Change Management

ITBusi101
 Change Management
• Strategic change is often a huge step for companies,
requiring a lot of dedication and appropriate
management. Change can often come with various
types of resistance from employees. So, how can
companies overcome this resistance? Through change
management.
Change Management Theory
Change Management Theory
• Change management is the process of making sure
that the business responds correctly to changes in its
internal and external environment
 Strategic Change
• Strategic change can be defined as "changes in the
content of a firm's strategy as defined by its scope,
resource deployments, competitive advantages, and
synergy" (Hofer & Schendel, 1978).
 Strategic Change
• In other words, strategic change can often lead to
changes in the vision of the company to become more
competitive or profitable. It is not guaranteed that
strategic change will always be
successful. Companies have to create and implement
a specific plan correctly. It is the managers' role to
convey this change to employees and the organisation
in general.
Change Management in
Organisations
• Two different types of change can take place within the
organisation.
• Change can either be incremental, taking place in
small steps over a long period of time.
Coca-Cola releasing new flavours like cherry or vanilla.
• Or disruptive (step-change), which is a more large-scale
type of change that occurs rapidly, often throughout an
entire industry.
Smartphones replace digital cameras.
Key drivers of Change
External influences
• Some examples of external factors that could influence
change are:
• The competitive environment: the competitive
environment of a business is likely to experience various
changes (Porter's Five Forces).
A competitor can easily gain increased market share due
to a technological innovation that makes their production
process more efficient or a competitor that can sell
products for lower prices.
Key drivers of Change
• When rivalry between competitors is intense, a
company may have to consider a strategic change to
keep up with competitors. In these cases, it is
possible that a quick and dramatic response is
necessary (disruptive change) otherwise the firm
will lose its competitive edge.
Key drivers of Change
• First mover advantage: rather than reacting to its
environment, a firm might consider being the first
mover when it comes to new technology or
innovation. First mover advantage comes from a
business that is first (or one of the few first)
organizations that address the new wants and needs
of consumers - before most competitors follow. This
usually requires radical changes and for the business
to be very open in embracing new technology.
Key drivers of Change
• New regulations and legislation: could also lead a
business to consider strategic change, as it could put
pressure on certain functional aspects of the
business.
If new environmental regulations on emissions come
into effect, the business might change its strategic
direction to becoming a more environmentally
conscious firm (reducing emissions and using
sustainable energy).
 Key drivers of Change
Internal Influences
• Some examples of internal factors that might influence the need for
change are:
• Issues with profitability: it could be that the business is not making
enough money or even incurring losses. This would be a substantial
reason why strategic change is necessary.
• Weaknesses of the business: the need for change can come from a
weakness the business has identified in a SWOT analysis. For example,
inefficiencies like high waiting times during the production process,
manufacturing costs or employee turnover.
• Lack of internal innovation: Lack of innovation can be a reason why a
business would consider change, as this can impact the competitiveness
of the business.
 Change Management Models and
Process
Companies need to have an appropriate management
tactic for embracing strategic change.
 Change Management Models and
Process
Managing Change and Organisational Culture
• Organisational culture plays a huge role in strategic change. For
strategic change to be effective, the change has to be integrated into the
internal culture of the organization appropriately. Established firms can
often have difficulty rethinking organizational culture, as shared
organizational values and habits have been around for a long time -
change will not happen overnight. This is why
managers' leadership style is important to lead change. Managers need
to understand that education, training and open communication are
essential for leading effective change.
• Effective management is also important as change can often come with
an attitude of resistance. Resistance to change can show its forms
through different ways, such as missing meetings and failing to deliver
on commitments. Some of the reasons why employees could resist change
include:
 Change Management Models and
Process
• Fear of the unknown/change: the business has to be very
transparent about the process of change. The more employees know
about the change, the less likely they will feel fearful or neglected.
• Misunderstanding: this can come from communication problems or
mistrust due to the lack of two-way communication.
• Organizational politics: some people may resist change to 'prove'
that the organization has made a bad decision in their eyes,
meanwhile others may resist change if they fear they will lose power
within the organization.
• Self-interest: when employees fear that change might lead them to
lose their jobs.
 Change Management Models and
Process
• A flexible organization is one that can respond quickly to
changes in the external environment.
 Change Management Models and
Process
• The characteristics of a flexible organization include:
• A flexible workforce: flexible work contracts make it easier for the
organization to increase and decrease capacity quickly.
• Information management systems in place: to increase the speed at
which information and knowledge are shared within the organization. This
can improve internal communication and customer service.
• Flexible work options: like offering employees the option to work from
home and working flexible hours. This can remove the time spent travelling
to work and improve employees' work-life balance.
• Cost savings: having a flexible workforce can decrease labour costs and so
can remote working options.
 Lewin's Force Field Analysis
• Kurt Lewin proposed a model, the Force Field Analysis, which
provides an overview of the different factors and issues that
influence change within an organization.
• Lewin argued that there are forces that drive change and
forces that hinder change and in order to create effective
change within the organization, there have to be more driving
forces than restraining forces. If the number of forces is the same,
meaning they are in equilibrium, no change will be made, which
is why an organization has to disturb the equilibrium to bring
about change.
 Kotter and Schlesinger's Overcoming
Resistance to Change Model
• Kotter and Schlesinger (1979) developed a model for overcoming
resistance to change.² The model includes six methods for
managing resistance:
• Education can be used when employees lack information or have
wrong information about the changing process and its
implications. Management should communicate the changes
effectively to overcome this issue.
• Participation includes involving resistors in the change design
and implementation process. In this case, people will have a
sense of ownership and commitment to making the change
happen.
 Kotter and Schlesinger's Overcoming
Resistance to Change Model
• Facilitation can be used when people are resistant to change because
they feel like they will not be able to make sufficient adjustments. To
overcome resistance, management could provide training and emotional
support.
• Negotiation includes offering incentives for people to make the
change. Negotiation could include a compromise leading to a slightly
different type of change than originally intended.
• Manipulation is when people are offered rewards if they agree to
change.
• Coercion is usually used when other methods are not viable. Coercion
can include threatening employees with either job loss, transfer or
promotion opportunities. This method is usually used when it is
important to make the change quickly.
• Change Management - key takeaways

• Change management is the process of making sure that the business responds correctly to changes
in its internal and external environment.

• Strategic change can be defined as "changes in the content of a firm's strategy as defined by its
scope, resource deployments, competitive advantages, and synergy" (Hofer & Schendel, 1978).

• It is not guaranteed that strategic change will always be successful. Companies have to create and
implement a specific plan correctly.

• Change can either be incremental (small, gradual change) or disruptive (completely reinventing an
industry).

• Organizational culture plays a huge role in strategic change. For strategic change to be effective,
the change has to be integrated into the internal culture of the organization appropriately.

• A flexible organization is one that can respond quickly to changes in the external environment.

• Kotter and Schlesinger (1979) developed a model for overcoming resistance to change. The six
methods proposed include education, participation, facilitation, negotiation, manipulation and
coercion.

• The Force Field Analysis provides an overview of the different factors and issues that influence
change within an organization.