


Outsourcing – the contracting of some operational operations to outside suppliers. Many
businesses rearranged their workforce to employ minimum full-time staff and use many from
outside the business on contract, casual or part-time.

Flatter organisational structures – middle-management positions abolished, greater levels of
accountability and responsibility for frontline staff.

Work teams – allow businesses to be more flexible and more responsive. They motivate
employees to be creative, develop a broader view of goals and contribute.
These changes aim to streamline business operations, improve efficiency and empower
employees to make their own decisions.
Activity
Construct a mind map to summarise the business’s three main structural responses to
the change in the environment. See page 297
+
Impact of change on business
culture

Changes within the external and internal environments should
be reflected in the business culture.

If the business culture fits the external environment managers
and employees have the attitude they need to compete
successfully. For example:

Telstra – Changed from having a monopoly on telecommunications
within Australia to increasing competition due to deregulation of the
telecommunications industry and the privatisation of Telstra. The new
external environment required a new way of thinking.
+
Impact of change on human
resource management

Adjustments to the human resource management function are necessary to
improve the effectiveness of changes in other business divisions such as
organisational structure and technology.

The main changes are:








Recruitment and selection are altered to reflect the need for individuals who
possess the knowledge and skills required to handle changing circumstances.
To be made redundant appropriate termination procedures must be put in place.
Existing employees need training in teamwork, problem solving, decision making
and change management.
New performance appraisal and reward systems are required.
Autonomous and empowered employees require changed roles and communication
methods.
Flexible working arrangements are required to attract and maintain skilled
employees.
Bases of power shift from seniority and authority to collaboration and contribution.
A clear vision of the business direction and benefits to employees needs to be
developed and clearly communicated.
Activity
Outline what human resource management
change businesses have undertaken in response
to environmental changes.
+
Impact of change on operations
management

Businesses seek ways to speed up production time, shorten production
development, streamline distribution and serve customers.

Main operations management changes:

Businesses refitted and reorganised to take advantage of improvements in
technology.

Changes in the production process including flexible manufacturing –
production by computer controlled machines that can adapt to various
versions of the same operation. Plants can then be smaller, more specialised
and closer to important markets.

Emphasis on quality assurance – procedures like quality control and quality
assurance to ensure products satisfy consumers.

Human relations are being improved for employees so they can balance their
workloads, simplify materials handling, change operations sequences and train
employees.
+

Managing change effectively
Change is the most daunting challenge confronting
managers and the most promising opportunity. It is also
inevitable.


See Snapshot – The challenge of change –
Microforte Technologies page 299
To manage change effectively:


Change needs to be as productive as possible.
It needs to be a process for revitalising and strengthening the
business.

Managers can adopt a number of low and high risk
strategies to manage change effectively.

Low risk strategies focus on keeping employees informed
about why changes are needed and involving them in the
change process. Strategies rely on communication,
involvement, support and negotiation.

Two low risk strategies are:


Identifying the need for change.
Setting achievable goals.
Source:
http://www.principalspage.com/theblo
g/wpcontent/uploads//2010/10/clip_image0
011.jpg
+

A holistic approach is required – look at the whole picture.




Low risk strategy - Identifying
the need for change
Anticipate factors so the business can take advantage of opportunities.
Share the visions with employees so they understand the need for change.
Access to accurate, up-to-date information is required.
Business information systems: Businesses need to be able to collect,
organise, process and retrieve information quickly.

Data (unprocessed facts and figures like sales figures) need to be quickly
and efficiently gathered, stored, combined and analysed.

This information (processed data deliberately selected and organised to
be useful to to an individual manager) becomes the raw material for
decision making.

A business information system (BIS) or management information system
(MIS) gathers data, organises and summarises and converts to practical
information managers use for decision making.

Managers plan for the future, implement plans and evaluate results against
past performance.
+
Low risk strategy – setting
achievable goals

A vision statement states the purpose of the business

Specific company goals that are measurable are usually set
on a yearly basis. Goals need to be attainable and realistic.
Unachievable goals cause cynicism among employees and
damage relationships between employees and supervisors.

The vision statement and business goals are reassessed if
changes in the external business environment are detected
that have an impact on business activities.
+
High risk strategies - manipulation

Considered high risk because their failure may generate
negative outcomes.

If used intelligently and wisely result in lowered resistance to
change.

Two high risk strategies are:

Manipulation – the skilful or devious exertion of influence over
someone to get them to do what you want. For example if
introducing new technology staff are informed of exciting new
training and promotional opportunities but not told it will result in
a number of forced redundancies.
+
High risk strategies - threat

Threat – the use of power to force change
resistors to conform.
 Threats can be direct or indirect and involve
loss of promotion, transfer, overtime or
ultimately termination.


For example in 2006 Qantas flight engineers
were given an ultimatum by senior
management that job losses would occur if
current work practices and manning levels
were not changed. This threat resulted in
prolonged industrial action causing disruption
through numerous flight delays.
People can be compliant but also resentful
resulting in increased resistance, industrial
sabotage, grievance complaints, compensation
and industrial disputes.
Source http://4.bp.blogspot.com/4xPo0nrO3HE/TbnrTkY6dFI/AAAAAAAABFY/bid_yU
yBpG4/s1600/qantas-logo.jpg
Activity
Exercise 9.3
Page 303
Distinguish
between a lowrisk strategy
and a high-risk
strategy for
managing
change.
Common
reasons
+
for resistance to
change
Source http://www.kaushik.net/avinash/wpcontent/uploads/2006/12/change.jpg
1.
Management – make hasty decisions that are poorly timed or unclear or can be indecisive
and put off making a decision creating uncertainty.
2.
Fear of job loss – fearful of changes that threaten job security or require new work routines.
Resist new processes because they could result in forced redundancies and loss of power.
3.
Disruption to routine – employees may resist change because they are worried about
adapting to new procedures that threaten established work routines.
4.
Time – enough time needs to be provided to allow people to think about change, accept it
and then implement it.
5.
Fear of the unknown – change can create feelings of lack of control, fear of the unknown and
uncertainty about the future leading to anxiety.
6.
Inertia – refers to an unenthusiastic response to proposed change possibly because it
requires moving outside and away from your comfort zone.
7.
Cost – businesses need to weigh up the costs and benefits of change. The financial cost of
implementation can be high.
+
Resistance to change

At the same time as managers are undertaking, driving
change for the best of reasons, there are restraining forces
working against the change.

For most people personal change like exercising more is:

Achieved only with considerable effort

Often emotionally stressful
Source: Chapman and Devenish Business Studies in
Action – Preliminary Course Page 304
+
Driving and resisting forces

Businesses must deal with trying to balance the force driving
change with the forces resisting change.

Driving forces are forces that initiate, encourage and
support change.

Restraining forces are those that work against the
change, creating resistance.

It is important employees are not neglected and
communication channels are adequate when reporting
progress.
Activity
Distinguish between driving and resisting forces.
Strategies
for
reducing
resistance
+
to change


Resistance to change is common among managers and
employees.
Regardless of where or how a change originated the
workplace culture created by the manager and his or her
leadership abilities can affect employee acceptance.
Activity
Examine the
diagram
below. Select the two
strategies you think are the most
important. Justify your selection.
+
Two strategies for overcoming
resistance to change

Creating a culture of change (encouraging teamwork)

This requires a degree of risk taking by participants which requires a
supportive business culture.

One method to assist in this process is the use of change agents such
as a member of management, an employee or an outside consultant –
a change agent is a person or group of people who act as
catalysts, assuming responsibility for managing the change
process.

Effective teams have open communication channels, develop a strong
sense of identity and offer a supportive environment.

Great teams mean reduced staff turnover and
absenteeism, change is readily accommodated
productivity rises.
and
Source - http://www.betadaily.com/wpcontent/uploads/2010/02/team-building.jpg
+

Two strategies for overcoming
resistance to change
Providing positive leadership (sharing the vision)

A managers treatment of employees determines their
acceptance or resistance to change.

Managers who concentrate on the needs of their
employees are the most effective, building high
performance teams that attain their objectives. Less
affective managers focus on tasks and meeting
deadlines, the characteristics of a manager rather than
a leader.

Other qualities of successful leaders:
 Market and promote change to achieve cooperation
and acceptance.
 Resolve conflicts when change is implemented.
 Keep an open mind, seek new ideas and freely share
information.
 Cultivate a sense of stability while adding more
change.
 Show confidence in people, share credit and
recognition.
 Build and communicate a clear vision.
Source-http://ourteamrocks.com/wpcontent/uploads/2010/06/leadership.jpgce
+
Activity – Overcoming resistance
to change.

Select a major change in your life, such as moving house,
changing schools or starting a new casual job and complete
the following:
a)
State the reasons you liked or disliked the change. Share
with other group members.
b)
Identify the reasons that were common among the group.
c)
Interpret what this tells you about the best strategy a
manager could use to help overcome resistance to change.
+
Management consultants

A management consultant is someone who has specialised knowledge and skills
within an area of business.

It is best to hire members of the Institute of Management as they have recognised
standards of character, experience and education.

They provide businesses with:





A wide range of business experiences.
Specialised knowledge and skills.
An objective, external, viewpoint.
Access to the latest research.
Awareness of industry best practices (Business practices that are regarded as the best or
the highest standard in the industry).

Their main role is to help business improve their performance by investigating
existing business problems and developing plans for improvement.

They can provide change management advice. Change management is a
methodical approach to dealing with change, both from the perspective of a
business and on the individual level.

They provide strategies to smoothly manage the introduction of business changes
by:




Undertaking change readiness reviews.
Creating a supportive business culture.
Actively involving all stakeholders in the change process.
Gaining and recognising early achievements.
Activity - Use the Institute of Management
Consultants website to outline the:
a) Role of the IMC
b) Purpose of the certified Management
Consultancy (CMC) delegation.