Lecture 4: Change Management Systems PDF

**Lecture 4: Change Management Systems** In this lecture we explore the reasons why global businesses need to have in place a system or process for managing change. In business, change is inevitable -- some changes are internal to the business and some changes are external. Businesses face changing...

**Lecture 4: Change Management Systems** In this lecture we explore the reasons why global businesses need to have in place a system or process for managing change. In business, change is inevitable -- some changes are internal to the business and some changes are external. Businesses face changing demands by consumers, changing trends & fashions, changes in materials, production processes and technology. They also face changing regulations, laws and government involvement in markets. With all of these changes occurring businesses also face resistance to change -- from employees, shareholders, customers and the community. Therefore, it is important for businesses to have a clear process for managing change. By the end of this lecture you should to be able to: - Define the business concept of change management - Explain why it is important that businesses manage change in a systematic way - Explain business inertia - Explain the different change management strategies and systems **Defining Change Management** "Change management is the planning, implementing, controlling and reviewing of the movement of an organisation from its current state to a new one, while minimising resistance to the change through the involvement of key players and stakeholders." (Farquhar, p41) **Why is a Systematic Approach to Change Management Important?** Businesses introduce change because they want to move from where they are now to the future state that they want to achieve. However, within any organisation there can be a fear of changing or a reluctance to change. Change brings an unknown quantity to our day-to-day actions. We feel safe knowing what is expected of us, change can disrupt this. Change usually results in us having to put in extra effort to learn or adapt. Often there can be a reluctance to do this unless we receive some tangible benefit from doing so. By having a systematic approach to change management, businesses can mitigate (reduce) the fear and reluctance to change and therefore the change is more likely to be successfully implemented. **Internal factors** leading to change. Internal factors are those reasons from within a business that drive the business to introduce change. Examples: - A natural ageing or decline of a business -- or its product - A desire to in to increase its profitability - A general sense that the business can do better **External factors** leading to change. External factors are those reasons from outside of the business that drive the business to introduce change. Examples: - Greater competition - Legal and political changes - Economic changes **Business Inertia** This is the tendency for mature organisations to continue along their current trajectory without changing. They keep doing the same things without trying anything new. One possible consequence of business inertia for a business is that they will be left behind when new competition enters the market or existing competitors invest in change. An example of this can be seen in the mobile phone market where Nokia lost its dominance of the market by failing to see the growth of the smartphone. As a result companies like Apple and Samsung have grown while Nokia has lost market share. Another possible consequence is missing out on potential opportunities to expand. For example, Fonterra could have missed out on a huge potential market in China if it had solely focussed on its traditional markets in Europe and the USA. **Strategies for Managing Change** There are FIVE key strategies that businesses can use to implement change. Typically business managers will default to a particular strategy based on their personal leadership style and the "culture" that has been developed in the workplace. NOTE -- many managers will not be able to specifically "name" the strategy they use... the terms below are the academic names that we give the strategies. **Communication** In this strategy managers inform employees about the change before it happens. The idea behind this strategy is that employees will understand the purpose of the change and will be more likely to get on board with the change. **Participation & Involvement** In this strategy managers include employees in the change program. The idea behind this strategy is that if employees are involved in the decision making behind the change they are less likely to oppose them. This strategy is also referred to as an **inclusive process**, as all staff are involved in the entire process... identifying the need to change, brainstorming possible solutions, developing a solution and implementing the change. **Support** In this strategy managers offer support, either financial or personal to employees who will be affected by the change. The idea behind this strategy is that employees will be motivated by the reward to adopt the change. **Negotiation** In this strategy managers allow employees to alter elements of the change that they find threatening. The idea behind this strategy is that managers can negotiate a smoother transition through the change process. **Coercion** In this strategy managers force employees to accept the change by making clear the consequences of resistance, such as loss of employment or promotion opportunities. The idea behind this strategy is that the fear of the negative consequences will outweigh the fear of the change. **Leadership Styles for Managing Change** Every manager has their own leadership style. When implementing change in the organisation the manager will typically use a strategy that matches their style of leadership. The main leadership styles are: **Autocratic** In this leadership style the leader makes all the decisions without input from anyone else. The leader gives clear directions and expectations and believes there is a clear distinction between themselves and other employees. **Democratic** In this leadership style, there is a two-way relationship between the leader and employees in decision making but the leader is still responsible for the final choice. **Laissez-Faire** In this leadership style the leader has a hands-off approach to decision making and provides little or no guidance. All decisions are left to the group to make. The democratic leadership style is most likely to result in a smooth change transition in a business. This is because it is the style that is most likely to allow employees to be involved in the decision-making process leading up to the change. The democratic leader is more likely to use participation & involvement, support and negotiation strategies to achieve the desired change. Using an inclusive strategy is also likely to result in greater staff "buy in" to the change as they have helped develop the change. It can also result in higher levels of staff motivation and loyalty as they feel their views have been asked for, listened to and valued. An autocratic leader is more likely to use a communication or coercion strategy to manage a change. By default, autocratic leaders want to feel in control at all times and will usually make decisions themselves without seeking advice from staff (especially from staff lower down the organisation structure). It would be difficult for an autocratic leader to use an inclusive change management strategy -- staff are unlikely to buy into the process of managing change if they are used to a manager making all decisions without consultation. **Change Management Systems** There are a number of different models that can be applied to businesses trying to manage change. For this standard you are only required to be able to use and apply one of these models. **Lewin's 3-stage Model of Organisational Change** **"Kurt Lewin** developed a change model involving three steps: **unfreezing**, **changing** and **refreezing** steps. The model represents a very simple and practical model for understanding the change process. For Lewin, the process of change entails creating the perception that a change is needed, then moving toward the new, desired level of behaviour and finally, solidifying that new behaviour as the norm. The model is still widely used and serves as the basis for many modern change models. **Unfreezing** Before you can cook a meal that has been frozen, you need to defrost or thaw it out. The same can be said of change. Before a change can be implemented, it must go through the initial step of **unfreezing**. Because many people will naturally resist change, the goal during the unfreezing stage is to create an awareness of how the status quo, or current level of acceptability, is hindering the organisation in some way. Old behaviours, ways of thinking, processes, people and organisational structures must all be carefully examined to show employees how necessary a change is for the organisation to create or maintain a competitive advantage in the marketplace. Communication is especially important during the unfreezing stage so that employees can become informed about the imminent change, the logic behind it and how it will benefit each employee. The idea is that the more we know about a change and the more we feel it is necessary and urgent, the more motivated we are to accept the change. **Changing** Now that the people are \'unfrozen\' they can begin to move. Lewin recognised that change is a process where the organisation must transition or move into this new state of being. This **changing** step, also referred to as \'transitioning\' or \'moving,\' is marked by the implementation of the change. This is when the change becomes real. It\'s also, consequently, the time that most people struggle with the new reality. It is a time marked with uncertainty and fear, making it the hardest step to overcome. During the changing step people begin to learn the new behaviours, processes and ways of thinking. The more prepared they are for this step, the easier it is to complete. For this reason, education, communication, support and time are critical for employees as they become familiar with the change. Again, change is a process that must be carefully planned and executed. Throughout this process, employees should be reminded of the reasons for the change and how it will benefit them once fully implemented. **Refreezing** Lewin called the final stage of his change model freezing, but many refer to it as **refreezing** to symbolise the act of [reinforcing](http://study.com/academy/lesson/reinforcer-definition-examples-quiz.html), stabilising and solidifying the new state after the change. The changes made to organisational processes, goals, structure, offerings or people are accepted and refrozen as the new norm or status quo. Lewin found the refreezing step to be especially important to ensure that people do not revert back to their old ways of thinking or doing prior to the implementation of the change. Efforts must be made to guarantee the change is not lost; rather, it needs to be cemented into the organisation\'s culture and maintained as the acceptable way of thinking or doing. Positive rewards and acknowledgment of individualised efforts are often used to reinforce the new state because it is believed that positively reinforced behaviour will likely be repeated. Some argue that the refreezing step is outdated in contemporary business due to the continuous need for change. They find it unnecessary to spend time freezing a new state when chances are it will need to be re-evaluated and possibly changed again in the immediate future. However - as previously mentioned - without the refreezing step, there is a high chance that people will revert back to the old way of doing things. Taking one step forward and two steps back can be a common theme when organisations overlook the refreezing step in anticipation of future change." Source: http://study.com/academy/lesson/lewins-3-stage-model-of-change-unfreezing-changing-refreezing.html **Kubler-Ross 5-stage Model of Organisational Change** **The Kubler-Ross 5-stage Model** is based on research done into how people respond to grief (such as a death of a close friend or family member or developing a life-threatening illness). However, the model was refined by business analysts and can be used in a business context in regards to how individuals in an organisation respond to change.  From a management point of view the model is used to understand the processes that individuals will go through when a (major) new change is introduced. By understanding this process, management can lead their staff through each stage, with the end result being the successful implementation of the change. **Kotter's 8-step Model of Organisational Change** **Kotter's 8-step Model** of organisational change focuses on the process of change rather than the impact on individuals. In this model the first step is to establish a need for the change (a sense of urgency) -- "if we don't do this now we are in big trouble". From there, a select group is formed to lead the change process through the remaining stages, until the final stage is achieved, where the change becomes the normal practice.